availability and transparency of information related 
to the health care needs of an individual for such in-
dividual; 
‘‘(3) ensures that appropriate information nec-
essary to make medical decisions is available in a us-
able form at the time and in the location that the 
medical service involved is provided; 
‘‘(4) produces greater value for health care ex-
penditures by reducing health care costs that result 
from inefficiency, medical errors, inappropriate care, 
and incomplete information; 
‘‘(5) promotes a more effective marketplace, 
greater competition, greater systems analysis, in-
creased choice, enhanced quality, and improved out-
comes in health care services; 
‘‘(6) improves the coordination of information 
and the provision of such services through an effec-
tive infrastructure for the secure and authorized ex-
change and use of health care information; and 
‘‘(7) ensures that the confidentiality of individ-
ually identifiable health information of a patient is 
secure and protected. 
‘‘(c) DUTIES OF NATIONAL COORDINATOR.— 
‘‘(1) STRATEGIC
PLANNER
FOR
INTEROPER-
ABLE
HEALTH
INFORMATION
TECHNOLOGY.—The 
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National Coordinator shall maintain, direct, and 
oversee the continuous improvement of a strategic 
plan to guide the nationwide implementation of 
interoperable health information technology in both 
the public and private health care sectors consistent 
with subsection (b). 
‘‘(2) PRINCIPAL ADVISOR TO HHS.—The Na-
tional Coordinator shall serve as the principal advi-
sor of the Secretary on the development, application, 
and use of health information technology, and co-
ordinate the health information technology programs 
of the Department of Health and Human Services. 
‘‘(3) COORDINATOR OF FEDERAL GOVERNMENT 
ACTIVITIES.— 
‘‘(A) IN GENERAL.—The National Coordi-
nator shall serve as the coordinator of Federal 
Government activities relating to health infor-
mation technology. 
‘‘(B) 
SPECIFIC
COORDINATION
FUNC-
TIONS.—In carrying out subparagraph (A), the 
National Coordinator shall provide for— 
‘‘(i) the development and approval of 
standards used in the electronic creation, 
maintenance, or exchange of health infor-
mation; and 
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‘‘(ii) the certification and inspection of 
health information technology products, ex-
changes, and architectures to ensure that 
such products, exchanges, and architec-
tures conform to the applicable standards 
approved under clause (i). 
‘‘(C) USE
OF
PRIVATE
ENTITIES.—The 
National Coordinator shall, to the maximum ex-
tent possible, contract with or recognize private 
entities in carrying out subparagraph (B). 
‘‘(D) UNIFORM
APPLICATION
OF
STAND-
ARDS.—A standard approved under subpara-
graph (B)(i) for use in the electronic creation, 
maintenance, or exchange of health information 
shall preempt a standard adopted under State 
law, regulation, or rule for such a use. 
‘‘(4) INTRAGOVERNMENTAL
COORDINATOR.— 
The National Coordinator shall ensure that health 
information technology policies and programs of the 
Department of Health and Human Services are co-
ordinated with those of relevant executive branch 
agencies and departments with a goal to avoid dupli-
cation of effort and to ensure that each agency or 
department conducts programs within the areas of 
its greatest expertise and its mission in order to cre-
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ate a national interoperable health information sys-
tem capable of meeting national public health needs 
effectively and efficiently. 
‘‘(5) ADVISOR TO OMB.—The National Coordi-
nator shall provide to the Director of the Office of 
Management and Budget comments and advice with 
respect to specific Federal health information tech-
nology programs. 
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as may be 
necessary to carry out this section for each of fiscal years 
2007 through 2011.’’. 
(b) TREATMENT OF EXECUTIVE ORDER 13335.—Ex-
ecutive Order 13335 shall not have any force or effect 
after the date of the enactment of this Act. 
(c) TRANSITION FROM ONCHIT UNDER EXECUTIVE 
ORDER.— 
(1) IN GENERAL.—All functions, personnel, as-
sets, liabilities, administrative actions, and statutory 
reporting requirements applicable to the old Na-
tional Coordinator or the Office of the old National 
Coordinator on the date before the date of the enact-
ment of this Act shall be transferred, and applied in 
the same manner and under the same terms and 
conditions, to the new National Coordinator and the 
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Office of the new National Coordinator as of the 
date of the enactment of this Act. 
(2) ACTING NATIONAL COORDINATOR.—Before 
the appointment of the new National Coordinator, 
the old National Coordinator shall act as the Na-
tional Coordinator for Health Information Tech-
nology until the office is filled as provided in section 
271(a) of the Public Health Service Act, as added 
by subsection (a). The President may appoint the 
old National Coordinator as the new National Coor-
dinator. 
(3) DEFINITIONS.—For purposes of this sub-
section: 
(A) NEW NATIONAL COORDINATOR.—The 
term ‘‘new National Coordinator’’ means the 
National Coordinator for Health Information 
Technology appointed under section 271(a) of 
the Public Health Service Act, as added by sub-
section (a). 
(B) OLD
NATIONAL
COORDINATOR.—The 
term ‘‘old National Coordinator’’ means the 
National Coordinator for Health Information 
Technology appointed under Executive Order 
13335. 
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SEC. 413. SAFE HARBORS FOR PROVISION OF HEALTH IN-
FORMATION TECHNOLOGY AND TRAINING 
SERVICES 
TO 
HEALTH 
CARE 
PROFES-
SIONALS. 
(a) FOR CIVIL PENALTIES.—Section 1128A(b) of the 
Social Security Act (42 U.S.C. 1320a–7a(b)) is amended 
by adding at the end the following new paragraph: 
‘‘(4)(A) For purposes of this subsection, a payment 
described in paragraph (1) does not include any nonmone-
tary remuneration (in the form of health information tech-
nology and related training services) made by an entity 
to a physician if— 
‘‘(i) such remuneration is made without a con-
dition that— 
‘‘(I) limits or restricts the use of the health 
information technology to services provided by 
the physician to individuals receiving services at 
the entity; 
‘‘(II) limits or restricts the use of the 
health information technology in conjunction 
with other health information technology; or 
‘‘(III) takes into account the volume or 
value of referrals (or other business generated) 
by the physician to the entity; 
‘‘(ii) in the case of such remuneration made on 
a date that is on or after the date described in sec-
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tion 413(d)(2) of the Health Information Tech-
nology Promotion Act of 2006, to the extent the Na-
tional Coordinator of Health Information Tech-
nology has approved a standard under section 
271(c)(3)(B)(i) of the Public Health Service Act, the 
health information technology provided conforms to 
such standard; 
‘‘(iii) in the case of such remuneration made on 
or after the date that is three years after the date 
described in section 413(d)(2) of the Health Infor-
mation Technology Promotion Act of 2006, if the 
Secretary 
establishes 
criteria 
under 
section 
413(e)(3) of such Act, such remuneration is made in 
accordance with such criteria; and 
‘‘(iv) such remuneration is arranged for in a 
written agreement that is signed by a representative 
of the entity and by the physician and that specifies 
the remuneration made. 
‘‘(B) For purposes of subparagraph (A) and sections 
1128B(b)(3)(J) and 1877(e)(9), the term ‘health informa-
tion technology’ means hardware, software, license, right, 
intellectual property, equipment, or other information 
technology used primarily for the electronic creation, 
maintenance, and exchange of clinical health information 
to improve health care quality or efficiency.’’. 
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(b) 
FOR
CRIMINAL
PENALTIES.—Section 
1128B(b)(3) of such Act (42 U.S.C. 1320a–7b(b)(3)) is 
amended— 
(1) in subparagraph (G), by striking ‘‘and’’ at 
the end; 
(2) in the subparagraph (H) added by section 
237(d) of the Medicare Prescription Drug, Improve-
ment, and Modernization Act of 2003 (Public Law 
108–173; 117 Stat. 2213)— 
(A) by moving such subparagraph 2 ems to 
the left; and 
(B) by striking the period at the end and 
inserting a semicolon; 
(3) in the subparagraph (H) added by section 
431(a) of such Act (117 Stat. 2287)— 
(A) by redesignating such subparagraph as 
subparagraph (I); 
(B) by moving such subparagraph 2 ems 
to the left; and 
(C) by striking the period at the end and 
inserting ‘‘; and’’; and 
(4) by adding at the end the following new sub-
paragraph: 
‘‘(J) any nonmonetary remuneration (in the 
form of health information technology, as defined in 
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section 1128A(b)(4)(B), and related training serv-
ices) made to a person if— 
‘‘(i) such remuneration is solicited or re-
ceived (or offered or paid) without a condition 
that— 
‘‘(I) limits or restricts the use of the 
health information technology to services 
provided by the person to individuals re-
ceiving services at the location of the entity 
providing such technology; 
‘‘(II) limits or restricts the use of the 
health information technology in conjunc-
tion with other health information tech-
nology; or 
‘‘(III) takes into account the volume 
or value of referrals (or other business 
generated) by the person to the entity pro-
viding such technology; 
‘‘(ii) in the case of such remuneration 
made on a date that is on or after the date de-
scribed in section 413(d)(2) of the Health In-
formation Technology Promotion Act of 2006, 
to the extent the National Coordinator of 
Health Information Technology has approved a 
standard under section 271(c)(3)(B)(i) of the 
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Public Health Service Act, the health informa-
tion technology provided conforms to such 
standard; 
‘‘(iii) in the case of such remuneration 
made on or after the date that is three years 
after the date described in section 413(d)(2) of 
the Health Information Technology Promotion 
Act of 2006, if the Secretary establishes criteria 
under section 413(e)(3) of such Act, such remu-
neration is made in accordance with such cri-
teria; and 
‘‘(iv) such remuneration is arranged for in 
a written agreement that is signed by the par-
ties involved and that specifies the remunera-
tion solicited or received (or offered or paid).’’. 
(c) FOR LIMITATION ON CERTAIN PHYSICIAN RE-
FERRALS.—Section 1877(e) of such Act (42 U.S.C. 
1395nn(e)) is amended by adding at the end the following 
new paragraph: 
‘‘(9) INFORMATION TECHNOLOGY AND TRAIN-
ING SERVICES.—Any nonmonetary remuneration (in 
the form of health information technology, as de-
fined in section 1128A(b)(4)(B), and related train-
ing services) made by an entity to a physician if— 
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‘‘(A) such remuneration is made without a 
condition that— 
‘‘(i) limits or restricts the use of the 
health information technology to services 
provided by the physician to individuals re-
ceiving services at the location of the entity 
providing such technology; 
‘‘(ii) limits or restricts the use of the 
health information technology in conjunc-
tion with other health information tech-
nology; or 
‘‘(iii) takes into account the volume or 
value of referrals (or other business gen-
erated) by the physician to the entity pro-
viding such technology; 
‘‘(B) in the case of such remuneration 
made on a date that is on or after the date de-
scribed in section 413(d)(2) of the Health In-
formation Technology Promotion Act of 2006, 
to the extent the National Coordinator of 
Health Information Technology has approved a 
standard under section 271(c)(3)(B)(i) of the 
Public Health Service Act, the health informa-
tion technology provided conforms to such 
standard; 
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‘‘(C) in the case of such remuneration 
made on or after the date that is three years 
after the date described in section 413(d)(2) of 
the Health Information Technology Promotion 
Act of 2006, if the Secretary establishes criteria 
under section 413(e)(3) of such Act, such remu-
neration is made in accordance with such cri-
teria; and 
‘‘(D) such remuneration is arranged for in 
a written agreement that is signed by a rep-
resentative of the entity and by the physician 
and that specifies the remuneration made.’’. 
(d) REGULATION, EFFECTIVE DATE, AND EFFECT 
ON STATE LAWS.— 
(1) REGULATIONS.—Not later than 180 days 
after the date of the enactment of this Act, the Sec-
retary of Health and Human Services shall promul-
gate such regulations as may be necessary to carry 
out the provisions of this section. 
(2) EFFECTIVE DATE.—The amendments made 
by this section shall take effect on the date that is 
180 days after the date of the enactment of this Act. 
(3) PREEMPTION OF STATE LAWS.—No State 
(as defined in section 414(a)(3)) shall have in effect 
a State law that imposes a criminal or civil penalty 
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for a transaction described in section 1128A(b)(4); 
1128B(b)(3)(J); or 1877(e)(9) of the Social Security 
Act, as added by this section, if the conditions de-
scribed in the respective section, with respect to such 
transaction, are met. 
(e) STUDY AND REPORT TO ASSESS EFFECT OF 
SAFE HARBORS ON HEALTH SYSTEM.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall conduct a study to determine 
the impact of each of the safe harbors described in 
paragraph (4). In particular, the study shall examine 
the following: 
(A) The effectiveness of each safe harbor 
in increasing the adoption of health information 
technology. 
(B) The types of health information tech-
nology provided under each safe harbor. 
(C) The extent to which the financial or 
other business relationships between providers 
under each safe harbor have changed as a re-
sult of the safe harbor in a way that adversely 
affects the health care system or choices avail-
able to consumers. 
(2) REPORT.—Not later than three years after 
the effective date described in subsection (d)(2), the 
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Secretary of Health and Human Services shall sub-
mit to Congress a report on the study under para-
graph (1) and shall include such recommendations 
for changes in the safe harbors as the Secretary de-
termines may be appropriate. 
(3) UPDATED
CRITERIA
FOR
PERMISSIBLE 
HEALTH
INFORMATION
TECHNOLOGY
REMUNERA-
TION UNDER SAFE HARBORS.—Not later than three 
years after the effective date described in subsection 
(d)(2), the Secretary of Health and Human Services 
may issue regulations that establish updated criteria 
for nonmonetary remuneration (in the form of 
health information technology and related training 
services) for purposes of the safe harbors described 
in paragraph (4). Such criteria may be based on the 
extent to which the health information technology 
conforms to a standard developed under section 
271(c)(3)(B)(i) of the Public Health Service Act, as 
added by section 412, only to the extent that such 
standard is recognized by the National Coordinator 
of Health Information Technology under such sec-
tion 271(c)(3)(B)(i). 
(4) SAFE HARBORS DESCRIBED.—For purposes 
of paragraphs (1) and (3), the safe harbors de-
scribed in this paragraph are— 
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(A) 
the 
safe 
harbor 
under 
section 
1128A(b)(4) of the Social Security Act (42 
U.S.C. 1320a–7a(b)(4)), as added by subsection 
(a); 
(B) 
the 
safe 
harbor 
under 
section 
1128B(b)(3)(J) of such Act (42 U.S.C. 1320a– 
7b(b)(3)(J)), as added by subsection (b); and 
(C) 
the 
safe 
harbor 
under 
section 
1877(e)(9) 
of 
such 
Act 
(42 
U.S.C. 
1395nn(e)(9)), as added by subsection (c). 
SEC. 414. UNIFORM HEALTH INFORMATION LAWS AND REG-
ULATIONS. 
(a) STUDY TO DETERMINE EXTENT OF VARIATION 
IN STATE HEALTH INFORMATION LAWS AND REGULA-
TIONS.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall conduct a study of State secu-
rity and confidentiality laws and current Federal se-
curity and confidentiality standards to determine— 
(A) the degree to which such State laws 
vary among States, and between the States and 
such current Federal standards; 
(B) how any such variation may adversely 
impact the security and confidentiality of indi-
vidually identifiable health information and the 
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electronic exchange of clinical health informa-
tion among States, the Federal government, 
and private entities; and 
(C) the strengths and weaknesses of such 
State laws and of such current Federal stand-
ards for purposes of protecting the security and 
confidentiality of individually identifiable health 
information while also taking into account the 
need for timely and efficient exchanges of 
health information to improve quality of care 
and ensure the availability of health informa-
tion necessary to make medical decisions at the 
the location in which the medical care involved 
is provided. 
(2) REPORT.—Not later than 18 months after 
the date of the enactment of this Act, the Secretary 
of Health and Human Services shall submit to Con-
gress a report on the study under paragraph (1) and 
shall include in such report— 
(A) a determination by the Secretary 
whether State security and confidentiality laws 
and current Federal security and confidentiality 
standards should be conformed to create a sin-
gle set of national standards to preserve and 
protect the security and confidentiality of pa-
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tient health information in order to improve 
health care quality and efficiency; and 
(B) if the Secretary determines such State 
laws and such current Federal standards should 
be conformed to create such a single set of na-
tional standards, what the single set of stand-
ards should be. 
(3) DEFINITIONS.—For purposes of this sub-
section: 
(A) STATE
SECURITY
AND
CONFIDEN-
TIALITY LAWS.—The term ‘‘State security and 
confidentiality laws’’ means State laws and reg-
ulations relating to the privacy and confiden-
tiality of individually identifiable health infor-
mation or to the security of such information. 
(B) CURRENT
FEDERAL
SECURITY
AND 
CONFIDENTIALITY
STANDARDS.—The 
term 
‘‘current Federal security and confidentiality 
standards’’ means the Federal privacy stand-
ards established pursuant to section 264(c) of 
the Health Insurance Portability and Account-
ability Act of 1996 (42 U.S.C. 1320d–2 note) 
and security standards established under sec-
tion 1173(d) of the Social Security Act. 
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(C) STATE.—The term ‘‘State’’ has the 
meaning given such term when used in title XI 
of the Social Security Act, as provided under 
section 1101(a) of such Act (42 U.S.C. 
1301(a)). 
(b) ESTABLISHMENT
OF
UNIFORM
CONFIDEN-
TIALITY AND SECURITY STANDARDS.— 
(1) IN GENERAL.—Section 1178(a) of the So-
cial Security Act (42 U.S.C. 1320d–7(a)), is amend-
ed— 
(A) in paragraph (1), by inserting after 
‘‘Except as provided in paragraph (2)’’ the fol-
lowing: ‘‘and subject to paragraph (3)’’; 
(B) in paragraph (2), by striking ‘‘A provi-
sion’’ and inserting ‘‘Subject to paragraph 
(3)(B), a provision’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(3) UNIFORM NATIONAL STANDARDS.— 
‘‘(A) IN GENERAL.— 
‘‘(i) CREATING
UNIFORM
NATIONAL 
STANDARDS.—If 
the 
conditions 
under 
clause (ii) are met, then the regulation and 
standards described in subparagraph (C) 
shall become the single set of national 
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standards to preserve and protect the secu-
rity and confidentiality of individually iden-
tifiable patient health information in order 
to improve health care quality and effi-
ciency and supersede the current Federal 
security and confidentiality standards and 
State security and confidentiality laws, as 
defined in section 414(a)(3) of the Health 
Information Technology Promotion Act of 
2006. 
‘‘(ii) CONDITIONS.—For purposes of 
clause (i), the conditions under this clause 
are the following: 
‘‘(I) DETERMINATION
OF
NEED 
FOR
SINGLE
SET
OF
STANDARDS.— 
The Secretary determines under sec-
tion 414(a)(2)(A) of the Health Infor-
mation Technology Promotion Act of 
2006 that State security and con-
fidentiality laws and current Federal 
security and confidentiality standards 
should be conformed to create a single 
set of national standards to preserve 
and protect the security and confiden-
tiality of individually identifiable pa-
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tient health information in order to 
improve health care quality and effi-
ciency. 
‘‘(II) 
SECRETARY
SPECIFIES 
STANDARDS.—The Secretary specifies 
that the regulation and standards de-
scribed in subparagraph (C) should be 
the single set of national standards. 
‘‘(III) NO
LEGISLATION
ESTAB-
LISHING
STANDARDS.—Legislation 
creating a single set of national stand-
ards and preempting State security 
and confidentiality laws is not enacted 
by the date that is 36 months after 
the date of the enactment of the 
Health Information Technology Pro-
motion Act of 2006. 
‘‘(B) NARROWING OF PREEMPTION EXCEP-
TIONS.— 
‘‘(i) SUBSEQUENT
LEGISLATION.—If 
legislation described in subparagraph (A) 
is enacted by the date described in such 
subparagraph, as of the date of enactment 
of such legislation paragraph (2) shall be 
superseded by such exceptions as may be 
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provided for in such legislation. It is the 
intent of Congress that such exceptions be 
as narrow as possible to maximize the uni-
form application of the regulation and 
standards described in subparagraph (C). 
‘‘(ii) NO LEGISLATION.—If legislation 
described in subparagraph (A) is not en-
acted by the date described in such sub-
paragraph, paragraph (2) shall be super-
seded by such exceptions as may be pro-
vided for by the Secretary by regulation 
issued in connection with the regulation 
and standards described in subparagraph 
(C). It is the intent of Congress that such 
exceptions be as narrow as possible to 
maximize the uniform application of the 
regulation and standards described in sub-
paragraph (C). 
‘‘(C) APPLICATION
OF
UNIFORM
STAND-
ARDS.—The regulation and standards described 
in this subparagraph are the regulation promul-
gated under section 264(c)(1) of the Health In-
surance Portability and Accountability Act of 
1996 (42 U.S.C. 1320d–2 note) and standards 
under section 1173(d), as modified by the Sec-
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retary to the extent the Secretary determines, 
after consideration of the results of the study 
conducted under section 414(a) of the Health 
Information Technology Promotion Act of 
2006, necessary to promote uniformity and effi-
ciency in the application of confidentiality and 
security standards with respect to individually 
identifiable health information.’’. 
(2) HIPAA CONFORMING
AMENDMENT.—Sec-
tion 264(c)(2) of the Health Insurance Portability 
and Accountability Act of 1996 (42 U.S.C. 1320d– 
2 note) is amended by striking ‘‘A regulation’’ and 
inserting ‘‘(A) Subject to section 1178(a)(3) of the 
Social Security Act, a regulation’’. 
SEC. 415. RULEMAKING TO UPGRADE ASC X12 AND NCPDP 
STANDARDS AND ICD CODES. 
(a) IN GENERAL.—Not later than April 1, 2007, the 
Secretary of Health and Human Services shall promulgate 
a final rule under section 1174(b) of the Social Security 
Act (42 U.S.C. 1320d–3(b)) to provide for the following 
modification of standards: 
(1) ACCREDITED STANDARDS COMMITTEE X12 
(ASC X12) STANDARD.—The replacement of the Ac-
credited Standards Committee X12 (ASC X12) 
version 4010 adopted under section 1173(a) of such 
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Act (42 U.S.C. 1320d–2(a)), including for purposes 
of part A of title XVIII of such Act, with the ASC 
X12 version 5010, as reviewed by the National Com-
mittee on Vital Health Statistics. 
(2) NATIONAL
COUNCIL
FOR
PRESCRIPTION 
DRUG
PROGRAMS (NCPDP) TELECOMMUNICATIONS 
STANDARDS.—The replacement of the National 
Council for Prescription Drug Programs (NCPDP) 
Telecommunications Standards version 5.1 adopted 
under section 1173(a) of such Act (42 U.S.C. 
1320d–2(a)), including for purposes of part A of 
title XVIII of such Act, with NCPDP Telecommuni-
cations Standards version C.3, as approved by such 
Council and reviewed by the National Committee on 
Vital Health Statistics. 
(3) ICD CODES.—The replacement of the Inter-
national Statistical Classification of Diseases and 
Related Health Problems, 9th revision, Clinical 
Modification (ICD–9–CM) under the regulation pro-
mulgated under section 1173(c) of such Act (42 
U.S.C. 1320d–2(c)), including for purposes of part 
A of title XVIII of such Act, with both of the fol-
lowing: 
(A) The International Statistical Classi-
fication of Diseases and Related Health Prob-
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lems, 10th revision, Clinical Modification (ICD– 
10–CM). 
(B) The International Statistical Classi-
fication of Diseases and Related Health Prob-
lems, 10th revision, Procedure Coding System 
(ICD–10–PCS). 
(b) RULE
OF CONSTRUCTION.—Nothing in sub-
section (a)(3) shall be construed as affecting the applica-
tion of classification methodologies or codes, such as CPT 
or HCPCS codes, other than under the International Sta-
tistical Classification of Diseases and Related Health 
Problems (ICD). 
(c) NOTICE.—Not later than 30 days after the date 
of the enactment of this Act, the Secretary of Health and 
Human Services shall publish in the Federal Register a 
notice of the requirements to promulgate final rules under 
subsection (a). Such notice shall include— 
(1) the respective date by which each such rule 
must be promulgated under such subsection; 
(2) the respective compliance date described in 
subsection (e) for each such rule; and 
(3) a statement that entities covered under the 
Health Insurance Portability and Accountability Act 
of 1996 and health information technology vendors 
should plan for the implementation of upgraded ASC 
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