189
purposes of applying section 703 of the Employee Retire-
ment Income Security Act of 1974.
‘‘(e) APPLICATION OF RULES FOR NETWORK PLANS
AND
FINANCIAL
CAPACITY.—The provisions of sub-
sections (c) and (d) of section 2711 apply to health bene-
fits coverage offered by a health insurance issuer through
a HealthMart.
‘‘(f) CONSTRUCTION RELATING TO OFFERING RE-
QUIREMENT.—Nothing in section 2711(a) of this Act or
703 of the Employee Retirement Income Security Act of
1974 shall be construed as permitting the offering outside
the HealthMart of health benefits coverage that is only
made available through a HealthMart under this section
because of the application of subsection (b).
‘‘(g) APPLICATION TO GUARANTEED RENEWABILITY
REQUIREMENTS IN CASE OF DISCONTINUATION OF AN
ISSUER.—For purposes of applying section 2712 in the
case of health insurance coverage offered by a health in-
surance issuer through a HealthMart, if the contract be-
tween the HealthMart and the issuer is terminated and
the HealthMart continues to make available any health in-
surance coverage after the date of such termination, the
following rules apply:
‘‘(1) RENEWABILITY.—The HealthMart shall
fulfill the obligation under such section of the issuer
190
renewing and continuing in force coverage by offer-
ing purchasers (and members and their dependents)
all available health benefits coverage that would oth-
erwise be available to similarly-situated purchasers
and members from the remaining participating
health insurance issuers in the same manner as
would be required of issuers under section 2712(c).
‘‘(2) APPLICATION OF ASSOCIATION RULES.—
The HealthMart shall be considered an association
for purposes of applying section 2712(e).
‘‘(h) CONSTRUCTION
IN RELATION
TO CERTAIN
OTHER LAWS.—Nothing in this title shall be construed
as modifying or affecting the applicability to HealthMarts
or health benefits coverage offered by a health insurance
issuer through a HealthMart of parts 6 and 7 of subtitle
B of title I of the Employee Retirement Income Security
Act of 1974 or titles XXII and XXVII of this Act.
‘‘SEC. 2803. ADMINISTRATION.
‘‘(a) IN GENERAL.—The applicable Federal authority
shall administer this title through the division established
under subsection (b) and is authorized to issue such regu-
lations as may be required to carry out this title. Such
regulations shall be subject to Congressional review under
the provisions of chapter 8 of title 5, United States Code.
The applicable Federal authority shall incorporate the
191
process of ‘deemed file and use’ with respect to the infor-
mation filed under section 2801(a)(6)(A) and shall deter-
mine whether information filed by a HealthMart dem-
onstrates compliance with the applicable requirements of
this title. Such authority shall exercise its authority under
this title in a manner that fosters and promotes the devel-
opment of HealthMarts in order to improve access to
health care coverage and services.
‘‘(b) ADMINISTRATION THROUGH HEALTH CARE
MARKETPLACE DIVISION.—
‘‘(1) IN GENERAL.—The applicable Federal au-
thority shall carry out its duties under this title
through a separate Health Care Marketplace Divi-
sion, the sole duty of which (including the staff of
which) shall be to administer this title.
‘‘(2) ADDITIONAL
DUTIES.—In addition to
other responsibilities provided under this title, such
Division is responsible for—
‘‘(A) 
oversight 
of 
the 
operations 
of
HealthMarts under this title; and
‘‘(B) the periodic submittal to Congress of
reports on the performance of HealthMarts
under this title under subsection (c).
‘‘(c) PERIODIC REPORTS.—The applicable Federal
authority shall submit to Congress a report every 30
192
months, during the 10-year period beginning on the effec-
tive date of the rules promulgated by the applicable Fed-
eral authority to carry out this title, on the effectiveness
of this title in promoting coverage of uninsured individ-
uals. Such authority may provide for the production of
such reports through one or more contracts with appro-
priate private entities.
‘‘SEC. 2804. DEFINITIONS.
‘‘For purposes of this title:
‘‘(1) APPLICABLE FEDERAL AUTHORITY.—The
term ‘applicable Federal authority’ means the Sec-
retary of Health and Human Services.
‘‘(2) ELIGIBLE
EMPLOYEE
OR
INDIVIDUAL.—
The term ‘eligible’ means, with respect to an em-
ployee or other individual and a HealthMart, an em-
ployee or individual who is eligible under section
2801(c)(2) to enroll or be enrolled in health benefits
coverage offered through the HealthMart.
‘‘(3) EMPLOYER; EMPLOYEE; DEPENDENT.—
Except as the applicable Federal authority may oth-
erwise provide, the terms ‘employer’, ‘employee’, and
‘dependent’, as applied to health insurance coverage
offered by a health insurance issuer licensed (or oth-
erwise regulated) in a State, shall have the meanings
applied to such terms with respect to such coverage
193
under the laws of the State relating to such coverage
and such an issuer.
‘‘(4) HEALTH BENEFITS COVERAGE.—The term
‘health benefits coverage’ has the meaning given the
term group health insurance coverage in section
2791(b)(4).
‘‘(5) HEALTH INSURANCE ISSUER.—The term
‘health insurance issuer’ has the meaning given such
term in section 2791(b)(2) and includes a commu-
nity health organization that is offering coverage
pursuant to section 330B(a).
‘‘(6) HEALTH STATUS-RELATED FACTOR.—The
term ‘health status-related factor’ has the meaning
given such term in section 2791(d)(9).
‘‘(7) HEALTHMART.—The term ‘HealthMart’ is
defined in section 2801(a).
‘‘(8) MEMBER.—The term ‘member’ means,
with respect to a HealthMart, an individual enrolled
for health benefits coverage through the HealthMart
under section 2801(c)(2).
‘‘(9) 
PURCHASER.—The 
term 
‘purchaser’
means, with respect to a HealthMart, a small em-
ployer 
that 
has 
contracted 
under 
section
2801(c)(1)(A) with the HealthMart for the purchase
of health benefits coverage.
194
‘‘(10) SMALL EMPLOYER.—The term ‘small em-
ployer’ has the meaning given such term for pur-
poses of title XXVII.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on January 1, 2000. The
Secretary of Health and Human Services shall first issue
all regulations necessary to carry out such amendment be-
fore such date.
Subtitle D—Community Health
Organizations
SEC. 2301. PROMOTION OF PROVISION OF INSURANCE BY
COMMUNITY HEALTH ORGANIZATIONS.
(a) WAIVER OF STATE LICENSURE REQUIREMENT
FOR COMMUNITY HEALTH ORGANIZATIONS IN CERTAIN
CASES.—Subpart I of part D of title III of the Public
Health Service Act is amended by adding at the end the
following new section:
‘‘WAIVER OF STATE LICENSURE REQUIREMENT FOR
COMMUNITY HEALTH ORGANIZATIONS IN CERTAIN CASES
‘‘SEC. 330B. (a) WAIVER AUTHORIZED.—
‘‘(1) IN GENERAL.—A community health orga-
nization may offer health insurance coverage in a
State notwithstanding that it is not licensed in such
a State to offer such coverage if—
‘‘(A) the organization files an application
for waiver of the licensure requirement with the
195
Secretary of Health and Human Services (in
this section referred to as the ‘Secretary’) by
not later than November 1, 2003; and
‘‘(B) the Secretary determines, based on
the application and other evidence presented to
the Secretary, that any of the grounds for ap-
proval of the application described in subpara-
graph (A), (B), or (C) of paragraph (2) has
been met.
‘‘(2) GROUNDS FOR APPROVAL OF WAIVER.—
‘‘(A) FAILURE TO ACT ON LICENSURE AP-
PLICATION ON A TIMELY BASIS.—The ground
for approval of such a waiver application de-
scribed in this subparagraph is that the State
has failed to complete action on a licensing ap-
plication of the organization within 90 days of
the date of the State’s receipt of a substantially
complete application. No period before the date
of the enactment of this section shall be in-
cluded in determining such 90-day period.
‘‘(B) DENIAL OF APPLICATION BASED ON
DISCRIMINATORY TREATMENT.—The ground for
approval of such a waiver application described
in this subparagraph is that the State has de-
nied such a licensing application and the stand-
196
ards or review process imposed by the State as
a condition of approval of the license or as the
basis for such denial by the State imposes any
material requirements, procedures, or standards
(other than solvency requirements) to such or-
ganizations that are not generally applicable to
other entities engaged in a substantially similar
business.
‘‘(C) DENIAL OF APPLICATION BASED ON
APPLICATION OF SOLVENCY REQUIREMENTS.—
With respect to waiver applications filed on or
after the date of publication of solvency stand-
ards established by the Secretary under sub-
section (d), the ground for approval of such a
waiver application described in this subpara-
graph is that the State has denied such a li-
censing application based (in whole or in part)
on the organization’s failure to meet applicable
State solvency requirements and such require-
ments are not the same as the solvency stand-
ards established by the Secretary. For purposes
of this subparagraph, the term solvency require-
ments means requirements relating to solvency
and other matters covered under the standards
197
established by the Secretary under subsection
(d).
‘‘(3) TREATMENT OF WAIVER.—In the case of
a waiver granted under this subsection for a commu-
nity health organization with respect to a State—
‘‘(A) LIMITATION TO STATE.—The waiver
shall be effective only with respect to that State
and does not apply to any other State.
‘‘(B) LIMITATION TO 36-MONTH PERIOD.—
The waiver shall be effective only for a 36-
month period but may be renewed for up to 36
additional months if the Secretary determines
that such an extension is appropriate.
‘‘(C) CONDITIONED ON COMPLIANCE WITH
CONSUMER PROTECTION AND QUALITY STAND-
ARDS.—The continuation of the waiver is condi-
tioned upon the organization’s compliance with
the requirements described in paragraph (5).
‘‘(D) PREEMPTION OF STATE LAW.—Any
provisions of law of that State which relate to
the licensing of the organization and which pro-
hibit the organization from providing health in-
surance coverage shall be superseded.
‘‘(4) PROMPT ACTION ON APPLICATION.—The
Secretary shall grant or deny such a waiver applica-
198
tion within 60 days after the date the Secretary de-
termines that a substantially complete waiver appli-
cation has been filed. Nothing in this section shall
be construed as preventing an organization which
has had such a waiver application denied from sub-
mitting a subsequent waiver application.
‘‘(5) APPLICATION
AND
ENFORCEMENT
OF
STATE
CONSUMER
PROTECTION
AND
QUALITY
STANDARDS.—A waiver granted under this sub-
section to an organization with respect to licensing
under State law is conditioned upon the organiza-
tion’s compliance with all consumer protection and
quality standards insofar as such standards—
‘‘(A) would apply in the State to the com-
munity health organization if it were licensed as
an entity offering health insurance coverage
under State law; and
‘‘(B) are generally applicable to other risk-
bearing managed care organizations and plans
in the State.
‘‘(6) REPORT.—By not later than December 31,
2002, the Secretary shall submit to the Committee
on Commerce of the House of Representatives and
the Committee on Labor and Human Resources of
the Senate a report regarding whether the waiver
199
process under this subsection should be continued
after December 31, 2003.
‘‘(b) ASSUMPTION OF FULL FINANCIAL RISK.—To
qualify for a waiver under subsection (a), the community
health organization shall assume full financial risk on a
prospective basis for the provision of covered health care
services, except that the organization—
‘‘(1) may obtain insurance or make other ar-
rangements for the cost of providing to any enrolled
member such services the aggregate value of which
exceeds such aggregate level as the Secretary speci-
fies from time to time;
‘‘(2) may obtain insurance or make other ar-
rangements for the cost of such services provided to
its enrolled members other than through the organi-
zation because medical necessity required their pro-
vision before they could be secured through the orga-
nization;
‘‘(3) may obtain insurance or make other ar-
rangements for not more than 90 percent of the
amount by which its costs for any of its fiscal years
exceed 105 percent of its income for such fiscal year;
and
‘‘(4) may make arrangements with physicians
or other health care professionals, health care insti-
200
tutions, or any combination of such individuals or
institutions to assume all or part of the financial
risk on a prospective basis for the provision of
health services by the physicians or other health pro-
fessionals or through the institutions.
‘‘(c) CERTIFICATION OF PROVISION AGAINST RISK OF
INSOLVENCY FOR UNLICENSED CHOS.—
‘‘(1) IN GENERAL.—Each community health or-
ganization that is not licensed by a State and for
which a waiver application has been approved under
subsection (a)(1), shall meet standards established
by the Secretary under subsection (d) relating to the
financial solvency and capital adequacy of the orga-
nization.
‘‘(2) CERTIFICATION PROCESS FOR SOLVENCY
STANDARDS FOR CHOS.—The Secretary shall estab-
lish a process for the receipt and approval of appli-
cations of a community health organization de-
scribed in paragraph (1) for certification (and peri-
odic recertification) of the organization as meeting
such solvency standards. Under such process, the
Secretary shall act upon such a certification applica-
tion not later than 60 days after the date the appli-
cation has been received.
201
‘‘(d) ESTABLISHMENT
OF SOLVENCY STANDARDS
FOR COMMUNITY HEALTH ORGANIZATIONS.—
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish, on an expedited basis and by rule pursuant to
section 553 of title 5, United States Code and
through the Health Resources and Services Adminis-
tration, standards described in subsection (c)(1) (re-
lating to financial solvency and capital adequacy)
that entities must meet to obtain a waiver under
subsection (a)(2)(C). In establishing such standards,
the Secretary shall consult with interested organiza-
tions, including the National Association of Insur-
ance Commissioners, the Academy of Actuaries, and
organizations representing Federally qualified health
centers.
‘‘(2) FACTORS
TO
CONSIDER
FOR
SOLVENCY
STANDARDS.—In establishing solvency standards for
community health organizations under paragraph
(1), the Secretary shall take into account—
‘‘(A) the delivery system assets of such an
organization and ability of such an organization
to provide services to enrollees;
‘‘(B) alternative means of protecting
against insolvency, including reinsurance, unre-
stricted surplus, letters of credit, guarantees,
202
organizational insurance coverage, partnerships
with other licensed entities, and valuation at-
tributable to the ability of such an organization
to meet its service obligations through direct
delivery of care; and
‘‘(C) any standards developed by the Na-
tional Association of Insurance Commissioners
specifically for risk-based health care delivery
organizations.
‘‘(3) ENROLLEE PROTECTION AGAINST INSOL-
VENCY.—Such standards shall include provisions to
prevent enrollees from being held liable to any per-
son or entity for the organization’s debts in the
event of the organization’s insolvency.
‘‘(4) DEADLINE.—Such standards shall be pro-
mulgated in a manner so they are first effective by
not later than April 1, 1999.
‘‘(e) DEFINITIONS.—In this section:
‘‘(1) COMMUNITY
HEALTH
ORGANIZATION.—
The term ‘community health organization ’ means
an organization that is a Federally-qualified health
center or is controlled by one or more Federally-
qualified health centers.
‘‘(2) FEDERALLY-QUALIFIED
HEALTH
CEN-
TER.—The term ‘Federally-qualified health center’
203
has the meaning given such term in section
1905(l)(2)(B) of the Social Security Act.
‘‘(3) HEALTH
INSURANCE
COVERAGE.—The
term ‘health insurance coverage’ has the meaning
given such term in section 2791(b)(1).
‘‘(4) CONTROL.—The term ‘control’ means the
possession, whether direct or indirect, of the power
to direct or cause the direction of the management
and policies of the organization through member-
ship, board representation, or an ownership interest
equal to or greater than 50.1 percent.’’.
TITLE 
III—AMENDMENTS 
TO
THE 
INTERNAL 
REVENUE
CODE OF 1986
Subtitle A—Patient Protections
SEC. 3001. PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE, EMERGENCY MEDICAL CARE, OB-
STETRIC AND GYNECOLOGICAL CARE, PEDI-
ATRIC CARE.
(a) IN GENERAL.—Subchapter B of chapter 100 of
the Internal Revenue Code of 1986 (relating to other re-
quirements) is amended by adding at the end the following
new section:
204
‘‘SEC. 9813. PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE, EMERGENCY MEDICAL CARE, OB-
STETRIC AND GYNECOLOGICAL CARE, PEDI-
ATRIC CARE.
‘‘(a) PATIENT ACCESS TO UNRESTRICTED MEDICAL
ADVICE.—
‘‘(1) IN GENERAL.—In the case of any health
care professional acting within the lawful scope of
practice in the course of carrying out a contractual
employment arrangement or other direct contractual
arrangement between such professional and a group
health plan, the plan with which such contractual
employment arrangement or other direct contractual
arrangement is maintained by the professional may
not impose on such professional under such arrange-
ment any prohibition or restriction with respect to
advice, provided to a participant or beneficiary
under the plan who is a patient, about the health
status of the participant or beneficiary or the medi-
cal care or treatment for the condition or disease of
the participant or beneficiary, regardless of whether
benefits for such care or treatment are provided
under the plan.
‘‘(2) HEALTH CARE PROFESSIONAL DEFINED.—
For purposes of this subsection, the term ‘health
care professional’ means a physician (as defined in
205
section 1861(r) of the Social Security Act) or other
health care professional if coverage for the profes-
sional’s services is provided under the group health
plan for the services of the professional. Such term
includes a podiatrist, optometrist, chiropractor, psy-
chologist, dentist, physician assistant, physical or oc-
cupational therapist and therapy assistant, speech–
language pathologist, audiologist, registered or li-
censed practical nurse (including nurse practitioner,
clinical nurse specialist, certified registered nurse
anesthetist, and certified nurse–midwife), licensed
certified social worker, registered respiratory thera-
pist, and certified respiratory therapy technician.
‘‘(b) PATIENT ACCESS
TO EMERGENCY MEDICAL
CARE.—
‘‘(1) IN
GENERAL.—To the extent that the
group health plan provides for any benefits consist-
ing of emergency medical care (as defined in section
503(b)(9)(I) of the Employee Retirement Income Se-
curity Act of 1974), except for items or services spe-
cifically excluded—
‘‘(A) the plan shall provide benefits, with-
out requiring preauthorization and without re-
gard to otherwise applicable network limita-
tions, 
for 
appropriate 
emergency 
medical
206
screening examinations (within the capability of
the emergency facility, including ancillary serv-
ices routinely available to the emergency facil-
ity) to the extent that a prudent layperson, who
possesses an average knowledge of health and
medicine, would determine such examinations to
be necessary in order to determine whether
emergency medical care (as so defined) is re-
quired; and
‘‘(B) the plan shall provide benefits for ad-
ditional emergency medical services following an
emergency medical screening examination (if
determined necessary under subparagraph (A))
to the extent that a prudent emergency medical
professional would determine such additional
emergency services to be necessary to avoid the
consequences described in clause (i) of section
503(b)(9)(I) of such Act.
‘‘(2) UNIFORM
COST-SHARING
REQUIRED.—
Nothing in this subsection shall be construed as pre-
venting a group health plan from imposing any form
of cost-sharing applicable to any participant or bene-
ficiary 
(including 
coinsurance, 
copayments,
deductibles, and any other charges) in relation to
benefits described in paragraph (1), if such form of
207
cost-sharing is uniformly applied under such plan,
with respect to similarly situated participants and
beneficiaries, to all benefits consisting of emergency
medical care (as defined in section 503(b)(9)(I) of
the Employee Retirement Income Security Act of
1974) provided to such similarly situated partici-
pants and beneficiaries under the plan.
‘‘(c) PATIENT ACCESS TO OBSTETRIC AND GYNECO-
LOGICAL CARE.—
‘‘(1) IN
GENERAL.—In any case in which a
group health plan—
‘‘(A) provides benefits under the terms of
the plan consisting of—
‘‘(i) routine gynecological care (such
as preventive women’s health examina-
tions); or
‘‘(ii) routine obstetric care (such as
routine pregnancy-related services),
provided by a participating physician who spe-
cializes in such care (or provides benefits con-
sisting of payment for such care); and
‘‘(B) the plan requires or provides for des-
ignation by a participant or beneficiary of a
participating primary care provider,
208
if the primary care provider designated by such a
participant or beneficiary is not such a physician,
then the plan shall meet the requirements of para-
graph (2).
‘‘(2) REQUIREMENTS.—A group health plan
meets the requirements of this paragraph, in connec-
tion with benefits described in paragraph (1) con-
sisting of care described in clause (i) or (ii) of para-
graph (1)(A) (or consisting of payment therefor), if
the plan—
‘‘(A) does not require authorization or a
referral by the primary care provider in order
to obtain such benefits; and
‘‘(B) treats the ordering of other routine
care of the same type, by the participating phy-
sician providing the care described in clause (i)
or (ii) of paragraph (1)(A), as the authorization
of the primary care provider with respect to
such care.
‘‘(3) CONSTRUCTION.—Nothing in paragraph
(2)(B) shall waive any requirements of coverage re-
lating to medical necessity or appropriateness with
respect to coverage of gynecological or obstetric care
so ordered.
‘‘(d) PATIENT ACCESS TO PEDIATRIC CARE.—
209
‘‘(1) IN
GENERAL.—In any case in which a
group health plan (or a health insurance issuer of-
fering health insurance coverage in connection with
the plan) provides benefits consisting of routine pe-
diatric care provided by a participating physician
who specializes in pediatrics (or consisting of pay-
ment for such care) and the plan requires or pro-
vides for designation by a participant or beneficiary
of a participating primary care provider, the plan (or
issuer) shall provide that such a participating physi-
cian may be designated, if available, by a parent or
guardian of any beneficiary under the plan is who
under 18 years of age, as the primary care provider
with respect to any such benefits.
‘‘(2) CONSTRUCTION.—Nothing in paragraph
(1) shall waive any requirements of coverage relating
to medical necessity or appropriateness with respect
to coverage of pediatric care.
‘‘(e) TREATMENT
OF MULTIPLE COVERAGE OP-
TIONS.—In the case of a plan providing benefits under two
or more coverage options, the requirements of subsections
(c) and (d) shall apply separately with respect to each cov-
erage option.’’.
210
(b) CLERICAL AMENDMENT.—The table of sections
of such subchapter of such chapter is amended by adding
at the end the following new item:
‘‘Sec. 9813. Patient access to unrestricted medical advice, emer-
gency medical care, obstetric and gynecological
care, pediatric care.’’.
SEC. 3002. EFFECTIVE DATE AND RELATED RULES.
(a) IN GENERAL.—The amendments made by this
subtitle shall apply with respect to plan years beginning
on or after January 1 of the second calendar year follow-
ing the date of the enactment of this Act, except that the
Secretary of the Treasury may issue regulations before
such date under such amendments. The Secretary shall
first issue regulations necessary to carry out the amend-
ments made by this section before the effective date there-
of.
(b) LIMITATION ON PENALTY FOR CERTAIN FAIL-
URES.—No penalty shall be imposed on any failure to
comply with any requirement imposed by the amendments
made by section 3101 to the extent such failure occurs
before the date of issuance of regulations issued in connec-
tion with such requirement if the plan has sought to com-
ply in good faith with such requirement.
(c) SPECIAL RULE FOR COLLECTIVE BARGAINING
AGREEMENTS.—In the case of a group health plan main-
tained pursuant to one or more collective bargaining
agreements between employee representatives and one or
211
more employers ratified before the date of the enactment
of this Act, the provisions of subsections (b), (c), and (d)
of section 9813 of the Internal Revenue Code of 1986 (as
added by this subtitle) shall not apply with respect to plan
years beginning before the later of—
(1) the date on which the last of the collective
bargaining agreements relating to the plan termi-
nates (determined without regard to any extension
thereof agreed to after the date of the enactment of
this Act); or
(2) January 1, 2001.
For purposes of this subsection, any plan amend-
ment made pursuant to a collective bargaining
agreement relating to the plan which amends the
plan solely to conform to any requirement added by
this subtitle shall not be treated as a termination of
such collective bargaining agreement.
Subtitle B—Patient Access to
Information
SEC. 3101. PATIENT ACCESS TO INFORMATION REGARDING
PLAN COVERAGE, MANAGED CARE PROCE-
DURES, 
HEALTH 
CARE 
PROVIDERS, 
AND
QUALITY OF MEDICAL CARE.
(a) IN GENERAL.—Subchapter B of chapter 100 of
the Internal Revenue Code of 1986 (relating to other re-
212
quirements) is amended by adding at the end the following
new section:
‘‘SEC. 9814. DISCLOSURE BY GROUP HEALTH PLANS.
‘‘(a) DISCLOSURE
REQUIREMENT.—The adminis-
trator of each group health plan shall take such actions
as are necessary to ensure that the summary plan descrip-
tion of the plan required under section 102 of Employee
Retirement Income Security Act of 1974 (or each sum-
mary plan description in any case in which different sum-
mary plan descriptions are appropriate under part 1 of
subtitle B of title I of such Act for different options of
coverage) contains the information required under sub-
sections (b), (c), (d), and (e)(2)(A). To the extent that
any health insurance issuer offering health insurance cov-
erage in connection with such plan provides such informa-
tion on a timely basis to plan participants and bene-
ficiaries, the requirements of this subsection shall be
deemed satisfied in the case of such plan with respect to
such information.
‘‘(b) PLAN BENEFITS.—The information required
under subsection (a) includes the following:
‘‘(1) COVERED ITEMS AND SERVICES.—
‘‘(A) CATEGORIZATION OF INCLUDED BEN-
EFITS.—A description of covered benefits, cat-
egorized by—
213
‘‘(i) types of items and services (in-
cluding any special disease management
program); and
‘‘(ii) types of health care professionals
providing such items and services.
‘‘(B) EMERGENCY MEDICAL CARE.—A de-
scription of the extent to which the plan covers
emergency medical care (including the extent to
which the plan provides for access to urgent
care centers), and any definitions provided
under the plan for the relevant plan terminol-
ogy referring to such care.
‘‘(C) PREVENTATIVE
SERVICES.—A de-
scription of the extent to which the plan pro-
vides benefits for preventative services.
‘‘(D) DRUG FORMULARIES.—A description
of the extent to which covered benefits are de-
termined by the use or application of a drug
formulary and a summary of the process for de-
termining what is included in such formulary.
‘‘(E) 
COBRA 
CONTINUATION
COV-
ERAGE.—A description of the requirements
under section 4980B.
‘‘(2) LIMITATIONS, EXCLUSIONS, AND RESTRIC-
TIONS ON COVERED BENEFITS.—
214
‘‘(A) 
CATEGORIZATION
OF
EXCLUDED
BENEFITS.—A description of benefits specifi-
cally excluded from coverage, categorized by
types of items and services.
‘‘(B) 
UTILIZATION
REVIEW
AND
PREAUTHORIZATION REQUIREMENTS.—Whether
coverage for medical care is limited or excluded
on 
the 
basis 
of 
utilization 
review 
or
preauthorization requirements.
‘‘(C) LIFETIME, ANNUAL, OR OTHER PE-
RIOD LIMITATIONS.—A description of the cir-
cumstances under which, and the extent to
which, coverage is subject to lifetime, annual, or
other period limitations, categorized by types of
benefits.
‘‘(D) CUSTODIAL CARE.—A description of
the circumstances under which, and the extent
to which, the coverage of benefits for custodial
care is limited or excluded, and a statement of
the definition used by the plan for custodial
care.
‘‘(E) 
EXPERIMENTAL
TREATMENTS.—
Whether coverage for any medical care is lim-
ited or excluded because it constitutes experi-
mental treatment or technology, and any defini-
215
tions provided under the plan for the relevant
plan terminology referring to such limited or
excluded care.
‘‘(F) MEDICAL APPROPRIATENESS OR NE-
CESSITY.—Whether coverage for medical care
may be limited or excluded by reason of a fail-
ure to meet the plan’s requirements for medical
appropriateness or necessity, and any defini-
tions provided under the plan for the relevant
plan terminology referring to such limited or
excluded care.
‘‘(G) SECOND
OR
SUBSEQUENT
OPIN-
IONS.—A description of the circumstances
under which, and the extent to which, coverage
for second or subsequent opinions is limited or
excluded.
‘‘(H) SPECIALTY CARE.—A description of
the circumstances under which, and the extent
to which, coverage of benefits for specialty care
is conditioned on referral from a primary care
provider.
‘‘(I) CONTINUITY OF CARE.—A description
of the circumstances under which, and the ex-
tent to which, coverage of items and services
provided by any health care professional is lim-
216
ited or excluded by reason of the departure by
the professional from any defined set of provid-
ers.
‘‘(J) RESTRICTIONS
ON
COVERAGE
OF
EMERGENCY
SERVICES.—A description of the
circumstances under which, and the extent to
which, the plan, in covering emergency medical
care furnished to a participant or beneficiary of
the plan imposes any financial responsibility de-
scribed in subsection (c) on participants or
beneficiaries or limits or conditions benefits for
such care subject to any other term or condition
of such plan.
‘‘(c) 
PARTICIPANT’S
FINANCIAL
RESPONSIBIL-
ITIES.—The information required under subsection (a) in-
cludes an explanation of—
‘‘(1) a participant’s financial responsibility for
payment of premiums, coinsurance, copayments,
deductibles, and any other charges; and
‘‘(2) the circumstances under which, and the
extent to which, the participant’s financial respon-
sibility described in paragraph (1) may vary, includ-
ing any distinctions based on whether a health care
provider from whom covered benefits are obtained is
included in a defined set of providers.
217
‘‘(d) DISPUTE RESOLUTION PROCEDURES.—The in-
formation required under subsection (a) includes a de-
scription of the processes adopted by the plan pursuant
to section 503(b) of Employee Retirement Income Secu-
rity Act of 1974, including—
‘‘(1) descriptions thereof relating specifically
to—
‘‘(A) coverage decisions;
‘‘(B) internal review of coverage decisions;
and
‘‘(C) any external review of coverage deci-
sions; and
‘‘(2) the procedures and time frames applicable
to each step of the processes referred to in subpara-
graphs (A), (B), and (C) of paragraph (1).
‘‘(e) INFORMATION AVAILABLE ON REQUEST.—
‘‘(1) ACCESS TO PLAN BENEFIT INFORMATION
IN ELECTRONIC FORM.—
‘‘(A) IN GENERAL.—A group health plan
shall, upon written request (made not more fre-
quently than annually), make available to par-
ticipants and beneficiaries, in a generally recog-
nized electronic format, the following informa-
tion:
218
‘‘(i) the latest summary plan descrip-
tion, including the latest summary of ma-
terial modifications; and
‘‘(ii) the actual plan provisions setting
forth the benefits available under the plan
to the extent such information relates to the
coverage options under the plan available to the
participant or beneficiary. A reasonable charge
may be made to cover the cost of providing
such information in such generally recognized
electronic format. The Secretary may by regula-
tion prescribe a maximum amount which will
constitute a reasonable charge under the pre-
ceding sentence.
‘‘(B) ALTERNATIVE ACCESS.—The require-
ments of this paragraph may be met by making
such information generally available (rather
than upon request) on the Internet or on a pro-
prietary computer network in a format which is
readily accessible to participants and bene-
ficiaries.
‘‘(2) ADDITIONAL
INFORMATION
TO
BE
PRO-
VIDED ON REQUEST.—
‘‘(A) INCLUSION IN SUMMARY PLAN DE-
SCRIPTION
OF
SUMMARY
OF
ADDITIONAL
IN-
219
FORMATION.—The information required under
subsection (a) includes a summary description
of the types of information required by this
subsection to be made available to participants
and beneficiaries on request.
‘‘(B) 
INFORMATION
REQUIRED
FROM
PLANS ON REQUEST.—In addition to informa-
tion required to be included in summary plan
descriptions under this subsection, a group
health plan shall provide the following informa-
tion to a participant or beneficiary on request:
‘‘(i) NETWORK CHARACTERISTICS.—If
the plan (or a health insurance issuer of-
fering health insurance coverage in connec-
tion with the plan) utilizes a defined set of
providers under contract with the plan (or
issuer), a detailed list of the names of such
providers and their geographic location, set
forth separately with respect to primary
care providers and with respect to special-
ists.
‘‘(ii) CARE
MANAGEMENT
INFORMA-
TION.—A description of the circumstances
under which, and the extent to which, the
plan has special disease management pro-
220
grams or programs for persons with dis-
abilities, indicating whether these pro-
grams are voluntary or mandatory and
whether a significant benefit differential
results from participation in such pro-
grams.
‘‘(iii) INCLUSION
OF
DRUGS
AND
BIOLOGICALS IN FORMULARIES.—A state-
ment of whether a specific drug or biologi-
cal is included in a formulary used to de-
termine benefits under the plan and a de-
scription of the procedures for considering
requests for any patient-specific waivers.
‘‘(iv) PROCEDURES FOR DETERMINING
EXCLUSIONS BASED ON MEDICAL NECES-
SITY OR EXPERIMENTAL TREATMENTS.—
Upon receipt by the participant or bene-
ficiary of any notification of an adverse
coverage decision based on a determination
relating to medical necessity or an experi-
mental treatment or technology, a descrip-
tion of the procedures and medically-based
criteria used in such decision.
‘‘(v) PREAUTHORIZATION AND UTILI-
ZATION REVIEW PROCEDURES.—Upon re-
221
ceipt by the participant or beneficiary of
any notification of an adverse coverage de-
cision, a description of the basis on which
any preauthorization requirement or any
utilization review requirement has resulted
in such decision.
‘‘(vi) ACCREDITATION
STATUS
OF
HEALTH INSURANCE ISSUERS AND SERV-
ICE PROVIDERS.—A description of the ac-
creditation and licencing status (if any) of
each health insurance issuer offering
health insurance coverage in connection
with the plan and of any utilization review
organization utilized by the issuer or the
plan, together with the name and address
of the accrediting or licencing authority.
‘‘(vii) MEASURES OF ENROLLEE SAT-
ISFACTION.—The latest information (if
any) maintained by the plan, or by any
health insurance issuer offering health in-
surance coverage in connection with the
plan, relating to enrollee satisfaction.
‘‘(viii) QUALITY PERFORMANCE MEAS-
URES.—The latest information (if any)
maintained by the plan, or by any health
222
insurance issuer offering health insurance
coverage in connection with the plan, relat-
ing to quality of performance of the deliv-
ery of medical care with respect to cov-
erage options offered under the plan and
of health care professionals and facilities
providing medical care under the plan.
‘‘(ix) INFORMATION RELATING TO EX-
TERNAL REVIEWS.—The number of exter-
nal reviews under section 503(b)(4) of the
Employee Retirement Income Security Act
of 1974 that have been completed during
the prior plan year and the number of such
reviews in which the recommendation re-
ported under section 503(b)(4)(C)(iii) of
such Act includes a recommendation for
modification or reversal of an internal re-
view decision under the plan.
‘‘(C) 
INFORMATION
REQUIRED
FROM
HEALTH CARE PROFESSIONALS ON REQUEST.—
Any health care professional treating a partici-
pant or beneficiary under a group health plan
shall provide to the participant or beneficiary,
on request, a description of his or her profes-
sional qualifications (including board certifi-
223
cation status, licensing status, and accreditation
status, if any), privileges, and experience and a
general description by category (including sal-
ary, fee-for-service, capitation, and such other
categories as may be specified in regulations of
the Secretary) of the applicable method by
which such professional is compensated in con-
nection with the provision of such medical care.
‘‘(D) 
INFORMATION
REQUIRED
FROM
HEALTH CARE FACILITIES ON REQUEST.—Any
health care facility from which a participant or
beneficiary has sought treatment under a group
health plan shall provide to the participant or
beneficiary, on request, a description of the fa-
cility’s corporate form or other organizational
form and all forms of licensing and accredita-
tion status (if any) assigned to the facility by
standard-setting organizations.
‘‘(f) ACCESS TO INFORMATION RELEVANT TO THE
COVERAGE OPTIONS UNDER WHICH THE PARTICIPANT OR
BENEFICIARY IS ELIGIBLE TO ENROLL.—In addition to
information otherwise required to be made available under
this section, a group health plan shall, upon written re-
quest (made not more frequently than annually), make
available to a participant (and an employee who, under
224
the terms of the plan, is eligible for coverage but not en-
rolled) in connection with a period of enrollment the sum-
mary plan description for any coverage option under the
plan under which the participant is eligible to enroll and
any information described in clauses (i), (ii), (iii), (vi),
(vii), and (viii) of subsection (e)(2)(B).
‘‘(g) ADVANCE NOTICE
OF CHANGES
IN DRUG
FORMULARIES.—Not later than 30 days before the effec-
tive of date of any exclusion of a specific drug or biological
from any drug formulary under the plan that is used in
the treatment of a chronic illness or disease, the plan shall
take such actions as are necessary to reasonably ensure
that plan participants are informed of such exclusion. The
requirements of this subsection may be satisfied—
‘‘(1) by inclusion of information in publications
broadly distributed by plan sponsors, employers, or
employee organizations;
‘‘(2) by electronic means of communication (in-
cluding the Internet or proprietary computer net-
works in a format which is readily accessible to par-
ticipants);
‘‘(3) by timely informing participants who,
under an ongoing program maintained under the
plan, have submitted their names for such notifica-
tion; or
225
‘‘(4) by any other reasonable means of timely
informing plan participants.’’.
(b) CLERICAL AMENDMENT.—The table of sections
of such subchapter of such chapter is amended by adding
at the end the following new item:
‘‘Sec. 9814. Disclosure by group health plans.’’.
SEC. 3102. EFFECTIVE DATE.
(a) IN GENERAL.—The amendments made by this
subtitle shall apply with respect to plan years beginning
on or after January 1 of the second calendar year follow-
ing the date of the enactment of this Act. The Secretary
of the Treasury or the Secretary’s delegate shall first issue
all regulations necessary to carry out the amendments
made by this subtitle before such date.
(b) LIMITATION ON ENFORCEMENT ACTIONS.—No
enforcement action shall be taken, pursuant to the amend-
ments made by this subtitle, against a group health plan
with respect to a violation of a requirement imposed by
such amendments before the date of issuance of final regu-
lations issued in connection with such requirement, if the
plan has sought to comply in good faith with such require-
ment.
226
Subtitle C—Medical Savings
Accounts
SEC. 3201. EXPANSION OF AVAILABILITY OF MEDICAL SAV-
INGS ACCOUNTS.
(a) REPEAL OF LIMITATIONS ON NUMBER OF MEDI-
CAL SAVINGS ACCOUNTS.—
(1) IN GENERAL.—Subsections (i) and (j) of
section 220 of the Internal Revenue Code of 1986
are hereby repealed.
(2) CONFORMING AMENDMENT.—Paragraph (1)
of section 220(c) of such Code is amended by strik-
ing subparagraph (D).
(b) ALL EMPLOYERS MAY OFFER MEDICAL SAVINGS
ACCOUNTS.—
(1) IN
GENERAL.—Subclause (I) of section
220(c)(1)(A)(iii) of such Code (defining eligible indi-
vidual) is amended by striking ‘‘and such employer
is a small employer’’.
(2) CONFORMING AMENDMENTS.—
(A) Paragraph (1) of section 220(c) of
such Code is amended by striking subparagraph
(C).
(B) Subsection (c) of section 220 of such
Code is amended by striking paragraph (4) and
227
by redesignating paragraph (5) as paragraph
(4).
(c) INCREASE IN AMOUNT OF DEDUCTION ALLOWED
FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNTS.—
(1) IN
GENERAL.—Paragraph (2) of section
220(b) of such Code is amended to read as follows:
‘‘(2) MONTHLY LIMITATION.—The monthly lim-
itation for any month is the amount equal to 1⁄12 of
the annual deductible (as of the first day of such
month) of the taxpayer’s coverage under the high
deductible health plan.’’.
(2) CONFORMING AMENDMENT.—Clause (ii) of
section 220(d)(1)(A) of such Code is amended by
striking ‘‘75 percent of’’.
(d) BOTH EMPLOYERS AND EMPLOYEES MAY CON-
TRIBUTE TO MEDICAL SAVINGS ACCOUNTS.—Paragraph
(5) of section 220(b) of such Code is amended to read
as follows:
‘‘(5) COORDINATION WITH EXCLUSION FOR EM-
PLOYER
CONTRIBUTIONS.—The limitation which
would (but for this paragraph) apply under this sub-
section to the taxpayer for any taxable year shall be
reduced (but not below zero) by the amount which
would (but for section 106(b)) be includible in the
taxpayer’s gross income for such taxable year.’’.
228
(e) REDUCTION
OF
PERMITTED
DEDUCTIBLES
UNDER HIGH DEDUCTIBLE HEALTH PLANS.—
(1) IN GENERAL.—Subparagraph (A) of section
220(c)(2) of such Code (defining high deductible
health plan) is amended—
(A) by striking ‘‘$1,500’’ and inserting
‘‘$1,000’’; and
(B) by striking ‘‘$3,000’’ and inserting
‘‘$2,000’’.
(2) CONFORMING AMENDMENT.—Subsection (g)
of section 220 of such Code is amended—
(A) by striking ‘‘1998’’ and inserting
‘‘1999’’; and
(B) by striking ‘‘1997’’ and inserting
‘‘1998’’.
(f) MEDICAL SAVINGS ACCOUNTS MAY BE OFFERED
UNDER CAFETERIA PLANS.—Subsection (f) of section
125 of such Code is amended by striking ‘‘106(b),’’.
(g) INDIVIDUALS RECEIVING IMMEDIATE FEDERAL
ANNUITIES
ELIGIBLE
FOR
MEDICAL
SAVINGS
AC-
COUNTS.—Paragraph (1) of section 220(c) of such Code
(defining eligible individual), as amended by subsections
(a) and (b), is amended by adding at the end the following
new subparagraph:
229
‘‘(C) SPECIAL
RULES
FOR
INDIVIDUALS
RECEIVING IMMEDIATE FEDERAL ANNUITIES.—
‘‘(i) 
IN
GENERAL.—Subparagraph
(A)(iii) and subsection (b)(4) shall not
apply for any month to an individual—
‘‘(I) who, as of the first day of
such month, is enrolled in a high de-
ductible health plan under chapter 89
of title 5, United States Code; and
‘‘(II) who is entitled to receive
for such month any amount by reason
of being an annuitant (as defined in
section 8901(3) of such title 5).
‘‘(ii) SPECIAL RULE FOR SPOUSE OF
ANNUITANT.—In the case of the spouse of
an individual described in clause (i) who is
not also described in clause (i), subsection
(b)(4) shall not apply to such spouse if
such individual and spouse have family
coverage under the same plan described in
clause (i)(I).’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
230
SEC. 3202. EXCEPTION FROM INSURANCE LIMITATION IN
CASE OF MEDICAL SAVINGS ACCOUNTS.
(a) IN GENERAL.—Section 220(d)(2)(B) of the Inter-
nal Revenue Code of 1986 is amended by adding at the
end the following new clause:
‘‘(iii) INSURANCE OFFERED BY COM-
MUNITY HEALTH CENTERS.—
‘‘(I) IN
GENERAL.—Subject to
clauses (II) and (III), clause (i) shall
not apply to any expense for coverage
under insurance offered by a health
center (as defined in section 330(a)(1)
of the Public Health Service Act) if
the coverage consists solely of cov-
erage for required primary health ben-
efits 
(as 
defined 
in 
section
330(b)(1)(A) of such Act) provided on
a capitated basis.
‘‘(II) INCOME LIMITATION.—Sub-
clause (I) shall only apply to expenses
for coverage of an individual who, in
the taxable year involved, has income
that is less than 200 percent of the
income official poverty line (as defined
by the Office of Management and
Budget, and revised annually in ac-
231
cordance with section 673(2) of the
Omnibus Budget Reconciliation Act of
1981) applicable to a family of the
size involved.
‘‘(III) LIMITATION
ON
NUMBER
OF CONTRACTS.—For a taxable year
ending in a calendar year, subclause
(I) shall apply only to expenses for
coverage for the first 15,000 individ-
uals enrolled in insurance described in
such subclause in the year.’’.
(b) REPORTS ON ENROLLMENT.—Section 330(j)(3)
of the Public Health Service Act (42 U.S.C. 254c(j)(3))
is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (K);
(2) by striking the period at the end of sub-
paragraph (L) and inserting ‘‘; and’’; and
(3) by inserting after subparagraph (L) the fol-
lowing new subparagraph:
‘‘(M) if the center offers insurance cov-
erage to an individual with a medical savings
account 
under 
subclause 
(I) 
of 
section
220(d)(2)(B)(iii), the center shall provide such
reports in such time and manner as may be re-
232
quired by the Secretary and the Secretary of
the Treasury in order to carry out subclause
(III) of such section.’’.
SEC. 3203. SENSE OF THE HOUSE OF REPRESENTATIVES.
It is the sense of the House of Representatives that
patients are best served when they are empowered to make
informed choices about their own health care. The same
is true regarding an individual’s choice of health insur-
ance. A system that gives people the power to choose the
coverage that best meets their needs, combined with insur-
ance market reforms, offers great promise of increased
choices and greater access to health insurance for Ameri-
cans.
Subtitle D—Revenue Offsets
SEC. 3301. CLARIFICATION OF DEFINITION OF SPECIFIED
LIABILITY LOSS.
(a) IN GENERAL.—Subparagraph (B) of section
172(f)(1) of the Internal Revenue Code of 1986 (defining
specified liability loss) is amended to read as follows:
‘‘(B)(i) Any amount allowable as a deduc-
tion under this chapter (other than section
468(a)(1) or 468A(a)) which is in satisfaction
of a liability under a Federal or State law re-
quiring—
‘‘(I) the reclamation of land;
233
‘‘(II) the decommissioning of a nu-
clear power plant (or any unit thereof);
‘‘(III) the dismantlement of a drilling
platform;
‘‘(IV) the remediation of environ-
mental contamination; or
‘‘(V) a payment under any workers
compensation act (within the meaning of
section 461(h)(2)(C)(i)).
‘‘(ii) A liability shall be taken into account
under this subparagraph only if—
‘‘(I) the act (or failure to act) giving
rise to such liability occurs at least 3 years
before the beginning of the taxable year;
and
‘‘(II) the taxpayer used an accrual
method of accounting throughout the pe-
riod or periods during which such act (or
failure to act) occurred.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to net operating losses arising in
taxable years ending after the date of the enactment of
this Act.
234
SEC. 3302. PROPERTY SUBJECT TO A LIABILITY TREATED
IN SAME MANNER AS ASSUMPTION OF LI-
ABILITY.
(a) REPEAL OF PROPERTY SUBJECT TO A LIABILITY
TEST.—
(1) SECTION 357.—Section 357(a) of the Inter-
nal Revenue Code of 1986 (relating to assumption
of liability) is amended by striking ‘‘, or acquires
from the taxpayer property subject to a liability’’ in
paragraph (2).
(2) SECTION 358.—Section 358(d)(1) of such
Code (relating to assumption of liability) is amended
by striking ‘‘or acquired from the taxpayer property
subject to a liability’’.
(3) SECTION 368.—
(A) Section 368(a)(1)(C) of such Code is
amended by striking ‘‘, or the fact that prop-
erty acquired is subject to a liability,’’.
(B) 
The 
last 
sentence 
of 
section
368(a)(2)(B) of such Code is amended by strik-
ing ‘‘, and the amount of any liability to which
any property acquired from the acquiring cor-
poration is subject,’’.
(b) CLARIFICATION
OF ASSUMPTION
OF LIABIL-
ITY.—
235
(1) IN GENERAL.—Section 357 of such Code is
amended by adding at the end the following new
subsections:
‘‘(d) DETERMINATION OF AMOUNT OF LIABILITY AS-
SUMED.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, 
section 
358(d), 
section 
362(d), 
section
368(a)(1)(C), and section 368(a)(2)(B), except as
provided in regulations—
‘‘(A) a recourse liability (or portion there-
of) shall be treated as having been assumed if,
as determined on the basis of all facts and cir-
cumstances, the transferee has agreed to, and is
expected to, satisfy such liability (or portion),
whether or not the transferor has been relieved
of such liability; and
‘‘(B) a nonrecourse liability shall be treat-
ed as having been assumed by the transferee of
any asset subject to such liability.
‘‘(2) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection and section
362(d). The Secretary may also prescribe regula-
tions which provide that the manner in which a li-
ability is treated as assumed under this subsection
236
is applied, where appropriate, elsewhere in this
title.’’.
(2) LIMITATION ON BASIS INCREASE ATTRIB-
UTABLE
TO
ASSUMPTION
OF
LIABILITY.—Section
362 of such Code is amended by adding at the end
the following new subsection:
‘‘(d) LIMITATION
ON
BASIS
INCREASE
ATTRIB-
UTABLE TO ASSUMPTION OF LIABILITY.—
‘‘(1) IN GENERAL.—In no event shall the basis
of any property be increased under subsection (a) or
(b) above fair market value (determined without re-
gard to section 7701(g)) by reason of any gain rec-
ognized to the transferor as a result of the assump-
tion of a liability.
‘‘(2) TREATMENT OF GAIN NOT SUBJECT TO
TAX.—Except as provided in regulations, if—
‘‘(A) gain is recognized to the transferor as
a result of an assumption of a nonrecourse li-
ability by a transferee which is also secured by
assets not transferred to such transferee; and
‘‘(B) no person is subject to tax under this
title on such gain,
then, for purposes of determining basis under sub-
sections (a) and (b), the amount of gain recognized
by the transferor as a result of the assumption of
237
the liability shall be determined as if the liability as-
sumed by the transferee equaled such transferee’s
ratable portion of such liability determined on the
basis of the relative fair market values (determined
without regard to section 7701(g)) of all of the as-
sets subject to such liability.’’.
(c) APPLICATION TO PROVISIONS OTHER THAN SUB-
CHAPTER C.—
(1) SECTION 584.—Section 584(h)(3) of such
Code is amended—
(A) by striking ‘‘, and the fact that any
property transferred by the common trust fund
is subject to a liability,’’ in subparagraph (A);
and
(B) by striking clause (ii) of subparagraph
(B) and inserting:
‘‘(ii) 
ASSUMED
LIABILITIES.—For
purposes of clause (i), the term ‘assumed
liabilities’ means any liability of the com-
mon trust fund assumed by any regulated
investment company in connection with the
transfer referred to in paragraph (1)(A).
‘‘(C) ASSUMPTION.—For purposes of this
paragraph, in determining the amount of any li-
238
ability assumed, the rules of section 357(d)
shall apply.’’.
(2) SECTION 1031.—The last sentence of section
1031(d) of such Code is amended—
(A) by striking ‘‘assumed a liability of the
taxpayer or acquired from the taxpayer prop-
erty subject to a liability’’ and inserting ‘‘as-
sumed (as determined under section 357(d)) a
liability of the taxpayer’’; and
(B) by striking ‘‘or acquisition (in the
amount of the liability)’’.
(d) CONFORMING AMENDMENTS.—
(1) Section 351(h)(1) of such Code is amended
by striking ‘‘, or acquires property subject to a li-
ability,’’.
(2) Section 357 of such Code is amended by
striking ‘‘or acquisition’’ each place it appears in
subsection (a) or (b).
(3) Section 357(b)(1) of such Code is amended
by striking ‘‘or acquired’’.
(4) Section 357(c)(1) of such Code is amended
by striking ‘‘, plus the amount of the liabilities to
which the property is subject,’’.
239
(5) Section 357(c)(3) of such Code is amended
by striking ‘‘or to which the property transferred is
subject’’.
(6) Section 358(d)(1) of such Code is amended
by striking ‘‘or acquisition (in the amount of the li-
ability)’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to transfers after the date of the
enactment of this Act.
SEC. 
3303. 
LIMITATION 
ON 
REQUIRED 
ACCRUAL 
OF
AMOUNTS RECEIVED FOR PERFORMANCE OF
CERTAIN PERSONAL SERVICES.
(a) IN GENERAL.—Paragraph (5) of section 448(d)
of the Internal Revenue Code of 1986 (relating to special
rule for services) is amended by inserting ‘‘in fields re-
ferred to in paragraph (2)(A)’’ after ‘‘services by such per-
son’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1998.
(c) COORDINATION WITH SECTION 481.—In the case
of any taxpayer required by this section to change its
method of accounting for any taxable year—
(1) such change shall be treated as initiated by
the taxpayer;
240
(2) such change shall be treated as made with
the consent of the Secretary of the Treasury; and
(3) the period for taking into account the ad-
justments under section 481 by reason of such
change shall be 3 years.
SEC. 3304. RETURNS RELATING TO CANCELLATIONS OF IN-
DEBTEDNESS BY ORGANIZATIONS LENDING
MONEY.
(a) 
IN
GENERAL.—Paragraph 
(2) 
of 
section
6050P(c) of the Internal Revenue Code of 1986 (relating
to definitions and special rules) is amended by striking
‘‘and’’ at the end of subparagraph (B), by striking the
period at the end of subparagraph (C) and inserting ‘‘;
and’’, and by inserting after subparagraph (C) the follow-
ing new subparagraph:
‘‘(D) any organization a significant trade
or business of which is the lending of money.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to discharges of indebtedness
after December 31, 1998.
SEC. 3305. CLARIFICATION AND EXPANSION OF MATHE-
MATICAL ERROR ASSESSMENT PROCEDURES.
(a) TIN DEEMED INCORRECT IF INFORMATION ON
RETURN DIFFERS WITH AGENCY RECORDS.—Section
6213(g)(2) of the Internal Revenue Code of 1986 (defin-
241
ing mathematical or clerical error) is amended by adding
at the end the following flush sentence:
‘‘A taxpayer shall be treated as having omitted a
correct TIN for purposes of the preceding sentence
if information provided by the taxpayer on the re-
turn with respect to the individual whose TIN was
provided differs from the information the Secretary
obtains from the person issuing the TIN.’’.
(b) EXPANSION OF MATHEMATICAL ERROR PROCE-
DURES TO CASES WHERE TIN ESTABLISHES INDIVIDUAL
NOT ELIGIBLE FOR TAX CREDIT.—Section 6213(g)(2) of
such Code is amended by striking ‘‘and’’ at the end of
subparagraph (J), by striking the period at the end of the
subparagraph (K) and inserting ‘‘; and’’, and by adding
at the end the following new subparagraph:
‘‘(L) the inclusion on a return of a TIN re-
quired to be included on the return under sec-
tion 21, 24, or 32 if—
‘‘(i) such TIN is of an individual
whose age affects the amount of the credit
under such section; and
‘‘(ii) the computation of the credit on
the return reflects the treatment of such
individual as being of an age different
242
from the individual’s age based on such
TIN.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 3306. INCLUSION OF ROTAVIRUS GASTROENTERITIS
AS A TAXABLE VACCINE.
(a) IN GENERAL.—Section 4132(1) of the Internal
Revenue Code of 1986 (defining taxable vaccine) is
amended by adding at the end the following new subpara-
graph:
‘‘(K) 
Any 
vaccine 
against 
rotavirus
gastroenteritis.’’.
(b) EFFECTIVE DATE.—
(1) SALES.—The amendment made by this sec-
tion shall apply to sales after the date of the enact-
ment of this Act.
(2) DELIVERIES.—For purposes of paragraph
(1), in the case of sales on or before the date of the
enactment of this Act for which delivery is made
after such date, the delivery date shall be considered
the sale date.
243
TITLE IV—HEALTH CARE
LAWSUIT REFORM
Subtitle A—General Provisions
SEC. 4001. FEDERAL REFORM OF HEALTH CARE LIABILITY
ACTIONS.
(a) APPLICABILITY.—This title shall apply with re-
spect to any health care liability action brought in any
State or Federal court, except that this title shall not
apply to—
(1) an action for damages arising from a vac-
cine-related injury or death to the extent that title
XXI of the Public Health Service Act applies to the
action; or
(2) an action under the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1001 et
seq.).
(b) PREEMPTION.—This title shall preempt any State
law to the extent such law is inconsistent with the limita-
tions contained in this title. This title shall not preempt
any State law that provides for defenses or places limita-
tions on a person’s liability in addition to those contained
in this title or otherwise imposes greater restrictions than
those provided in this title.
244
(c) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE
OF LAW OR VENUE.—Nothing in subsection (b) shall be
construed to—
(1) waive or affect any defense of sovereign im-
munity asserted by any State under any provision of
law;
(2) waive or affect any defense of sovereign im-
munity asserted by the United States;
(3) affect the applicability of any provision of
the Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with re-
spect to claims brought by a foreign nation or a citi-
zen of a foreign nation; or
(5) affect the right of any court to transfer
venue or to apply the law of a foreign nation or to
dismiss a claim of a foreign nation or of a citizen
of a foreign nation on the ground of inconvenient
forum.
(d) AMOUNT
IN CONTROVERSY.—In an action to
which this title applies and which is brought under section
1332 of title 28, United States Code, the amount of non-
economic damages or punitive damages, and attorneys’
fees or costs, shall not be included in determining whether
the matter in controversy exceeds the sum or value of
$50,000.
245
(e) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this title shall be construed to establish any jurisdiction
in the district courts of the United States over health care
liability actions on the basis of section 1331 or 1337 of
title 28, United States Code.
SEC. 4002. DEFINITIONS.
As used in this title:
(1) ACTUAL DAMAGES.—The term ‘‘actual dam-
ages’’ means damages awarded to pay for economic
loss.
(2) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution
system’’ or ‘‘ADR’’ means a system established
under Federal or State law that provides for the res-
olution of health care liability claims in a manner
other than through health care liability actions.
(3) CLAIMANT.—The term ‘‘claimant’’ means
any person who brings a health care liability action
and any person on whose behalf such an action is
brought. If such action is brought through or on be-
half of an estate, the term includes the claimant’s
decedent. If such action is brought through or on be-
half of a minor or incompetent, the term includes
the claimant’s legal guardian.
246
(4) CLEAR AND CONVINCING EVIDENCE.—The
term ‘‘clear and convincing evidence’’ is that meas-
ure or degree of proof that will produce in the mind
of the trier of fact a firm belief or conviction as to
the truth of the allegations sought to be established.
Such measure or degree of proof is more than that
required under preponderance of the evidence but
less than that required for proof beyond a reason-
able doubt.
(5) COLLATERAL
SOURCE
PAYMENTS.—The
term ‘‘collateral source payments’’ means any
amount paid or reasonably likely to be paid in the
future to or on behalf of a claimant, or any service,
product, or other benefit provided or reasonably like-
ly to be provided in the future to or on behalf of a
claimant, as a result of an injury or wrongful death,
pursuant to—
(A) any State or Federal health, sickness,
income-disability, accident or workers’ com-
pensation Act;
(B) any health, sickness, income-disability,
or accident insurance that provides health bene-
fits or income-disability coverage;
(C) any contract or agreement of any
group, organization, partnership, or corporation
247
to provide, pay for, or reimburse the cost of
medical, hospital, dental, or income disability
benefits; and
(D) any other publicly or privately funded
program.
(6) DRUG.—The term ‘‘drug’’ has the meaning
given such term in section 201(g)(1) of the Federal
Food, 
Drug, 
and 
Cosmetic 
Act 
(21 
U.S.C.
321(g)(1)).
(7) ECONOMIC
LOSS.—The term ‘‘economic
loss’’ means any pecuniary loss resulting from injury
(including the loss of earnings or other benefits re-
lated to employment, medical expense loss, replace-
ment services loss, loss due to death, burial costs,
and loss of business or employment opportunities),
to the extent recovery for such loss is allowed under
applicable State law.
(8) HARM.—The term ‘‘harm’’ means any le-
gally cognizable wrong or injury for which punitive
damages may be imposed.
(9) 
HEALTH
BENEFIT
PLAN.—The 
term
‘‘health benefit plan’’ means—
(A) a hospital or medical expense incurred
policy or certificate;
248
(B) a hospital or medical service plan con-
tract;
(C) a health maintenance subscriber con-
tract; or
(D) a Medicare+Choice plan (offered
under part C of title XVIII of the Social Secu-
rity Act),
that provides benefits with respect to health care
services.
(10) HEALTH
CARE
LIABILITY
ACTION.—The
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court against—
(A) a health care provider;
(B) an entity which is obligated to provide
or pay for health benefits under any health ben-
efit plan (including any person or entity acting
under a contract or arrangement to provide or
administer any health benefit); or
(C) the manufacturer, distributor, supplier,
marketer, promoter, or seller of a medical prod-
uct,
in which the claimant alleges a claim (including third
party claims, cross claims, counter claims, or contribution
claims) based upon the provision of (or the failure to pro-
vide or pay for) health care services or the use of a medical
249
product, regardless of the theory of liability on which the
claim is based or the number of plaintiffs, defendants, or
causes of action.
(11) HEALTH
CARE
LIABILITY
CLAIM.—The
term ‘‘health care liability claim’’ means a claim in
which the claimant alleges that injury was caused by
the provision of (or the failure to provide) health
care services.
(12) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means any person that is en-
gaged in the delivery of health care services in a
State and that is required by the laws or regulations
of the State to be licensed or certified by the State
to engage in the delivery of such services in the
State.
(13) 
HEALTH
CARE
SERVICE.—The 
term
‘‘health care service’’ means any service eligible for
payment under a health benefit plan, including serv-
ices related to the delivery or administration of such
service.
(14) MEDICAL DEVICE.—The term ‘‘medical de-
vice’’ has the meaning given such term in section
201(h) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 321(h)).
250
(15) NON-ECONOMIC
DAMAGES.—The term
‘‘non-economic damages’’ means damages paid to an
individual for pain and suffering, inconvenience,
emotional distress, mental anguish, loss of consor-
tium, injury to reputation, humiliation, and other
nonpecuniary losses.
(16) PERSON.—The term ‘‘person’’ means any
individual, corporation, company, association, firm,
partnership, society, joint stock company, or any
other entity, including any governmental entity.
(17) PRODUCT SELLER.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘‘product seller’’ means a
person who, in the course of a business con-
ducted for that purpose—
(i) sells, distributes, rents, leases, pre-
pares, blends, packages, labels, or is other-
wise involved in placing, a product in the
stream of commerce; or
(ii) installs, repairs, or maintains the
harm-causing aspect of a product.
(B) EXCLUSION.—Such term does not in-
clude—
(i) a seller or lessor of real property;
251
(ii) a provider of professional services
in any case in which the sale or use of a
product is incidental to the transaction and
the essence of the transaction is the fur-
nishing of judgment, skill, or services; or
(iii) any person who—
(I) acts in only a financial capac-
ity with respect to the sale of a prod-
uct; or
(II) leases a product under a
lease arrangement in which the selec-
tion, possession, maintenance, and op-
eration of the product are controlled
by a person other than the lessor.
(18) PUNITIVE DAMAGES.—The term ‘‘punitive
damages’’ means damages awarded against any per-
son not to compensate for actual injury suffered, but
to punish or deter such person or others from en-
gaging in similar behavior in the future.
(19) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa,
the Northern Mariana Islands, and any other terri-
tory or possession of the United States.
252
SEC. 4003. EFFECTIVE DATE.
This title will apply to—
(1) any health care liability action brought in a
Federal or State court; and
(2) any health care liability claim subject to an
alternative dispute resolution system,
that is initiated on or after the date of enactment of this
title, except that any health care liability claim or action
arising from an injury occurring before the date of enact-
ment of this title shall be governed by the applicable stat-
ute of limitations provisions in effect at the time the injury
occurred.
Subtitle B—Uniform Standards for
Health Care Liability Actions
SEC. 4011. STATUTE OF LIMITATIONS.
A health care liability action may not be brought
after the expiration of the 2-year period that begins on
the date on which the alleged injury that is the subject
of the action was discovered or should reasonably have
been discovered, but in no case after the expiration of the
5-year period that begins on the date the alleged injury
occurred.
SEC. 4012. CALCULATION AND PAYMENT OF DAMAGES.
(a) TREATMENT OF NON-ECONOMIC DAMAGES.—
(1) LIMITATION
ON
NON-ECONOMIC
DAM-
AGES.—The total amount of non-economic damages
253
that may be awarded to a claimant for losses result-
ing from the injury which is the subject of a health
care liability action may not exceed $250,000, re-
gardless of the number of parties against whom the
action is brought or the number of actions brought
with respect to the injury. The limitation under this
paragraph shall not apply to an action for damages
based solely on intentional denial of medical treat-
ment necessary to preserve a patient’s life that the
patient is otherwise qualified to receive, against the
wishes of a patient, or if the patient is incompetent,
against the wishes of the patient’s guardian, on the
basis of the patient’s present or predicated age, dis-
ability, degree of medical dependency, or quality of
life.
(2) LIMIT.—If, after the date of the enactment
of this Act, a State enacts a law which prescribes
the amount of non-economic damages which may be
awarded in a health care liability action which is dif-
ferent from the amount prescribed by section
4012(a)(1), the State amount shall apply in lieu of
the amount prescribed by such section. If, after the
date of the enactment of this Act, a State enacts a
law which limits the amount of recovery in a health
care liability action without delineating between eco-
254
nomic and non-economic damages, the State amount
shall apply in lieu of the amount prescribed by such
section.
(3) JOINT AND SEVERAL LIABILITY.—In any
health care liability action brought in State or Fed-
eral court, a defendant shall be liable only for the
amount of non-economic damages attributable to
such defendant in direct proportion to such defend-
ant’s share of fault or responsibility for the claim-
ant’s actual damages, as determined by the trier of
fact. In all such cases, the liability of a defendant
for non-economic damages shall be several and not
joint and a separate judgment shall be rendered
against each defendant for the amount allocated to
such defendant.
(b) TREATMENT OF PUNITIVE DAMAGES.—
(1) GENERAL RULE.—Punitive damages may,
to the extent permitted by applicable State law, be
awarded in any health care liability action for harm
in any Federal or State court against a defendant if
the claimant establishes by clear and convincing evi-
dence that the harm suffered was the result of con-
duct—
(A) specifically intended to cause harm; or
255
(B) conduct manifesting a conscious, fla-
grant indifference to the rights or safety of oth-
ers.
(2) 
APPLICABILITY.—This 
subsection 
shall
apply to any health care liability action brought in
any Federal or State court on any theory where pu-
nitive damages are sought. This subsection does not
create a cause of action for punitive damages. This
subsection does not preempt or supersede any State
or Federal law to the extent that such law would
further limit the award of punitive damages.
(3) BIFURCATION.—At the request of any
party, the trier of fact shall consider in a separate
proceeding whether punitive damages are to be
awarded and the amount of such award. If a sepa-
rate proceeding is requested, evidence relevant only
to the claim of punitive damages, as determined by
applicable State law, shall be inadmissible in any
proceeding to determine whether actual damages are
to be awarded.
(4) DRUGS AND DEVICES.—
(A) IN GENERAL.—
(i) 
PUNITIVE
DAMAGES.—Punitive
damages shall not be awarded against a
manufacturer or product seller of a drug
256
or medical device which caused the claim-
ant’s harm where—
(I) such drug or device was sub-
ject to premarket approval by the
Food and Drug Administration with
respect to the safety of the formula-
tion or performance of the aspect of
such drug or device which caused the
claimant’s harm, or the adequacy of
the packaging or labeling of such drug
or device which caused the harm, and
such drug, device, packaging, or label-
ing was approved by the Food and
Drug Administration; or
(II) the drug is generally recog-
nized as safe and effective pursuant to
conditions established by the Food
and Drug Administration and applica-
ble regulations, including packaging
and labeling regulations.
(ii) APPLICATION.—Clause (i) shall
not apply in any case in which the defend-
ant, before or after premarket approval of
a drug or device—
257
(I) intentionally and wrongfully
withheld from or misrepresented to
the Food and Drug Administration in-
formation concerning such drug or de-
vice required to be submitted under
the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 301 et seq.) or
section 351 of the Public Health Serv-
ice Act (42 U.S.C. 262) that is mate-
rial and relevant to the harm suffered
by the claimant; or
(II) made an illegal payment to
an official or employee of the Food
and Drug Administration for the pur-
pose of securing or maintaining ap-
proval of such drug or device.
(B) PACKAGING.—In a health care liability
action for harm which is alleged to relate to the
adequacy of the packaging or labeling of a drug
which is required to have tamper-resistant
packaging under regulations of the Secretary of
Health and Human Services (including labeling
regulations related to such packaging), the
manufacturer or product seller of the drug shall
not be held liable for punitive damages unless
258
such packaging or labeling is found by the court
by clear and convincing evidence to be substan-
tially out of compliance with such regulations.
(c) PERIODIC PAYMENTS FOR FUTURE LOSSES.—
(1) GENERAL RULE.—In any health care liabil-
ity action in which the damages awarded for future
economic and non-economic loss exceeds $50,000, a
person shall not be required to pay such damages in
a single, lump-sum payment, but shall be permitted
to make such payments periodically based on when
the damages are likely to occur, as such payments
are determined by the court.
(2) FINALITY OF JUDGMENT.—The judgment
of the court awarding periodic payments under this
subsection may not, in the absence of fraud, be re-
opened at any time to contest, amend, or modify the
schedule or amount of the payments.
(3) 
LUMP-SUM
SETTLEMENTS.—This 
sub-
section shall not be construed to preclude a settle-
ment providing for a single, lump-sum payment.
(d) TREATMENT
OF COLLATERAL SOURCE PAY-
MENTS.—
(1) INTRODUCTION
INTO
EVIDENCE.—In any
health care liability action, any defendant may intro-
duce evidence of collateral source payments. If any
259
defendant elects to introduce such evidence, the
claimant may introduce evidence of any amount paid
or contributed or reasonably likely to be paid or con-
tributed in the future by or on behalf of the claim-
ant to secure the right to such collateral source pay-
ments.
(2) NO SUBROGATION.—No provider of collat-
eral source payments shall recover any amount
against the claimant or receive any lien or credit
against the claimant’s recovery or be equitably or le-
gally subrogated to the right of the claimant in a
health care liability action.
(3) APPLICATION TO SETTLEMENTS.—This sub-
section shall apply to an action that is settled as well
as an action that is resolved by a fact finder.
SEC. 4013. ALTERNATIVE DISPUTE RESOLUTION.
Any ADR used to resolve a health care liability action
or claim shall contain provisions relating to statute of limi-
tations, non-economic damages, joint and several liability,
punitive damages, collateral source rule, and periodic pay-
ments which are consistent with the provisions relating to
such matters in this title.
SEC. 4014. REPORTING ON FRAUD AND ABUSE ENFORCE-
MENT ACTIVITIES.
The General Accounting Office shall—
260
(1) monitor—
(A) the compliance of the Department of
Justice and all United States Attorneyswith the
guideline entitled ‘‘Guidance on the Use of the
False Claims Act in Civil Health Care Matters’’
issued by the Department on June 3, 1998, in-
cluding any revisions to that guideline; and
(B) the compliance of the Office of the In-
spector General of the Department of Health
and Human Services with the protocols and
guidelines entitled ‘‘National Project Proto-
cols—Best Practice Guidelines’’ issued by the
Inspector General on June 3, 1998, including
any revisions to such protocols and guidelines;
and
(2) submit a report on such compliance to the
Committee on Commerce, the Committee on the Ju-
diciary, and the Committee on Ways and Means of
the House of Representatives and the Committee on
the Judiciary and the Committee on Finance of the
Senate not later than February 1, 1999, and every
year thereafter for a period of 4 years ending Feb-
ruary 1, 2002.
261
TITLE V—CONFIDENTIALITY OF
HEALTH INFORMATION
SEC. 5001. CONFIDENTIALITY OF PROTECTED HEALTH IN-
FORMATION.
(a) IN GENERAL.—Title XI of the Social Security Act
(42 U.S.C. 1301 et seq.) is amended by adding at the end
the following:
‘‘PART D—CONFIDENTIALITY OF PROTECTED HEALTH
INFORMATION
‘‘INSPECTION AND COPYING OF PROTECTED HEALTH
INFORMATION
‘‘SEC. 1181. (a) IN GENERAL.—Subject to the suc-
ceeding provisions of this section, upon the request of an
individual who is the subject of protected health informa-
tion, a person who is a health care provider, health plan,
employer, health or life insurer, or educational institution
shall make available to the individual (or, in the discretion
of the person, to a health care provider designated by the
individual), for inspection and copying, protected health
information concerning the individual that the person
maintains, including records created under section 1182.
‘‘(b) ACCESS THROUGH ORIGINATING PROVIDER.—
Protected health information that is created by an origi-
nating provider, and subsequently received by another
health care provider or a health plan as part of treatment
262
or payment activities, shall be made available for inspec-
tion and copying as provided in this section through the
originating provider, rather than the receiving health care
provider or health plan, unless the originating provider
does not maintain the information.
‘‘(c) INVESTIGATIONAL INFORMATION.—With respect
to protected health information that was created as part
of the requesting individual’s participation in a clinical
trial monitored by an institutional review board estab-
lished to review health research with respect to potential
risks to human subjects pursuant to Federal regulations
adopted under section 1802(b) of the Public Health Serv-
ice Act (42 U.S.C. 300v–1(b)) and the notice (informally
referred to as the ‘Common Rule’) promulgated in the
Federal Register at 56 Fed. Reg. 28003), a request under
subsection (a) shall be granted only to the extent and in
a manner consistent with such regulations.
‘‘(d) OTHER EXCEPTIONS.—Unless ordered by a
court of competent jurisdiction, a person to whom a re-
quest under subsection (a) is made is not required to grant
the request, if—
‘‘(1) the person determines that the disclosure
of the information could reasonably be expected to
endanger the life or physical safety of, or cause sub-
stantial harm to, any individual; or
263
‘‘(2) the information is compiled principally—
‘‘(A) in anticipation of a civil, criminal, or
administrative action or proceeding; or
‘‘(B) for use in such action or proceeding.
‘‘(e) DENIAL
OF REQUEST
FOR INSPECTION
OR
COPYING.—If a person to whom a request under sub-
section (a) is made denies a request for inspection or copy-
ing pursuant to this section, the person shall inform the
individual making the request, in writing, of—
‘‘(1) the reasons for the denial of the request;
‘‘(2) the availability of procedures for further
review of the denial; and
‘‘(3) the individual’s right to file with the per-
son a concise statement setting forth the request.
‘‘(f) STATEMENT REGARDING REQUEST.—If an indi-
vidual has filed with a person a statement under sub-
section (e)(3) with respect to protected health information,
the person, in any subsequent disclosure of the informa-
tion—
‘‘(1) shall include a notation concerning the in-
dividual’s statement; and
‘‘(2) may include a concise statement of the
reasons for denying the request for inspection or
copying.
264
‘‘(g) PROCEDURES.—A person providing access to
protected health information for inspection or copying
under this section may set forth appropriate procedures
to be followed for such inspection or copying and may re-
quire an individual to pay reasonable costs associated with
such inspection or copying.
‘‘(h) INSPECTION
AND COPYING
OF SEGREGABLE
PORTION.—A person to whom a request under subsection
(a) is made shall permit the inspection and copying of any
reasonably segregable portion of a record after deletion of
any portion that the person is not required to disclose
under this section.
‘‘(i) DEADLINE.—A person described in subsection
(a) shall comply with or deny, in accordance with this sec-
tion, a request for inspection or copying of protected
health information under this section not later than 30
days after the date on which the person receives the re-
quest.
‘‘(j) RULES GOVERNING AGENTS.—An agent of a
person described in subsection (a) shall not be required
to provide for the inspection and copying of protected
health information, except where—
‘‘(1) the protected health information is re-
tained by the agent; and
265
‘‘(2) the agent has been asked by the person to
fulfill the requirements of this section.
‘‘SUPPLEMENTATION OF PROTECTED HEALTH
INFORMATION
‘‘SEC. 1182. (a) IN GENERAL.—Subject to subsection
(b), not later than 45 days after the date on which a per-
son who is a health care provider, health plan, employer,
health or life insurer, or educational institution receives,
from an individual who is a subject of protected health
information that is maintained by the person, a request
in writing to amend the information by adding a concise
written supplement to it, the person—
‘‘(1) shall make the amendment requested;
‘‘(2) shall inform the individual of the amend-
ment that has been made; and
‘‘(3) shall make reasonable efforts to inform
any person who is identified by the individual, who
is not an officer, employer, or agent of the person
receiving the request, and to whom the unamended
portion of the information was disclosed during the
preceding year, by sending a notice to the person’s
last known address that an amendment, consisting
of the addition of a supplement, has been made to
the protected health information of the individual.
‘‘(b) REFUSAL TO AMEND.—If a person described in
subsection (a) refuses to make an amendment requested
266
by an individual under such subsection, the person shall
inform the individual, in writing, of—
‘‘(1) the reasons for the refusal to make the
amendment;
‘‘(2) any procedures for further review of the
refusal; and
‘‘(3) the individual’s right to file with the per-
son a concise statement setting forth the requested
amendment and the individual’s reasons for dis-
agreeing with the refusal.
‘‘(c) STATEMENT OF DISAGREEMENT.—If an individ-
ual has filed a statement of disagreement with a person
under subsection (b)(3), the person, in any subsequent dis-
closure of the disputed portion of the information—
‘‘(1) shall include a notation that such individ-
ual has filed a statement of disagreement; and
‘‘(2) may include a concise statement of the
reasons for not making the requested amendment.
‘‘(d) RULES GOVERNING AGENTS.—The agent of a
person described in subsection (a) shall not be required
to make amendments to individually identifiable health in-
formation, except where—
‘‘(1) the information is retained by the agent;
and
267
‘‘(2) the agent has been asked by such person
to fulfill the requirements of this section.
‘‘(e) DUPLICATIVE REQUESTS FOR AMENDMENTS.—
If a person described in subsection (a) receives a duplica-
tive request for an amendment of information as provided
for in such subsection and a statement of disagreement
with respect to the request has been filed pursuant to sub-
section (c), the person shall inform the individual of such
filing and shall not be required to carry out the procedures
under this section.
‘‘(f) RULE OF CONSTRUCTION.—This section shall
not be construed—
‘‘(1) to permit an individual to modify state-
ments in his or her record that document the factual
observations of another individual or state the re-
sults of diagnostic tests; or
‘‘(2) to permit an individual to amend his or
her record as to the type, duration, or quality of
treatment the individual believes he or she should
have been provided.
‘‘NOTICE OF CONFIDENTIALITY PRACTICES
‘‘SEC. 1183. (a) PREPARATION OF WRITTEN NO-
TICE.—A person who is a health care provider, health
plan, health oversight agency, public health authority, em-
ployer, health or life insurer, health researcher, or edu-
cational institution shall post or provide, in writing and
268
in a clear and conspicuous manner, notice of the person’s
protected health information confidentiality practices. The
notice shall include—
‘‘(1) a description of an individual’s rights with
respect to protected health information;
‘‘(2) the intended uses and disclosures of pro-
tected health information;
‘‘(3) the procedures established by the person
for the exercise of an individual’s rights with respect
to protected health information; and
‘‘(4) the procedures established by the person
for obtaining copies of the notice.
‘‘(b) MODEL NOTICE.—The Secretary, after notice
and opportunity for public comment, and based on the ad-
vice of the National Committee on Vital and Health Sta-
tistics established under section 306(k) of the Public
Health Service Act (42 U.S.C. 242k(k)), shall develop and
disseminate, not later than 6 months after the date of the
enactment of the Patient Protection Act of 1998, model
notices of confidentiality practices, for use under this sec-
tion. Use of a model notice developed by the Secretary
shall serve as a complete defense in any civil action to an
allegation that a violation of this section has occurred.
‘‘ESTABLISHMENT OF SAFEGUARDS
‘‘SEC. 1184. (a) IN GENERAL.—A person who is a
health care provider, health plan, health oversight agency,
269
public health authority, employer, health or life insurer,
health researcher, or educational institution shall estab-
lish, maintain, and enforce reasonable and appropriate ad-
ministrative, technical, and physical safeguards to protect
the confidentiality, security, accuracy, and integrity of
protected health information created, received, obtained,
maintained, used, transmitted, or disposed of by the per-
son.
‘‘(b) FACTORS TO BE CONSIDERED.—A person sub-
ject to subsection (a) shall consider the following factors
in establishing safeguards under such subsection:
‘‘(1) The need for protected health information.
‘‘(2) The categories of personnel who will have
access to protected health information.
‘‘(3) The feasibility of limiting access to individ-
ual identifiers.
‘‘(4) The appropriateness of the policy or proce-
dure to the person, and to the medium in which pro-
tected health information is stored and transmitted.
‘‘(5) The value of audit trails in computerized
records.
‘‘(c) RELATIONSHIP TO PART C REQUIREMENT.—
Any safeguard established under this section shall be con-
sistent with the requirement in section 1173(d)(2).
270
‘‘(d) CONVERSION TO NONIDENTIFIABLE HEALTH
INFORMATION.—A person subject to subsection (a) shall,
to the extent practicable and consistent with the purpose
for which protected health information is maintained, con-
vert such information into nonidentifiable health informa-
tion.
‘‘AVAILABILITY OF PROTECTED HEALTH INFORMATION
FOR PURPOSES OF HEALTH CARE OPERATIONS
‘‘SEC. 1185. (a) DISCLOSURE.—Any person who
maintains protected health information may disclose the
information to a health care provider or a health plan for
the purpose of permitting the provider or plan to conduct
health care operations.
‘‘(b) USE.—A health care provider or a health plan
that maintains protected health information may use it for
the purposes described in subsection (a).
‘‘(c) LIMITATION ON SALE OR BARTER.—Notwith-
standing subsection (b), no health care provider or health
plan may, as part of conducting health care operations,
sell or barter protected health information.
‘‘RELATIONSHIP TO OTHER LAWS
‘‘SEC. 1186. (a) STATE LAW.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the provisions of this part shall
preempt a provision of State law to the extent that
such provision—
271
‘‘(A) otherwise would be preempted as in-
consistent with this part under article VI of the
Constitution of the United States;
‘‘(B) relates to authorization for the use or
disclosure of—
‘‘(i) protected health information for
health care operations; or
‘‘(ii) nonidentifiable health informa-
tion; or
‘‘(C) relates to any of the following:
‘‘(i) Inspection or copying of protected
health information by a person who is a
subject of the information.
‘‘(ii) Amendment of protected health
information by a person who is a subject
of the information.
‘‘(iii) Notice of confidentiality prac-
tices with respect to protected health infor-
mation.
‘‘(iv) Establishment of safeguards for
protected health information.
‘‘(2) EXCEPTIONS.—Nothing in this part shall
be construed to preempt or modify a provision of
State law to the extent that such provision relates
to protected health information and—
272
‘‘(A) the confidentiality of the records
maintained by a licensed mental health profes-
sional;
‘‘(B) the provision of health care to a
minor, or the disclosure of information about a
minor to a parent or guardian of the minor;
‘‘(C) condition-specific limitations on dis-
closure;
‘‘(D) the use or disclosure of information
for use in legally authorized—
‘‘(i) disease or injury reporting;
‘‘(ii) public health surveillance, inves-
tigation, or intervention;
‘‘(iii) vital statistics reporting, such as
reporting of birth or death information;
‘‘(iv) reporting of abuse or neglect in-
formation;
‘‘(v) reporting of information concern-
ing a communicable disease status; or
‘‘(vi) reporting concerning the safety
or effectiveness of a biological product reg-
ulated under section 351 of the Public
Health Service Act (42 U.S.C. 262) or a
drug or device regulated under the Federal
273
Food, Drug, and Cosmetic Act (21 U.S.C.
301 et seq.);
‘‘(E) the disclosure to a person by a health
care provider of information about an individ-
ual, in any case in which the provider has de-
termined—
‘‘(i) in the provider’s reasonable medi-
cal judgment, that the individual is uncon-
scious, incompetent, or otherwise incapable
of deciding whether to authorize disclosure
of the protected health information; and
‘‘(ii) in the provider’s reasonable judg-
ment, that the person is a spouse, relative,
guardian, or close friend of the individ-
ual’s; or
‘‘(F) the use of information by, or the dis-
closure of information to, a person holding a
valid and applicable power of attorney that in-
cludes the authority to make health care deci-
sions on behalf of an individual who is a subject
of the information.
‘‘(3) PRIVILEGES.—Nothing in this part shall
be construed to preempt or modify a provision of
State law to the extent that such provision relates
274
to a privilege of a witness or other person in a court
of that State.
‘‘(b) FEDERAL LAW.—Nothing in this part shall be
construed to preempt, modify, or repeal a provision of any
other Federal law relating to protected health information
or relating to an individual’s access to protected health
information or health care services. Nothing in this part
shall be construed to preempt, modify, or repeal a provi-
sion of Federal law to the extent that such provision re-
lates to a privilege of a witness or other person in a court
of the United States.
‘‘CIVIL PENALTIES
‘‘SEC. 1187. (a) VIOLATION.—A person who the Sec-
retary determines has substantially and materially failed
to comply with this part shall be subject, in addition to
any other penalties that may be prescribed by law—
‘‘(1) in a case in which the violation relates to
section 1181 or 1182, to a civil penalty of not more
than $500 for each such violation but not to exceed
$5,000 in the aggregate for all violations of an iden-
tical requirement or prohibition during a calendar
year;
‘‘(2) in the case in which the violation relates
to section 1183 or 1184, to a civil penalty of not
more than $10,000 for each such violation, but not
to exceed $50,000 in the aggregate for all violations
275
of an identical requirement or prohibition during a
calendar year; or
‘‘(3) in a case in which the Secretary finds that
such violations have occurred with such frequency as
to constitute a general business practice, to a civil
penalty of not more than $100,000.
‘‘(b) PROCEDURES
FOR
IMPOSITION
OF
PEN-
ALTIES.—Section 1128A, other than subsections (a) and
(b) and the second sentence of subsection (f) of that sec-
tion, shall apply to the imposition of a civil or monetary
penalty under this section in the same manner as such
provisions apply with respect to the imposition of a penalty
under section 1128A.
‘‘DEFINITIONS
‘‘SEC. 1188. As used in this part:
‘‘(1) AGENT.—The term ‘agent’ means a per-
son, including a contractor, who represents and acts
for another under the contract or relation of agency,
or whose function is to bring about, modify, affect,
accept performance of, or terminate contractual obli-
gations between the principal and a third person.
‘‘(2) CONDITION-SPECIFIC LIMITATIONS ON DIS-
CLOSURE.—The term ‘condition-specific limitations
on disclosure’ means State laws that prohibit the
disclosure of protected health information relating to
276
a health condition or disease that has been identified
by the Secretary as posing a public health threat.
‘‘(3) DISCLOSE.—The term ‘disclose’ means to
release, transfer, provide access to, or otherwise di-
vulge protected health information to any person
other than an individual who is the subject of such
information.
‘‘(4) EDUCATIONAL
INSTITUTION.—The term
‘educational institution’ means an institution or
place accredited or licensed for purposes of providing
for instruction or education, including an elementary
school, secondary school, or institution of higher
learning, a college, or an assemblage of colleges
united under one corporate organization or govern-
ment.
‘‘(5) EMPLOYER.—The term ‘employer’ has the
meaning given such term under section 3(5) of the
Employee Retirement Income Security Act of 1974
(29 U.S.C. 1002(5)), except that such term shall in-
clude only employers of two or more employees.
‘‘(6) HEALTH CARE.—The term ‘health care’
means—
‘‘(A) preventive, diagnostic, therapeutic,
rehabilitative, maintenance, or palliative care,
including appropriate assistance with disease or
277
symptom management and maintenance, coun-
seling, service, or procedure—
‘‘(i) with respect to the physical or
mental condition of an individual; or
‘‘(ii) affecting the structure or func-
tion of the human body or any part of the
human body, including the banking of
blood, sperm, organs, or any other tissue;
or
‘‘(B) any sale or dispensing, pursuant to a
prescription or medical order, of a drug, device,
equipment, or other health care-related item to
an individual, or for the use of an individual.
‘‘(7) HEALTH
CARE
OPERATIONS.—The term
‘health care operations’ means services, provided di-
rectly by or on behalf of a health plan or health care
provider or by its agent, for any of the following
purposes:
‘‘(A) Coordinating health care, including
health care management of the individual
through risk assessment, case management, and
disease management.
‘‘(B) Conducting quality assessment and
improvement activities, including outcomes eval-
278
uation, clinical guideline development and im-
provement, and health promotion.
‘‘(C) Carrying out utilization review activi-
ties, 
including 
precertification 
and
preauthorization of services, and health plan
rating activities, including underwriting and ex-
perience rating.
‘‘(D) Conducting or arranging for auditing
services.
‘‘(8) HEALTH
CARE
PROVIDER.—The term
‘health care provider’ means a person, who with re-
spect to a specific item of protected health informa-
tion, receives, creates, uses, maintains, or discloses
the information while acting in whole or in part in
the capacity of—
‘‘(A) a person who is licensed, certified,
registered, or otherwise authorized by Federal
or State law to provide an item or service that
constitutes health care in the ordinary course of
business, or practice of a profession;
‘‘(B) a Federal, State, or employer-spon-
sored or any other privately-sponsored program
that directly provides items or services that con-
stitute health care to beneficiaries; or
279
‘‘(C) an officer or employee of a person de-
scribed in subparagraph (A) or (B).
‘‘(9) HEALTH
OR
LIFE
INSURER.—The term
‘health or life insurer’ means a health insurance
issuer, as defined in section 9832(b)(2) of the Inter-
nal Revenue Code of 1986, or a life insurance com-
pany, as defined in section 816 of such Code.
‘‘(10) HEALTH PLAN.—The term ‘health plan’
means any health insurance plan, including any hos-
pital or medical service plan, dental or other health
service plan, health maintenance organization plan,
plan offered by a provider-sponsored organization
(as defined in section 1855(d)), or other program
providing or arranging for the provision of health
benefits.
‘‘(11) 
HEALTH
RESEARCHER.—The 
term
‘health researcher’ means a person (or an officer,
employee, or agent of a person) who is engaged in
systematic investigation, including research develop-
ment, testing, data analysis, and evaluation, de-
signed to develop or contribute to generalizable
knowledge relating to basic biomedical processes,
health, health care, health care delivery, or health
care cost.
280
‘‘(12) NONIDENTIFIABLE
HEALTH
INFORMA-
TION.—The term ‘nonidentifiable health information’
means protected health information from which per-
sonal identifiers that reveal the identity of the indi-
vidual who is the subject of such information or pro-
vide a direct means of identifying the individual
(such as name, address, and social security number)
have been removed, encrypted, or replaced with a
code, such that the identity of the individual is not
evident without (in the case of encrypted or coded
information) use of a key.
‘‘(13) 
ORIGINATING
PROVIDER.—The 
term
‘originating provider’, when used with respect to
protected health information, means the health care
provider who takes an action that initiates the treat-
ment episode to which that information relates, such
as prescribing a drug, ordering a diagnostic test, or
admitting an individual to a health care facility. A
hospital or nursing facility is the originating pro-
vider with respect to protected health information
created or received as part of inpatient or outpatient
treatment provided in the hospital or facility.
‘‘(14) PAYMENT ACTIVITIES.—The term ‘pay-
ment activities’ means—
‘‘(A) activities undertaken—
281
‘‘(i) by, or on behalf of, a health plan
to determine its responsibility for coverage
under the plan; or
‘‘(ii) by a health care provider to ob-
tain payment for items or services provided
to an individual, provided under a health
plan, or provided based on a determination
by the health plan of responsibility for cov-
erage under the plan; and
‘‘(B) includes the following activities, when
performed in a manner consistent with subpara-
graph (A):
‘‘(i) Billing, claims management, med-
ical data processing, other administrative
services, and actual payment.
‘‘(ii) Determinations of coverage or
adjudication of health benefit or subroga-
tion claims.
‘‘(iii) Review of health care services
with respect to coverage under a health
plan or justification of charges.
‘‘(15) PERSON.—The term ‘person’ means—
‘‘(A) a natural person;
‘‘(B) a government or governmental sub-
division, agency, or authority;
282
‘‘(C) a company, corporation, estate, firm,
trust, partnership, association, joint venture,
society, or joint stock company; or
‘‘(D) any other legal entity.
‘‘(16) PROTECTED
HEALTH
INFORMATION.—
The term ‘protected health information’, when used
with respect to an individual who is a subject of in-
formation means any information (including genetic
information) that identifies the individual, whether
oral or recorded in any form or medium, and that—
‘‘(A) is created or received by a health care
provider, health plan, health oversight agency,
public health authority, employer, health or life
insurer, or educational institution;
‘‘(B) relates to the past, present, or future
physical or mental health or condition of an in-
dividual (including individual cells and their
components);
‘‘(C) is derived from—
‘‘(i) the provision of health care to an
individual; or
‘‘(ii) payment for the provision of
health care to an individual; and
‘‘(D) is not nonidentifiable health informa-
tion.
283
‘‘(17) STATE.—The term ‘State’ includes the
District of Columbia, Puerto Rico, the Virgin Is-
lands, Guam, American Samoa, and the Northern
Mariana Islands.
‘‘(18) 
TREATMENT.—The 
term 
‘treatment’
means the provision of health care by a health care
provider.
‘‘(19) WRITING.—The term ‘writing’ means
writing either in a paper-based, computer-based, or
electronic form, including electronic signatures.’’.
(b) ENFORCEMENT OF PROVISIONS THROUGH CON-
DITIONS ON PARTICIPATION.—
(1) PARTICIPATING
PHYSICIANS
AND
SUPPLI-
ERS.—Section 1842(h) of the Social Security Act
(42 U.S.C. 1395u(h)) is amended by adding at the
end the following:
‘‘(9) The Secretary may refuse to enter into an agree-
ment with a physician or supplier under this subsection,
or may terminate or refuse to renew such agreement, in
the event that such physician or supplier has been found
to have violated a provision of part D of title XI.’’.
(2) MEDICARE+CHOICE ORGANIZATIONS.—Sec-
tion 1852(h) of the Social Security Act (42 U.S.C.
1395w–22(h)) is amended—
284
(A) in the matter preceding paragraph (1),
by striking ‘‘procedures—’’ and inserting ‘‘pro-
cedures, consistent with sections 1181 through
1185—’’; and
(B) in paragraph (1), by striking ‘‘privacy
of any individually identifiable enrollee informa-
tion;’’ and inserting ‘‘confidentiality of pro-
tected health information concerning enroll-
ees;’’.
(3) 
MEDICARE
PROVIDERS.—Section
1866(a)(1) of the Social Security Act (42 U.S.C.
1395cc(a)(1)) is amended—
(A) by inserting a semicolon at the end of
subparagraph (R);
(B) by striking the period at the end of
subparagraph (S) and inserting ‘‘; and’’; and
(C) by inserting immediately after sub-
paragraph (S) the following new subparagraph:
‘‘(T) to comply with sections 1181 through
1184.’’.
(4) HEALTH
MAINTENANCE
ORGANIZATIONS
WITH
RISK-SHARING
CONTRACTS.—Section
1876(k)(4) of the Social Security Act (42 U.S.C.
1395mm(k)(4)) of the Social Security Act is amend-
ed by adding at the end the following:
285
‘‘(E) The confidentiality and accuracy proce-
dure requirements under section 1852(h).’’.
(c) CONFORMING AMENDMENTS.—
(1) TITLE HEADING.—Title XI of the Social
Security Act (42 U.S.C. 1301 et seq.) is amended by
striking the title heading and inserting the following:
‘‘TITLE XI—GENERAL PROVISIONS, PEER RE-
VIEW, ADMINISTRATIVE SIMPLIFICATION,
AND CONFIDENTIALITY OF PROTECTED
HEALTH INFORMATION’’.
(2) NATIONAL
COMMITTEE
ON
VITAL
AND
HEALTH
STATISTICS.—Section 306(k)(5) of the
Public Health Service Act (42 U.S.C. 242(k)(5)) is
amended—
(A) in subparagraphs (A)(viii) and (D), by
striking ‘‘part C’’ and inserting ‘‘parts C and
D’’;
(B) in subparagraph (C), by striking
‘‘and’’ at the end;
(C) in subparagraph (D), by striking the
period at the end and inserting ‘‘; and’’; and
(D) by adding at the end the following:
‘‘(E) shall study the issues relating to section
1184 of the Social Security Act (as added by the Pa-
tient Protection Act of 1998), and, not later than 1
286
year after the date of the enactment of the Patient
Protection Act of 1998, shall report to the Congress
on such section.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date that is 1 year
after the date of the enactment of this Act, except that
subsection (c)(2), and section 1183(b) of the Social Secu-
rity Act (as added by subsection (a)), shall take effect on
the date of the enactment of this Act.
SEC. 5002. STUDY AND REPORT ON EFFECT OF STATE LAW
ON HEALTH-RELATED RESEARCH.
Not later than 1 year after the date of the enactment
of this Act, the Comptroller General of the United States
shall prepare and submit to the Congress a report contain-
ing the results of a study on the effect of State laws on
health-related research subject to review by an institu-
tional review board or institutional review committee with
respect to the protection of human subjects.
SEC. 5003. STUDY AND REPORT ON STATE LAW ON PRO-
TECTED HEALTH INFORMATION.
(a) IN GENERAL.—Not later than 9 months after the
date of the enactment of this Act, the Comptroller General
of the United States shall prepare and submit to the Con-
gress a report containing the results of a study—
287
(1) compiling State laws on the confidentiality
of protected health information (as defined in sec-
tion 1188 of the Social Security Act, as added by
section 5001 of this Act); and
(2) analyzing the effect of such laws on the pro-
vision of health care and securing payment for such
care.
(b) 
MODIFICATION
OF
DEADLINE.—Section
264(c)(1) of the Health Insurance Portability and Ac-
countability Act of 1996 (Public Law 104–191; 110 Stat.
2033) is amended by striking ‘‘36 months after the date
of the enactment of this Act,’’ and inserting ‘‘6 months
after the date on which the Comptroller General of the
United States submits to the Congress a report under sec-
tion 5003(a) of the Patient Protection Act of 1998,’’.
SEC. 5004. PROTECTION FOR CERTAIN INFORMATION DE-
VELOPED TO REDUCE MORTALITY OR MOR-
BIDITY OR FOR IMPROVING PATIENT CARE
AND SAFETY.
(a) PROTECTION OF CERTAIN INFORMATION.—Not-
withstanding any other provision of Federal or State law,
health care response information shall be exempt from any
disclosure requirement (regardless of whether the require-
ment relates to subpoenas, discovery, introduction of evi-
dence, testimony, or any other form of disclosure), in con-
288
nection with a civil or administrative proceeding under
Federal or State law, to the same extent as information
developed by a health care provider with respect to any
of the following:
(1) Peer review.
(2) Utilization review.
(3) Quality management or improvement.
(4) Quality control.
(5) Risk management.
(6) Internal review for purposes of reducing
mortality, morbidity, or for improving patient care
or safety.
(b) NO WAIVER OF PROTECTION THROUGH INTER-
ACTION WITH ACCREDITING BODY.—Notwithstanding any
other provision of Federal or State law, the protection of
health care response information from disclosure provided
under subsection (a) shall not be deemed to be modified
or in any way waived by—
(1) the development of such information in con-
nection with a request or requirement of an accredit-
ing body; or
(2) the transfer of such information to an ac-
crediting body.
(c) DEFINITIONS.—For purposes of this section:
289
(1) The term ‘‘accrediting body’’ means a na-
tional, not-for-profit organization that—
(A) accredits health care providers; and
(B) is recognized as an accrediting body by
statute or by a Federal or State agency that
regulates health care providers.
(2) The term ‘‘health care provider’’ has the
meaning given such term in section 1188 of the So-
cial Security Act (as added by section 5001 of this
Act).
(3) The term ‘‘health care response informa-
tion’’ means information (including any data, report,
record, memorandum, analysis, statement, or other
communication) developed by, or on behalf of, a
health care provider in response to a serious, ad-
verse, patient-related event—
(A) during the course of analyzing or
studying the event and its causes; and
(B) for purposes of—
(i) reducing mortality or morbidity; or
(ii) improving patient care or safety
(including the provider’s notification to an
accrediting body and the provider’s plans
of action in response to such event).
290
(5) The term ‘‘State’’ has the meaning given
such term in section 1188 of the Social Security Act
(as added by section 5001 of this Act).
SEC. 5005. EFFECTIVE DATE FOR STANDARDS GOVERNING
UNIQUE HEALTH IDENTIFIERS FOR INDIVID-
UALS.
Section 1174 of the Social Security Act (42 U.S.C.
1320d–3) is amended by adding at the end the following:
‘‘(c) UNIQUE HEALTH IDENTIFIERS.—Notwithstand-
ing subsections (a) and (b), the Secretary may not promul-
gate or adopt a final standard under section 1173(b) pro-
viding for a unique health identifier for an individual (ex-
cept in an individual’s capacity as an employer or a health
care provider), until legislation is enacted specifically ap-
proving the standard or containing provisions consistent
with the standard.’’.
Passed the House of Representatives July 24, 1998.
Attest:
Clerk.