that have been certified under such pro-
gram. 
‘‘(iii) The development of a Federal 
open source health IT system in accord-
ance with paragraph (4). 
‘‘(iv) The widespread utilization of 
electronic health records in the United 
States and the establishment of a nation-
wide health information network described 
in paragraph (5). 
‘‘(v) Specifying a framework for the 
coordination and flow of recommendations 
and policies under this subtitle among the 
Secretary, the National Coordinator, the 
HIT Policy Committee, health information 
exchanges, and other relevant entities. 
‘‘(vi) Methods to foster the public un-
derstanding of health information tech-
nology and related privacy and security 
laws. 
‘‘(vii) The availability of technical as-
sistance and training for health care pro-
viders in the implementation and utiliza-
tion of health information technology sys-
tems. 
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‘‘(C) COLLABORATION.—The strategic plan 
shall be developed and updated through collabo-
ration of public and private interests. 
‘‘(D) MEASURABLE
OUTCOME
GOALS.— 
The strategic plan shall include measurable out-
come goals including timeframes for such goals. 
‘‘(E) PUBLICATION.—The National Coor-
dinator shall publish the strategic plan, includ-
ing all updates. 
‘‘(7) IMPLEMENTATION
REPORTS.—Not later 
than 12 months after the date of publication of the 
strategic plan under paragraph (6) and annually 
thereafter, the National Coordinator shall submit to 
the Secretary a report that identifies the progress 
achieved with respect to the objectives, milestones, 
and metrics identified in such strategic plan for each 
strategic plan area described in paragraph (6)(B). 
‘‘(8) ASSESSMENT OF IMPACT OF HIT ON COM-
MUNITIES
WITH
HEALTH
DISPARITIES
AND
UNIN-
SURED, UNDERINSURED, AND MEDICALLY UNDER-
SERVED AREAS.—The National Coordinator shall as-
sess and publish the impact of health information 
technology in communities with health disparities 
and in areas that serve uninsured, underinsured, 
and medically underserved individuals (including 
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urban and rural areas) and identify practices to in-
crease the adoption of such technology by health 
care providers in such communities. 
‘‘(9) WEBSITE.—The National Coordinator 
shall maintain and frequently update an Internet 
website on which there is posted information that in-
cludes the following: 
‘‘(A) Recommendations made by the Na-
tional Coordinator under paragraph (2)(A). 
‘‘(B) The standards and guidance adopted 
by the Secretary under section 3003(a). 
‘‘(C) Sources of Federal grant funds and 
technical assistance that are available to facili-
tate the purchase of, or enhance the utilization 
of, health information technology systems. 
‘‘(D) The reports prepared by the National 
Coordinator under paragraph (7). 
‘‘(E) The assessment by the National Co-
ordinator under paragraph (8). 
‘‘(d) STAFF.— 
‘‘(1) IN GENERAL.—The National Coordinator 
may appoint personnel to the Office as the National 
Coordinator considers appropriate. Such personnel 
shall have the requisite skills needed to develop and 
make recommendations in each of the categories de-
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scribed in clauses (iii), (iv), and (v) of subsection 
(c)(2)(A). 
‘‘(2) DETAIL OF FEDERAL EMPLOYEES.— 
‘‘(A) IN GENERAL.—Upon the request of 
the National Coordinator, the head of any Fed-
eral agency is authorized to detail, with or with-
out reimbursement from the Office, any of the 
personnel of such agency to the Office to assist 
it in carrying out its duties under this section. 
‘‘(B) EFFECT OF DETAIL.—Any detail of 
personnel under subparagraph (A) shall— 
‘‘(i) not interrupt or otherwise affect 
the civil service status or privileges of the 
Federal employee; and 
‘‘(ii) be in addition to any other staff 
of the Department employed by the Na-
tional Coordinator. 
‘‘(C) ACCEPTANCE OF DETAILEES.—Not-
withstanding any other provision of law, the Of-
fice may accept detailed personnel from other 
Federal agencies without regard to whether the 
agency described under subparagraph (A) is re-
imbursed. 
‘‘(3) TEMPORARY
AND
INTERMITTENT
SERV-
ICES.—The National Coordinator may procure tem-
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porary and intermittent services under section 
3109(b) of title 5, United States Code to the extent 
that such services cannot adequately be provided by 
any personnel appointed or detailed under paragraph 
(1) or (2), respectively. 
‘‘(e) FUNDING.— 
‘‘(1) AUTHORIZATION
OF
APPROPRIATIONS.— 
There are authorized to be appropriated to carry out 
this section such sums as may be necessary for each 
of the fiscal years 2009 through 2013. 
‘‘(2) DHHS AGENCY CONTRIBUTIONS.—In ad-
dition to amounts authorized under paragraph (1), 
for purposes of carrying out this section, for each of 
the fiscal years 2009 through 2013 there shall be 
transferred to the National Coordinator from the 
amount appropriated for the fiscal year to each 
agency within the Department an amount that is 
equal to 1 percent of the amount appropriated to the 
agency for the fiscal year to carry out health infor-
mation technology activities. 
‘‘(3) 
OPEN
SOURCE
PRODUCT
LICENSING 
FEE.—In addition to amounts authorized under 
paragraph (1) and transferred under paragraph (2), 
any fees collected under subsection (c)(4)(B) shall be 
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available to the National Coordinator for purposes of 
carrying out this section. 
‘‘SEC. 3002. HIT ADVISORY COMMITTEE. 
‘‘(a) ESTABLISHMENT.—There is established a HIT 
Advisory Committee to make recommendations to and ad-
vise the National Coordinator with respect to all of the 
duties of the National Coordinator described in section 
3001(c). 
‘‘(b) ADDITIONAL DUTIES.— 
‘‘(1) FORUM.—The HIT Advisory Committee 
shall serve as a forum for broad stakeholder input 
with specific expertise necessary to advise the Na-
tional Coordinator for purposes of carrying out the 
duties of the National Coordinator described in sec-
tion 3001(c), including expertise related to the cat-
egories described in paragraph (2)(A) of such sec-
tion. 
‘‘(2) WEBSITE.—The HIT Advisory Committee 
shall develop and maintain an Internet website on 
which there is posted information that includes the 
following: 
‘‘(A) Established governance rules. 
‘‘(B) A business plan. 
‘‘(C) Meeting notices at least 14 days prior 
to each meeting. 
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‘‘(D) Meeting agendas at least 7 days prior 
to each meeting. 
‘‘(E) Meeting materials at least 3 days 
prior to each meeting. 
‘‘(c) MEMBERSHIP.— 
‘‘(1) 
APPOINTMENTS.—The 
HIT 
Advisory 
Committee shall be composed of members to be ap-
pointed as follows: 
‘‘(A) Such members as shall be appointed 
by the Secretary, from the Department of 
Health and Human Services as representatives 
of agencies within the Department, including 
from the Agency for Healthcare Research and 
Quality, the Centers for Disease Control and 
Prevention, the Centers of Medicare & Medicaid 
Services, the Health Resources and Services 
Administration, and the Indian Health Service. 
‘‘(B) 1 member shall be appointed by the 
majority leader of the Senate. 
‘‘(C) 1 member shall be appointed by the 
minority leader of the Senate. 
‘‘(D) 1 member shall be appointed by the 
Speaker of the House of Representatives. 
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‘‘(E) 1 member shall be appointed by the 
minority leader of the House of Representa-
tives. 
‘‘(F) Such other members as shall be ap-
pointed by the President as representatives of 
other relevant Federal agencies, such as the De-
partment of Veterans Affairs, the National In-
stitute of Standards and Technology, and the 
Department of Defense. 
‘‘(G) 12 members shall be appointed by the 
Comptroller General of the United States of 
whom— 
‘‘(i) 1 member shall be an advocate 
for patients or consumers; 
‘‘(ii) 2 members shall represent health 
care providers, one of which shall be a phy-
sician; 
‘‘(iii) 1 member shall be from a labor 
organization 
representing 
health 
care 
workers; 
‘‘(iv) 1 member shall have expertise in 
privacy and security; 
‘‘(v) 1 member shall have expertise in 
improving the health of vulnerable popu-
lations; 
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‘‘(vi) 1 member shall be from the 
health research community; 
‘‘(vii) 1 member shall represent health 
plans or other third-party payers; 
‘‘(viii) 1 member shall represent infor-
mation technology vendors; 
‘‘(ix) 1 member shall represent pur-
chasers or employers; 
‘‘(x) 1 member shall have expertise in 
health care quality measurement and re-
porting; and 
‘‘(xi) 1 member shall have expertise in 
open source health information technology 
systems. 
In no case may the total number of members 
appointed under subparagraphs (A) and (F) ex-
ceed 10. 
‘‘(2) NATIONAL COORDINATOR.—The National 
Coordinator shall be a member of the HIT Advisory 
Committee and act as a liaison between the Com-
mittee and agencies of the Federal Government. 
‘‘(3) CHAIRPERSON AND VICE CHAIRPERSON.— 
The HIT Advisory Committee shall designate 1 
member to serve as the chairperson and 1 member 
to serve as the vice chairperson of the HIT Advisory 
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Committee, such that one is a representative of the 
public sector and one is a representative from the 
private sector. 
‘‘(4) PARTICIPATION.—The members of the 
HIT Advisory Committee appointed under para-
graph (1) shall represent a balance among various 
sectors of the health care system so that no single 
sector unduly influences the recommendations of 
such Committee. 
‘‘(5) AUTHORIZED USE OF TASK FORCES AND 
WORK GROUPS.—The National Coordinator, in con-
sultation with the chairperson and vice chairperson 
of the HIT Advisory Committee, may convene task 
forces or working groups as necessary to carry out 
the duties of the Committee. 
‘‘(6) COMPENSATION.—Subject to the avail-
ability of appropriations, while serving on the busi-
ness of the HIT Advisory Committee (including 
traveltime), a member of the Committee who is not 
a Federal employee shall be entitled to compensation 
at the per diem equivalent of the rate provided for 
level IV of the Executive Schedule under section 
5315 of title 5, United States Code; and while so 
serving away from home and the member’s regular 
place of business, a member may be allowed travel 
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expenses, as authorized by the Chairman of the 
Committee. 
‘‘(7) TERMS.— 
‘‘(A) IN GENERAL.—The terms of mem-
bers of the HIT Advisory Committee appointed 
under paragraph (1) shall be 3 years except 
that the Comptroller General of the United 
States shall designate staggered terms for the 
members first appointed under paragraph 
(1)(G). 
‘‘(B) VACANCIES.—Any member appointed 
to fill a vacancy in the membership of the HIT 
Advisory Committee that occurs prior to the ex-
piration of the term for which the member’s 
predecessor was appointed shall be appointed 
only for the remainder of that term. A member 
may serve after the expiration of that member’s 
term until a successor has been appointed. A 
vacancy in the HIT Advisory Committee shall 
be filled in the manner in which the original ap-
pointment was made. 
‘‘(8) OUTSIDE INVOLVEMENT.—The HIT Advi-
sory Committee shall ensure an adequate oppor-
tunity for the participation in activities of the Com-
mittee of outside advisors, including individuals with 
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expertise in the development of policies for the elec-
tronic exchange and use of health information, in-
cluding in the areas of health information privacy 
and security. 
‘‘(9) QUORUM.—Ten members of the HIT Advi-
sory Committee shall constitute a quorum for pur-
poses of voting, but a lesser number of members 
may meet and hold hearings. 
‘‘(d) APPLICATION OF FACA.—The Federal Advisory 
Committee Act (5 U.S.C. App.), other than section 14 of 
such Act, shall apply to the HIT Advisory Committee. 
‘‘(e) PUBLICATION.—The Secretary shall provide for 
publication in the Federal Register and the posting on the 
Internet website of the Office of the National Coordinator 
for Health Information Technology of all policy rec-
ommendations made by the HIT Advisory Committee 
under this section. 
‘‘SEC. 3003. PROCESS FOR ADOPTION OF RECOMMENDED 
STANDARDS AND GUIDANCE. 
‘‘(a) IN GENERAL.— 
‘‘(1) STANDARDS.—Not later than 9 months 
after the date of receipt of a recommendation under 
section 3001(c)(2) from the National Coordinator 
for any grouping of standards for purposes of certi-
fying health information technology under the cer-
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tification program under section 3001(c)(3), the 
Secretary shall, through a rulemaking process and 
after consideration of public comments, determine 
whether or not to adopt such grouping of standards. 
‘‘(2) GUIDANCE.—Not later than 9 months 
after the date of receipt of a recommendation under 
section 3001(c)(2) from the National Coordinator 
for any guidance, the Secretary shall, through the 
applicable administrative process that includes public 
notice in the Federal Register and opportunity for 
public comment, determine whether or not to adopt 
such guidance. 
‘‘(b) INITIAL STANDARDS.—Not later than Sep-
tember 30, 2011, the Secretary shall, through a rule-
making process and after consideration of public com-
ments, adopt the initial set of standards recommended 
from the National Coordinator pursuant to the second 
sentence under section 3001(c)(2). Such initial set of 
standards shall include, at a minimum, technical stand-
ards for de-identifying health information and for immu-
table audit trails. 
‘‘(c) PUBLICATION.—Not later than 30 days after the 
Secretary makes a determination under subsection (a), the 
Secretary shall provide for publication in the Federal Reg-
ister, and on the Internet website maintained by the Na-
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tional Coordinator in accordance with section 3001(c)(9), 
of such determination. 
‘‘SEC. 3004. APPLICATION AND USE OF ADOPTED STAND-
ARDS BY FEDERAL AGENCIES. 
‘‘For requirements relating to the application and use 
by Federal agencies of the standards adopted under sec-
tion 3003(a), see section 111 of the Health-e Information 
Technology Act of 2008. 
‘‘SEC. 3005. VOLUNTARY APPLICATION AND USE OF ADOPT-
ED STANDARDS BY PRIVATE ENTITIES. 
‘‘(a) IN GENERAL.—Except as provided under section 
112 of the Health-e Information Technology Act of 2008, 
any standard adopted under section 3003(a) shall be vol-
untary with respect to private entities. 
‘‘(b) RULE OF CONSTRUCTION.—Nothing in this sub-
title shall be construed to require that a private entity that 
enters into a contract with the Federal Government apply 
or use the standards adopted under section 3003(a) with 
respect to activities not related to the contract. The pre-
vious sentence shall not affect any other provision of law, 
such as part C of title XI of the Social Security Act, title 
III of the Health-e Information Technology Act of 2008, 
or regulations promulgated to carry out section 264(c) of 
the Health Insurance Portability and Accountability Act 
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of 1996, that requires the application or use of such a 
standard. 
‘‘SEC. 3006. HEALTH INFORMATION TECHNOLOGY RE-
SOURCE CENTER. 
‘‘(a) DEVELOPMENT.— 
‘‘(1) IN GENERAL.—The National Coordinator 
shall develop a Health Information Technology Re-
source Center to provide technical assistance and de-
velop best practices to support and accelerate efforts 
to adopt, implement, and effectively use health infor-
mation technology that allows for the electronic ex-
change and use of information in compliance with 
standards and any guidance adopted under section 
3003(a), including for purposes of each of the cat-
egories described in such section 3001(c)(2). 
‘‘(2) PURPOSES.—The purpose of the Center is 
to— 
‘‘(A) provide a forum for the exchange of 
knowledge and experience; 
‘‘(B) accelerate the transfer of lessons 
learned from existing public and private sector 
initiatives, including those currently receiving 
Federal financial support; 
‘‘(C) assemble, analyze, and widely dis-
seminate evidence and experience related to the 
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adoption, implementation, and effective use of 
health information technology that allows for 
the electronic exchange and use of information; 
‘‘(D) provide technical assistance for the 
establishment and evaluation of regional and 
local health information networks to facilitate 
the electronic exchange of information across 
health care settings and improve the quality of 
health care; 
‘‘(E) provide technical assistance for the 
development and dissemination of solutions to 
barriers to the exchange of electronic health in-
formation; 
‘‘(F) learn about effective strategies to 
adopt and utilize health information technology 
in medically underserved communities; 
‘‘(G) conduct other activities identified by 
the States, local or regional health information 
networks, or health care stakeholders as a focus 
for developing and sharing best practices; and 
‘‘(H) provide technical assistance to pro-
mote adoption and utilization of health informa-
tion technology by health care providers, includ-
ing in medically underserved communities. 
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‘‘(b) TECHNICAL ASSISTANCE TELEPHONE NUMBER 
OR WEBSITE.—The National Coordinator shall establish 
a toll-free telephone number or Internet website to provide 
health care providers with a single point of contact to— 
‘‘(1) learn about Federal grants and technical 
assistance services related to the electronic exchange 
and use of health information; 
‘‘(2) learn about standards adopted under sec-
tion 3003(a); 
‘‘(3) learn about regional and local health infor-
mation networks for assistance with health informa-
tion technology; and 
‘‘(4) disseminate additional information deter-
mined by the National Coordinator.’’. 
SEC. 102. TRANSITIONS. 
(a) ONCHIT.—To the extent consistent with section 
3001 of the Public Health Service Act, as added by section 
101, all functions, personnel, assets, liabilities, and admin-
istrative actions applicable to the National Coordinator for 
Health Information Technology appointed under Execu-
tive Order 13335 or the Office of such National Coordi-
nator on the date before the date of the enactment of this 
Act shall be transferred to the National Coordinator ap-
pointed under section 3001(a) of such Act and the Office 
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sponse to Executive Order 13335 is consistent with 
the provisions of such section 3002. 
Subtitle B—Application and Use of 
Adopted 
Health 
Information 
Technology Standards; Reports 
SEC. 111. COORDINATION OF FEDERAL ACTIVITIES WITH 
ADOPTED STANDARDS. 
(a) SPENDING
ON HEALTH INFORMATION TECH-
NOLOGY SYSTEMS.—As each agency (as defined in the Ex-
ecutive Order issued on August 22, 2006, relating to pro-
moting quality and efficient health care in Federal govern-
ment administered or sponsored health care programs) im-
plements, acquires, or upgrades health information tech-
nology systems used for the direct exchange of individually 
identifiable health information between agencies and with 
non-Federal entities, it shall utilize, where available, 
health information technology systems and products that 
meet standards adopted under section 3003(a) of the Pub-
lic Health Service Act, as added by section 101. 
(b) FEDERAL INFORMATION COLLECTION ACTIVI-
TIES.—With respect to a standard adopted under section 
3003(a) of the Public Health Service Act, as added by 
section 101, the President shall take measures to ensure 
that Federal activities involving the broad collection and 
submission of health information are consistent with such 
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standard within three years after the date of such adop-
tion. 
(c) APPLICATION OF DEFINITIONS.—The definitions 
contained in section 3000 of the Public Health Service 
Act, as added by section 101, shall apply for purposes of 
this part. 
SEC. 112. APPLICATION TO PRIVATE ENTITIES. 
Each agency (as defined in such Executive Order 
issued on August 22, 2006, relating to promoting quality 
and efficient health care in Federal government adminis-
tered or sponsored health care programs) shall require in 
contracts or agreements with health care providers, health 
plans, or health insurance issuers that as each provider, 
plan, or issuer implements, acquires, or upgrades health 
information technology systems, it shall utilize, where 
available, health information technology systems and prod-
ucts that meet standards adopted under section 3003(a) 
of the Public Health Service Act, as added by section 101. 
SEC. 113. ANNUAL REPORTS. 
Not later than 2 years after the date of the enact-
ment of this Act and annually thereafter, the Secretary 
of Health and Human Services shall submit to the Com-
mittee on Finance, the Committee on Health, Education, 
Labor, and Pensions and the Committee on Commerce, 
Science, and Transportation of the Senate and the Com-
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mittee on Ways and Means, the Committee on Energy and 
Commerce, and the Committee on Science and Technology 
of the House of Representatives a report that— 
(1) describes the specific actions that have been 
taken by the Federal Government and private enti-
ties to facilitate the adoption of a nationwide system 
for the electronic use and exchange of health infor-
mation, including information from the implementa-
tion reports submitted under section 3001(c)(7) of 
the Public Health Service Act, as added by section 
101; 
(2) describes barriers to the adoption of such a 
nationwide system; and 
(3) contains recommendations to achieve full 
implementation of such a nationwide system. 
TITLE II—TESTING OF HEALTH 
INFORMATION TECHNOLOGY 
SEC. 201. NATIONAL INSTITUTE FOR STANDARDS AND 
TECHNOLOGY TESTING. 
(a) PILOT TESTING OF STANDARDS AND IMPLEMEN-
TATION SPECIFICATIONS.—In coordination with the Office 
of the National Coordinator of Health Information Tech-
nology established under section 3001 of the Public 
Health Service Act, as added by section 101, with respect 
to the development of standards under such section, the 
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Director of the National Institute for Standards and Tech-
nology shall test such standards in order to assure the 
efficient implementation and use of such standards. 
(b) VOLUNTARY TESTING PROGRAM.—In coordina-
tion with the Office of the National Coordinator of Health 
Information Technology established under section 3001 of 
the Public Health Service Act, as added by section 101, 
with respect to the development of standards under such 
section, the Director of the National Institute of Stand-
ards and Technology shall support the establishment of 
a conformance testing infrastructure, including the devel-
opment of technical test beds. The development of this 
conformance testing infrastructure may include a program 
to accredit independent, non-Federal laboratories to per-
form testing. 
TITLE 
III—INCENTIVES 
FOR 
ADOPTION OF HEALTH IN-
FORMATION TECHNOLOGY 
Subtitle A—Medicare Program 
SEC. 301. INCENTIVES FOR ELIGIBLE PROFESSIONALS. 
(a) INCENTIVE PAYMENTS.—Section 1848 of the So-
cial Security Act (42 U.S.C. 1395w–4) is amended by add-
ing at the end the following new subsection: 
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‘‘(o) INCENTIVES FOR ADOPTION AND MEANINGFUL 
USE OF CERTIFIED HEALTH INFORMATION TECHNOLOGY 
SYSTEM.— 
‘‘(1) INCENTIVE PAYMENTS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B), (C), and (D), with respect to cov-
ered professional services furnished by an eligi-
ble professional during a reporting period dur-
ing the first calendar year beginning after the 
date specified under subparagraph (B)(iv) (or, 
if sooner, 2013) or any subsequent year (before 
2017), if the eligible professional is a meaning-
ful HIT user for the reporting period (as deter-
mined under paragraph (2), in addition to the 
amount otherwise paid under this part, there 
also shall be paid to the eligible professional (or 
to an employer or facility in the cases described 
in clause (A) of section 1842(b)(6)) or, in the 
case of a group practice under paragraph 
(2)(D), to the group practice, from the Federal 
Supplementary Medical Insurance Trust Fund 
established under section 1841 an amount equal 
to 75 percent of the Secretary’s estimate (based 
on claims submitted not later than 2 months 
after the end of the reporting period) of the al-
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lowed charges under this part for all such cov-
ered professional services furnished by the eligi-
ble professional (or, in the case of a group prac-
tice under paragraph (2)(D), by the group 
practice) during the reporting period. 
‘‘(B) LIMITATIONS
ON
AMOUNTS
OF
IN-
CENTIVE PAYMENTS.— 
‘‘(i) IN GENERAL.—In no case shall 
the amount of the incentive payment pro-
vided under this paragraph exceed the ap-
plicable amount specified in clause (ii) with 
respect to any eligible professional. 
‘‘(ii) AMOUNT.—Subject to clauses 
(iii) and (iv), the applicable amount speci-
fied in this clause is as follows: 
‘‘(I) For the first calendar year 
beginning after the date specified in 
clause (iv) or, if sooner, for 2013, 
$15,000. 
‘‘(II) For the calendar year fol-
lowing the year specified in subclause 
(I), $12,000. 
‘‘(III) For the calendar year fol-
lowing the year specified in subclause 
(II), $8,000. 
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‘‘(IV) For the calendar year fol-
lowing the year specified in subclause 
(III), $4,000. 
‘‘(V) For the calendar year fol-
lowing the year specified in subclause 
(IV), $2,000. 
‘‘(iii) PRO-RATION FOR PARTIAL YEAR 
PROFESSIONALS.—In the case of an eligi-
ble professional who is a meaningful HIT 
user for only a portion of a reporting pe-
riod for reasons such as the professional 
did not provide services for which payment 
is made under this part for the entire pe-
riod or the professional initiated the use of 
health information technology during the 
period, the Secretary may pro-rate the ap-
plicable amount specified under clause (ii) 
to reflect the portion of the period during 
which the professional was a meaningful 
HIT user. 
‘‘(iv) DATE
SPECIFIED.—The date 
specified in this subclause is the date on 
which the open source health information 
technology 
system 
under 
section 
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3001(c)(4) of the Public Health Service 
Act is first made publicly available. 
‘‘(C) NON-APPLICATION
TO
HOSPITAL- 
BASED ELIGIBLE PROFESSIONALS.— 
‘‘(i) IN GENERAL.—No payment may 
be made under subparagraph (A) in the 
case of hospital-based eligible professionals. 
‘‘(ii) HOSPITAL-BASED ELIGIBLE PRO-
FESSIONAL.—For purposes of clause (i), 
the term ‘hospital-based eligible profes-
sional’ means an eligible professional, such 
as a pathologist or anesthesiologist, who 
furnishes items and services principally in 
a hospital setting and through the use of 
the facilities and equipment, including 
computer equipment, of the hospital. 
‘‘(D) FORM OF PAYMENT.—The payment 
under this subsection for a reporting period 
may be in the form of a single consolidated pay-
ment or in the form of such periodic install-
ments as the Secretary may specify. 
‘‘(2) MEANINGFUL HIT USER.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an eligible professional shall be 
treated as a meaningful HIT user for a report-
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ing period for a year if the eligible professional 
demonstrates to the satisfaction of the Sec-
retary that the professional is meaningfully 
using a certified health information technology 
system during the reporting period, as dem-
onstrated in accordance with applicable meas-
ures established under subparagraph (B). 
‘‘(B) MEASURES FOR MEANINGFUL USE.— 
The Secretary shall establish measures under 
which an eligible professional may demonstrate 
meaningful use of a certified health information 
technology system for a reporting period. Such 
measures may include— 
‘‘(i) self-certification of operational 
use of such a system; 
‘‘(ii) the submission (or ability to sub-
mit), in a form and manner specified by 
the Secretary, of such information on clin-
ical measures and data (that does not in-
clude individually identifiable health infor-
mation) from such system that indicates a 
meaningful utilization of such a system 
during the period; and 
‘‘(iii) such other means as the Sec-
retary may specify. 
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The Secretary may establish and apply different 
measures based on the stage of implementation 
or adoption of the certified health information 
technology system involved. 
‘‘(C) USE
OF
PART
D
DATA.—Notwith-
standing 
sections 
1860D–15(d)(2)(B) 
and 
1860D–15(f)(2), the Secretary may use data 
regarding drug claims submitted for purposes 
of section 1860D–15 that are necessary for 
purposes of subparagraph (B)(ii). 
‘‘(D) 
SATISFACTORY
MEASURES
FOR 
GROUP PRACTICES.— 
‘‘(i) IN
GENERAL.—Not later than 
January 1, 2013, the Secretary shall pro-
vide for a method of applying the measures 
established under subparagraph (B) or re-
vised under subparagraph (F) to eligible 
professionals in a group practice (as de-
fined by the Secretary). 
‘‘(ii) 
STATISTICAL
SAMPLING 
MODEL.—In the case that the Secretary 
provides for a method under clause (i), the 
method may provide for the use of a statis-
tical sampling model to submit data on 
measures, such as the model used under 
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the Physician Group Practice demonstra-
tion project under section 1866A. 
‘‘(iii) NO DOUBLE PAYMENTS.—Pay-
ments for a reporting period to a group 
practice under this paragraph by reason of 
the method under clause (i) shall be in lieu 
of the payments that would otherwise be 
made under this paragraph to eligible pro-
fessionals in the group practice for being a 
meaningful HIT user during such period. 
‘‘(E) AUTHORITY TO REVISE MEASURES.— 
The Secretary may periodically revise the meas-
ures established under subparagraph (B) with 
respect to demonstrating meaningful use of a 
certified health information technology system. 
‘‘(3) APPLICATION.— 
‘‘(A) 
PHYSICIAN
REPORTING
SYSTEM 
RULES.—Paragraphs (5), (6),and (8) of sub-
section (k) shall apply for purposes of this sub-
section in the same manner as they apply for 
purposes of such subsection. 
‘‘(B) COORDINATION WITH OTHER BONUS 
PAYMENTS.—The provisions of this subsection 
shall not be taken into account in applying sub-
sections (m) and (u) of section 1833 and any 
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payment under such subsections shall not be 
taken into account in computing allowable 
charges under this subsection. 
‘‘(C) LIMITATIONS
ON
REVIEW.—There 
shall be no administrative or judicial review 
under 1869, section 1878, or otherwise of— 
‘‘(i) the determination of measures 
applicable to services furnished by eligible 
professionals under this subsection; 
‘‘(ii) the determination of a meaning-
ful HIT user under paragraph (2)(A), a 
limitation under paragraph (1)(B), and the 
exception under subsection (a)(7)(B); and 
‘‘(iii) the determination of any incen-
tive payment under this subsection and the 
payment 
adjustment 
under 
subsection 
(a)(7)(A). 
‘‘(D) POSTING
ON
WEBSITE.—The Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services, in an 
easily understandable format, a list of the 
names, business addresses, and business phone 
numbers of the eligible professionals (or, in the 
case of reporting under paragraph (2)(D), the 
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group practices) who are meaningful HIT 
users. 
‘‘(4) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) CERTIFIED
HEALTH
INFORMATION 
TECHNOLOGY
SYSTEM.—The term ‘certified 
health information technology system’ means, 
with respect to an eligible professional and a re-
porting period for a year, a health information 
technology system (as defined in section 3000 
of the Public Health Service Act) that has a 
current certification under section 3001(c)(3) of 
such Act as satisfying all interoperability stand-
ards, privacy and security standards, and clin-
ical and quality functions adopted under section 
3003(a) of such Act that are applicable to the 
eligible professional. 
‘‘(B) 
COVERED
PROFESSIONAL
SERV-
ICES.—The term ‘covered professional services’ 
has the meaning given such term in subsection 
(k)(3). 
‘‘(C) ELIGIBLE PROFESSIONAL.—The term 
‘eligible professional’ means a physician, as de-
fined in section 1861(r)(1). 
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‘‘(D) REPORTING PERIOD.—The term ‘re-
porting period’ means any period, with respect 
to a calendar year, as specified by the Sec-
retary.’’. 
(b) INCENTIVE PAYMENT ADJUSTMENT.—Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w– 
4(a)) is amended by adding at the end the following new 
paragraph: 
‘‘(7) INCENTIVES
FOR
MEANINGFUL
USE
OF 
HEALTH INFORMATION TECHNOLOGY SYSTEMS.— 
‘‘(A) ADJUSTMENT.— 
‘‘(i) IN
GENERAL.—Subject to sub-
paragraph (B), with respect to covered 
professional services furnished by an eligi-
ble professional during 2016 or any subse-
quent year, if the eligible professional is 
not a meaningful HIT user for a reporting 
period for the year (as determined under 
subsection (o)(2)), the fee schedule amount 
for such services furnished by such profes-
sional during the year (including the fee 
schedule amount for purposes of deter-
mining a payment based on such amount) 
shall be equal to the applicable percent of 
the fee schedule amount that would other-
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wise apply to such services under this sub-
section (determined after application of 
paragraph (3) but without regard to this 
paragraph). 
‘‘(ii) 
APPLICABLE
PERCENT.—For 
purposes of clause (i), the term ‘applicable 
percent’ means— 
‘‘(I) for 2016, 99 percent; 
‘‘(II) for 2017, 98.5 percent; 
‘‘(III) for 2018, 98 percent; 
‘‘(IV) for 2019, 97.5 percent; 
and 
‘‘(V) for 2020 and each subse-
quent year, 97 percent. 
‘‘(B) 
SIGNIFICANT
HARDSHIP
EXCEP-
TION.—The Secretary may, on a case-by-case 
basis, exempt an eligible professional from the 
application of the payment adjustment under 
subparagraph (A) if the Secretary determines, 
subject to annual renewal, that compliance with 
the requirement for being a meaningful HIT 
user would result in a significant hardship, such 
as in the case of an eligible professional who 
practices in a rural area without sufficient 
Internet access. In no case may an eligible pro-
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fessional be granted an exemption under this 
subparagraph for more than 5 years. 
‘‘(C) APPLICATION OF PHYSICIAN REPORT-
ING SYSTEM RULES.—Paragraphs (5), (6), and 
(8) of subsection (k) shall apply for purposes of 
this paragraph in the same manner as they 
apply for purposes of such subsection. 
‘‘(D) NON-APPLICATION
TO
HOSPITAL- 
BASED
ELIGIBLE
PROFESSIONALS.—No pay-
ment adjustment may be made under subpara-
graph (A) in the case of hospital-based eligible 
professionals 
(as 
defined 
in 
subsection 
(o)(1)(C)(ii)). 
‘‘(E) DEFINITIONS.—For purposes of this 
paragraph: 
‘‘(i) COVERED
PROFESSIONAL
SERV-
ICES.—The 
term 
‘covered 
professional 
services’ has the meaning given such term 
in subsection (k)(3). 
‘‘(ii) ELIGIBLE PROFESSIONAL.—The 
term ‘eligible professional’ means a physi-
cian, as defined in section 1861(r)(1). 
‘‘(iii) REPORTING PERIOD.—The term 
‘reporting period’ means, with respect to a 
year, a period specified by the Secretary.’’. 
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(c) 
CONFORMING
AMENDMENTS
TO
E-PRE-
SCRIBING.— 
(1) Section 1848(a)(5)(A)(ii)(III) of the Social 
Security Act (42 U.S.C. 1395w–4(a)(5)(A)(ii)(III)) 
is amended by striking ‘‘and each subsequent year’’ 
and inserting ‘‘and 2015’’. 
(2) Section 1848(m)(2) of the Social Security 
Act (42 U.S.C. 1395w–4(m)(2)) is amended— 
(A) in subparagraph (A), by striking ‘‘For 
2009’’ and inserting ‘‘Subject to subparagraph 
(D), for 2009’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) LIMITATION
WITH
RESPECT
TO 
HEALTH
INFORMATION
TECHNOLOGY
INCEN-
TIVE PAYMENTS.—The provisions of this para-
graph shall not apply to an eligible professional 
(or, in the case of a group practice under para-
graph (3)(C), to the group practice) if, for the 
reporting period the eligible professional (or 
group practice) receives an incentive payment 
under subsection (o)(1)(A) with respect to a 
certified health information system (as defined 
in subsection (o)(4)(A)) that has the capability 
of electronic prescribing.’’. 
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(d) GAO STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study to determine the 
extent to which and manner in which payment in-
centives (such as under title XVIII or XIX of the 
Social Security Act) and other funding for purposes 
of implementing and using health information tech-
nology should be made available to health care pro-
viders who are receiving minimal or no payment in-
centives or other funding under this Act, under title 
XVIII or XIX of the Social Security Act, or other-
wise, for such purposes. Such study shall include an 
examination of— 
(A) the adoption rates of certified health 
information technology systems by such health 
care providers; 
(B) the clinical utility of such systems by 
such health care providers; 
(C) whether the services furnished by such 
health care providers are appropriate for or 
would benefit from the use of such systems; 
(D) the extent to which such health care 
providers work in settings that might otherwise 
receive an incentive payment or other funding 
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under this Act, title XVIII or XIX of the Social 
Security Act, or otherwise; 
(E) the potential costs and the potential 
benefits of making payment incentives and 
other funding available to such health care pro-
viders; and 
(F) any other issues the Comptroller Gen-
eral deems to be appropriate. 
(2) REPORT.—Not later than June 30, 2010, 
the Comptroller General shall submit to Congress a 
report on the findings and conclusions of the study 
conducted under paragraph (1). 
SEC. 302. INCENTIVES FOR HOSPITALS. 
(a) INCENTIVE PAYMENT.—Section 1886 of the So-
cial Security Act (42 U.S.C. 1395ww) is amended by add-
ing at the end the following new subsection: 
‘‘(o) INCENTIVES FOR ADOPTION AND MEANINGFUL 
USE OF CERTIFIED HEALTH INFORMATION TECHNOLOGY 
SYSTEMS.— 
‘‘(1) IN GENERAL.—Subject to the succeeding 
provisions of this subsection, with respect to inpa-
tient hospital services furnished by an eligible hos-
pital during the first fiscal year beginning after the 
date specified in paragraph (6) (or, if sooner, fiscal 
year 2013) or any subsequent fiscal year (before fis-
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cal year 2017), if the eligible hospital is a meaning-
ful HIT user for the fiscal year (as determined 
under paragraph (3)), in addition to the amount 
otherwise paid under this section, there also shall be 
paid to the eligible hospital, from the Federal Hos-
pital Insurance Trust Fund established under sec-
tion 1817, an amount equal to the applicable 
amount specified in paragraph (2)(A) for such fiscal 
year. 
‘‘(2) PAYMENT AMOUNT.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (F), the applicable amount specified in 
this subparagraph for an eligible hospital for a 
fiscal year is equal to the product of the fol-
lowing: 
‘‘(i) INITIAL AMOUNT.—The sum of— 
‘‘(I) the base amount specified in 
subparagraph (B); plus 
‘‘(II) 
the 
discharge 
related 
amount specified in subparagraph (C) 
for a period selected by the Secretary 
with respect to such fiscal year. 
‘‘(ii) MEDICARE
SHARE.—The Medi-
care share as specified in subparagraph 
(D) for the hospital for a period selected 
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by the Secretary with respect to such fiscal 
year. 
‘‘(iii) 
TRANSITION
FACTOR.—The 
transition factor specified in subparagraph 
(E) for the fiscal year. 
‘‘(B) BASE
AMOUNT.—The base amount 
specified in this subparagraph is $1,000,000. 
‘‘(C) DISCHARGE RELATED AMOUNT.—The 
discharge related amount specified in this sub-
paragraph for a period shall be determined as 
the sum of the amount, based upon total dis-
charges (regardless of any source of payment) 
for the period, for each discharge up to the 
13,800th discharge as follows: 
‘‘(i) For the 1150th through the 
9,200nd discharge, $200. 
‘‘(ii) For the 9,201st through the 
13,800th discharge, 50 percent of the 
amount specified in clause (i). 
‘‘(D) MEDICARE
SHARE.—The Medicare 
share specified under this subparagraph for a 
hospital for a period is equal to the fraction— 
‘‘(i) the numerator of which is the 
sum (for the period and with respect to the 
hospital) of— 
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‘‘(I) the number of inpatient-bed- 
days (as established by the Secretary) 
which are attributable to individuals 
with respect to whom payment may be 
made under part A; and 
‘‘(II) the number of inpatient- 
bed-days (as so established) which are 
attributable to individuals who are en-
rolled under a risk-sharing contract 
with an eligible organization under 
section 1876 and who are entitled to 
part A or with a Medicare Advantage 
organization under part C; and 
‘‘(ii) the denominator of which is the 
product of— 
‘‘(I) the total number of inpa-
tient-bed-days with respect to the hos-
pital during the period; and 
‘‘(II) the total amount of the hos-
pital’s charges during the period, not 
including any charges that are attrib-
utable to charity care (as such term is 
used for purposes of hospital cost re-
porting under this title), divided by 
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the total amount of the hospital’s 
charges during the period. 
‘‘(E) TRANSITION
FACTOR
SPECIFIED.— 
The transition factor specified in this subpara-
graph is as follows: 
‘‘(i) For the first fiscal year beginning 
after the date specified in paragraph (6) 
(or, of sooner, fiscal year 2013), 1. 
‘‘(ii) For the fiscal year following the 
fiscal year specified in clause (i), 3⁄4. 
‘‘(iii) For the fiscal year following the 
fiscal year specified in clause (ii), 1⁄2. 
‘‘(iv) For the fiscal year following the 
fiscal year specified in clause (iii), 1⁄4. 
‘‘(F) LIMITATIONS.— 
‘‘(i) PRO-RATION FOR PARTIAL YEAR 
HOSPITALS.—In the case of an eligible hos-
pital that is a meaningful HIT user for 
only a portion of a fiscal year for reasons 
such as the hospital did not provide serv-
ices for which payment is made under this 
section for a portion of the fiscal year or 
the hospital changed the use of health in-
formation technology during the fiscal 
year, the Secretary may pro-rate the appli-
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cable amount specified under subparagraph 
(A) to reflect the portion of the fiscal year 
during which the hospital was a meaning-
ful HIT user. 
‘‘(ii) FORM OF PAYMENT.—The pay-
ment under this subsection for a fiscal 
year may be in the form of a single con-
solidated payment or in the form of such 
periodic installments as the Secretary may 
specify. 
There shall be no incentive payment under this 
subsection, or payment adjustment under sub-
section (b)(3)(B)(ix), for a fiscal year in the 
case of an eligible hospital for which the sum of 
the inpatient-bed days described in subclauses 
(I) and (II) of subparagraph (D)(i), for a pe-
riod specified by the Secretary with respect to 
such fiscal year, is an amount that is less than 
1,000. 
‘‘(3) MEANINGFUL HIT USER.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an eligible hospital shall be treated 
as a meaningful HIT user for a fiscal year if 
the eligible hospital demonstrates to the satis-
faction of the Secretary that the hospital is 
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meaningfully using a certified health informa-
tion technology system with respect to such fis-
cal year, as demonstrated in accordance with 
applicable measures established under subpara-
graph (B). 
‘‘(B) 
STANDARDS
FOR
MEANINGFUL 
USE.—The Secretary shall establish measures 
under which an eligible hospital may dem-
onstrate meaningful use of a certified health in-
formation technology system for a fiscal year. 
Such measures may include— 
‘‘(i) self-certification of operational 
use of such a system; 
‘‘(ii) the submission (or ability to sub-
mit), in a form and manner specified by 
the Secretary (which may include the man-
ner used for purposes of subsection 
(b)(3)(B)(viii)), of such information on 
clinical measures and data (that does not 
include individually identifiable health in-
formation) from such system that indicates 
a meaningful utilization of such a system 
during the year; and 
‘‘(iii) such other means as the Sec-
retary may specify. 
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The Secretary may establish and apply different 
measures based on the stage of implementation 
or adoption of the certified health information 
technology system involved or based on the 
characteristics (such as size) of the hospital. 
‘‘(C) AUTHORITY TO REVISE MEASURES.— 
The Secretary may periodically revise the meas-
ures established under subparagraph (B) with 
respect to demonstrating meaningful use of a 
certified health information technology system. 
‘‘(4) APPLICATION.— 
‘‘(A) LIMITATIONS
ON
REVIEW.—There 
shall be no administrative or judicial review 
under 1869, section 1878, or otherwise of— 
‘‘(i) the determination of measures 
applicable to services furnished by eligible 
hospitals under this subsection; 
‘‘(ii) the determination of a meaning-
ful HIT user under paragraph (3)(A) and 
the 
exception 
under 
subsection 
(b)(3)(B)(ix)(III); and 
‘‘(iii) the determination of any incen-
tive payment under this subsection and the 
payment 
adjustment 
under 
subsection 
(b)(3)(B)(ix). 
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‘‘(B) POSTING
ON
WEBSITE.—The Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services, in an 
easily understandable format, a list of the 
names of the eligible hospitals that are mean-
ingful HIT users and other relevant data as de-
termined appropriate by the Secretary. The 
Secretary shall ensure that a hospital has the 
opportunity to review the other relevant data 
that are to be made public with respect to the 
hospital prior to such data being made public. 
‘‘(5) APPLICATION
TO
CERTAIN
MA
HOS-
PITALS.—Notwithstanding section 1851(i)(1), an eli-
gible hospital that is under common corporate gov-
ernance with a qualifying MA organization (as de-
fined in section 1853(l)(5)) and that serves individ-
uals enrolled under a plan offered by such organiza-
tion shall be eligible for an incentive payment under 
this subsection in the same manner as an eligible 
hospital that is not under such common corporate 
governance with a qualifying MA organization. 
‘‘(6) DATE SPECIFIED.—The date specified in 
this paragraph is the date on which the open source 
health information technology system under section 
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3001(c)(4) of the Public Health Service Act is first 
made publicly available. 
‘‘(7) DEFINITIONS.—For purposes of this sub-
section and subsection (b)(3)(B)(ix): 
‘‘(A) CERTIFIED
HEALTH
INFORMATION 
TECHNOLOGY
SYSTEM.—The term ‘certified 
health information technology system’ means, 
with respect to an eligible hospital and a fiscal 
year, a health information technology system 
(as defined in section 3000 of the Public Health 
Service Act) that has a current certification 
under section 3001(c)(3) of such Act as satis-
fying all interoperability standards, privacy and 
security standards, and clinical and quality 
functions adopted under section 3003(a) of 
such Act as of a date specified by the Secretary 
with respect to such fiscal year that are applica-
ble to the eligible hospital. 
‘‘(B) ELIGIBLE HOSPITAL.—The term ‘eli-
gible hospital’ means a subsection (d) hos-
pital.’’. 
(b) INCENTIVE MARKET BASKET ADJUSTMENT.— 
Section 1886(b)(3)(B) of the Social Security Act (42 
U.S.C. 1395ww(b)(3)(B)) is amended— 
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(1) in clause (viii)(I), by inserting ‘‘(or, begin-
ning with fiscal year 2016, by one-half)’’ after ‘‘2.0 
percentage points’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(ix)(I) Subject to the third sentence of subsection 
(o)(2)(F), for purposes of clause (i) for fiscal year 2016 
and each subsequent fiscal year, in the case of a sub-
section (d) hospital that is not a meaningful HIT user (as 
defined in subsection (o)(3)) with respect to such fiscal 
year, one-half of the applicable percentage increase other-
wise applicable under clause (i) for such fiscal year shall 
be reduced by 25 percent for fiscal year 2016, 50 percent 
for fiscal year 2017, 75 percent for fiscal year 2018, and 
100 percent for fiscal year 2019 and each subsequent fis-
cal year. Such reduction shall apply only with respect to 
the fiscal year involved and the Secretary shall not take 
into account such reduction in computing the applicable 
percentage increase under clause (i) for a subsequent fis-
cal year. 
‘‘(II) The Secretary may, on a case-by-case basis, ex-
empt a subsection (d) hospital from the application of sub-
clause (I) with respect to a fiscal year if the Secretary 
determines, subject to annual renewal, that requiring such 
hospital to be a meaningful HIT user during such fiscal 
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year would result in a significant hardship, such as in the 
case of a hospital in a rural area without sufficient Inter-
net access. In no case may a hospital be granted an ex-
emption under this subclause for more than 5 years.’’. 
(c) CONFORMING AMENDMENT.—Section 1851(i)(1) 
of such Act (42 U.S.C. 1395w–21(i)(1)) is amended by 
striking 
‘‘and 
1886(h)(3)(D)’’ 
and 
inserting 
‘‘1886(h)(3)(D), and 1886(o)(6)’’. 
(d) GAO STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study to determine the 
extent to which and manner in which payment in-
centives (such as under title XVIII or XIX of the 
Social Security Act) and other funding for purposes 
of implementing and using health information tech-
nology should be made available to health care set-
tings that are receiving minimal or no payments or 
other funding under this Act, title XVIII or XIX of 
the Social Security Act, or otherwise, for such pur-
poses. Such health care settings may include skilled 
nursing facilities, home health agencies, hospice pro-
grams, laboratories, federally qualified health cen-
ters, and pediatric hospitals. Such study shall in-
clude an examination of— 
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(A) the adoption rates of certified health 
information technology systems at such set-
tings; 
(B) the clinical utility of such systems at 
such settings; 
(C) whether the services furnished at such 
settings are appropriate for or would benefit 
from the use of such systems; 
(D) the potential costs and the potential 
benefits of providing such settings with incen-
tive payments and other funding for such pur-
poses; and 
(E) any other issues the Comptroller Gen-
eral deems to be appropriate. 
(2) REPORT.—Not later than June 30, 2010, 
the Comptroller General shall submit to Congress a 
report on the findings and conclusions of the study 
conducted under paragraph (1). 
SEC. 303. INCENTIVES FOR CERTAIN MEDICARE ADVAN-
TAGE PLANS. 
(a) IN GENERAL.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23) is amended— 
(1) in subsection (a)(1)(A), by striking ‘‘and 
(i)’’ and inserting ‘‘(i), and (l)’’; and 
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(2) by adding at the end the following new sub-
sections: 
‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL IN-
CENTIVES FOR CERTAIN MA ORGANIZATIONS TO IMPLE-
MENT CERTIFIED HEALTH INFORMATION TECHNOLOGY 
SYSTEMS.— 
‘‘(1) IN GENERAL.—Subject to paragraphs (3) 
and (4), in the case of a qualifying MA organization, 
the provisions of sections 1848(o) and 1848(a)(7) 
shall apply with respect to eligible professionals de-
scribed in paragraph (2) of the organization who the 
organization attests under section 1854(a)(1)(A)(iv) 
to be meaningful HIT users under in a similar man-
ner as they apply to eligible professionals in a group 
practice under such sections. 
‘‘(2) ELIGIBLE PROFESSIONALS DESCRIBED.— 
With respect to a qualifying MA organization, eligi-
ble professionals described in this paragraph are eli-
gible professionals (as defined for purposes of sec-
tion 1848(o)) who— 
‘‘(A) are employed by the organization or 
are employed by or partners of an entity that, 
through contract with the organization, pro-
vides its services predominantly or exclusively to 
enrollees of such organization; and 
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‘‘(B) furnish, on average, at least 20 hours 
per week of professional services. 
‘‘(3) INCENTIVE PAYMENTS.—In applying sec-
tion 1848(o) under paragraph (1), instead of the ad-
ditional payment amount under subparagraph (A) of 
section 1848(o)(1), there shall be substituted the 
maximum amount permitted under such section mul-
tiplied by the medicare share (as determined by the 
Secretary). Such medicare share for an organization 
shall be determined in a manner so as to result in 
the same aggregate payments to the organization as 
would be paid under section 1848(o) to the eligible 
professionals described in paragraph (2)(A) for serv-
ices furnished under part B of this title. 
‘‘(4) PAYMENT ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In applying section 
1848(a)(7) under paragraph (1), instead of the 
payment adjustment being an applicable per-
cent of the fee schedule amount for a year 
under such section, the payment adjustment 
under paragraph (1) shall be equal to the per-
cent specified in subparagraph (B) for such 
year of the payment amount otherwise provided 
under this section for the year. 
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‘‘(B) SPECIFIED
PERCENT.—The percent 
specified under this subparagraph for— 
‘‘(i) 2016 is 99.6 percent; 
‘‘(ii) 2017 is 99.2 percent; 
‘‘(iii) 2018 is 98.8 percent; and 
‘‘(iv) 2019 and each subsequent year 
is 98.4 percent. 
‘‘(5) 
QUALIFYING
MA
ORGANIZATION
DE-
FINED.—In this subsection and subsection (m), the 
term ‘qualifying MA organization’ means an organi-
zation that is organized as a health maintenance or-
ganization (as defined in section 2791(b)(3) of the 
Public Health Service Act) that offers one or more 
MA plans under which the physicians furnishing 
physicians’ services under such a plan are predomi-
nantly either employees of the organization or are 
employees or partners of an entity that, through 
contract with the organization, provides its services 
predominantly or exclusively to enrollees of such or-
ganization. 
‘‘(m) ELIGIBLE HOSPITAL INCENTIVES FOR CER-
TAIN MA ORGANIZATIONS TO IMPLEMENT CERTIFIED 
HEALTH INFORMATION TECHNOLOGY SYSTEMS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (3), 
in the case of a qualifying MA organization (as de-
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fined in section 1853(l)(5)), if, according to the at-
testation of the organization submitted under section 
1854(a)(1)(A)(iv) for a year, one or more eligible 
hospitals (as defined in section 1886(o)(7)(B)) that 
are under common corporate governance with such 
organization and that serve individuals enrolled 
under a plan offered by such organization are not 
meaningful HIT users (as defined in section 
1886(o)(3) with respect to a year, the payment 
amount payable under this section for such organi-
zation for such year shall be— 
‘‘(A) reduced by a percent specified by the 
Secretary for such year; or 
‘‘(B) in the case the Secretary is not able 
to specify reductions under subparagraph (A) 
because of insufficient encounter data or other 
appropriate date, the amount that is equal to 
the percent specified under paragraph (2) of 
the payment amount otherwise provided under 
this section to the organization for the year. 
Reductions specified by the Secretary under sub-
paragraph (A) shall be determined in a manner so 
as to result in the same aggregate reductions to the 
organization as would be applied under section 
1886(b)(3)(B)(ix) to all such eligible hospitals under 
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common corporate governance with such organiza-
tion if payment for inpatient services furnished by 
such hospitals was payable under part A instead of 
this part. 
‘‘(2) ALTERNATIVE PERCENT SPECIFIED.—The 
percent specified under this paragraph for— 
‘‘(A) 2016 is 99.95 percent; 
‘‘(B) 2017 is 99.90 percent; 
‘‘(C) 2018 is 99.85 percent; and 
‘‘(D) 2019 and each subsequent year is 
99.80 percent. 
‘‘(3) LIMITATION.—In no case may the applica-
tion of subsection (l) and this subsection with re-
spect to a year result in a payment amount payable 
under this section for a qualifying MA organization 
for the year that is less than the amount that is 
equal to the percent specified under paragraph (4) 
of the payment amount that would otherwise be pro-
vided under this section to the organization for the 
year without regard to subsection (l) and this sub-
section. 
‘‘(4) SPECIFIED PERCENT.—The percent speci-
fied under this paragraph for— 
‘‘(A) 2016 is 99 percent; 
‘‘(B) 2017 is 98 percent; 
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‘‘(C) 2018 is 97 percent; and 
‘‘(D) 2019 and each subsequent year is 96 
percent.’’. 
(b) MEANINGFUL HIT USER ATTESTATION WITH 
BIDS.—Section 1854(a)(1)(A) of the Social Security Act 
(42 U.S.C. 1395w–24(a)(1)(A)) is amended by adding at 
the end the following new clause: 
‘‘(iv) An attestation identifying wheth-
er each eligible professional described in 
section 1853(l)(2) with respect to such or-
ganization is a meaningful HIT user (as 
defined in section 1848(o)(3)) for the year 
and whether each eligible hospital de-
scribed in section 1853(m)(1), with respect 
to such organization, is a meaningful HIT 
user (as defined in section 1886(o)(3)) for 
the year.’’. 
(c) HIT INCENTIVE PAYMENTS EXEMPT FROM 
BENCHMARK DETERMINATIONS.—Section 1853(c) of the 
Social Security Act (42 U.S.C. 1395w–23(c)) is amend-
ed— 
(1) in paragraph (1)(D)(i), by striking ‘‘section 
1886(h)’’ and inserting ‘‘sections 1848(o), 1886(h), 
and 1886(o)’’; and 
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(2) in paragraph (6)(A), by inserting after 
‘‘under part B,’’ the following: ‘‘excluding expendi-
tures attributable to sections 1848(o) and 1886(o)’’. 
(d) CONFORMING AMENDMENT.—Section 1853(f) of 
such Act (42 U.S.C. 1395w–23(f)) is amended by insert-
ing ‘‘and for payments under subsection (l)’’ after ‘‘with 
the organization’’. 
Subtitle B—Other Incentives for 
the Implementation and Use of 
Health Information Technology 
SEC. 311. GRANT, LOAN, AND DEMONSTRATION PROGRAMS. 
Title XXX of the Public Health Service Act, as added 
by section 101, is amended by adding at the end the fol-
lowing new subtitle: 
‘‘Subtitle B—Incentives for the Use 
of Health Information Technology 
‘‘SEC. 3011. GRANTS AND LOANS TO FACILITATE THE WIDE-
SPREAD ADOPTION OF QUALIFIED HEALTH 
INFORMATION TECHNOLOGY. 
‘‘(a) COMPETITIVE GRANTS TO FACILITATE
THE 
WIDESPREAD
ADOPTION
OF
HEALTH
INFORMATION 
TECHNOLOGY.— 
‘‘(1) IN GENERAL.—The National Coordinator 
may award competitive grants to eligible entities to 
purchase qualified health information technology. 
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‘‘(2) QUALIFIED HEALTH INFORMATION TECH-
NOLOGY.—For purposes of this section, the term 
‘qualified health information technology’ means 
health information technology that consists of hard-
ware, software, or the provision of support services 
and that— 
‘‘(A) enables the protection of health infor-
mation, in accordance with applicable law; 
‘‘(B) is (or is necessary for the operation 
of) an electronic health records system, includ-
ing the provision of decision support and physi-
cian order entry for medications; 
‘‘(C) has the ability to allow timely and 
permissible access to patient information and to 
transmit and exchange health information 
among providers, patients, or insurers; and 
‘‘(D) is certified under the program devel-
oped under section 3001(c)(3) to be in compli-
ance with any applicable standards adopted 
under section 3003(a). 
‘‘(3) ELIGIBILITY.—To be eligible to receive a 
grant under paragraph (1) an entity shall— 
‘‘(A) submit to the National Coordinator 
an application at such time and in such manner 
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as the National Coordinator may require, and 
containing— 
‘‘(i) a plan on how the entity intends 
to maintain and support the qualified 
health information technology that would 
be purchased with amounts under such 
grant, including the type of resources ex-
pected to be involved; and 
‘‘(ii) such other information as the 
National Coordinator may require; 
‘‘(B) submit to the National Coordinator a 
plan for how qualified health information tech-
nology purchased by the entity will result in the 
electronic exchange and use of health informa-
tion; 
‘‘(C) be— 
‘‘(i) a not for profit hospital or a Fed-
erally qualified health center (as defined in 
section 1861(aa)(4) of the Social Security 
Act); 
‘‘(ii) an individual or group practice; 
or 
‘‘(iii) another health care provider, 
such as a rural health clinic, not described 
in clause (i) or (ii); 
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‘‘(D) demonstrate significant financial 
need; 
‘‘(E) agree to notify individuals in accord-
ance with section 402 of the Health-e Informa-
tion Technology Act of 2008 (relating to notifi-
cations in the case of breaches); 
‘‘(F) provide matching funds in accordance 
with paragraph (5); 
‘‘(G) consult with the Health Information 
Technology Resource Center established under 
section 3006 to access the knowledge and expe-
rience of existing initiatives regarding the suc-
cessful implementation and effective use of 
health information technology; and 
‘‘(H) link, to the extent practicable, to one 
or more local or regional health information 
plans. 
‘‘(4) USE OF FUNDS.—Amounts received under 
a grant under this subsection shall be used to facili-
tate the purchase of qualified health information 
technology. 
‘‘(5) MATCHING REQUIREMENT.—To be eligible 
for a grant under this subsection an entity shall con-
tribute non-Federal contributions to the costs of car-
rying out the activities for which the grant is award-
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ed in an amount equal to $1 for each $3 of Federal 
funds provided under the grant. 
‘‘(6) PREFERENCE IN AWARDING GRANTS.— 
‘‘(A) IN
GENERAL.—In awarding grants 
under this subsection the National Coordinator 
shall give preference to the following eligible en-
tities: 
‘‘(i) Small health care providers. 
‘‘(ii) Entities that are located in rural 
and other areas that serve uninsured, 
underinsured, and medically underserved 
individuals (regardless of whether such 
area is urban or rural). 
‘‘(iii) Nonprofit health care providers. 
‘‘(iv) Health care providers (such as 
children’s hospitals, pediatricians, obstetri-
cian-gynecologists, and hospitals that serve 
uninsured, underinsured, and medically un-
derserved individuals and that have limited 
Medicare patient loads) that have not re-
ceived any funds, or have received a mini-
mal amount of funds, under sections 
1848(o) and 1886(o) of the Social Security 
Act. 
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‘‘(B) 
CONSIDERATION.—In 
awarding 
grants to entities under this subsection, the Na-
tional Coordinator shall take into account the 
amount of funds provided to such entities under 
other laws, including under sections 1848(o) 
and 1886(o) of the Social Security Act. 
‘‘(7) ADDITIONAL SOURCES OF FUNDING FOR 
HEALTH
INFORMATION
TECHNOLOGY.—Funding 
made available under this subsection is in addition 
to funding which may be used toward the acquisition 
and utilization of health information technology 
under other law, which includes the following: 
‘‘(A) 
Medicaid 
transformation 
grants 
under section 1903(z) of the Social Security 
Act. 
‘‘(B) Grants or funding available through 
the Agency for Healthcare Research and Qual-
ity. 
‘‘(C) Grants or funding that may be avail-
able through the Health Resources and Services 
Administration for investment in health infor-
mation technologies or telehealth. 
‘‘(D) Grants or funding that may be avail-
able through the Department of Agriculture’s 
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Rural Development Telecommunications Pro-
gram for investment in telemedicine. 
‘‘(E) Sections 1848(o) and 1886(o) of the 
Social Security Act. 
‘‘(b) COMPETITIVE GRANTS TO STATES AND INDIAN 
TRIBES FOR THE DEVELOPMENT OF LOAN PROGRAMS TO 
FACILITATE THE WIDESPREAD ADOPTION OF QUALIFIED 
HEALTH INFORMATION TECHNOLOGY.— 
‘‘(1) IN GENERAL.—The National Coordinator 
may award competitive grants to eligible entities for 
the establishment of programs for loans to health 
care providers to purchase qualified health informa-
tion technology. 
‘‘(2) ELIGIBLE
ENTITY
DEFINED.—For pur-
poses of this subsection, the term ‘eligible entity’ 
means a State or Indian tribe (as defined in the In-
dian Self-Determination and Education Assistance 
Act) that— 
‘‘(A) submits to the National Coordinator 
an application at such time, in such manner, 
and containing such information as the Na-
tional Coordinator may require; 
‘‘(B) submits to the National Coordinator 
a strategic plan in accordance with paragraph 
(4) and provides to the National Coordinator 
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assurances that the entity will update such plan 
annually in accordance with such paragraph; 
‘‘(C) provides assurances to the National 
Coordinator that the entity will establish a 
Loan Fund in accordance with paragraph (3); 
‘‘(D) provides assurances to the National 
Coordinator that the entity will not provide a 
loan from the Loan Fund to a health care pro-
vider unless the provider meets each of the con-
ditions described in paragraph (5); and 
‘‘(E) agrees to provide matching funds in 
accordance with paragraph (9). 
‘‘(3) ESTABLISHMENT OF FUND.—For purposes 
of paragraph (2)(C), an eligible entity shall establish 
a qualified health information technology loan fund 
(referred to in this subsection as a ‘Loan Fund’) 
and comply with the other requirements contained in 
this section. A grant to an eligible entity under this 
subsection shall be deposited in the Loan Fund es-
tablished by the eligible entity. No funds authorized 
by other provisions of this subtitle to be used for 
other purposes specified in this subtitle shall be de-
posited in any Loan Fund. 
‘‘(4) STRATEGIC PLAN.— 
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‘‘(A) IN GENERAL.—For purposes of para-
graph (2)(B), a strategic plan of an eligible en-
tity under this paragraph shall identify the in-
tended uses of amounts available to the Loan 
Fund of such entity. 
‘‘(B) CONTENTS.—A strategic plan under 
subparagraph (A), with respect to a Loan Fund 
of an eligible entity, shall include for a year the 
following: 
‘‘(i) A list of the projects to be as-
sisted through the Loan Fund during such 
year. 
‘‘(ii) A description of the criteria and 
methods established for the distribution of 
funds from the Loan Fund during the 
year. 
‘‘(iii) A description of the financial 
status of the Loan Fund as of the date of 
submission of the plan. 
‘‘(iv) The short-term and long-term 
goals of the Loan Fund. 
‘‘(5) HEALTH CARE PROVIDER CONDITIONS FOR 
RECEIPT
OF
LOANS.—For purposes of paragraph 
(2)(D), the conditions described in this paragraph, 
with respect to a health care provider that seeks a 
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loan from a Loan Fund established under this sub-
section, are the following: 
‘‘(A) The health care provider links, to the 
extent practicable, to one or more local or re-
gional health information networks. 
‘‘(B) The health care provider consults 
with the Health Information Technology Re-
source Center established under section 3006 to 
access the knowledge and experience of existing 
initiatives regarding the successful implementa-
tion and effective use of health information 
technology. 
‘‘(C) The health care provider agrees to 
notify individuals in accordance with section 
402 of the Health-e Information Technology 
Act of 2008 (relating to notifications in the 
case of breaches). 
‘‘(D) The health care provider submits to 
the State or Indian tribe involved a plan on how 
the health care provider intends to maintain 
and support the qualified health information 
technology that would be purchased with such 
loan, including the type of resources expected to 
be involved and any such other information as 
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the State or Indian Tribe, respectively, may re-
quire. 
‘‘(6) USE OF FUNDS.— 
‘‘(A) IN GENERAL.—Amounts deposited in 
a Loan Fund, including loan repayments and 
interest earned on such amounts, shall be used 
only for awarding loans or loan guarantees, 
making reimbursements described in paragraph 
(8)(D)(I), or as a source of reserve and security 
for leveraged loans, the proceeds of which are 
deposited in the Loan Fund established under 
paragraph (1). Loans under this section may be 
used by a health care provider to purchase 
qualified health information technology. 
‘‘(B) LIMITATION.—Amounts received by 
an eligible entity under this subsection may not 
be used— 
‘‘(i) for the purchase or other acquisi-
tion of any health information technology 
system that is not a qualified health infor-
mation technology; or 
‘‘(ii) to conduct activities for which 
Federal funds are expended under this 
title. 
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‘‘(7) TYPES OF ASSISTANCE.—Except as other-
wise limited by applicable State law, amounts depos-
ited into a Loan Fund under this subsection may 
only be used for the following: 
‘‘(A) To award loans that comply with the 
following: 
‘‘(i) The interest rate for each loan 
shall not exceed the market interest rate. 
‘‘(ii) The principal and interest pay-
ments on each loan shall commence not 
later than 1 year after the date the loan 
was awarded, and each loan shall be fully 
amortized not later than 10 years after the 
date of the loan. 
‘‘(iii) The Loan Fund shall be cred-
ited with all payments of principal and in-
terest on each loan awarded from the Loan 
Fund. 
‘‘(B) To guarantee, or purchase insurance 
for, a local obligation (all of the proceeds of 
which finance a project eligible for assistance 
under this subsection) if the guarantee or pur-
chase would improve credit market access or re-
duce the interest rate applicable to the obliga-
tion involved. 
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‘‘(C) As a source of revenue or security for 
the payment of principal and interest on rev-
enue or general obligation bonds issued by the 
eligible entity if the proceeds of the sale of the 
bonds will be deposited into the Loan Fund. 
‘‘(D) To earn interest on the amounts de-
posited into the Loan Fund. 
‘‘(E) To make reimbursements described in 
paragraph (8)(D)(I). 
‘‘(8) ADMINISTRATION OF LOAN FUNDS.— 
‘‘(A) COMBINED FINANCIAL ADMINISTRA-
TION.—An eligible entity may (as a convenience 
and to avoid unnecessary administrative costs) 
combine, in accordance with applicable State 
law, the financial administration of a Loan 
Fund established under this subsection with the 
financial administration of any other revolving 
fund established by the entity if otherwise not 
prohibited by the law under which the Loan 
Fund was established. 
‘‘(B) COST
OF
ADMINISTERING
FUND.— 
Each eligible entity may annually use not to ex-
ceed 4 percent of the funds provided to the en-
tity under a grant under this subsection to pay 
the reasonable costs of the administration of 
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the programs under this section, including the 
recovery of reasonable costs expended to estab-
lish a Loan Fund which are incurred after the 
date of the enactment of this title. 
‘‘(C) GUIDANCE AND REGULATIONS.—The 
National Coordinator shall publish guidance 
and promulgate regulations as may be nec-
essary to carry out the provisions of this sub-
section, including— 
‘‘(i) provisions to ensure that each eli-
gible entity commits and expends funds al-
lotted to the entity under this subsection 
as efficiently as possible in accordance with 
this title and applicable State laws; and 
‘‘(ii) guidance to prevent waste, fraud, 
and abuse. 
‘‘(D) PRIVATE SECTOR CONTRIBUTIONS.— 
‘‘(i) IN GENERAL.—A Loan Fund es-
tablished under this subsection may accept 
contributions from private sector entities, 
except that such entities may not specify 
the recipient or recipients of any loan 
issued under this subsection. An eligible 
entity may agree to reimburse a private 
sector entity for any contribution made 
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under this subparagraph, except that the 
amount of such reimbursement may not be 
greater than the principal amount of the 
contribution made. 
‘‘(ii) 
AVAILABILITY
OF
INFORMA-
TION.—An eligible entity shall make pub-
licly available the identity of, and amount 
contributed by, any private sector entity 
under clause (i) and may issue letters of 
commendation or make other awards (that 
have no financial value) to any such entity. 
‘‘(9) MATCHING REQUIREMENTS.— 
‘‘(A) IN GENERAL.—The National Coordi-
nator may not make a grant under paragraph 
(1) to an eligible entity unless the entity agrees 
to make available (directly or through donations 
from public or private entities) non-Federal 
contributions in cash to the costs of carrying 
out the activities for which the grant is awarded 
in an amount equal to not less than $1 for each 
$1 of Federal funds provided under the grant. 
‘‘(B) DETERMINATION
OF
AMOUNT
OF 
NON-FEDERAL CONTRIBUTION.—In determining 
the amount of non-Federal contributions that 
an eligible entity has provided pursuant to sub-
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paragraph (A), the National Coordinator may 
not include any amounts provided to the entity 
by the Federal Government. 
‘‘(10) REPORTS.—The National Coordinator 
shall annually submit to the Committee on Health, 
Education, Labor, and Pensions and the Committee 
on Finance of the Senate, and the Committees on 
Energy and Commerce and Ways and Means of the 
House of Representatives, a report summarizing the 
reports received by the National Coordinator from 
each eligible entity that receives a grant under this 
subsection. 
‘‘(c) COMPETITIVE GRANTS FOR THE IMPLEMENTA-
TION OF REGIONAL OR LOCAL HEALTH INFORMATION 
TECHNOLOGY PLANS.— 
‘‘(1) IN GENERAL.—The National Coordinator 
may award competitive grants to eligible entities to 
implement regional or local health information plans 
to improve health care quality and efficiency through 
the electronic exchange and use of health informa-
tion. 
‘‘(2) ELIGIBILITY.—To be eligible to receive a 
grant under paragraph (1) an entity shall— 
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‘‘(A) facilitate the electronic exchange and 
use of health information within the local or re-
gional area and among local and regional areas; 
‘‘(B) demonstrate financial need to the Na-
tional Coordinator; 
‘‘(C) demonstrate that one of its principal 
missions or purposes is to use information tech-
nology to improve health care quality and effi-
ciency; 
‘‘(D) adopt bylaws, memoranda of under-
standing, or other charter documents that dem-
onstrate that the governance structure and de-
cisionmaking processes of such entity allow for 
participation on an ongoing basis by multiple 
stakeholders within a community, including— 
‘‘(i) physicians (as defined in section 
1861(r)) of the Social Security Act), in-
cluding physicians that provide services to 
low income populations and populations 
that are uninsured, underinsured, and 
medically underserved (including such pop-
ulations in urban and rural areas); 
‘‘(ii) other health care providers, such 
as hospitals that serve uninsured, under-
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insured, and medically underserved individ-
uals; 
‘‘(iii) patient or consumer organiza-
tions that reflect the population to be 
served; 
‘‘(iv) employers; 
‘‘(v) public health agencies; and 
‘‘(vi) such other entities, as deter-
mined appropriate by the National Coordi-
nator; 
‘‘(E) demonstrate the participation, to the 
extent practicable, of stakeholders in the elec-
tronic exchange and use of health information 
within the local or regional health information 
plan pursuant to subparagraph (D); 
‘‘(F) adopt nondiscrimination and conflict 
of interest policies that demonstrate a commit-
ment to open, fair, and nondiscriminatory par-
ticipation in the regional or local health infor-
mation plan by all stakeholders; 
‘‘(G) comply with applicable standards 
adopted under section 3003(a); 
‘‘(H) prepare and submit to the National 
Coordinator an application in accordance with 
paragraph (3); and 
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‘‘(I) agree to provide matching funds in ac-
cordance with paragraph (6). 
‘‘(3) APPLICATION.— 
‘‘(A) IN GENERAL.—To be eligible to re-
ceive a grant under paragraph (1), an entity 
shall submit to the National Coordinator an ap-
plication at such time, in such manner, and 
containing such information (in addition to in-
formation required under subparagraph (B)), as 
the National Coordinator may require. 
‘‘(B) 
REQUIRED
INFORMATION.—At 
a 
minimum, an application submitted under this 
paragraph shall include— 
‘‘(i) clearly identified short-term and 
long-term objectives of the regional or local 
health information plan; 
‘‘(ii) an estimate of costs of the hard-
ware, software, training, and other services 
necessary to implement the regional or 
local health information plan; 
‘‘(iii) a strategy that includes initia-
tives to improve health care quality and ef-
ficiency; 
‘‘(iv) a plan that describes provisions 
to encourage the electronic exchange and 
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use of health information by all physicians, 
including single physician practices and 
small physician groups, participating in the 
health information plan; 
‘‘(v) a plan to ensure the privacy and 
security of individually identifiable health 
information that is consistent with applica-
ble Federal and State law; 
‘‘(vi) a governance plan that defines 
the manner in which the stakeholders shall 
jointly make policy and operational deci-
sions on an ongoing basis; 
‘‘(vii) a financial or business plan that 
describes— 
‘‘(I) the sustainability of the 
plan; 
‘‘(II) the financial costs and ben-
efits of the plan; and 
‘‘(III) the entities to which such 
costs and benefits will accrue; 
‘‘(viii) a plan on how the entity in-
volved intends to maintain and support the 
regional or local health information plan, 
including the type of resources expected to 
be involved; and 
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‘‘(ix) in the case of an applicant that 
is unable to demonstrate the participation 
of all stakeholders pursuant to paragraph 
(2)(D), the justification from the entity for 
any such nonparticipation. 
‘‘(4) USE OF FUNDS.—Amounts received under 
a grant under paragraph (1) shall be used to estab-
lish and implement a regional or local health infor-
mation plan in accordance with this subsection. 
‘‘(5) PREFERENCE.—In awarding grants under 
paragraph (1), the Secretary shall give preference to 
eligible entities that intend to use amounts received 
under a grant to establish or implement a regional 
or local health information plan that encompasses 
communities with health disparities or areas that 
serve uninsured, underinsured, and medically under-
served individuals (including urban and rural areas). 
‘‘(6) MATCHING REQUIREMENT.— 
‘‘(A) IN GENERAL.—The National Coordi-
nator may not make a grant under this sub-
section to an entity unless the entity agrees 
that, with respect to the costs of carrying out 
the activities for which the grant is awarded, 
the entity will make available (directly or 
through donations from public or private enti-
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ties) non-Federal contributions toward such 
costs in an amount equal to not less than 50 
percent of such costs ($1 for each $2 of Federal 
funds provided under the grant). 
‘‘(B) DETERMINATION
OF
AMOUNT
CON-
TRIBUTED.—Non-Federal 
contributions 
re-
quired under subparagraph (A) may be in cash 
or in kind, fairly evaluated, including equip-
ment, technology, or services. Amounts provided 
by the Federal Government, or services assisted 
or subsidized to any significant extent by the 
Federal Government, may not be included in 
determining the amount of such non-Federal 
contributions. 
‘‘(d) REPORTS.—Not later than 1 year after the date 
on which the first grant is awarded under this section, 
and annually thereafter during the grant period, an entity 
that receives a grant under this section shall submit to 
the National Coordinator a report on the activities carried 
out under the grant involved. Each such report shall in-
clude— 
‘‘(1) a description of the financial costs and 
benefits of the project involved and of the entities to 
which such costs and benefits accrue; 
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‘‘(2) an analysis of the impact of the project on 
health care quality and safety; 
‘‘(3) a description of any reduction in duplica-
tive or unnecessary care as a result of the project in-
volved; 
‘‘(4) a description of the efforts of recipients 
under this section to facilitate secure patient access 
to health information; 
‘‘(5) an analysis of the effectiveness of the 
project involved on ensuring the privacy and security 
of individually identifiable health information in ac-
cordance with applicable Federal and State law; and 
‘‘(6) other information as required by the Na-
tional Coordinator. 
‘‘(e) REQUIREMENT TO IMPROVE QUALITY OF CARE 
AND DECREASE IN COSTS.—The National Coordinator 
shall annually evaluate the activities conducted under this 
section and shall, in awarding grants, implement the les-
sons learned from such evaluation in a manner so that 
awards made subsequent to each such evaluation are made 
in a manner that, in the determination of the National 
Coordinator, will result in the greatest improvement in 
quality of care and decrease in costs. 
‘‘(f) LIMITATION.—An eligible entity may only receive 
one non-renewable grant under subsection (a), one non- 
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renewable grant under subsection (b), and one non-renew-
able grant under subsection (c). 
‘‘(g) SMALL HEALTH CARE PROVIDER.—For pur-
poses of this section, the term ‘small health care provider’ 
means a health care provider that has an average of 10 
or fewer full-time equivalent employees during the period 
involved. 
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.— 
‘‘(1) IN
GENERAL.—For the purpose of car-
rying out subsections (a) through (d), there is au-
thorized to be appropriated $115,000,000 for each 
of the fiscal years 2009 through 2013. 
‘‘(2) 
AVAILABILITY.—Amounts 
appropriated 
under paragraph (1) shall remain available through 
fiscal year 2013. 
‘‘SEC. 3012. DEMONSTRATION PROGRAM TO INTEGRATE IN-
FORMATION TECHNOLOGY INTO CLINICAL 
EDUCATION. 
‘‘(a) IN GENERAL.—The Secretary may award grants 
under this section to carry out demonstration projects to 
develop academic curricula integrating qualified health in-
formation technology in the clinical education of health 
professionals. Such awards shall be made on a competitive 
basis and pursuant to peer review. 
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100 
‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 
under subsection (a), an entity shall— 
‘‘(1) submit to the Secretary an application at 
such time, in such manner, and containing such in-
formation as the Secretary may require; 
‘‘(2) submit to the Secretary a strategic plan 
for integrating qualified health information tech-
nology in the clinical education of health profes-
sionals to reduce medical errors and enhance health 
care quality; 
‘‘(3) be— 
‘‘(A) a school of medicine, osteopathic 
medicine, dentistry, or pharmacy, a graduate 
program in behavioral or mental health, or any 
other graduate health professions school; 
‘‘(B) a graduate school of nursing or phy-
sician assistant studies; 
‘‘(C) a consortium of two or more schools 
described in subparagraph (A) or (B); or 
‘‘(D) an institution with a graduate med-
ical education program in medicine, osteopathic 
medicine, dentistry, pharmacy, nursing, or phy-
sician assistance studies; 
‘‘(4) provide for the collection of data regarding 
the effectiveness of the demonstration project to be 
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101 
funded under the grant in improving the safety of 
patients, the efficiency of health care delivery, and 
in increasing the likelihood that graduates of the 
grantee will adopt and incorporate qualified health 
information technology, in the delivery of health care 
services; and 
‘‘(5) provide matching funds in accordance with 
subsection (d). 
‘‘(c) USE OF FUNDS.— 
‘‘(1) IN GENERAL.—With respect to a grant 
under subsection (a), an eligible entity shall— 
‘‘(A) use grant funds in collaboration with 
2 or more disciplines; and 
‘‘(B) use grant funds to integrate qualified 
health information technology into community- 
based clinical education. 
‘‘(2) LIMITATION.—An eligible entity shall not 
use amounts received under a grant under sub-
section (a) to purchase hardware, software, or serv-
ices. 
‘‘(d) MATCHING FUNDS.— 
‘‘(1) IN GENERAL.—The Secretary may award 
a grant to an entity under this section only if the 
entity agrees to make available non-Federal con-
tributions toward the costs of the program to be 
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102 
funded under the grant in an amount that is not 
less than $1 for each $2 of Federal funds provided 
under the grant. 
‘‘(2) DETERMINATION
OF
AMOUNT
CONTRIB-
UTED.—Non-Federal contributions under paragraph 
(1) may be in cash or in kind, fairly evaluated, in-
cluding equipment or services. Amounts provided by 
the Federal Government, or services assisted or sub-
sidized to any significant extent by the Federal Gov-
ernment, may not be included in determining the 
amount of such contributions. 
‘‘(e) EVALUATION.—The Secretary shall take such 
action as may be necessary to evaluate the projects funded 
under this section and publish, make available, and dis-
seminate the results of such evaluations on as wide a basis 
as is practicable. 
‘‘(f) REPORTS.—Not later than 1 year after the date 
of enactment of this title, and annually thereafter, the Sec-
retary shall submit to the Committee on Health, Edu-
cation, Labor, and Pensions and the Committee on Fi-
nance of the Senate, and the Committees on Energy and 
Commerce and Ways and Means of the House of Rep-
resentatives a report that— 
‘‘(1) describes the specific projects established 
under this section; and 
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103 
‘‘(2) contains recommendations for Congress 
based on the evaluation conducted under subsection 
(e). 
‘‘(g) AUTHORIZATION OF APPROPRIATIONS.—There 
is authorized to be appropriated to carry out this section, 
$10,000,000 for each of fiscal years 2009 through 2011. 
‘‘(h) SUNSET.—This section shall not apply after 
September 30, 2011.’’. 
TITLE IV—PRIVACY AND 
SECURITY PROVISIONS 
SEC. 400. DEFINITIONS. 
In this title, except as specified otherwise: 
(1) BREACH.—The term ‘‘breach’’ means the 
unauthorized acquisition, access, or disclosure of 
protected health information which compromises the 
security, privacy, or integrity of protected health in-
formation maintained by or on behalf of a person. 
Such term does not include any unintentional acqui-
sition or access of such information by an employee 
or agent of the covered entity or business associate 
involved if such acquisition or access, respectively, 
was made in good faith and within the course and 
scope of the employment or other contractual rela-
tionship of such employee or agent, respectively, 
with the covered entity or business associate and if 
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104 
such information is not further acquired, accessed, 
or disclosed by such employee or agent. 
(2) BUSINESS ASSOCIATE.—The term ‘‘business 
associate’’ has the meaning given such term in sec-
tion 160.103 of title 45, Code of Federal Regula-
tions. 
(3) COVERED ENTITY.—The term ‘‘covered en-
tity’’ has the meaning given such term in section 
160.103 of title 45, Code of Federal Regulations. 
(4) DISCLOSE.—The terms ‘‘disclose’’ and ‘‘dis-
closure’’ have the meaning given the term ‘‘disclo-
sure’’ in section 160.103 of title 45, Code of Federal 
Regulations. 
(5) ELECTRONIC HEALTH RECORD.—The term 
‘‘electronic health record’’ means an electronic 
record of health-related information on an individual 
that is created, gathered, managed, and consulted by 
authorized health care clinicians and staff of one or 
more organizations, that conforms to standards 
adopted under section 3003(a) of the Public Health 
Service Act, as added by section 101, and is made 
accessible electronically to other health care organi-
zations and other authorized users. 
(6) ELECTRONIC MEDICAL RECORD.—The term 
‘‘electronic medical record’’ means an electronic 
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105 
record of individually identifiable health information 
on an individual that is created, gathered, managed, 
and consulted by authorized health care clinicians 
and staff within a single organization. 
(7) HEALTH
CARE
OPERATIONS.—The term 
‘‘health care operation’’ has the meaning given such 
term in section 164.501 of title 45, Code of Federal 
Regulations. 
(8) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ has the meaning given such 
term in section 160.103 of title 45, Code of Federal 
Regulations. 
(9) HEALTH PLAN.—The term ‘‘health plan’’ 
has the meaning given such term in section 1171(5) 
of the Social Security Act, as amended by section 
415. 
(10) 
NATIONAL
COORDINATOR.—The 
term 
‘‘National Coordinator’’ means the head of the Of-
fice of the National Coordinator for Health Informa-
tion Technology established under section 3001(a) of 
the Public Health Service Act, as added by section 
101. 
(11) PAYMENT.—The term ‘‘payment’’ has the 
meaning given such term in section 164.501 of title 
45, Code of Federal Regulations. 
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106 
(12) PERSONAL HEALTH RECORD.—The term 
‘‘personal health record’’ means an electronic record 
of individually identifiable health information on an 
individual that can be drawn from multiple sources 
and that is managed, shared, and controlled by or 
for the individual. 
(13) PROTECTED HEALTH INFORMATION.—The 
term ‘‘protected health information’’ has the mean-
ing given such term in section 160.103 of title 45, 
Code of Federal Regulations. 
(14) 
SECRETARY.—The 
term 
‘‘Secretary’’ 
means the Secretary of Health and Human Services. 
(15) SECURITY.—The term ‘‘security’’ has the 
meaning given such term in section 164.304 of title 
45, Code of Federal Regulations. 
(16) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, Puerto 
Rico, the Virgin Islands, Guam, American Samoa, 
and the Northern Mariana Islands. 
(17) TREATMENT.—The term ‘‘treatment’’ has 
the meaning given such term in section 164.501 of 
title 45, Code of Federal Regulations. 
(18) USE.—The term ‘‘use’’ has the meaning 
given such term in section 160.103 of title 45, Code 
of Federal Regulations. 
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107 
(19) 
VENDOR
OF
PERSONAL
HEALTH 
RECORDS.—The term ‘‘vendor of personal health 
records’’ means an entity that offers or maintains a 
personal health record. Such term does not include 
an entity that is a covered entity for purposes of of-
fering or maintaining such personal health record. 
Subtitle A—Improved Privacy 
Provisions and Security Provisions 
SEC. 401. APPLICATION OF SECURITY PROVISIONS AND 
PENALTIES TO BUSINESS ASSOCIATES OF 
COVERED ENTITIES; ANNUAL GUIDANCE ON 
PRIVACY AND SECURITY PROVISIONS. 
(a) APPLICATION OF SECURITY PROVISIONS.—Sec-
tions 164.308, 164.310, 164.312, and 164.316 of title 45, 
Code of Federal Regulations, and any applicable security 
standards adopted by the Secretary under section 3003(a) 
of the Public Health Service Act, as added by section 101, 
shall apply to a business associate of a covered entity in 
the same manner that such sections and standards, re-
spectively, apply to the covered entity. 
(b) APPLICATION
OF CIVIL
AND CRIMINAL PEN-
ALTIES.—Sections 1176 and 1177 of the Social Security 
Act (42 U.S.C. 1320d–5, 1320d–6) shall apply to a busi-
ness associate of a covered entity with respect to a section 
applied under subsection (a) to such business associate in 
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108 
the same manner that such sections apply to a covered 
entity with respect to such section. 
(c) ANNUAL GUIDANCE.—Not later than 12 months 
after the date of the enactment of this Act and annually 
thereafter, the Secretary of Health and Human Services 
shall, in consultation with industry stakeholders, annually 
issue guidance on the latest privacy and security safeguard 
technologies for use in carrying out the sections described 
in subsection (a). 
SEC. 402. NOTIFICATION IN THE CASE OF BREACH. 
(a) IN GENERAL.—A covered entity that accesses, 
maintains, retains, modifies, records, stores, destroys, or 
otherwise holds, uses, or discloses unsecured protected 
health information (as defined in subsection (h)(1)) shall, 
in the case of a breach of such information that is discov-
ered by the covered entity, notify each individual whose 
unsecured protected health information has been, or is 
reasonably believed by the covered entity to have been, 
accessed, acquired, or disclosed as a result of such breach. 
(b) NOTIFICATION OF COVERED ENTITY BY BUSI-
NESS ASSOCIATE.—A business associate of a covered enti-
ty that accesses, maintains, retains, modifies, records, 
stores, destroys, or otherwise holds, uses, or discloses un-
secured protected health information shall, following the 
discovery of a breach of such information, notify the cov-
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109 
ered entity of such breach. Such notice shall include the 
identification of each individual whose unsecured protected 
health information has been, or is reasonably believed by 
the business associate to have been, accessed, acquired, 
or disclosed during such breach. 
(c) BREACHES TREATED AS DISCOVERED.—For pur-
poses of this section, a breach shall be treated as discov-
ered by a covered entity or by a business associate as of 
the first day on which such breach is known to such entity 
or associate, respectively, (including any person that is an 
employee, officer, or other agent of such entity or asso-
ciate, respectively) or should reasonably have been known 
to such entity or associate (or person) to have occurred. 
(d) TIMELINESS OF NOTIFICATION.— 
(1) IN GENERAL.—Subject to subsection (g), all 
notifications required under this section shall be 
made without unreasonable delay and in no case 
later than 60 calendar days after the discovery of a 
breach by the covered entity involved (or business 
associate involved in the case of a notification re-
quired under subsection (b)). 
(2) BURDEN OF PROOF.—The covered entity in-
volved (or business associate involved in the case of 
a notification required under subsection (b)), shall 
have the burden of demonstrating that all notifica-
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tions were made as required under this subtitle, in-
cluding evidence demonstrating the necessity of any 
delay. 
(e) METHODS OF NOTICE.— 
(1) 
INDIVIDUAL
NOTICE.—Notice 
required 
under this section to be provided to an individual, 
with respect to a breach, shall be provided promptly 
and in the following form: 
(A) Written notification by first-class mail 
to the individual (or the next of kin of the indi-
vidual if the individual is deceased) at the last 
known address of the individual or the next of 
kin, respectively, or, if specified as a preference 
by the individual, by electronic mail. The notifi-
cation may be provided in one or more mailings 
as information is available. 
(B) In the case in which there is insuffi-
cient, or out-of-date contact information that 
precludes direct written (or, if specified by the 
individual under subparagraph (A), electronic) 
notification to the individual, a substitute form 
of notice shall be provided, including a con-
spicuous posting on the home page of the Web 
site of the covered entity involved or notice in 
major print or broadcast media, including 
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111 
major media in geographic areas where the in-
dividuals affected by the breach likely reside. 
Such a notice in media will include a toll-free 
phone number where an individual can learn 
whether or not the individual’s unsecured pro-
tected health information is possibly included in 
the breach. 
(C) In any case deemed by the covered en-
tity involved to require urgency because of pos-
sible imminent misuse of unsecured protected 
health information, the covered entity, in addi-
tion to notice provided under subparagraph (A), 
may provide information to individuals by tele-
phone or other means, as appropriate. 
(2) MEDIA NOTICE.—Notice shall be provided 
to prominent media outlets serving a State or juris-
diction, following the discovery of a breach described 
in subsection (a), if the unsecured protected health 
information of more than 500 residents of such 
State or jurisdiction is, or is reasonably believed to 
have been, accessed, acquired, or disclosed during 
such breach. 
(3) NOTICE TO SECRETARY.—Notice shall be 
provided to the Secretary by covered entities of un-
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secured protected health information that has been 
acquired or disclosed in a breach. 
(4) POSTING ON HHS PUBLIC WEBSITE.—The 
Secretary shall make available to the public on the 
Internet website of the Department of Health and 
Human Services a list that identifies each covered 
entity involved in a breach described in subsection 
(a) in which the unsecured protected health informa-
tion of more than 1,000 individuals is acquired or 
disclosed. 
(f) CONTENT OF NOTIFICATION.—Regardless of the 
method by which notice is provided to individuals under 
this section, notice of a breach shall include, to the extent 
possible, the following: 
(1) A brief description of what happened, in-
cluding the date of the breach and the date of the 
discovery of the breach, if known. 
(2) A description of the types of unsecured pro-
tected health information that were involved in the 
breach (such as full name, Social Security number, 
date of birth, home address, account number, or dis-
ability code). 
(3) The steps individuals should take to protect 
themselves from potential harm resulting from the 
breach. 
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113 
(4) A brief description of what the covered enti-
ty involved is doing to investigate the breach, to 
mitigate losses, and to protect against any further 
breaches. 
(5) Contact procedures for individuals to ask 
questions or learn additional information, which 
shall include a toll-free telephone number, an e-mail 
address, Web site, or postal address. 
(g) DELAY OF NOTIFICATION AUTHORIZED FOR LAW 
ENFORCEMENT PURPOSES.—If a law enforcement official 
determines that a notification, notice, or posting required 
under this section would impede a criminal investigation 
or cause damage to national security, such notification, 
notice, or posting shall be delayed in the same manner 
as provided under section 164.528(a)(2) of title 45, Code 
of Federal Regulations, in the case of a disclosure covered 
under such section. 
(h) UNSECURED PROTECTED HEALTH INFORMA-
TION.— 
(1) DEFINITION.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), for purposes of this section, the 
term ‘‘unsecured protected health information’’ 
means protected health information that is not 
protected through the use of a technology or 
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114 
methodology specified by the Secretary in the 
guidance issued under paragraph (2). 
(B) EXCEPTION
IN
CASE
TIMELY
GUID-
ANCE NOT ISSUED.—In the case that the Sec-
retary does not issue guidance under paragraph 
(2) by the date specified in such paragraph, for 
purposes of this section, the term ‘‘unsecured 
protected health information’’ shall mean infor-
mation that is not protected by technology 
standards developed or endorsed by a standards 
developing organization that is accredited by 
the American National Standards Institute. 
(2) GUIDANCE.—For purposes of paragraph (1) 
and section 415(f), not later than the date that is 
60 days after the date of the enactment of this Act, 
the Secretary shall, after consultation with stake-
holders, issue (and annually update) guidance speci-
fying the technologies and methodologies that render 
protected health information unusable, unreadable, 
or indecipherable to unauthorized individuals. 
(i) REPORT TO CONGRESS ON BREACHES.— 
(1) IN GENERAL.—Not later than 12 months 
after the date of the enactment of this Act and an-
nually thereafter, the Secretary shall prepare and 
submit to the Committee on Finance and the Com-
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115 
mittee on Health, Education, Labor, and Pensions 
of the Senate and the Committee on Ways and 
Means and the Committee on Energy and Commerce 
of the House of Representatives a report containing 
the information described in paragraph (2) regard-
ing breaches for which notice was provided to the 
Secretary under subsection (e)(3). 
(2) INFORMATION.—The information described 
in this paragraph regarding breaches specified in 
paragraph (1) shall include— 
(A) the number and nature of such 
breaches; 
(B) actions taken in response to such 
breaches; and 
(C) any recommendations described in sec-
tion 422(b)(9) made by the National Coordi-
nator for the year involved. 
(j) EFFECTIVE DATE.—The provisions of this section 
shall apply to breaches that are discovered on or after the 
date that is 90 days after the date of the enactment of 
this Act. 
SEC. 403. EDUCATION ON HEALTH INFORMATION PRIVACY 
AND REPORT ON COMPLIANCE. 
(a) REGIONAL OFFICE PRIVACY ADVISORS.—Not 
later than 6 months after the date of the enactment of 
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116 
this Act, the Secretary shall designate an individual in 
each regional office of the Department of Health and 
Human Services to offer guidance and education to cov-
ered entities, business associates, and individuals on their 
rights and responsibilities related to Federal privacy and 
security requirements for protected health information. 
(b) REPORT ON COMPLIANCE.— 
(1) IN GENERAL.—Not later than 24 months 
after the date of the enactment of this Act and an-
nually thereafter, the Secretary shall prepare and 
submit to the Committee on Finance and the Com-
mittee on Health, Education, Labor, and Pensions 
of the Senate and the Committee on Ways and 
Means and the Committee on Energy and Commerce 
of the House of Representatives a report concerning 
the number of audits performed and a summary of 
audit findings pursuant to section 414 and com-
plaints of alleged violations of the provisions of sec-
tions 401 and 402, the provisions of subtitle B, and 
the provisions of subparts C and E of title 45, Code 
of Federal Regulations that are received by the Sec-
retary during the year for which the report is being 
prepared. Each such report shall include, with re-
spect to such complaints received during the year— 
(A) the number of such complaints; 
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117 
(B) the number of such complaints re-
solved informally, a summary of the types of 
such complaints so resolved, and the number of 
covered entities that received technical assist-
ance from the Secretary during such year in 
order to achieve compliance with such provi-
sions and the types of such technical assistance 
provided; 
(C) the number of such complaints that re-
sulted in the imposition of civil money penalties, 
the amount of the civil money penalty imposed 
in each such case, and a summary of the basis 
for each such civil money penalty; 
(D) the number of compliance reviews con-
ducted and the outcome of each such review; 
(E) the number of subpoenas or inquiries 
issued; and 
(F) the Secretary’s plan for improving 
compliance with and enforcement of such provi-
sions for the following year. 
(2) AVAILABILITY
TO
PUBLIC.—Each report 
under paragraph (1) shall be made available to the 
public on the Internet website of the Department of 
Health and Human Services. 
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118 
(c) EDUCATION INITIATIVE ON USES OF HEALTH IN-
FORMATION.— 
(1) IN GENERAL.—Not later than 12 months 
after the date of the enactment of this Act, the Of-
fice for Civil Rights within the Department of 
Health and Human Services shall develop and main-
tain a multi-faceted national education initiative to 
enhance public transparency regarding the uses of 
protected health information, including programs to 
educate individuals about the potential uses of their 
protected health information, the effects of such 
uses, and the rights of individuals with respect to 
such uses. Such programs shall be conducted in a 
variety of languages and present information in a 
clear and understandable manner. 
(2) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
paragraph (1), $10,000,000 for the period of fiscal 
years 2009 through 2013. 
SEC. 404. APPLICATION OF PENALTIES TO BUSINESS ASSO-
CIATES OF COVERED ENTITIES FOR VIOLA-
TIONS OF PRIVACY CONTRACT REQUIRE-
MENTS. 
(a) APPLICATION OF CONTRACT REQUIREMENTS.— 
In the case of a business associate of a covered entity that 
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119 
obtains or creates protected health information pursuant 
to a written contract (or other written arrangement) de-
scribed in section 164.502(e)(2) of title 45, Code of Fed-
eral Regulations, with such covered entity, the business 
associate may use and disclose such protected health infor-
mation only if such use or disclosure, respectively, is in 
compliance with each applicable requirement of section 
164.504(e) of such title and section 405(b). 
(b) APPLICATION OF KNOWLEDGE ELEMENTS ASSO-
CIATED WITH CONTRACTS.—Section 164.504(e)(1)(ii) of 
title 45, Code of Federal Regulations, shall apply to a 
business associate described in subsection (a), with respect 
to compliance with such subsection, in the same manner 
that such section applies to a covered entity, with respect 
to compliance with the standards in sections 164.502(e) 
and 164.504(e) of such title, except that in applying such 
section 164.504(e)(1)(ii) each reference to the business as-
sociate, with respect to a contract, shall be treated as a 
reference to the covered entity involved in such contract. 
(c) APPLICATION
OF CIVIL
AND CRIMINAL PEN-
ALTIES.—In the case of a business associate that violates 
any provision of subsection (a) or (b), the provisions of 
sections 1176 and 1177 of the Social Security Act (42 
U.S.C. 1320d–5, 1320d–6) shall apply to the business as-
sociate with respect to such violation in the same manner 
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120 
as such provisions apply to a person who violates a provi-
sion of part C of title XI of such Act. 
SEC. 405. RESTRICTIONS ON CERTAIN USES AND DISCLO-
SURES AND SALES OF HEALTH INFORMA-
TION; ACCOUNTING OF CERTAIN PROTECTED 
HEALTH INFORMATION DISCLOSURES; AC-
CESS TO CERTAIN INFORMATION IN ELEC-
TRONIC FORMAT. 
(a) REQUESTED RESTRICTIONS ON CERTAIN DIS-
CLOSURES OF HEALTH INFORMATION.—In the case that 
an individual requests under paragraph (a)(1)(i)(A) of 
section 164.522 of title 45, Code of Federal Regulations, 
that a covered entity restrict the disclosure of the pro-
tected health information of the individual, notwith-
standing paragraph (a)(1)(ii) of such section, the covered 
entity must comply with the requested restriction if— 
(1) except as otherwise required by law, the dis-
closure is to a health plan for purposes of carrying 
out payment or health care operations (and is not 
for purposes of carrying out treatment); and 
(2) the protected health information pertains 
solely to a health care item or service for which the 
health care provider involved has been paid out of 
pocket in full. 
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121 
(b) DISCLOSURES REQUIRED TO BE LIMITED TO 
THE
LIMITED
DATA
SET
OR
THE
MINIMUM
NEC-
ESSARY.— 
(1) TRANSITIONAL RULE.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), a covered entity shall be treated as 
being in compliance with section 164.502(b)(1) 
of title 45, Code of Federal Regulations, and 
for purposes of section 404(a) a business asso-
ciate shall be treated as being in compliance 
with this subsection, with respect to the use, 
disclosure, or request of protected health infor-
mation described in such section, only if the 
covered entity or business associate, respec-
tively, limits such protected health information, 
to the extent practicable, to either the limited 
data set (as defined in section 164.514(e)(2) of 
such title) or to the minimum necessary to ac-
complish the intended purpose of such use, dis-
closure, or request, respectively. 
(B) SUNSET.—Subparagraph (A) shall not 
apply on and after the earlier of— 
(i) the effective date on which the 
Secretary adopts, taking into consideration 
the regulations promulgated under section 
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122 
406(d), the study under section 410, and 
the report under section 411, a standard 
under section 3003(a) of the Public Health 
Service Act, as added by section 101, 
which defines the term ‘‘minimum nec-
essary’’ for purposes of subpart E of part 
164 of title 45, Code of Federal Regula-
tions; or 
(ii) the National Coordinator rec-
ommends 
guidance 
under 
section 
3001(c)(2) of such Act which defines such 
term for such purposes. 
(2) 
DETERMINATION
OF
MINIMUM
NEC-
ESSARY.—For purposes of paragraph (1), in the 
case of the disclosure of protected health informa-
tion, the covered entity or business associate dis-
closing such information shall determine what con-
stitute the minimum necessary to accomplish the in-
tended purpose of such disclosure. 
(3) APPLICATION OF EXCEPTIONS.—The excep-
tions described in section 164.502(b)(2) of title 45, 
Code of Federal Regulations, shall apply to the re-
quirement under paragraph (1) as of the effective 
date described in section 433 in the same manner 
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that such exceptions apply to section 164.502(b)(1) 
of such title before such date. 
(4) RULE OF CONSTRUCTION.—Nothing in this 
subsection shall be construed as affecting the use, 
disclosure, or request of protected health information 
that has been de-identified to the greatest extent 
practicable rather than the use of protected health 
information that has been limited to the limited data 
set. 
(c) ACCOUNTING OF CERTAIN PROTECTED HEALTH 
INFORMATION DISCLOSURES REQUIRED IF COVERED EN-
TITY USES ELECTRONIC MEDICAL RECORD OR ELEC-
TRONIC HEALTH RECORD.— 
(1) IN GENERAL.—In applying section 164.528 
of title 45, Code of Federal Regulations, in the case 
of protected health information used or maintained 
by a covered entity in an electronic medical record 
or an electronic health record— 
(A) the exception under section paragraph 
(a)(1)(i) of such section shall not apply to dis-
closures (other than oral disclosures) made by 
such entity of such information; and 
(B) an individual shall have a right to re-
ceive an accounting of disclosures described in 
such paragraph of such information made by 
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124 
such covered entity during only the three years 
prior to the date on which the accounting is re-
quested. 
(2) EFFECTIVE DATE.—The provisions of this 
subsection shall apply to disclosures, with respect to 
protected health information, made by a covered en-
tity on or after the sooner of the following dates: 
(A) In the case of an entity that does not 
use or maintain an electronic medical record or 
electronic health record before the date of the 
enactment of this Act with respect to such in-
formation, the date on which the covered entity 
first uses or maintains an electronic medical 
record or electronic health record, with respect 
to such information, and in the case of an enti-
ty that uses or maintains an electronic medical 
record or electronic health record with respect 
to such information before such date of enact-
ment, the date on which the covered entity up-
grades such electronic medical record or elec-
tronic health record. 
(B) If a standard that relates to tech-
nologies that allow for an accounting for disclo-
sures made by a covered entity for purposes of 
treatment, payment, and health care operations 
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125 
is adopted under section 3003(a) of the Public 
Health Service Act, as added by section 101, 
the date that is 6 months after the date of such 
adoption. 
(d) PROHIBITION ON CERTAIN DISCLOSURES.— 
(1) IN GENERAL.—The following uses and dis-
closures shall not be considered to be permitted uses 
or disclosures of protected health information for 
purposes of subparts C and E of part 164 of title 
45, Code of Federal Regulations: 
(A) SALE OF PROTECTED HEALTH INFOR-
MATION.—The sale of any protected health in-
formation of an individual by a covered entity 
or business associate unless the covered entity 
or business associate obtains from the indi-
vidual, in accordance with section 164.508 of 
title 45, Code of Federal Regulations, a valid 
authorization (as described in paragraph (b) of 
such section) to sell such information or unless 
the sale is for purposes of research and public 
health activities (as described in sections 
164.501, 164.512(i), and 164.512(b) of title 
45, Code of Federal Regulations) and the price 
charged reflects the costs of preparation and 
transmittal of the data for such purposes. 
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126 
(B) RE-IDENTIFICATION
OF
DE-IDENTI-
FIED INFORMATION.—In the case of an entity 
that has received information that has been de- 
identified in accordance with section 164.514 of 
title 45, Code of Federal Regulations, the re- 
identification by the entity of such information. 
(C) 
IDENTIFICATION
OF
INDIVIDUAL 
THROUGH USE OF LIMITED DATA SET.—In the 
case of an entity that has received a limited 
data set (as defined in section 164.514(e)(2) of 
title 45, Code of Federal Regulations), the use, 
alone or in combination with other information, 
of such set to identify the subject of the data 
set. 
(2) LIMITATION
ON
CONDITION.—In no case 
may a covered entity condition the provision of 
treatment to an individual, or payment for such 
treatment, on the individual providing authorization 
described in paragraph (1)(A). 
(3) CONSTRUCTION.—Nothing in this sub-
section shall be construed as limiting the authority 
of the Secretary to adopt standards and guidance 
under section 3003(a) of the Public Health Service 
Act, as added by section 101. 
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127 
(4) EFFECTIVE DATE.—The provisions of this 
subsection shall apply to uses and disclosures made 
on or after the date of the enactment of this Act. 
(e) ACCESS TO CERTAIN INFORMATION IN ELEC-
TRONIC FORMAT.—In applying section 164.524 of title 
45, Code of Federal Regulations, in the case that a cov-
ered entity uses or maintains an electronic medical record 
or electronic health record with respect to protected health 
information of an individual— 
(1) the individual shall have a right to obtain 
from such covered entity a copy of such information 
in an electronic format; and 
(2) notwithstanding paragraph (c)(4) of such 
section, the covered entity may not impose any fee 
for providing such individual with a copy of such in-
formation (or a summary or explanation of such in-
formation) if such copy (or summary or explanation) 
is in an electronic form. 
(f) APPLICATION
OF PRIVACY REGULATIONS
FOR 
MAKING AMENDMENTS TO PROTECTED HEALTH INFOR-
MATION TO INFORMATION IN ELECTRONIC FORMAT.—In 
applying section 164.526 of title 45, Code of Regulations, 
in the case of protected health information used or main-
tained by a covered entity in an electronic medical record 
or electronic health record, instead of any timeframes or 
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128 
deadlines described in such section the Secretary may 
apply such timeframes and deadlines as the Secretary de-
termines to be appropriate. 
SEC. 406. LIMITATIONS ON CERTAIN ACTIVITIES AS PART 
OF HEALTH CARE OPERATIONS. 
(a) MARKETING.— 
(1) IN GENERAL.—A communication by a cov-
ered entity or business associate that is about a 
product or service and that encourages recipients of 
the communication to purchase or use the product 
or service shall not be considered a health care oper-
ation for purposes of subpart E of part 164 of title 
45, Code of Federal Regulations, unless the commu-
nication is made as described in subparagraph (i), 
(ii), or (iii) of paragraph (1) of the definition of 
marketing in section 164.501 of such title. 
(2) 
PAYMENT
FOR
CERTAIN
COMMUNICA-
TIONS.—Subject to subparagraph (B), a covered en-
tity or business associate may not receive direct or 
indirect payment in exchange for making any com-
munication described in subparagraph (i), (ii), or 
(iii) of paragraph (1) of the definition of marketing 
in section 164.501 of title 45, Code of Federal Reg-
ulations, except— 
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129 
(A) a business associate of a covered entity 
may receive payment from the covered entity 
for making any such communication on behalf 
of the covered entity that is consistent with the 
written contract (or other written arrangement) 
described in section 164.502(e)(2) of such title 
between such business associate and covered en-
tity; and 
(B) a covered entity may receive payment 
in exchange for making any such communica-
tion if the entity obtains from the recipient of 
the communication, in accordance with section 
164.508 of title 45, Code of Federal Regula-
tions, a valid authorization (as described in 
paragraph (b) of such section), which shall be 
explicitly and affirmatively provided by the re-
cipient, with respect to such communication. 
(b) FUND RAISING.—Fundraising for the benefit of 
a covered entity shall not be considered a health care oper-
ation for purposes of section 164.501 of title 45, Code of 
Federal Regulations. 
(c) EFFECTIVE DATE.—Subsections (a) and (b) shall 
apply to contracting occurring on or after the effective 
date specified under section 433. 
(d) REGULATIONS.— 
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130 
(1) IN GENERAL.—Not later than 18 months 
after the date of the enactment of this Act, the Sec-
retary shall issue a notice of proposed rulemaking in 
the Federal Register, taking into account the report 
submitted under section 411 and the study under 
section 410, to eliminate from the definition of 
health care operations under section 164.501 of title 
45, Code of Federal Regulations, those activities 
(other than the process of de-identifying health in-
formation) that can reasonably and efficiently be 
conducted through the use of information that is de- 
identified (in accordance with the requirements of 
section 164.514(b) of such title) or that should re-
quire a valid authorization for use or disclosure. In 
promulgating any such regulations, the Secretary 
may consider the form in which the health informa-
tion is maintained, such as non-electronic records. 
(2) CONSIDERATIONS.—In promulgating any 
such regulations, the Secretary shall take into con-
sideration the extent to which— 
(A) specific health care operations require 
the use or disclosure of protected health infor-
mation; and 
(B) clinical utility of such information 
would potentially be decreased in the case that 
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such information is de-identified or valid au-
thorization is required; and 
(C) the classification of health care oper-
ations (as in existence as of the date of the en-
actment of this Act) under section 164.501 of 
title 45, Code of Federal Regulations, may be 
further delineated. 
SEC. 407. STUDY AND REPORT ON APPLICATION OF PRI-
VACY AND SECURITY REQUIREMENTS TO 
NON-HIPAA COVERED ENTITIES. 
Not later than one year after the date of the enact-
ment of this Act, the Secretary, in consultation with the 
Federal Trade Commission, shall conduct a study on pri-
vacy and security requirements to entities that are not 
considered covered entities as of the date of the enactment 
of this Act and submit to the Committee on Finance and 
the Committee on Health, Education, Labor, and Pen-
sions of the Senate and the Committee on Ways and 
Means and the Committee on Energy and Commerce of 
the House of Representatives a report on the findings of 
the study, including— 
(1) requirements relating to security, privacy, 
and notification in the case of a breach of security 
or privacy (including the applicability of an exemp-
tion to notification in the case of individually identi-
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fiable health information that has been rendered un-
usable, unreadable, or indecipherable through tech-
nologies or methodologies recognized by appropriate 
professional organization or standard setting bodies 
to provide effective security for the information) that 
should be applied to— 
(A) vendors of personal health records; 
(B) entities that offer products or services 
through the website of a vendor of personal 
health records; 
(C) entities that are not covered entities 
and that offer products or services through the 
websites of covered entities that offer individ-
uals personal health records; 
(D) entities that are not covered entities 
and that access information in a personal 
health record or send information to a personal 
health record; and 
(E) third party service providers used by a 
vendor or entity described in subparagraph (A), 
(B), (C), or (D) to assist in providing personal 
health record products or services; 
(2) a determination of which Federal govern-
ment agency is best equipped to enforce such re-
quirements recommended to be applied to such ven-
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dors, entities, and service providers under paragraph 
(1); and 
(3) a timeframe for implementing regulations 
based on such findings. 
SEC. 408. TEMPORARY BREACH NOTIFICATION REQUIRE-
MENT FOR VENDORS OF PERSONAL HEALTH 
RECORDS AND OTHER NON-HIPAA COVERED 
ENTITIES. 
(a) IN GENERAL.—In accordance with subsection (c), 
each vendor of personal health records, following the dis-
covery of a breach of security of unsecured PHR identifi-
able health information that is in a personal health record 
maintained or offered by such vendor, and each entity de-
scribed in subparagraph (B), (C), or (D) of section 
407(1), following the discovery of a breach of security of 
such information that is obtained through a product or 
service provided by such entity, shall— 
(1) notify each individual who is a citizen or 
resident of the United States whose unsecured PHR 
identifiable health information was acquired by an 
unauthorized person as a result of such a breach of 
security; and 
(2) notify the Federal Trade Commission. 
(b) NOTIFICATION BY THIRD PARTY SERVICE PRO-
VIDERS.—A third party service provider that provides 
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services to a vendor of personal health records or to an 
entity described in subparagraph (B), (C), or (D) of sec-
tion 407(1) in connection with the offering or maintenance 
of a personal health record or a related product or service 
and that accesses, maintains, retains, modifies, records, 
stores, destroys, or otherwise holds, uses, or discloses un-
secured PHR identifiable health information in such a 
record as a result of such services shall, following the dis-
covery of a breach of security of such information, notify 
such vendor or entity, respectively, of such breach. Such 
notice shall include the identification of each individual 
whose unsecured PHR identifiable health information has 
been, or is reasonably believed to have been, accessed, ac-
quired, or disclosed during such breach. 
(c) APPLICATION OF REQUIREMENTS FOR TIMELI-
NESS, METHOD, AND CONTENT
OF NOTIFICATIONS.— 
Subsections (c), (d), (e), and (f) of section 402 shall apply 
to a notification required under subsection (a) and a ven-
dor of personal health records, an entity described in sub-
section (a) and a third party service provider described 
in subsection (b), with respect to a breach of security 
under subsection (a) of unsecured PHR identifiable health 
information in such records maintained or offered by such 
vendor, in a manner specified by the Federal Trade Com-
mission. 
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