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of the State or for referring them to other State
agencies for action; and
(3) provide for the collection, or referral for col-
lection to a single State agency, of overpayments
that are made under the State health security pro-
gram to providers and that are discovered by the
fraud unit in carrying out its activities.
(d) RESOURCES.—The fraud unit must—
(1) employ such auditors, attorneys, investiga-
tors, and other necessary personnel,
(2) be organized in such a manner, and
(3) provide sufficient resources (as specified by
the Board),
as is necessary to promote the effective and efficient con-
duct of the unit’s activities.
(e) COOPERATIVE AGREEMENTS.—The fraud unit
must have cooperative agreements (as specified by the
Board) with—
(1) similar fraud units in other States,
(2) the Inspector General, and
(3) the Attorney General of the United States.
(f) REPORTS.—The fraud unit must submit to the
Inspector General an application and annual reports con-
taining such information as the Inspector General deter-
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mines to be necessary to determine whether the unit meets
the previous requirements of this section.
SEC. 414. ASSIGNMENT OF UNIQUE PROVIDER AND PA-
TIENT IDENTIFIERS.
(a) PROVIDER IDENTIFIERS.—
(1) IN GENERAL.—The Board shall provide for
the assignment, to each individual or entity provid-
ing health care services under a State health secu-
rity program, of a unique provider identifier.
(2) RESPONSE TO QUERIES.—Upon the request
of a State health security program with respect to
a provider, the Board shall provide the program with
the unique provider identifier (if any) assigned to
the provider under paragraph (1).
(b) PATIENT IDENTIFIERS.—The Board shall provide
for the assignment, to each eligible individual, of a unique
patient identifier. The identifier so assigned may be the
Social Security account number of the individual.
(c) REQUIREMENT
TO USE IDENTIFIERS.—Each
State health security program is required under section
405(b)(1)(L) to use the unique identifiers assigned under
this section.
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TITLE V—QUALITY ASSESSMENT
SEC. 501. FUNCTIONS OF QUALITY COUNCIL; DEVELOP-
MENT OF PRACTICE GUIDELINES AND APPLI-
CATION TO OUTLIERS.
(a) DEVELOPMENT OF PRACTICE GUIDELINES.—The
American Health Security Quality Council (in this title
referred to as the ‘‘Council’’)—
(1) shall collect data from outcomes research,
including data on patient satisfaction and post-hos-
pital discharge experience, on an ongoing basis
(whether conducted by the Federal Government or
other entities), and
(2) on the basis of such data and existing
clinical knowledge, shall develop practice guidelines.
Such guidelines may vary based upon the area in which
the services are provided and the degree of training, spe-
cialization, or similar characteristics of providers. Such
guidelines must be updated on an annual basis and based
on monitoring of outcomes research and other clinical
data. Such guidelines shall be based on the degree to
which a process of care increases the probability of desired
patient outcomes.
(b) PROFILING OF PATTERNS OF PRACTICE; IDENTI-
FICATION OF OUTLIERS.—The Council shall adopt meth-
odologies for profiling the patterns of practice of health
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care professionals and for identifying outliers (as defined
in subsection (f)).
(c) CENTERS OF EXCELLENCE.—The Council shall
develop guidelines for certain medical procedures des-
ignated by the Board to be performed only at tertiary care
centers which can meet standards for frequency of proce-
dure performance and intensity of support mechanisms
that are consistent with the high probability of desired pa-
tient outcome. Reimbursement under this Act for such a
designated procedure may only be provided if the
procedure was performed at a center that meets such
standards.
(d) REMEDIAL ACTIONS.—The Council shall develop
standards for education and sanctions with respect to
outliers so as to assure the quality of health care services
provided under this Act.
(e) DISSEMINATION.—The Council shall disseminate
to the State—
(1) the guidelines developed under subsections
(a) and (c),
(2) the methodologies adopted under subsection
(b), and
(3) the standards developed under subsection
(d),
for use by the States under section 502.
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(f) OUTLIER DEFINED.—In this title, the term
‘‘outlier’’ means a health care provider whose pattern of
practice, relative to applicable practice guidelines, suggests
deficiencies in the quality of health care services being
provided.
SEC. 502. STATE QUALITY REVIEW PROGRAMS.
(a) REQUIREMENT.—In order to meet the require-
ment of section 405(b)(1)(H), each State health security
program shall establish one or more qualified entities to
conduct quality reviews of persons providing covered serv-
ices under the program, in accordance with standards es-
tablished under subsection (b)(1) (except as provided in
subsection (b)(2)) and subsection (d).
(b) FEDERAL STANDARDS.—
(1) IN GENERAL.—The Council shall establish
standards with respect to—
(A) the adoption of practice guidelines (de-
veloped under section 501(a)),
(B) the identification of outliers (consist-
ent with methodologies adopted under section
501(b)),
(C) the development of remedial programs
and monitoring for outliers, and
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(D) the application of sanctions (consistent
with the standards developed under section
501(c)).
(2) STATE DISCRETION.—A State may apply
under subsection (a) standards other than those es-
tablished under paragraph (1) so long as the State
demonstrates to the satisfaction of the Council on an
annual basis that the standards applied have been as
efficacious in promoting and achieving improved
quality of care as the application of the standards
established under paragraph (1). Positive improve-
ments in quality shall be documented by reductions
in the variations of clinical care process and
improvement in patient outcomes.
(c) QUALIFICATIONS.—
(1) IN GENERAL.—An entity is not qualified to
conduct quality reviews under subsection (a) unless
the entity—
(A) is administratively independent of the
individual or board that administers the State
health security program, and
(B) does not provide any financial incen-
tive to reviewers to favor one pattern of practice
over another.
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(2) PROVIDER-SPECIFIC ENTITIES.—Subject to
paragraph (1), a State may provide that an individ-
ual hospital (or other institutional provider) may
serve as a qualified entity to conduct quality reviews
under subsection (a).
SEC. 503. ELIMINATION OF UTILIZATION REVIEW PRO-
GRAMS; TRANSITION.
(a) INTENT.—It is the intention of this title to re-
place by January 1, 1998, random utilization controls with
a systematic review of patterns of practice that com-
promise the quality of care.
(b) SUPERSEDING CASE REVIEWS.—
(1) IN
GENERAL.—Subject to the succeeding
provisions of this subsection, the program of quality
review provided under the previous sections of this
title supersede all existing Federal requirements for
utilization review programs, including requirements
for random case-by-case reviews and programs re-
quiring pre-certification of medical procedures on a
case-by-case basis.
(2) TRANSITION.—Before January 1, 1998, the
Board and the States may employ existing utiliza-
tion review standards and mechanisms as may be
necessary to effect the transition to pattern of prac-
tice-based reviews.
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(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed—
(A) as precluding the case-by-case review
of the provision of care—
(i) in individual incidents where the
quality of care has significantly deviated
from acceptable standards of practice, and
(ii) with respect to a provider who has
been determined to be an outlier; or
(B) as precluding the case management of
catastrophic, mental health, or substance abuse
cases where such management is necessary to
achieve appropriate, cost-effective, and bene-
ficial comprehensive medical care, as provided
for in section 204.
SEC. 504. DEVELOPMENT OF NATIONAL ELECTRONIC DATA
BASE.
(a) USE BY STATES.—In order to meet the require-
ment 
of 
this 
section, 
for 
purposes 
of 
section
405(b)(1)(N)), each State health security program shall
develop and use a uniform electronic data base which uses
the software designated under subsection (b) and which
assures confidentiality under subsection (c), for all patient
records in order to enable systematic quality review and
outcomes analysis. Subject to subsection (c), data in such
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data base shall be made available, under rules established
by the Board, in order to facilitate the portability of pa-
tient records and comparative outcomes research analysis.
(b) UNIFORM SOFTWARE.—The Board shall des-
ignate the uniform software that shall be used by States
in the operation of their electronic data bases, in order
to facilitate the portability of patient records and com-
parative outcomes research analysis. The Board shall not
grant any waiver of the requirement of the previous
sentence.
(c) CONFIDENTIALITY.—The Board shall establish
standards that are designed to protect the privacy and
otherwise shield the identity of the patients whose records
are included in the data base. Under such standards, gov-
ernment agencies shall not have access to information in
the data base that will identify individual patients except
in cases of quality review procedures which require that
individual patients be informed of necessary changes in
their treatment.
•HR 1200 SC4
TITLE 
VI—HEALTH 
SECURITY
BUDGET; 
PAYMENTS; 
COST
CONTAINMENT MEASURES
Subtitle A—Budgeting and
Payments to States
SEC. 601. NATIONAL HEALTH SECURITY BUDGET.
(a) NATIONAL HEALTH SECURITY BUDGET.—
(1) IN GENERAL.—By not later than September
1 before the beginning of each year (beginning with
1995), the Board shall establish a national health
security budget, which—
(A) specifies the total expenditures (includ-
ing expenditures for administrative costs) to be
made by the Federal Government and the
States for covered health care services under
this Act, and
(B) allocates those expenditures among the
States consistent with section 604.
Pursuant to subsection (b), such budget for a year
shall not exceed the budget for the preceding year
increased by the percentage increase in gross domes-
tic product.
(2) DIVISION OF BUDGET INTO COMPONENTS.—
The national health security budget shall consist of
at least 4 components:
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(A) A component for quality assessment
activities (described in title V).
(B) A component for health professional
education expenditures.
(C) A component for administrative costs.
(D) A component (in this title referred to
as the ‘‘operating component’’) for operating
and other expenditures not described in sub-
paragraphs (A) through (C), consisting of
amounts not included in the other components.
A State may provide for the allocation of this
component between capital expenditures and
other expenditures.
(3) ALLOCATION AMONG COMPONENTS.—Tak-
ing into account the State health security budgets
established and submitted under section 603, the
Board shall allocate the national health security
budget among the components in a manner that—
(A) assures a fair allocation for quality as-
sessment activities (consistent with the national
health security spending growth limit); and
(B) assures that the health professional
education expenditure component is sufficient
to provide for the amount of health professional
education expenditures sufficient to meet the