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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4880 Introduced in House (IH)]

108th CONGRESS
  2d Session
                                H. R. 4880

To improve the quality, efficiency, standards, and technology of health 
                     care, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 21, 2004

 Mr. Kennedy of Rhode Island introduced the following bill; which was 
 referred to the Committee on Energy and Commerce, and in addition to 
   the Committee on Ways and Means, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To improve the quality, efficiency, standards, and technology of health 
                     care, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Josie King Act of 2004'' or the 
``Quality, Efficiency, Standards, and Technology for Health Care 
Transformation Act of 2004''.

SEC. 2. DEFINITION.

    For purposes of this Act, the term ``Secretary'' means the 
Secretary of Health and Human Services.

SEC. 3. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Definition.
Sec. 3. Table of contents.
          TITLE I--NATIONAL HEALTH INFORMATION INFRASTRUCTURE

Sec. 101. Purpose.
Sec. 102. Health information technology grants.
Sec. 103. Standards for interoperability of health information 
                            technology systems.
Sec. 104. Loans.
Sec. 105. Safe harbor for equipment and services provided for the 
                            development or implementation of a health 
                            information infrastructure.
Sec. 106. Exception to medicare limitations on physician self-referral.
Sec. 107. Adjustments to medicare payments to providers of service and 
                            suppliers participating in health 
                            information exchanges.
Sec. 108. Medicaid payments for information infrastructure for health 
                            information exchange and information 
                            technology.
Sec. 109. Definitions.
     TITLE II--HEALTH CARE OUTCOMES, BEST PRACTICES, AND EFFICIENCY

Sec. 201. Research on Outcomes of Health Care Items and Services.
Sec. 202. Consortium for Health Outcomes Research Priorities.
Sec. 203. Center for Clinical Decision-Support Technology.
Sec. 204. Scholarships for study in health care quality and patient 
                            safety.
Sec. 205. Standardized measures of health care provider performance.
Sec. 206. Definitions.
             TITLE III--INCENTIVES FOR HEALTH CARE QUALITY

Sec. 301. Access to medicare health care claims databases.
Sec. 302. Incorporation of measures of health care practitioner 
                            performance in Federal programs.
Sec. 303. Interim claims-based practitioner performance database.
Sec. 304. Clinical-based practitioner performance database.
Sec. 305. Availability of performance measurements and data.
Sec. 306. Use of health care provider performances measure for pay for 
                            performance.
Sec. 307. Study comparing practitioner performance database.
Sec. 308. Regulations on auditing.
Sec. 309. AHRQ access to practitioner performance databases.

          TITLE I--NATIONAL HEALTH INFORMATION INFRASTRUCTURE

SEC. 101. PURPOSE.

    The Secretary of Health and Human Services shall implement this 
title with a view to developing a national health information 
infrastructure.

SEC. 102. HEALTH INFORMATION TECHNOLOGY GRANTS.

    (a) Phase I Grants.--
            (1) Grants.--The Secretary may make not more than 20 grants 
        to health information infrastructure organizations to enable 
        each grantee to develop and implement over a 4-year period a 
        community health information technology plan that provides for 
        a health information exchange to serve a geographic area in 1 
        or more States.
            (2) Use of funds.--The Secretary may not make a grant to a 
        health information infrastructure organization under this 
        section unless the organization agrees to use the grant--
                    (A) in the first year of the grant, to develop a 
                community health information technology plan described 
                in paragraph (3) for submission to the Secretary under 
                paragraph (4); and
                    (B) in each year of the grant, but not later than 
                the second year of the grant, to implement a health 
                information infrastructure, including a health 
                information exchange, in accordance with the plan.
            (3) Community health information technology plan.--
                    (A) In general.--A community health information 
                technology plan shall provide for the establishment and 
                implementation in a specified geographic area of a 
                health information infrastructure that--
                            (i) includes a health information exchange 
                        that allows the seamless, secure, electronic 
                        sharing of health information among health care 
                        providers and other authorized users;
                            (ii) provides consumers with secure, 
                        electronic access to their own health 
                        information;
                            (iii) meets data standards for 
                        interoperability adopted by the Secretary, 
                        including any standards providing for 
                        interoperability among health information 
                        exchanges;
                            (iv) meets the privacy requirements of 
                        subsection (d);
                            (v) provides such public health 
                        surveillance and reporting capability as the 
                        Secretary requires;
                            (vi) allows for such reporting of, and 
                        access to, health information for purposes of 
                        research (other than individually identifiable 
                        health information) as the Secretary requires; 
                        and
                            (vii) allows for the reporting of health 
                        information (other than individually 
                        identifiable health information) to the 
                        database established under section 304 for the 
                        purpose of health care provider performance 
                        measurement in such form as required by the 
                        Secretary.
                    (B) Contents.--A community health information 
                technology plan shall--
                            (i) be developed with the participation and 
                        widespread support of the health care 
                        community, including all stakeholders 
                        (including small physician groups), of the 
                        geographic area to be served by the grantee's 
                        health information exchange;
                            (ii) describe the technologies and systems, 
                        including interoperability data standards, that 
                        will be used to establish a health information 
                        exchange consistent with paragraph (A)(i) and 
                        the technological requirements and support that 
                        will be necessary for health care providers to 
                        participate in the health information exchange;
                            (iii) establish how health care 
                        stakeholders will share the costs of health 
                        information technology investments required by 
                        the community health information technology 
                        plan, including the costs of implementing and 
                        maintaining new systems in physicians offices, 
                        hospitals, laboratories, community health 
                        centers, pharmacies, and other facilities of 
                        health care providers;
                            (iv) establish how administrative and 
                        clinical savings resulting from widespread use 
                        of new health information technology will be 
                        accounted for and distributed among health care 
                        stakeholders;
                            (v) explain how the health information 
                        infrastructure organization involved will 
                        ensure widespread participation by health care 
                        providers (especially small physician groups) 
                        in the grantee's health information exchange 
                        and what support and assistance will be 
                        available to physicians seeking to integrate 
                        health information technologies into their 
                        practices;
                            (vi) describe how patients and caregivers 
                        who are not health care providers will be able 
                        to access and utilize the health information 
                        infrastructure;
                            (vii) establish how the health information 
                        infrastructure will be sustained over time, 
                        including anticipated sources of revenue;
                            (viii) explain how the grantee's health 
                        information exchange will protect patient 
                        privacy and maintain security;
                            (ix) explain how the grantee will ensure 
                        the participation of health care providers 
                        serving minority communities, including 
                        communities in which English is not the primary 
                        language spoken; and
                            (x) require that the grantee's health 
                        information exchange is certified by the 
                        Secretary under this section.
            (4) Approval of plan.--
                    (A) Submission.--Not later than the end of the 
                first year for which a health information 
                infrastructure organization receives a grant under this 
                subsection, the organization shall submit its community 
                health information technology plan to the Secretary.
                    (B) Approval.--The Secretary shall approve or 
                disapprove each community health information technology 
                plan submitted to the Secretary under this paragraph 
                based on whether the plan complies with the 
                requirements of this subsection.
                    (C) Effect of failure to approve.--The Secretary 
                may not make any payment under this subsection to a 
                health information infrastructure organization for the 
                second, third, or fourth year for which the 
                organization receives a grant unless the Secretary has 
                approved the organization's community health 
                information technology plan.
            (5) Selection.--In selecting grant recipients under this 
        section, the Secretary shall take into account the extent to 
        which an applicant intends to develop a community health 
        information technology plan that covers a complete medical 
        market area (as defined by the Secretary), geographical 
        diversity, extent of stakeholder participation, health care 
        provider participation commitments, capacity to measure quality 
        and efficiency improvements, and replicability.
    (b) Phase II Grants.--
            (1) Grants.--For the purpose described in paragraph (2), 
        the Secretary shall make a grant under this subsection to each 
        State that agrees to comply with the requirements of this 
        subsection.
            (2) Purpose.--A funding agreement for a grant under this 
        subsection is that the State involved will use the grant only 
        for making subgrants to health information infrastructure 
        organizations for the purpose of--
                    (A) maintaining and upgrading existing health 
                information exchanges;
                    (B) replicating existing health information 
                exchanges to develop and implement new health 
                information exchanges in areas not previously served by 
                an exchange in accordance with the process and 
                requirements described in subsection (a);
                    (C) including additional stakeholders in the health 
                information exchanges;
                    (D) working with entities in neighboring States to 
                expand health information exchanges on a regional 
                basis; and
                    (E) connecting health information exchanges with 
                public health and bioterrorism surveillance programs, 
                including those of the Centers for Disease Control and 
                Prevention.
            (3) Privacy.--A funding agreement for a grant under this 
        subsection is that the State involved must require that any 
        infrastructure funded in whole or in part under this subsection 
        must meet the privacy requirements of subsection (d).
            (4) Certification.--A funding agreement for a grant under 
        this subsection is that the State involved will require that 
        each health information exchange funded with the grant is 
        certified by the Secretary under this section.
            (5) Reports.--A funding agreement for a grant under this 
        subsection is that the State involved will submit an annual 
        report to the Secretary on the activities of the State under 
        this subsection, including--
                    (A) the status of existing health information 
                exchanges in the State; and
                    (B) the development and implementation of new 
                health information exchanges in the State in areas not 
                previously served by an exchange.
            (6) Allocation of funds.--Of the amount appropriated for 
        each fiscal year to carry out this subsection, the Secretary 
        shall use such appropriated amount to award a grant to each 
        State receiving a grant under this subsection in an amount that 
        bears the same relation to the appropriated amount as the 
        number of physicians and hospitals in the State bears to the 
        total number of physicians and hospitals in all such States.
    (c) Phase III Grants.--The Secretary shall continue to make grants 
to States in accordance with the provisions of subsection (b), except 
that--
            (1) grants under this subsection shall be used primarily to 
        maintain or upgrade existing health information exchanges; and
            (2) the Secretary may not make a grant to a State under 
        this subsection if less than 75 percent of the health care 
        providers in the State are participating in a health 
        information exchange.
    (d) Privacy.--Any health information infrastructure funded in whole 
or in part under this section shall--
            (1) comply with the regulations promulgated pursuant to 
        section 264(c) of the Health Insurance Portability and 
        Accountability Act of 1996 (42 U.S.C. 1320d-2(d));
            (2) allow patients to exclude their health information from 
        the health information exchange;
            (3) give patients the option of allowing only designated 
        health care providers to access their personally identifiable 
        information concerning diagnosis and treatment of sexually 
        transmitted diseases, addiction, and mental illnesses;
            (4) allow health care providers to access individually 
        identifiable health information through health information 
        exchanges only for reasonable purposes related to diagnosis and 
        treatment;
            (5) allow other persons to access individually identifiable 
        health information available through health information 
        exchanges only with express patient consent; and
            (6) require health care providers, in making a transmission 
        of individually identifiable health information to payers 
        through the health information infrastructure, to restrict the 
        transmission to the minimum amount of information necessary for 
        payment of the claim involved.
    (e) Application.--To seek a grant under this section, an applicant 
shall submit an application to the Secretary in such form, in such 
manner, and containing such information and assurances as the Secretary 
may require.
    (f) Technical Assistance.--
            (1) In general.--The Secretary shall provide to health 
        information infrastructure organizations such technical 
        assistance as the Secretary deems appropriate to carry out this 
        section, including assistance relating to questions of 
        governance, financing, and technological approaches to the 
        creation of health information infrastructure.
            (2) National technical assistance center.--
                    (A) Establishment.--The Director of the Agency for 
                Healthcare Resources and Quality shall establish and 
                maintain a national technical assistance center to 
                provide assistance to physicians described in 
                subparagraph (B) to facilitate successful adoption of 
                health information technologies and participation in 
                the development and implementation of community health 
                information technology plans by such physicians.
                    (B) Physicians.--The national technical assistance 
                center shall provide assistance to physicians in 
                geographical areas served by a health information 
                infrastructure organization with a phase I grant under 
                subsection (a).
                    (C) Priority.--In providing assistance to 
                physicians under this paragraph, the national technical 
                assistance centers shall--
                            (i) give priority to physicians in small 
                        physician groups; and
                            (ii) as resources allow, provide assistance 
                        to physicians in larger groups.
                    (D) Requirements.--Technical assistance provided 
                under this paragraph shall, at a minimum, include the 
                following:
                            (i) A clearinghouse of best practices, 
                        guidelines, and implementation strategies 
                        directed at the small medical practices that 
                        plan to adopt electronic medical records and 
                        other health information technologies.
                            (ii) A change management tool kit to enable 
                        physicians and their office staffs to 
                        successfully prepare practice workflows for 
                        electronic medical record adoption, to receive 
                        guidance in the selection of vendors of health 
                        information technology products and services 
                        that are appropriate within the context of the 
                        individual practice and the community setting, 
                        to implement health information technology 
                        solutions and manage the project at the 
                        practice level, and to address the ongoing need 
                        for upgrades, maintenance, and security of 
                        office-based health information technologies.
                            (iii) The capability to provide 
                        consultations and advice to small medical 
                        practices to facilitate adoption of health 
                        information technologies.
    (g) Certification.--Not later than the date that is 1 year after 
the date of the enactment of this Act, the Secretary shall establish a 
program of certifying health information infrastructures that are in 
compliance with the requirements of subsection (a)(3)(A) and any other 
requirements of the national health information infrastructure as 
established by the Secretary.
    (h) Authorization of Appropriations.--
            (1) In general.--To carry out the provisions of this 
        section other than subsection (f)(2), there are authorized to 
        be appropriated--
                    (A) for phase I grants under subsection (a), 
                $55,000,000 for fiscal year 2005 and $167,000,000 for 
                each of fiscal years 2006, 2007, and 2008;
                    (B) for phase II grants under subsection (b), 
                $400,000,000 for each of fiscal years 2009 through 
                2013; and
                    (C) for phase III grants under subsection (c), such 
                sums as may be necessary for fiscal year 2014 and each 
                subsequent fiscal year.
            (2) Technical assistance.--
                    (A) In general.--Of the amount appropriated to 
                carry out this section for a fiscal year, not more than 
                than 10 percent of such amount or $5,000,000, whichever 
                is lesser, may be used to provide technical assistance 
                under subsection (f)(1).
                    (B) National technical assistance center.--To carry 
                out subsection (f)(2), there is authorized to be 
                appropriated $2,500,000 for each of fiscal years 2005 
                through 2008.

SEC. 103. STANDARDS FOR INTEROPERABILITY OF HEALTH INFORMATION 
              TECHNOLOGY SYSTEMS.

    (a) Standards.--Not later than 1 year after the date of the 
enactment of this Act, after considering the recommendations of the 
Working Group, the Secretary of Health and Human Services, the 
Secretary of Defense, and the Secretary of Veterans Affairs, acting 
jointly, shall adopt data standards for the interoperability of health 
information technology systems.
    (b) Periodic Review.--The Secretary of Health and Human Services, 
the Secretary of Defense, and the Secretary of Veterans Affairs, acting 
jointly, shall periodically review the data standards adopted under 
subsection (a) and, as appropriate, revise such standards.
    (c) Application.--The Secretary of Health and Human Services, the 
Secretary of Defense, and the Secretary of Veterans Affairs shall 
require that each program using health information technology of the 
Department of Health and Human Services, the Department of Defense, and 
the Department of Veterans Affairs, respectively, complies with the 
data standards adopted under subsection (a).
    (d) Working Group.--
            (1) Establishment.--The Secretary of Health and Human 
        Services shall convene a Working Group to formulate 
        recommendations on the adoption of data standards for the 
        interoperability of health information technology systems.
            (2) Membership.--The members of the Working Group shall 
        include the following:
                    (A) Health informatics experts from the Department 
                of Defense, the Department of Health and Humans 
                Services, the Department of Veterans Affairs, the 
                Indian Health Service, and the private sector.
                    (B) Practicing physicians.
                    (C) Nurses.
                    (D) Representatives of other health care providers.
                    (E) Hospital administrators and hospital chief 
                information officers.
                    (F) Representatives of standards development 
                organizations.
                    (G) Representatives of standards development 
                organizations.
                    (H) Representatives of the Agency for Healthcare 
                Research and Quality.
                    (I) Representatives of the National Library of 
                Medicine.
                    (J) Other individuals, as determined appropriate by 
                the Secretary, with expertise relevant to recommending 
                data standards for the interoperability of health 
                information technology systems.
            (3) Duties.--The Working Group shall formulate 
        recommendations to the Secretary of Health and Human Services, 
        the Secretary of Defense, and the Secretary of Veterans Affairs 
        on the adoption of data standards for the interoperability of 
        health information technology systems, including 
        recommendations on standards for each of the following:
                    (A) Components of electronic medical records.
                    (B) Interchange of clinical data, including, with a 
                patient's consent, the sharing of patient data--
                            (i) across health care provider and 
                        community boundaries; and
                            (ii) between health care providers and 
                        patients.
                    (C) Terminologies.
                    (D) Medical knowledge representation.
                    (E) Computerized physician order entry.
                    (F) Privacy, security, and authentication of health 
                information.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section--
            (1) $5,000,000 for each of fiscal years 2005 and 2006; and
            (2) $2,000,000 for fiscal year 2007 and each subsequent 
        fiscal year.

SEC. 104. LOANS.

    (a) In General.--The Secretary may make loans to health information 
infrastructure organizations that receive a phase I grant under section 
102(a) or a phase II subgrant under section 102(b) to provide 
additional funding for activities under the grant, including funding 
for the costs of--
            (1) developing a community health information technology 
        plan under section 102(a)(3); and
            (2) implementing technology investments, training, and 
        workflow reengineering under the plan.
    (b) Terms and Conditions.--Each loan under this section shall be 
subject to such terms and conditions as the Secretary deems 
appropriate, except that--
            (1) the repayment period of each such loan may not exceed 
        10 years;
            (2) any technology investments paid for in whole or in part 
        with funds from the loan must comply with the data standards 
        for the interoperability of health information technology 
        systems adopted by the Secretary under section 103;
            (3) any technology investments paid for in whole or in part 
        with funds from the loan must comply with the privacy 
        requirements of section 102(d); and
            (4) the Secretary shall require the health information 
        infrastructure organization involved to provide to the 
        Secretary an annual accounting of loan funds.

SEC. 105. SAFE HARBOR FOR EQUIPMENT AND SERVICES PROVIDED FOR THE 
              DEVELOPMENT OR IMPLEMENTATION OF A HEALTH INFORMATION 
              INFRASTRUCTURE.

    Paragraph (3) of section 1128B(b) of the Social Security Act (42 
U.S.C. 1320a-7b(b)) is amended--
            (1) by striking the period at the end of the first 
        subparagraph (H) and inserting a semicolon;
            (2) by redesignating the second subparagraph (H) as 
        subparagraph (I);
            (3) by striking the period at the end of subparagraph (I) 
        (as so redesignated) and inserting ``; and''; and
            (4) by adding at the end the following:
                    ``(J) the provision of any equipment or services 
                that are appropriate for the development or 
                implementation of a health information infrastructure 
                under section 102 of the Quality, Efficiency, 
                Standards, and Technology for Health Care 
                Transformation Act of 2004, including the provision of 
                hardware, software, and services necessary to 
                participate in a health information exchange so long as 
                such equipment or services are not provided in any 
                manner that takes into account the volume, or value, of 
                referrals or other business generated between the 
                parties.''.

SEC. 106. EXCEPTION TO MEDICARE LIMITATIONS ON PHYSICIAN SELF-REFERRAL.

    Section 1877(e) of the Social Security Act (42 U.S.C. 1395nn(e)) is 
amended by adding at the end the following new paragraph:
            ``(9) Development or implementation of a health information 
        infrastructure.--The provision of any equipment or services as 
        appropriate for the development or implementation of a health 
        information infrastructure under section 102 of the Quality, 
        Efficiency, Standards, and Technology for Health Care 
        Transformation Act of 2004, including the provision of 
        hardware, software, and services necessary to participate in a 
        health information exchange so long as such equipment or 
        services are not provided in any manner that takes into account 
        the volume or value of referrals or other business generated 
        between the parties.''.

SEC. 107. ADJUSTMENTS TO MEDICARE PAYMENTS TO PROVIDERS OF SERVICE AND 
              SUPPLIERS PARTICIPATING IN HEALTH INFORMATION EXCHANGES.

    (a) In General.--The Secretary shall establish a methodology for 
making adjustments in payment amounts under title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) made to providers of services and 
suppliers who furnish items or services for which payment is made under 
that title who--
            (1) participate in a health information exchange certified 
        by the Secretary under section 103(b); or
            (2) in the course of furnishing items and services for 
        which payment may be made under such title, use information 
        technology with patient-specific applications that the 
        Secretary determines improve the quality and accuracy of 
        clinical decision-making (such as electronic medical records 
        and computerized physician order entry).
    (b) Establishment and Modification of Codes.--The methodology under 
subsection (a) shall--
            (1) include the establishment of new codes, modification of 
        existing codes, and adjustment of evaluation and management 
        modifiers to such codes that take into account the costs of 
        acquiring, using, and maintaining information technology with 
        patient-specific applications; and
            (2) take into account estimated aggregate annual savings in 
        overall payments under such title XVIII attributable to the use 
        of information technology with patient-specific applications.
    (c) Duration.--The Secretary may reduce or eliminate adjustments 
established made to subsection (a) as payment methodologies under title 
XVIII of the Social Security Act are adjusted to reflect provider 
quality and efficiency.
    (d) Rule of Construction.--In making national coverage 
determinations under section 1862(a) of the Social Security Act (42 
U.S.C. 1395y(a)) with respect to maintaining information technology 
with patient-specific applications, in determining whether the 
information technology is reasonable and necessary for the diagnosis or 
treatment of illness or injury or to improve the functioning of a 
malformed body member, the Secretary shall consider whether the 
information technology improves clinical outcomes or cost-effectiveness 
of treatment.
    (e) Definitions.--In this section:
            (1) Provider of services.--The term ``provider of 
        services'' has the meaning given such term under section 
        1861(u) of the Social Security Act (42 U.S.C. 1395x(u)).
            (2) Supplier.--The term ``supplier'' has the meaning given 
        such term under section 1861(d) of such Act (42 U.S.C. 
        1395x(d)).

SEC. 108. MEDICAID PAYMENTS FOR INFORMATION INFRASTRUCTURE FOR HEALTH 
              INFORMATION EXCHANGE AND INFORMATION TECHNOLOGY.

    (a) Payment.--In the case of a State that provides funding under a 
State plan under title XIX of the Social Security Act (42 U.S.C. 1396 
et seq.) for the design, development, and installation of information 
infrastructure consisting of a health information exchange and 
information technology operated by health care providers pursuant to a 
community health information technology plan approved by the Secretary 
under section 102, the Secretary shall make matching payments to States 
under section 1903(a) of such Act (42 U.S.C. 1396b(a)) for such 
funding.
    (b) 90 Percent FMAP for Phase I Grants.--In addition to payment 
amounts provided for in subsection (a), for calendar quarters occurring 
during the first three years during which a State provides funding 
referred to in subsection (a), the Secretary shall provide for payment 
to such State at the rate provided for under section 1903(a)(3)(A)(i) 
of such Act (42 U.S.C. 1396b(a)(3)(A)(i)).

SEC. 109. DEFINITIONS.

    In this title:
            (1) The term ``health care provider'' means an entity 
        involved in consultation, prevention, diagnosis, and treatment, 
        including but not limited to a physician group, physician in 
        individual practice, hospital, community health center, skilled 
        nursing facility, laboratory, imaging center, or pharmacy.
            (2) The term ``health information infrastructure 
        organization'' means an organization that--
                    (A) facilitates the drafting and implementation of 
                a community health information infrastructure plan for 
                a given geographic area in 1 or more States;
                    (B) with respect to each area to be served by the 
                organization with a grant under this section, is 
                designated by the Governors of the States involved as 
                the exclusive health information infrastructure 
                organization for that area; and
                    (C) is governed by a board that--
                            (i) includes representatives of health care 
                        insurers and other third party payors, 
                        government health care programs, employers, 
                        physicians and other health care providers, 
                        hospitals, and consumers; and
                            (ii) may include representatives of 
                        organized labor.
            (3) The term ``physician'' has the meaning given to that 
        term in section 1861(r) of the Social Security Act (42 U.S.C. 
        1395x(r)).
            (4) The term ``small physician group'' means a physician 
        practice group of 10 or fewer physicians.
            (5) The term ``State'' includes the 50 States and the 
        District of Columbia.
            (6) The term ``Working Group'' means the working group 
        convened under section 103.

     TITLE II--HEALTH CARE OUTCOMES, BEST PRACTICES, AND EFFICIENCY

SEC. 201. RESEARCH ON OUTCOMES OF HEALTH CARE ITEMS AND SERVICES.

    Section 1013 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (42 U.S.C. 299b-7) is amended--
            (1) in subsection (a)--
                    (A) in clause (i) of paragraph (1)(A), by inserting 
                ``cost-effectiveness,'' before ``comparative clinical 
                effectiveness,'';
                    (B) by striking paragraph (2) and inserting the 
                following:
            ``(2) Priorities.--In carrying out this section, the 
        Secretary shall adopt and implement the priorities established 
        by the Consortium for Health Outcomes Research Priorities under 
        section 202 of the Quality, Efficiency, Standards, and 
        Technology for Health Care Transformation Act of 2004.''; and
                    (C) in clause (i) of paragraph (3)(A), by inserting 
                ``cost-effectiveness,'' before ``comparative clinical 
                effectiveness,'';
            (2) by striking subsection (d);
            (3) in subsection (e), by inserting ``$150,000,000 for 
        fiscal year 2005, $250,000,000 for fiscal year 2006, 
        $400,000,000 for fiscal year 2007, $750,000,000 for fiscal year 
        2008, $1,000,000,000 for fiscal year 2009,'' before ``and such 
        sums as may be necessary for each fiscal year thereafter''; and
            (4) by redesignating subsection (e) as subsection (d).

SEC. 202. CONSORTIUM FOR HEALTH OUTCOMES RESEARCH PRIORITIES.

    (a) Establishment.--The Director of the Agency for Healthcare 
Research and Quality shall enter into an agreement with the Institute 
of Medicine to establish the Consortium for Health Outcomes Research 
Priorities.
    (b) Members.--
            (1) In general.--The Consortium shall be composed of the ex 
        officio members listed in paragraph (2) and the members 
        appointed by the Institute of Medicine under paragraph (3).
            (2) Ex officio members.--The ex officio members of the 
        Consortium shall include the following:
                    (A) The Administrator of the Centers for Medicare 
                and Medicaid Services.
                    (B) The Commissioner of Food and Drugs.
                    (C) The Director of the Agency for Healthcare 
                Research and Quality.
                    (D) The Director of the Centers for Disease Control 
                and Prevention.
                    (E) The Director of the Indian Health Service.
                    (F) The Director of the National Institutes of 
                Health.
                    (G) The Assistant Secretary of Defense for Health 
                Affairs.
                    (H) The Under Secretary for Health, Department of 
                Veterans Affairs.
            (3) Appointed members.--The members of the Consortium 
        appointed by the Institute of Medicine shall include the 
        following:
                    (A) Academics.
                    (B) Practicing physicians.
                    (C) Representatives of the following:
                            (i) Hospitals.
                            (ii) Drug companies.
                            (iii) Device companies.
                            (iv) Health care insurers, including State 
                        medicaid programs under title XIX of the Social 
                        Security Act (42 U.S.C. 1396 et seq.).
                            (v) Employers or employer groups with a 
                        history of supporting health care quality 
                        initiatives.
                            (vi) Patient advocacy groups.
                            (vii) Professional societies.
                            (viii) Health foundations.
            (4) Majority of members.--A majority of the members of the 
        Consortium shall be appointed by the Institute of Medicine 
        under paragraph (3).
    (c) Duties.--The Consortium shall--
            (1) establish research priorities under subsection (d); and
            (2) carry out section 205 (relating to standardized 
        measures of health care provider performance).
    (d) Research Priorities.--
            (1) Establishment.--On an annual basis, the Consortium 
        shall establish priorities for research conducted or supported 
        by the Agency for Healthcare Research and Quality under section 
        1013 of the Medicare Prescription Drug, Improvement, and 
        Modernization Act of 2003 (42 U.S.C. 299b-7) (relating to the 
        effectiveness and efficiency of health care items and 
        services).
            (2) Consideration.--In establishing research priorities 
        under subsection (c)(1), the Consortium shall take into 
        consideration--
                    (A) the extent to which health care items and 
                services--
                            (i) impact large numbers of people; or
                            (ii) impose high health care costs; and
                    (B) the extent of the need for data with respect to 
                diseases or conditions affected by those health care 
                items and services.
            (3) Transparency.--In carrying out this section, the 
        Consortium shall ensure that research priorities are 
        established in a manner that is publicly transparent.

SEC. 203. CENTER FOR CLINICAL DECISION-SUPPORT TECHNOLOGY.

    (a) Establishment.--The Director, in collaboration with the 
National Library of Medicine, shall establish and support by grant or 
contract a Center for Clinical Decision-Support Technology to enable 
health care providers across the United States to more efficiently and 
rapidly embed knowledge-based elements in their clinical information 
systems.
    (b) Duties.--The Center for Clinical Decision-Support Technology 
shall--
            (1) design and develop new approaches to knowledge 
        organization, modeling, and decision support;
            (2) develop standards and promote existing standards for 
        guideline models, standard data sets, vocabularies, and 
        interfaces among components of the decision-support system;
            (3) build tools to facilitate the encoding of medical 
        knowledge in a structured form to enable such knowledge to be 
        used in patient-specific decision support, associated with 
        other relevant evidence, updated and maintained, and adapted to 
        local systems and environments;
            (4) define and regularly update methods to determine the 
        effectiveness of such tools, including the appropriateness of 
        the knowledge, the ease of adaptation to local environments, 
        and the success of the intended application in achieving 
        specific goals;
            (5) generalize or abstract the features of specific 
        applications in the systems of the affiliated health care 
        delivery organizations that have been found to be successful, 
        but for which sharing and dissemination are not easily 
        achieved, due to system-specific designs; and
            (6) explore optimal interface approaches to access and use 
        of knowledge resources for health care providers and consumers.
    (c) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated $2,000,000 for fiscal year 2005 
and such sums as may be necessary for each subsequent fiscal year.

SEC. 204. SCHOLARSHIPS FOR STUDY IN HEALTH CARE QUALITY AND PATIENT 
              SAFETY.

    (a) Purposes.--The purposes of this section are to improve health 
care quality and patient safety and to achieve a corresponding 
reduction in health care costs by providing scholarships to future 
health care leaders for study in the fields of health care quality and 
patient safety.
    (b) Scholarships.--For the purposes described in subsection (a), 
the Director may make grants to eligible institutions for the awarding 
of scholarships to physicians, nurses, other health care personnel, and 
administrators to enable such individuals to obtain a master's degree 
or a doctoral degree in the field of health care quality and patient 
safety.
    (c) Priority.--A condition on the receipt of a grant under this 
section is that the eligible institution, in awarding scholarships, 
will give priority to applicants whose studies will focus on--
            (1) measuring, monitoring, and improving the clinical and 
        financial performance of health care service organizations; or
            (2) providing leadership for organizational change within 
        the health care system.
    (d) Use of Scholarships.--A scholarship under this section may be 
used to pay the costs of all reasonable educational expenses, including 
tuition, fees, and books, and such stipends as the Director determines 
to be appropriate.
    (e) Flexibility.--A condition on the receipt of a grant under this 
section is that the eligible institution will offer flexibility to 
scholarship recipients who desire to continue clinical practice while 
pursuing a course of study, including by allowing such recipients to 
pursue a course of study on a part-time basis.
    (f) Definition.--In this section:
            (1) The terms ``accredited'' and ``school of public 
        health'' have the meanings given to those terms in section 799B 
        of the Public Health Service Act (42 U.S.C. 295p).
            (2) The term ``eligible institution'' means an accredited 
        school of public health offering a master's degree or a 
        doctoral degree in the field of health care quality and patient 
        safety with a curriculum that--
                    (A) is interdisciplinary;
                    (B) includes coursework and training in--
                            (i) health services research;
                            (ii) health care quality;
                            (iii) decision analysis;
                            (iv) cost-benefit and cost-effectiveness 
                        analysis; and
                            (v) management skills and leadership; and
                    (C) includes fieldwork in a health care facility.
    (g) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated $2,000,000 for fiscal year 2005 
and such sums as may be necessary for each subsequent fiscal year.

SEC. 205. STANDARDIZED MEASURES OF HEALTH CARE PROVIDER PERFORMANCE.

    (a) Priorities.--Not later than 1 year after the date of the 
enactment of this Act, the Consortium shall identify priorities for 
developing, updating, and endorsing standardized measures of health 
care provider performance under this section. Such priorities shall--
            (1) first be developed for each of the 20 priority areas 
        for improvement in health care quality specified in the report 
        by the Institute of Medicine entitled ``Priority Areas for 
        National Action: Transforming Health Care Quality'';
            (2) include priorities for measures of health care provider 
        performance based on adherence to evidence-based medicine, 
        patient outcomes, efficiency, and patient satisfaction;
            (3) include priorities for measures specific to a range of 
        practice settings, including individual doctors and small 
        physician groups;
            (4) emphasize the development of reliable, risk-adjusted 
        outcome measures; and
            (5) be updated on an annual basis.
    (b) Development.--The Director shall enter into agreements with 
medical specialty societies, private accrediting organizations, and 
other appropriate organizations to develop and update measures of 
health care provider performance in accordance with the priorities 
identified under subsection (a).
    (c) Endorsement.--
            (1) In general.--The Director shall enter into an agreement 
        with the National Quality Forum for the endorsement by such 
        entity of standardized measures of health care provider 
        performance.
            (2) Requirements.--The agreement entered into under this 
        subsection shall require the National Quality Forum--
                    (A) to endorse standardized measures of health care 
                provider performance for each of the 20 priority areas 
                described in subsection (a)(1);
                    (B) to endorse other such measures over time 
                consistent with the priorities identified under 
                subsection (a); and
                    (C) to recommend aggregate measures of health care 
                provider performance to create simplified comparisons 
                of health care provider performance.

SEC. 206. DEFINITIONS.

    In this title:
            (1) The term ``Consortium'' means the Consortium for Health 
        Outcomes Research Priorities established under section 202.
            (2) The term ``Director'' means the Director of the Agency 
        for Healthcare Research and Quality.

             TITLE III--INCENTIVES FOR HEALTH CARE QUALITY

SEC. 301. ACCESS TO MEDICARE HEALTH CARE CLAIMS DATABASES.

    (a) Access by Health Plans.--
            (1) In general.--The Center for Medicare and Medicaid 
        Services shall make available to a group health plan, that 
        meets the condition under paragraph (2), all data in the 
        possession of the Secretary with respect to the most recent 
        claims submitted to the Secretary for items and services 
        furnished to medicare beneficiaries for which payment is made 
        under title XVIII of the Social Security Act.
            (2) Condition of access.--The condition referred to in 
        paragraph (1) for a group health plan to have access to data 
        under that paragraph is that the group health plan contribute 
        claims-based health care provider performance data to the 
        health care provider performance database established under 
        section 303.
    (b) Privacy Protections.--
            (1) In general.--A request under subsection (a) is subject 
        to the provisions of the Health Insurance Portability and 
        Accountability Act and the Privacy Act.
            (2) Specific protections.--
                    (A) Encryption.--The Secretary shall ensure that 
                any identification number of a beneficiary to which a 
                claim relates is encrypted in a consistent fashion in 
                order to access data with respect to that beneficiary 
                for claims for items and services under each applicable 
                part of title XVIII.
                    (B) Deletion of personal identifying information.--
                The Secretary shall ensure that the data omits the 
                name, date of birth, street address and the last two 
                applicable postal codes of each of the beneficiaries.
            (3) Exclusion of certain data.--In the case of a provider 
        of services or a supplier that submits a low volume of claims 
        to the Secretary for items or services furnished to medicare 
        beneficiaries, or in the case of certain rare medical 
        conditions or treatments, the Secretary may exclude data with 
        respect to such claims, conditions, or treatment from a request 
        under subsection (a) in order to protect patient privacy.
    (c) Form of Request.--Requests under subsection (a) shall require 
such information, and be in such form, as the Secretary determines 
appropriate. Such a request shall include the applicable period and 
areas for which such claims data is requested.
    (d) Fee.--The Secretary may require the payment of a fee by each 
group health plan that submits a request under subsection (a) to offset 
administrative costs incurred by the Secretary in carrying out this 
section.
    (e) Authority to Contract.--If the Secretary determines that data 
could be made available more promptly, the Secretary may enter into 
arrangements with private entities to merge data for claims under each 
part of title XVIII of the Social Security Act. The Secretary shall 
ensure that a unique encryption applies to each beneficiary encryption.

SEC. 302. INCORPORATION OF MEASURES OF HEALTH CARE PRACTITIONER 
              PERFORMANCE IN FEDERAL PROGRAMS.

    (a) In General.--Not later than 1 year after the date of the 
enactment of this Act, the Secretary of Defense, the Secretary of 
Health and Human Services, the Secretary of Veterans Affairs, and the 
Director of the Indian Health Service shall incorporate, to the extent 
practicable, measures of health care practitioner performance endorsed 
by the National Quality Forum into the health care programs of the 
Department of Defense, the Department of Health and Human Services, the 
Department of Veterans Affairs, and the Indian Health Service, 
respectively for the purpose of improving program quality and 
efficiency.
    (b) Report to Congress.--Not later than 18 months after the date of 
the enactment of this Act, each Federal official specified in 
subsection (a) shall submit a report to the Congress on the results of 
the official's activities under this section.

SEC. 303. INTERIM CLAIMS-BASED PRACTITIONER PERFORMANCE DATABASE.

    (a) In General.--Not later than the date that is 18 months after 
the date of the enactment of this Act, the Secretary shall establish a 
claims-based practitioner performance database that comprises de-
indentified claims data under the medicare program under title XVIII of 
the Social Security Act and claims data from any group health plan that 
voluntarily submits de-identified health care claims data to the 
Secretary for such purpose.
    (b) Requirement for Participation by FEHB Plans.--The Director of 
the Office of Personnel Management shall require, as a condition under 
chapter 89 of title 5, United States Code, that each plan under 
contract with the Director under such chapter submit de-identified 
claims data to practitioner performance database.
    (c) Performance Measurements.--Not later than 1 year after the date 
specified in subsection (a), and not less frequently than annually 
thereafter, the Secretary, from data in the database established under 
this section, shall prepare practitioner performance measurements. Such 
measurements shall--
            (1) be based on performance measures endorsed by the 
        National Quality Forum;
            (2) measure--
                    (A) the performance of individual physicians, 
                physician groups (if any), and hospitals; or
                    (B) if records are not available for measuring such 
                performance, the performance of the smallest 
                practitioner unit for which records are available; and
            (3) be presented in such manner as the Secretary determines 
        will accurately and clearly represent the comparative 
        performance quality and efficiency of physicians, physician 
        groups, and hospitals.
    (d) Privacy Protections.--The Secretary shall ensure that--
            (1) any patient identifier is encrypted or omitted in a 
        consistent fashion;
            (2) the data omits the name, date of birth, street address 
        and the last two applicable postal codes of each patient; and
            (3) the amount of the charge for services furnished is 
        omitted.
    (e) Requirement for Submission of Data by All Group Health Plans.--
Not later than four years after the date referred to in subsection (a), 
each group health plan shall contribute de-indentified claims data 
necessary for performance measurement to the practitioner performance 
database established under subsection (a). As soon as practicable, the 
Secretary shall make available annual performance measures to the 
public.
    (f) Termination.--Beginning on the date that is 10 years after the 
date referred to in subsection (a), the Secretary shall discontinue the 
collection of data under this section.

SEC. 304. CLINICAL-BASED PRACTITIONER PERFORMANCE DATABASE.

    (a) Establishment.--Not later than 18 months after the date of the 
enactment of this Act, the Secretary shall establish a practitioner 
performance database that comprises data from any health care 
practitioner that voluntarily submits de-indentified health care data 
to the Secretary for such purpose.
    (b) Privacy Protections.--The Secretary shall require health care 
practitioners to encrypt or omit all individually identifiable patient 
information from data submitted to the Secretary under this section, 
including by ensuring that--
            (1) any patient identifier is encrypted or omitted in a 
        consistent fashion;
            (2) the data omits the name, date of birth, street address, 
        and the last 2 applicable postal codes of each patient; and
            (3) the amount of the charge for services furnished is 
        omitted.
    (c) Performance Measurements.--Not later than 1 year after the date 
specified in subsection (a), and not less frequently than annually 
thereafter, the Secretary, from data in the database established under 
this section, shall prepare practitioner performance measurements. Such 
measurements shall--
            (1) be based on performance measures endorsed by the 
        National Quality Forum;
            (2) measure--
                    (A) the performance of individual physicians, 
                physician groups (if any), and hospitals; or
                    (B) if records are not available for measuring such 
                performance, the performance of the smallest 
                practitioner unit for which records are available; and
            (3) be presented in such manner as the Secretary determines 
        will accurately and clearly represent the comparative 
        performance quality and efficiency of physicians, physician 
        groups, and hospitals.
    (d) Certain Practitioners.--As a condition on any grant or subgrant 
awarded to a health information infrastructure organization under 
section 102, the Secretary shall require the organization to agree that 
the organization will not allow any health care practitioner to 
participate in a health information exchange established or implemented 
with the grant unless the practitioner submits claims data to the 
Secretary in accordance with this section.

SEC. 305. AVAILABILITY OF PERFORMANCE MEASUREMENTS AND DATA.

    (a) Performance Measures.--The Secretary shall make publicly 
available the practitioner performance measurements prepared under 
sections 303 and 304.
    (b) Data.--The Secretary shall restrict access to the data in the 
databases under sections 303 and 304 to individuals requesting such 
information in connection with research conducted or supported by the 
Agency for Healthcare Research and Quality.

SEC. 306. USE OF HEALTH CARE PROVIDER PERFORMANCES MEASURE FOR PAY FOR 
              PERFORMANCE.

    (a) In General.--The Secretary may provide for adjustments to 
payment systems under title XVIII of the Social Security Act based on 
performance measurements of physicians, physician groups, and 
institutional providers of services. Insofar as the Secretary exercises 
the authority under the preceding sentence, in the case of providers 
with both claims-based and clinical-based measurements, the Secretary 
shall use the clinical-based measurements for any pay-for-performance 
unless the provider elects to use claims-based measurements. In no case 
may an election under the preceding sentence be in effect after the 
date that is 6 years after the date of the enactment of this Act.
    (b) MedPAC Recommendations.--The Medicare Payment Advisory 
Commission shall include in the March 2007 report to Congress, and 
annually thereafter, specific recommendations for the amount of 
adjustments to payment systems and beneficiary cost-sharing under title 
XVIII of the Social Security Act based on performance measurements in 
order to share savings under such title attributable to quality 
improvement with practitioners, to create incentives for better 
practitioner performance, and shift medicare beneficiary caseload to 
higher quality, more efficient practitioners.
    (c) Sense of Congress.--It is the sense of the Congress that the 
Director of the Office of Personnel Management should encourage plans 
with contracts under chapter 89 of title 5, United States Code, to 
include differential payments, differential cost-sharing, or both based 
on HHS practitioner performance measurements under section 303.

SEC. 307. STUDY COMPARING PRACTITIONER PERFORMANCE DATABASE.

    Not later than 54 months after the date of the enactment of this 
Act, the Director of the Agency for Healthcare Research and Quality 
shall--
            (1) conduct a study to compare the interim claims-based 
        practitioner performance database established under section 303 
        with the clinical-based practitioner performance database 
        established under section 304, including by assessing the 
        scope, cause, and import of any differences between the 2 
        databases in practitioner performance measurement; and
            (2) submit a report to the Congress on the results of the 
        study.

SEC. 308. REGULATIONS ON AUDITING.

    The Secretary shall establish regulations governing the audit of 
group health plans that submit data under section 303 and health care 
practitioners that submit data under section 304 for compliance with 
such sections.

SEC. 309. AHRQ ACCESS TO PRACTITIONER PERFORMANCE DATABASES.

    The Director of the Agency for Healthcare Research and Quality 
shall have access to the data in the databases established under 
sections 303 and 304 for health outcomes research, including research 
conducted internally or by external researchers.
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