II
Calendar No. 256
107TH CONGRESS
1ST SESSION
H. R. 3323
IN THE SENATE OF THE UNITED STATES
DECEMBER 5, 2001
Received; read twice and placed on the calendar
AN ACT
To ensure that covered entities comply with the standards
for electronic health care transactions and code sets
adopted under part C of title XI of the Social Security
Act, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Administrative Sim-
plification Compliance Act’’.
SEC. 2. EXTENSION OF DEADLINE FOR COVERED ENTITIES
SUBMITTING COMPLIANCE PLANS.
(a) IN GENERAL.—
(1) EXTENSION.—Subject to paragraph (2),
notwithstanding section 1175(b)(1)(A) of the Social
Security Act (42 U.S.C. 1320d–4(b)(1)(A)) and sec-
tion 162.900 of title 45, Code of Federal Regula-
tions, a health care provider, health plan (other than
a small health plan), or a health care clearinghouse
shall not be considered to be in noncompliance with
the applicable requirements of subparts I through R
of part 162 of title 45, Code of Federal Regulations,
before October 16, 2003.
(2) CONDITION.—Paragraph (1) shall apply to
a person described in such paragraph only if, before
October 16, 2002, the person submits to the Sec-
retary of Health and Human Services a plan of how
the person will come into compliance with the re-
quirements described in such paragraph not later
than October 16, 2003. Such plan shall be a sum-
mary of the following:
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(A) An analysis reflecting the extent to
which, and the reasons why, the person is not
in compliance.
(B) A budget, schedule, work plan, and im-
plementation strategy for achieving compliance.
(C) Whether the person plans to use or
might use a contractor or other vendor to assist
the person in achieving compliance.
(D) A timeframe for testing that begins
not later than April 16, 2003.
(3) ELECTRONIC SUBMISSION.—Plans described
in paragraph (2) may be submitted electronically.
(4) MODEL FORM.—Not later than March 31,
2002, the Secretary of Health and Human Services
shall promulgate a model form that persons may use
in drafting a plan described in paragraph (2). The
promulgation of such form shall be made without re-
gard to chapter 35 of title 44, United States Code
(commonly known as the ‘‘Paperwork Reduction
Act’’).
(5) ANALYSIS OF PLANS; REPORTS ON SOLU-
TIONS.—
(A) ANALYSIS OF PLANS.—
(i) FURNISHING OF PLANS.—Subject
to subparagraph (D), the Secretary of
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Health and Human Services shall furnish
the National Committee on Vital and
Health Statistics with a sample of the
plans submitted under paragraph (2) for
analysis by such Committee.
(ii) ANALYSIS.—The National Com-
mittee on Vital and Health Statistics shall
analyze the sample of the plans furnished
under clause (i).
(B) REPORTS
ON
SOLUTIONS.—The Na-
tional Committee on Vital and Health Statistics
shall regularly publish, and widely disseminate
to the public, reports containing effective solu-
tions to compliance problems identified in the
plans analyzed under subparagraph (A). Such
reports shall not relate specifically to any one
plan but shall be written for the purpose of as-
sisting the maximum number of persons to
come into compliance by addressing the most
common or challenging problems encountered
by persons submitting such plans.
(C) CONSULTATION.—In carrying out this
paragraph, the National Committee on Vital
and Health Statistics shall consult with each
organization—
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(i) described in section 1172(c)(3)(B)
of the Social Security Act (42 U.S.C.
1320d–1(c)(3)(B)); or
(ii) designated by the Secretary of
Health and Human Services under section
162.910(a) of title 45, Code of Federal
Regulations.
(D) PROTECTION
OF
CONFIDENTIAL
IN-
FORMATION.—
(i) IN
GENERAL.—The Secretary of
Health and Human Services shall ensure
that any material provided under subpara-
graph (A) to the National Committee on
Vital and Health Statistics or any organi-
zation described in subparagraph (C) is re-
dacted so as to prevent the disclosure of
any—
(I) trade secrets;
(II) commercial or financial in-
formation that is privileged or con-
fidential; and
(III) other information the disclo-
sure of which would constitute a clear-
ly unwarranted invasion of personal
privacy.
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(ii) 
CONSTRUCTION.—Nothing 
in
clause (i) shall be construed to affect the
application of section 552 of title 5, United
States Code (commonly known as the
‘‘Freedom of Information Act’’), including
the exceptions from disclosure provided
under subsection (b) of such section.
(6) ENFORCEMENT THROUGH EXCLUSION FROM
PARTICIPATION IN MEDICARE.—
(A) IN GENERAL.—In the case of a person
described in paragraph (1) who fails to submit
a plan in accordance with paragraph (2), and
who is not in compliance with the applicable re-
quirements of subparts I through R of part 162
of title 45, Code of Federal Regulations, on or
after October 16, 2002, the person may be ex-
cluded at the discretion of the Secretary of
Health and Human Services from participation
(including under part C or as a contractor
under sections 1816, 1842, and 1893) in title
XVIII of the Social Security Act (42 U.S.C.
1395 et seq.).
(B) PROCEDURE.—The provisions of sec-
tion 1128A of the Social Security Act (42
U.S.C. 1320a–7a) (other than the first and sec-
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ond sentences of subsection (a) and subsection
(b)) shall apply to an exclusion under this para-
graph in the same manner as such provisions
apply with respect to an exclusion or proceeding
under section 1128A(a) of such Act.
(C) CONSTRUCTION.—The availability of
an exclusion under this paragraph shall not be
construed to affect the imposition of penalties
under section 1176 of the Social Security Act
(42 U.S.C. 1320d–5).
(D) NONAPPLICABILITY
TO
COMPLYING
PERSONS.—The exclusion under subparagraph
(A) shall not apply to a person who—
(i) submits a plan in accordance with
paragraph (2); or
(ii) who is in compliance with the ap-
plicable 
requirements 
of 
subparts 
I
through R of part 162 of title 45, Code of
Federal Regulations, on or before October
16, 2002.
(b) SPECIAL RULES.—
(1) RULES
OF
CONSTRUCTION.—Nothing in
this section shall be construed—
(A) as modifying the October 16, 2003,
deadline for a small health plan to comply with
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the requirements of subparts I through R of
part 162 of title 45, Code of Federal Regula-
tions; or
(B) as modifying—
(i) the April 14, 2003, deadline for a
health care provider, a health plan (other
than a small health plan), or a health care
clearinghouse to comply with the require-
ments of subpart E of part 164 of title 45,
Code of Federal Regulations; or
(ii) the April 14, 2004, deadline for a
small health plan to comply with the re-
quirements of such subpart.
(2) APPLICABILITY
OF
PRIVACY
STANDARDS
BEFORE COMPLIANCE DEADLINE FOR INFORMATION
TRANSACTION STANDARDS.—
(A) IN
GENERAL.—Notwithstanding any
other provision of law, during the period that
begins on April 14, 2003, and ends on October
16, 2003, a health care provider or, subject to
subparagraph (B), a health care clearinghouse,
that transmits any health information in elec-
tronic form in connection with a transaction de-
scribed in subparagraph (C) shall comply with
the requirements of subpart E of part 164 of
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title 45, Code of Federal Regulations, without
regard to whether the transmission meets the
standards required by part 162 of such title.
(B) 
APPLICATION
TO
HEALTH
CARE
CLEARINGHOUSES.—For purposes of this para-
graph, during the period described in subpara-
graph (A), an entity that processes or facilitates
the processing of information in connection with
a transaction described in subparagraph (C)
and that otherwise would be treated as a health
care clearinghouse shall be treated as a health
care clearinghouse without regard to whether
the processing or facilitation produces (or is re-
quired to produce) standard data elements or a
standard transaction as required by part 162 of
title 45, Code of Federal Regulations.
(C) 
TRANSACTIONS
DESCRIBED.—The
transactions described in this subparagraph are
the following:
(i) A health care claims or equivalent
encounter information transaction.
(ii) A health care payment and remit-
tance advice transaction.
(iii) A coordination of benefits trans-
action.
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(iv) A health care claim status trans-
action.
(v) An enrollment and disenrollment
in a health plan transaction.
(vi) An eligibility for a health plan
transaction.
(vii) A health plan premium payments
transaction.
(viii) A referral certification and au-
thorization transaction.
(c) DEFINITIONS.—In this section—
(1) the terms ‘‘health care provider’’, ‘‘health
plan’’, and ‘‘health care clearinghouse’’ have the
meaning given those terms in section 1171 of the
Social Security Act (42 U.S.C. 1320d) and section
160.103 of title 45, Code of Federal Regulations;
(2) the terms ‘‘small health plan’’ and ‘‘trans-
action’’ have the meaning given those terms in sec-
tion 160.103 of title 45, Code of Federal Regula-
tions; and
(3) the terms ‘‘health care claims or equivalent
encounter information transaction’’, ‘‘health care
payment and remittance advice transaction’’, ‘‘co-
ordination of benefits transaction’’, ‘‘health care
claim 
status 
transaction’’, 
‘‘enrollment 
and
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disenrollment in a health plan transaction’’, ‘‘eligi-
bility for a health plan transaction’’, ‘‘health plan
premium payments transaction’’, and ‘‘referral cer-
tification and authorization transaction’’ have the
meanings given those terms in sections 162.1101,
162.1601, 
162.1801, 
162.1401, 
162.1501,
162.1201, 162.1701, and 162.1301 of title 45, Code
of Federal Regulations, respectively.
SEC. 3. REQUIRING ELECTRONIC SUBMISSION OF MEDI-
CARE CLAIMS.
(a) IN GENERAL.—Section 1862 of the Social Secu-
rity Act (42 U.S.C. 1395y) is amended—
(1) in subsection (a)—
(A) by striking ‘‘or’’ at the end of para-
graph (20);
(B) by striking the period at the end of
paragraph (21) and inserting ‘‘; or’’; and
(C) by inserting after paragraph (21) the
following new paragraph:
‘‘(22) subject to subsection (h), for which a
claim is submitted other than in an electronic form
specified by the Secretary.’’; and
(2) by inserting after subsection (g) the fol-
lowing new subsection:
‘‘(h)(1) The Secretary—
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‘‘(A) shall waive the application of subsection
(a)(22) in cases in which—
‘‘(i) there is no method available for the
submission of claims in an electronic form; or
‘‘(ii) the entity submitting the claim is a
small provider of services or supplier; and
‘‘(B) may waive the application of such sub-
section in such unusual cases as the Secretary finds
appropriate.
‘‘(2) For purposes of this subsection, the term ‘small
provider of services or supplier’ means—
‘‘(A) a provider of services with fewer than 25
full-time equivalent employees; or
‘‘(B) a physician, practitioner, facility, or sup-
plier (other than provider of services) with fewer
than 10 full-time equivalent employees.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to claims submitted on or after
October 16, 2003.
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SEC. 4. CLARIFICATION WITH RESPECT TO APPLICABILITY
OF ADMINISTRATIVE SIMPLIFICATION RE-
QUIREMENTS TO MEDICARE+CHOICE ORGA-
NIZATIONS.
Section 1171(5)(D) of the Social Security Act (42
U.S.C. 1320d(5)(D)) is amended by striking ‘‘Part A or
part B’’ and inserting ‘‘Parts A, B, or C’’.
SEC. 5. AUTHORIZATION OF APPROPRIATIONS FOR IMPLE-
MENTATION OF REGULATIONS.
(a) IN GENERAL.—Subject to subsection (b), and in
addition to any other amounts that may be authorized to
be appropriated, there are authorized to be appropriated
a total of $44,200,000, for—
(1) technical assistance, education and out-
reach, and enforcement activities related to subparts
I through R of part 162 of title 45, Code of Federal
Regulations; and
(2) adopting the standards required to be
adopted under section 1173 of the Social Security
Act (42 U.S.C. 1320d–2).
(b) REDUCTIONS.—
(1) MODEL FORM 14 DAYS LATE.—If the Sec-
retary fails to promulgate the model form described
in section 1(a)(4) by the date that is 14 days after
the deadline described in such section, the amount
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referred to in subsection (a) shall be reduced by 25
percent.
(2) MODEL FORM 30 DAYS LATE.—If the Sec-
retary fails to promulgate the model form described
in section 1(a)(4) by the date that is 30 days after
the deadline described in such section, the amount
referred to in subsection (a) shall be reduced by 50
percent.
(3) MODEL FORM 45 DAYS LATE.—If the Sec-
retary fails to promulgate the model form described
in section 1(a)(4) by the date that is 45 days after
the deadline described in such section, the amount
referred to in subsection (a) shall be reduced by 75
percent.
(4) MODEL FORM 60 DAYS LATE.—If the Sec-
retary fails to promulgate the model form described
in section 1(a)(4) by the date that is 60 days after
the deadline described in such section, the amount
referred to in subsection (a) shall be reduced by 100
percent.
Passed the House of Representatives December 4,
2001.
Attest:
JEFF TRANDAHL,
Clerk.
Calendar No. 256
107TH CONGRESS
1ST SESSION
H. R. 3323
AN ACT
To ensure that covered entities comply with the
standards for electronic health care transactions
and code sets adopted under part C of title XI
of the Social Security Act, and for other pur-
poses.
DECEMBER 5, 2001
Received; read twice and placed on the calendar