118
(b) REQUIREMENT OF IMPLEMENTATION OF REIN-
SURANCE MECHANISMS.—
(1) IN GENERAL.—By not later than 2 years
after the date of the enactment of this Act, each
State shall establish one or more reinsurance mecha-
nisms by not later than the deadline specified in sec-
tion 401(b)(1)(B) of this Act.
(2) DEFAULT.—If the Secretary determines
that a State has failed to establish any reinsurance
mechanism under paragraph (1), the Secretary shall
establish one or more such mechanisms with respect
to that State. The authority provided under the pre-
vious sentence shall expire upon the Secretary’s de-
termination that the State has provided, by law, for
establishment of a reinsurance mechanism that
meets the requirement of paragraph (1).
(c) CONSTRUCTION.—Nothing in this section shall be
construed as to prohibit reinsurance arrangements, wheth-
er on a State or regional basis, not required under this
section.
SEC. 407. REGISTRATION OF ALL HEALTH BENEFIT PLANS
REQUIRED.
Notwithstanding any other provision of law, each
State commissioner or superintendant of insurance may,
under State law, require each employer health benefit plan
119
(including a self-insured plan) to be registered with such
official, if the plan is not otherwise required to be reg-
istered or licensed with the official under section 404(e),
and to provide the official with such information on the
plan as may be necessary to carry out section 406.
SEC. 408. DEFINITIONS.
In this subtitle:
(1)(A) The term ‘‘carrier’’ means any entity
which provides health insurance or health benefits in
a State, and includes a licensed insurance company,
a prepaid hospital or medical service plan, a health
maintenance organization, a multiple employer wel-
fare arrangement or employee benefits plan (as de-
fined under the Employee Retirement Income Secu-
rity Act of 1974), or any other entity providing a
plan of health insurance subject to State insurance
regulation.
(B) The term ‘‘small employer carrier’’ means
a carrier with respect to the issuance of a small em-
ployer health benefit plan.
(2) The term ‘‘health benefit plan’’ means any
hospital or medical expense incurred policy or certifi-
cate, hospital or medical service plan contract, or
health maintenance subscriber contract, but does not
include—
120
(A) accident-only, credit, dental, or disabil-
ity income insurance,
(B) coverage issued as a supplement to li-
ability insurance,
(C) worker’s compensation or similar in-
surance, or
(D) automobile medical-payment insur-
ance.
(2) The term ‘‘NAIC’’ means the National As-
sociation of Insurance Commissioners.
(3) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
(4)(A) The term ‘‘small employer’’ means an
entity actively engaged in business which, on at least
50 percent of its working days during the preceding
year, employed at least 3, but fewer than 50, full-
time employees. For purposes of determining if an
employer is a small employer, rules similar to the
rules of subsections (b) and (c) of section 414 of the
Internal Revenue Code of 1986 shall apply.
(B) The term ‘‘full-time employee’’ means, with
respect to an employer, an individual who normally
is employed for at least 30 hours per week by the
employer.
121
(5) The term ‘‘small employer health benefit
plan’’ means a health benefit plan which provides
coverage to one or more full-time employees of a
small employer.
(6) The term ‘‘State’’ means the 50 States, the
District of Columbia, and Puerto Rico.
(7) The term ‘‘State commissioner of insur-
ance’’ includes a State superintendent of insurance.
SEC. 409. PREEMPTION FROM INSURANCE MANDATES FOR
QUALIFIED SMALL EMPLOYER PURCHASING
GROUPS.
(a) QUALIFIED
SMALL
EMPLOYER
PURCHASING
GROUP DEFINED.—For purposes of this section, an asso-
ciation is a qualified small employer purchasing group if—
(1) the association submits an application to
the Secretary of Health and Human Services at such
time and in such form as the Secretary may require;
and
(2) on the basis of information contained in the
application and any other information the Secretary
may require, the Secretary determines that—
(A) the association is administered solely
under the authority and control of its mem-
ber employers,
122
(B) the association’s membership consists
solely of employers with not more than 100 em-
ployees (except that an employer member of the
group may retain its membership in the group
if, after the Secretary determines that the asso-
ciation meets the requirements of this para-
graph, the number of employees of the employer
member increases to more than 100),
(C) with respect to each State in which its
members are located, the association consists of
not fewer than 100 employers, and
(D) at the time the association submits its
application, the health benefit plans with re-
spect to the employer members of the associa-
tion are in compliance with applicable State
laws relating to health benefit plans.
(b) PREEMPTION FROM INSURANCE MANDATES.—
(1) FINDING.—Congress finds that employer
purchasing groups organized for the purpose of ob-
taining health insurance for employer members af-
fect interstate commerce.
(2) PREEMPTION OF STATE MANDATES.—In the
case of a qualified small employer purchasing group
described in subsection (a), no provision of State law
shall apply that requires the offering, as part of the
123
health benefit plan with respect to an employer
member of such a group, of any services, category
of care, or services of any class or type of provider.
(3) PREEMPTION OF TAXES ON PREMIUMS.—In
the case of a qualified small employer purchasing
group described in subsection (a), no provision of
State or local law shall apply that requires a pro-
vider of insurance to pay a tax on premiums received
from employer members of the group under a health
benefit plan obtained by the group from the insurer
for its employer members.
(4) PREEMPTION OF PROVISIONS RELATING TO
MANAGED CARE.—In the case of a qualified small
employer purchasing group described in subsection
(a), the following provisions of State law are pre-
empted and may not be enforced against the health
benefit plan with respect to an employer member of
such a group:
(A) RESTRICTIONS
ON
REIMBURSEMENT
RATES OR SELECTIVE CONTRACTING.—Any law
that restricts the ability of a carrier to nego-
tiate reimbursement rates with providers or to
contract selectively with one provider or a lim-
ited number of providers.
124
(B) RESTRICTIONS ON DIFFERENTIAL FI-
NANCIAL INCENTIVES.—Any law that limits the
financial incentives that a health benefit plan
may require a beneficiary to pay when a
nonplan provider is used on a nonemergency
basis.
(C) RESTRICTIONS
ON
UTILIZATION
RE-
VIEW METHODS.—(i) Any law that—
(I) prohibits utilization review of any
or all treatments and conditions;
(II) requires that such review be made
by a resident of the State in which the
treatment is to be offered or by an individ-
ual licensed in such State, or by a physi-
cian in any particular specialty or with any
board certified specialty of the same medi-
cal specialty as the provider whose services
are being rendered;
(III) requires the use of specified
standards of health care practice in such
reviews or requires the disclosure of the
specific criteria used in such reviews;
(IV) requires payments to providers
for the expenses of responding to utiliza-
tion review requests; or
125
(V) imposes liability for delays in per-
forming such review.
(ii) Nothing in clause (i)(II) shall be con-
strued as prohibiting a State from requiring
that utilization review be conducted by a li-
censed health care professional, or requiring
that any appeal from such a review be made by
a licensed physician or by a licensed physi-
cian in any particular specialty or with any
board certified specialty of the same medical
specialty as the provider whose services are
being rendered.
(c) EFFECTIVE DATE.—This section shall take effect
60 days after the date of the enactment of this Act.
Subtitle B—Equalization of Tax
Benefits for Self-employed Per-
sons Under Certain Plans
SEC. 411. EQUALIZATION OF TAX BENEFITS FOR SELF-EM-
PLOYED PERSONS UNDER CERTAIN PLANS.
(a) INCREASE
IN DEDUCTION.—Paragraph (1) of
section 162(l) of the Internal Revenue Code of 1986 (re-
lating to special rules for health insurance costs of self-
employed individuals) is amended by striking ‘‘25 percent’’
and inserting ‘‘100 percent’’.
126
(b) DEDUCTION MADE PERMANENT.—Subsection (l)
of section 162 of such Code is amended by striking para-
graph (6).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1992.
Subtitle C—Managed Care Rights
SEC. 421. MANAGED CARE RIGHTS.
(a) PREEMPTION OF STATE LAW PROVISIONS.—The
following provisions of State law are preempted and may
not be enforced:
(1) RESTRICTIONS ON REIMBURSEMENT RATES
OR
SELECTIVE
CONTRACTING.—Any law that re-
stricts the ability of a carrier to negotiate reimburse-
ment rates with providers or to contract selectively
with one provider or a limited number of providers.
(2) RESTRICTIONS
ON
DIFFERENTIAL
FINAN-
CIAL INCENTIVES.—Any law that limits the financial
incentives that a health benefit plan may require a
beneficiary to pay when a non-plan provider is used
on a non-emergency basis.
(3) RESTRICTIONS
ON
UTILIZATION
REVIEW
METHODS.—Any law that—
(A) prohibits utilization review of any or
all treatments and conditions,
127
(B) requires that such review be made (i)
by a resident of the State in which the treat-
ment is to be offered or by an individual li-
censed in such State, or (ii) by a physician in
any particular specialty or with any board cer-
tified specialty of the same medical specialty as
the provider whose services are being rendered,
(C) requires the use of specified standards
of health care practice in such reviews or re-
quires the disclosure of the specific criteria used
in such reviews,
(D) requires payments to providers for the
expenses of responding to utilization review re-
quests, or
(E) imposes liability for delays in perform-
ing such review.
Nothing in subparagraph (B) shall be construed as
prohibiting a State from (i) requiring that utilization
review be conducted by a licensed health care profes-
sional or (ii) requiring that any appeal from such a
review be made by a licensed physician or by a li-
censed physician in any particular specialty or with
any board certified specialty of the same medical
specialty as the provider whose services are being
rendered.
128
(b) GAO STUDY.—
(1) IN
GENERAL.—The Comptroller General
shall conduct a study of the benefits and cost effec-
tiveness of the use of managed care in the delivery
of health services.
(2) REPORT.—By not later than 4 years after
the date of the enactment of this Act, the Comptrol-
ler General shall submit a report to Congress on the
study conducted under paragraph (1) and shall in-
clude in the report such recommendations as may be
appropriate.
Subtitle D—Study and Report
SEC. 431. STUDY AND REPORT ON IMPACT.
(a) STUDY.—The Secretary of Health and Human
Services shall provide for a study of the impact of the
changes made by this title on—
(1) increasing access to health care,
(2) the number of employees of small employers
who do not have health insurance coverage,
(3) the cost of small employer health benefit
plans, and
(4) the effectiveness of MedEquity plans.
(b) REPORT.—Not later than 2 years after the first
date provided in section 401(b), the Secretary shall submit
to Congress a report on the study conducted under sub-
129
section (a). The Secretary shall include in the report such
recommendations for changes in the provisions of this Act
as the Secretary deems appropriate.
TITLE V—ADMINISTRATIVE
COST SAVINGS
Subtitle A—Standardization of
Claims Processing
SEC. 
501. 
ADOPTION 
OF 
DATA 
ELEMENTS, 
UNIFORM
CLAIMS, AND UNIFORM ELECTRONIC TRANS-
MISSION STANDARDS.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this subtitle referred to as the ‘‘Sec-
retary’’) shall adopt standards relating to each of the fol-
lowing:
(1) Data elements for use in paper and elec-
tronic claims processing under health benefit plans,
as well as for use in utilization review and manage-
ment of care (including data fields, formats, and
medical nomenclature, and including plan benefit
and insurance information).
(2) Uniform claims forms (including uniform
procedure and billing codes for uses with such forms
and including information on other health benefit
plans that may be liable for benefits).
130
(3) Uniform electronic transmission of the data
elements (for purposes of billing and utilization re-
view).
Standards under paragraph (3) relating to electronic
transmission of data elements for claims for services shall
supersede (to the extent specified in such standards) the
standards adopted under paragraph (2) relating to the
submission of paper claims for such services. Standards
under paragraph (3) shall include protections to assure
the confidentiality of patient-specific information and to
protect against the unauthorized use and disclosure of in-
formation.
(b) USE OF TASK FORCES.—In adopting standards
under this section—
(1) the Secretary shall take into account the
recommendations of current task forces, including at
least the Workgroup on Electronic Data Inter-
change, National Uniform Billing Committee, the
Uniform Claim Task Force, and the Computer-based
Patient Record Institute;
(2) the Secretary shall consult with the Na-
tional Association of Insurance Commissioners (and,
with respect to standards under subsection (a)(3),
the American National Standards Institute); and
131
(3) the Secretary shall, to the maximum extent
practicable, seek to make the standards consistent
with any uniform clinical data sets which have been
adopted and are widely recognized.
(c) DEADLINES
FOR PROMULGATION.—The Sec-
retary shall promulgate the standards under—
(1) subsection (a)(1) relating to claims process-
ing data, by not later than 12 months after the date
of the enactment of this Act;
(2) subsection (a)(2) (relating to uniform
claims forms) by not later than 12 months after the
date of the enactment of this Act; and
(3)(A) subsection (a)(3) relating to trans-
mission of information concerning hospital and phy-
sicians services, by not later than 24 months after
the date of the enactment of this Act, and
(B) subsection (a)(3) relating to transmission
of information on other services, by such later date
as the Secretary may determine it to be feasible.
(d) REPORT TO CONGRESS.—Not later than 3 years
after the date of the enactment of this Act, the Secretary
shall report to Congress recommendations regarding re-
structuring the medicare peer review quality assurance
program given the availability of hospital data in elec-
tronic form.
134
paragraph (2)) that knowingly and repeatedly
rejects claims in violation of subparagraph (B),
in an amount not to exceed $100 for each such
claim.
The provisions of section 1128A of the Social Secu-
rity Act (other than the first sentence of subsection
(a) and other than subsection (b)) shall apply to a
civil money penalty under subparagraph (D) in the
same manner as such provisions apply to a penalty
or proceeding under section 1128A(a) of such Act.
(2) PLANS SUBJECT TO EFFECTIVE STATE REG-
ULATION.—A plan described in this paragraph is a
health benefit plan—
(A) that is subject to regulation by a
State, and
(B) with respect to which the Secretary
finds that—
(i) the State provides for application
of the standards established under section
501, and
(ii) the State regulatory program pro-
vides for the appropriate and effective en-
forcement of such standards.
(d) TREATMENT OF REJECTIONS.—If a plan rejects
a claim pursuant to subsection (c)(1), the plan shall per-
135
mit the person submitting the claim a reasonable oppor-
tunity to resubmit the claim on a form or in an electronic
manner that meets the requirements for acceptance of the
claim under such subsection.
SEC. 
503. 
PERIODIC 
REVIEW 
AND 
REVISION 
OF
STANDARDS.
(a) IN GENERAL.—The Secretary shall—
(1) provide for the ongoing receipt and review
of comments and suggestions for changes in the
standards adopted and promulgated under section
501;
(2) establish a schedule for the periodic review
of such standards; and
(3) based upon such comments, suggestions,
and review, revise such standards and promulgate
such revisions.
(b) APPLICATION OF REVISED STANDARDS.—If the
Secretary under subsection (a) revises the standards de-
scribed in 501, then, in the case of any claim for benefits
submitted under a health benefit plan more than the mini-
mum period (of not less than 6 months specified by the
Secretary) after the date the revision is promulgated
under subsection (a)(3), such standards shall apply under
section 502 instead of the standards previously promul-
gated.
136
SEC. 504. HEALTH BENEFIT PLAN DEFINED.
In this subtitle, the term ‘‘health benefit plan’’ has
the meaning given such term in section 408(2) and in-
cludes—
(1) the medicare program (under title XVIII of
the Social Security Act) and medicare supplemental
health insurance, and
(2) a State medicaid plan (approved under title
XIX of such Act).
Subtitle B—Electronic Medical
Data Standards
SEC. 511. MEDICAL DATA STANDARDS FOR HOSPITALS AND
OTHER PROVIDERS.
(a) PROMULGATION
OF HOSPITAL DATA STAND-
ARDS.—
(1) IN GENERAL.—Between July 1, 1995, and
January 1, 1996, the Secretary shall promulgate
standards described in subsection (b) for hospitals
concerning electronic medical data.
(2) REVISION.—The Secretary may from time
to time revise the standards promulgated under this
subsection.
(b) CONTENTS OF DATA STANDARDS.—The stand-
ards promulgated under subsection (a) shall include at
least the following:
137
(1) A definition of a standard set of data ele-
ments for use by utilization and quality control peer
review organizations.
(2) A definition of the set of comprehensive
data elements, which set shall include for hospitals
the standard set of data elements defined under
paragraph (1).
(3) Standards for an electronic patient care in-
formation system with data obtained at the point of
care, including standards to protect against the un-
authorized use and disclosure of information.
(4) A specification of, and manner of presen-
tation of, the individual data elements of the sets
and system under this subsection.
(5) Standards concerning the transmission of
electronic medical data.
(6) Standards relating to confidentiality of pa-
tient-specific information.
The standards under this section shall be consistent with
standards for data elements established under section 501.
(c) OPTIONAL DATA STANDARDS FOR OTHER PRO-
VIDERS.—
(1) IN GENERAL.—The Secretary may promul-
gate standards described in paragraph (2) concern-
ing electronic medical data for providers that are not
138
hospitals. The Secretary may from time to time re-
vise the standards promulgated under this sub-
section.
(2) CONTENTS
OF
DATA
STANDARDS.—The
standards promulgated under paragraph (1) for non-
hospital providers may include standards comparable
to the standards described in paragraphs (2), (4),
and (5) of subsection (b) for hospitals.
(d) CONSULTATION.—In promulgating and revising
standards under this section, the Secretary shall—
(1) consult with the American National Stand-
ards Institute, hospitals, with the advisory commis-
sion established under section 515, and with other
affected providers, health benefit plans, and other
interested parties, and
(2) take into consideration, in developing stand-
ards under subsection (b)(1), the data set used by
the utilization and quality control peer review pro-
gram under part B of title XI of the Social Security
Act.
SEC. 512. APPLICATION OF ELECTRONIC DATA STANDARDS
TO CERTAIN HOSPITALS.
(a) MEDICARE REQUIREMENT
FOR SHARING
OF
HOSPITAL INFORMATION.—As of January 1, 1997, sub-
ject to paragraph (2), each hospital, as a requirement of
139
each participation agreement under section 1866 of the
Social Security Act, shall—
(1) maintain clinical data included in the set of
comprehensive 
data 
elements 
under 
section
511(b)(2) in electronic form on all inpatients,
(2) upon request of the Secretary or of a utili-
zation and quality control peer review organization
(with which the Secretary has entered into a con-
tract under part B of title XI of such Act), transmit
electronically the data set, and
(3) upon request of the Secretary, or of a fiscal
intermediary or carrier, transmit electronically any
data (with respect to a claim) from such data set,
in accordance with the standards promulgated under sec-
tion 511(a).
(b) WAIVER AUTHORITY.—Until January 1, 2000:
(1) The Secretary may waive the application of
the requirements of subsection (a) for a hospital
that is a small rural hospital, for such period as the
hospital demonstrates compliance with such require-
ments would constitute an undue financial hardship.
(2) The Secretary may waive the application of
the requirements of subsection (a) for a hospital
that is in the process of developing a system to pro-
vide the required data set and executes agreements
140
with its fiscal intermediary and its utilization and
quality control peer review organization that the hos-
pital will meet the requirements of subsection (a) by
a specified date (not later than January 1, 2000).
(3) The Secretary may waive the application of
the requirement of subsection (a)(1) for a hospital
that agrees to obtain from its records the data ele-
ments that are needed to meet the requirements of
paragraphs (2) and (3) of subsection (a) and agrees
to subject its data transfer process to a quality as-
surance program specified by the Secretary.
(c) APPLICATION TO HOSPITALS OF THE DEPART-
MENT OF VETERANS AFFAIRS.—
(1) IN GENERAL.—The Secretary of Veterans
Affairs shall provide that each hospital of the De-
partment of Veterans Affairs shall comply with the
requirements of subsection (a) in the same manner
as such requirements would apply to the hospital if
it were participating in the medicare program.
(2) WAIVER.—Such Secretary may waive the
application of such requirements to a hospital in the
same manner as the Secretary of Health and
Human Services may waive under subsection (b) the
application of the requirements of subsection (a).
141
SEC. 513. ELECTRONIC TRANSMISSION TO FEDERAL AGEN-
CIES.
(a) IN GENERAL.—Effective January 1, 2000, if a
provider is required under a Federal program to transmit
a data element that is subject to a presentation or trans-
mission standard (as defined in subsection (b)), the head
of the Federal agency responsible for such program (if not
otherwise authorized) is authorized to require the provider
to present and transmit the data element electronically in
accordance with such a standard.
(b) PRESENTATION
OR TRANSMISSION STANDARD
DEFINED.—In subsection (a), the term ‘‘presentation or
transmission standard’’ means a standard, promulgated
under subsection (b) or (c) of section 511, described in
paragraph (4) or (5) of section 511(b).
SEC. 514. LIMITATION ON DATA REQUIREMENTS WHERE
STANDARDS ARE IN EFFECT.
(a) IN GENERAL.—If standards with respect to data
elements are promulgated under section 511 with respect
to a class of provider, a health benefit plan may not re-
quire, for the purpose of utilization review or as a condi-
tion of providing benefits under the plan, that a provider
in the class—
(1) provide any data element not in the set of
comprehensive data elements specified under such
standards, or
142
(2) transmit or present any such data element
in a manner inconsistent with the applicable stand-
ards for such transmission or presentation.
(b) COMPLIANCE.—
(1) IN GENERAL.—The Secretary may impose a
civil money penalty on any health benefit plan (other
than a health benefit plan described in paragraph
(2)) that fails to comply with subsection (a) in an
amount not to exceed $100 for each such failure.
The provisions of section 1128A of the Social Secu-
rity Act (other than the first sentence of subsection
(a) and other than subsection (b)) shall apply to a
civil money penalty under this paragraph in the
same manner as such provisions apply to a penalty
or proceeding under section 1128A(a) of such Act.
(2) PLANS SUBJECT TO EFFECTIVE STATE REG-
ULATION.—A plan described in this paragraph is a
health benefit plan that is subject to regulation by
a State, if the Secretary finds that—
(A) the State provides for application of
the requirement of subsection (a), and
(B) the State regulatory program provides
for the appropriate and effective enforcement of
such requirement with respect to such plans.
143
SEC. 515. ADVISORY COMMISSION.
(a) IN GENERAL.—The Secretary shall establish an
advisory commission including hospital executives, hospital
data base managers, physicians, health services research-
ers, and technical experts in collection and use of data
and operation of data systems. Such commission shall in-
clude, as ex officio members, a representative of the Direc-
tor of the National Institutes of Health, the Administrator
for Health Care Policy and Research, the Secretary of
Veterans Affairs, and the Director of the Centers for Dis-
ease Control.
(b) FUNCTIONS.—The advisory commission shall
monitor and advise the Secretary concerning—
(1) the standards established under this part,
and
(2) operational concerns about the implementa-
tion of such standards under this part.
(c) STAFF.—From the amounts appropriated under
subsection (d), the Secretary shall provide sufficient staff
to assist the advisory commission in its activities under
this section.
(d) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $2,000,000 for each of
fiscal years 1994 through 1998 to carry out this section.
144
Subtitle C—Development and Dis-
tribution of Comparative Value
Information
SEC. 521. STATE COMPARATIVE VALUE INFORMATION PRO-
GRAMS FOR HEALTH CARE PURCHASING.
(a) PURPOSE.—In order to assure the availability of
comparative value information to purchasers of health
care in each State, the Secretary shall determine whether
each State is developing and implementing a health care
value information program that meets the criteria and
schedule set forth in subsection (b).
(b) CRITERIA
AND SCHEDULE
FOR STATE PRO-
GRAMS.—The criteria and schedule for a State health care
value information program in this subsection shall be spec-
ified by the Secretary as follows:
(1) The State begins promptly after enactment
of this Act to develop (directly or through contrac-
tual or other arrangements with one or more States,
coalitions of health insurance purchasers, other enti-
ties, or any combination of such arrangements) in-
formation systems regarding comparative health val-
ues.
(2) The information contained in such systems
covers at least the average prices of common health
care services (as defined in subsection (d)) and
145
health insurance plans, and, where available, meas-
ures of the variability of these prices within a State
or other market areas.
(3) The information described in paragraph (2)
is made available within the State beginning not
later than one year after the date of the enactment
of this Act, and is revised as frequently as reason-
ably necessary, but at intervals of no greater than
one year.
(4) Not later than 6 years after the date of the
enactment of this Act the State has developed infor-
mation systems that provide comparative costs, qual-
ity, and outcomes data with respect to health insur-
ance plans and hospitals and made the information
broadly available within the relevant market areas.
Nothing in this section shall preclude a State from provid-
ing additional information, such as information on prices
and benefits of different health benefit plans, available.
(c) GRANTS TO STATES FOR THE DEVELOPMENT OF
STATE PROGRAMS.—
(1) GRANT
AUTHORITY.—The Secretary may
make grants to each State to enable such State to
plan the development of its health care value infor-
mation program and, if necessary, to initiate the im-
plementation of such program. Each State seeking
146
such a grant shall submit an application therefore,
containing such information as the Secretary finds
necessary to assure that the State is likely to de-
velop and implement a program in accordance with
the criteria and schedule in subsection (b).
(2) OFFSET AUTHORITY.—If, at any time with-
in the 3-year period following the receipt by a State
of a grant under this subsection, the Secretary is re-
quired by section 522 to implement a health care in-
formation program in the State, the Secretary may
recover the amount of the grant under this sub-
section by offset against any other amount payable
to the State under the Social Security Act. The
amount of the offset shall be made available (from
the appropriation account with respect to which the
offset was taken) to the Secretary to carry out such
section.
(3) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated such sums
as are necessary to make grants under this sub-
section, to remain available until expended.
(d) COMMON HEALTH CARE SERVICES DEFINED.—
In this section, the term ‘‘common health care services’’
includes such procedures as the Secretary may specify and
147
any additional health care services which a State may wish
to include in its comparative value information program.
(e) STATE DEFINED.—In this subtitle, the term
‘‘State’’ includes the District of Columbia, Puerto Rico,
the Virgin Islands, Guam, and American Samoa.
SEC. 522. FEDERAL IMPLEMENTATION.
(a) IN GENERAL.—If the Secretary finds, at any
time, that a State has failed to develop or to continue to
implement a health care value information program in ac-
cordance with the criteria and schedule in section 521(b),
the Secretary shall take the actions necessary, directly or
through grants or contract, to implement a comparable
program in the State.
(b) FEES.—Fees may be charged by the Secretary
for the information materials provided pursuant to a pro-
gram under this section. Any amounts so collected shall
be deposited in the appropriation account from which the
Secretary’s costs of providing such materials were met,
and shall remain available for such purposes until ex-
pended.
SEC. 523. COMPARATIVE VALUE INFORMATION CONCERN-
ING FEDERAL PROGRAMS.
(a) DEVELOPMENT.—The head of each Federal agen-
cy with responsibility for the provision of health insurance
or of health care services to individuals shall promptly de-
148
velop health care value information relating to each pro-
gram that such head administers and covering the same
types of data that a State program meeting the criteria
of section 521(b) would provide.
(b) DISSEMINATION OF INFORMATION.—Such infor-
mation shall be made generally available to States and to
providers and consumers of health care services.
SEC. 524. DEVELOPMENT OF MODEL SYSTEMS.
(a) IN GENERAL.—The Secretary shall, directly or
through grant or contract, develop model systems to facili-
tate—
(1) the gathering of data on health care cost,
quality, and outcome described in section 521(b)(4),
and
(2) analyzing such data in a manner that will
permit the valid comparison of such data among
providers and among health plans.
(b) EXPERIMENTATION.—The Secretary shall sup-
port experimentation with different approaches to achieve
the objectives of subsection (a) in the most cost effective
manner (relative to the accuracy and timeliness of the
data secured) and shall evaluate the various methods to
determine their relative success.
(c) STANDARDS.—When the Secretary considers it
appropriate, the Secretary may establish standards for the
149
collection and reporting of data on health care cost, qual-
ity and outcomes in order to facilitate analysis and com-
parisons among States and nationally.
(e) REPORT.—By not later than 3 years after the
date of the enactment of this Act, the Secretary shall re-
port to the Congress and the States on the models devel-
oped, and experiments conducted, under this section.
(e) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated such sums as are nec-
essary for each fiscal year beginning with fiscal year 1994
to enable the Secretary to carry out this section, including
evaluation of the different approaches tested under sub-
section (b) and their relative cost effectiveness.
Subtitle D—Additional Standards
and 
Requirements; 
Research
and Demonstrations
SEC. 531. STANDARDS RELATING TO USE OF MEDICARE
AND MEDICAID MAGNETIZED HEALTH BENE-
FIT CARDS; SECONDARY PAYOR DATA BANK.
(a) MAGNETIZED IDENTIFICATION CARDS UNDER
MEDICARE PROGRAM.—The Secretary shall adopt stand-
ards relating to the design and use of magnetized medi-
care identification cards in order to assist health care pro-
viders providing medicare covered services to individuals—
150
(1) in determining whether individuals are eligi-
ble for benefits under the medicare program, and
(2) in billing the medicare program for such
services provided to eligible individuals.
Such cards shall be designed to be compatible with ma-
chines currently employed to transmit information on
credit cards. Such cards also shall be designed to be able
to be used with respect to the provision of benefits under
medicare supplemental policies.
(b) ADOPTION UNDER MEDICAID PLANS.—
(1) IN
GENERAL.—The Secretary shall take
such steps as may be necessary to encourage and as-
sist States to design and use magnetized medicaid
identification cards that meet such standards, for
use under their medicaid plans.
(2) LIMITATION ON MMIS FUNDS.—In applying
section 1903(a)(3) of the Social Security Act, the
Secretary may determine that Federal financial par-
ticipation is not available under that section to a
State which has provided for a magnetized card sys-
tem that is inconsistent with the standards adopted
under subsection (a).
(c) MEDICARE AND MEDICAID SECONDARY PAYOR
DATA BANK.—The Secretary shall establish a medicare
and medicaid information system which is designed to pro-
151
vide information on those group health plans and other
health benefit plans that are primary payors to the medi-
care program and medicaid program under section
1862(b) or section 1905(a)(25) of the Social Security Act.
(d) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated, in equal proportions
from the Federal Hospital Insurance Trust Fund and
from the Federal Supplementary Medical Insurance Trust
Fund, a total of $25,000,000 to carry out subsections (a)
and (c), including the issuance of magnetized cards to
medicare beneficiaries.
SEC. 532. PREEMPTION OF STATE QUILL PEN LAWS.
(a) IN GENERAL.—Effective January 1, 1995, no ef-
fect shall be given to any provision of State law that re-
quires medical or health insurance records (including bill-
ing information) to be maintained in written, rather than
electronic, form.
(b) SECRETARIAL AUTHORITY.—The Secretary of
Health and Human Services may issue regulations to
carry out subsection (a). Such regulations may provide for
such exceptions to subsection (a) as the Secretary deter-
mines to be necessary to prevent fraud and abuse, with
respect to controlled substances, and in such other cases
as the Secretary deems appropriate.
152
SEC. 533. USE OF STANDARD IDENTIFICATION NUMBERS.
(a) IN GENERAL.—Effective January 1, 1995, each
health benefit plan shall—
(1) for each of its beneficiaries that has a social
security account number, use that number as the
personal identifier for claims processing and related
purposes, and
(2) for each provider that has a unique identi-
fier for purposes of title XVIII of the Social Security
Act and that furnishes health care items or services
to a beneficiary under the plan, use that identifier
as the identifier of that provider for claims process-
ing and related purposes.
(b) COMPLIANCE.—
(1) IN GENERAL.—The Secretary may impose a
civil money penalty on any health benefit plan (other
than a health benefit plan described in paragraph
(2)) that fails to comply with standards established
under subsection (a) in an amount not to exceed
$100 for each such failure. The provisions of section
1128A of the Social Security Act (other than the
first sentence of subsection (a) and other than sub-
section (b)) shall apply to a civil money penalty
under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under
section 1128A(a) of such Act.
155
under this paragraph in the same manner as such
provisions apply to a penalty or proceeding under
section 1128A(a) of such Act.
(2) PLANS SUBJECT TO EFFECTIVE STATE REG-
ULATION.—A plan described in this paragraph is a
health benefit plan that is subject to regulation by
a State, if the Secretary finds that—
(A) the State provides for application of
the standards established under subsection (b),
and
(B) the State regulatory program provides
for the appropriate and effective enforcement of
such standards with respect to such plans.
(d) REVISION OF STANDARDS.—If the Secretary es-
tablishes standards under subsection (b), the Secretary
may revise such standards from time to time and such
revised standards shall be applied under subsection (c) on
or after such date (not earlier than 6 months after the
date the revision is promulgated) as the Secretary shall
specify.
SEC. 535. RESEARCH AND DEMONSTRATIONS.
(a) DEMONSTRATIONS AND RESEARCH ON MONITOR-
ING AND IMPROVING PATIENT CARE.—
(1) The Secretary shall provide grants to quali-
fied entities to demonstrate (and conduct research
156
concerning) the application of comprehensive infor-
mation systems—
(A) in continuously monitoring patient
care, and
(B) in improving patient care.
(2) To make grants under this subsection, there
are authorized to be appropriated from the Federal
Hospital Insurance Trust Fund $10,000,000 for
each fiscal year (beginning with fiscal year 1995 and
ending with fiscal year 1999).
(b) COMMUNICATION LINKS.—
(1) The Secretary may make grants to at least
two, but not more than five, community organiza-
tions, or coalitions of health care providers, health
benefit plans, and purchasers, to establish and docu-
ment the efficacy of communication links between
the information systems of health benefit plans and
of health care providers.
(2) To make grants under this subsection, there
are authorized to be appropriated such sums as may
be necessary for fiscal year 1994, to remain avail-
able until expended.
(c) REGIONAL OR COMMUNITY BASED CLINICAL IN-
FORMATION SYSTEMS.—
157
(1) The Secretary may make grants to at least
two, but not more than five, public or private non-
profit entities for the development of regional or
community-based clinical information systems.
(2) To make grants under this subsection, there
are authorized to be appropriated such sums as may
be necessary for fiscal year 1994, to remain avail-
able until expended.
(d) AMBULATORY CARE DATA SETS.—
(1) The Secretary may make grants to public or
private non-profit entities to develop and test, for
electronic medical data generated by physicians and
other entities (other than hospitals) that provide
health care services—
(A) the definition of a comprehensive set of
data elements, and
(B) the specification of, and manner of
presentation of, the individual data elements of
the set under subparagraph (A).
(2) To make grants under this subsection, there
are authorized to be appropriated such sums as may
be necessary for fiscal year 1994, to remain avail-
able until expended.
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