I
103D CONGRESS
2D SESSION
H. R. 3909
To amend title XVII of the Public Health Service Act to authorize the
Secretary of Health and Human Services to make grants to establish
and develop telemedicine projects for rural areas, to establish a health
care data interchange system, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 24, 1994
Mr. LAROCCO introduced the following bill; which was referred jointly to the
Committees on Energy and Commerce, Ways and Means, Armed Serv-
ices, Veterans’ Affairs, Post Office and Civil Service, Natural Resources,
and Education and Labor
A BILL
To amend title XVII of the Public Health Service Act to
authorize the Secretary of Health and Human Services
to make grants to establish and develop telemedicine
projects for rural areas, to establish a health care data
interchange system, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
TITLE 
I—PROMOTION 
OF
TELEMEDICINE 
PROJECTS
FOR RURAL AREAS
SECTION 101. GRANTS TO RURAL HEALTH CARE PROVID-
ERS AND RURAL HEALTH CARE NETWORKS
TO ESTABLISH AND DEVELOP TELEMEDICINE
PROJECTS.
Title XVII of the Public Health Service Act (42
U.S.C. 300u et seq.) is amended—
(1) by striking the title heading and inserting
the following:
‘‘TITLE XVII—HEALTH INFORMA-
TION, HEALTH PROMOTION,
AND 
PROMOTION 
OF
TELEMEDICINE PROJECTS
‘‘PART A—HEALTH INFORMATION AND HEALTH
PROMOTION’’; and
(2) by adding at the end the following:
‘‘PART B—PROMOTION OF TELEMEDICINE
PROJECTS FOR RURAL AREAS
‘‘SEC. 1711. PURPOSES.
‘‘The purposes of this part are as follows:
‘‘(1) To support the establishment and develop-
ment of telemedicine projects that use telecommuni-
cations technologies and other technologies to in-
crease the quality and accessibility of health care in
rural areas and to reduce the costs of such care.
Such technologies may include—
‘‘(A) testbed networks for linking health
care providers, medical schools, medical librar-
ies, and universities to enable health care pro-
viders and researchers to share medical images
and to develop computer-based records;
‘‘(B) software and visualization technology
for visualizing the human anatomy and analyz-
ing diagnostic images and records;
‘‘(C) virtual reality technology for simulat-
ing surgical and medical procedures;
‘‘(D) collaborative technology to allow geo-
graphically remote health care providers to pro-
vide real-time treatment to patients;
‘‘(E) interactive technologies to allow
health care providers to monitor, evaluate, and
treat patients in nonclinical settings;
‘‘(F) database technology to provide health
care providers with access to relevant medical
information and literature; and
‘‘(G) database technology for storing,
accessing, and transmitting patients’ medical
records while protecting the accuracy and pri-
vacy of such records.
‘‘(2) To encourage the use of the telecommuni-
cations technologies and other technologies described
in paragraph (1)—
‘‘(A) to permit rural health care providers
to maintain contact with itinerant staff and re-
mote specialists;
‘‘(B) to permit patients in rural areas to
receive health care locally whenever possible;
‘‘(C) to reduce the costs of health care in
rural areas by reducing the costs of paperwork;
‘‘(D) to improve coordination and effi-
ciency in the provision of health care in rural
areas; and
‘‘(E) to provide rural health care providers
with access to equipment, specialists, and con-
tinuing education programs that may not be
otherwise available in rural areas.
‘‘(3) To demonstrate the effectiveness of tele-
communications technologies and other technologies
in improving the quality and accessibility of health
care in rural areas and reducing the costs of such
care.
‘‘SEC. 
1712. 
GRANTS 
FOR 
ESTABLISHMENT 
OF
TELEMEDICINE PROJECTS.
‘‘(a) IN GENERAL.—The Secretary may make grants
under this section to rural health care providers and rural
health care networks for the establishment, and initial de-
velopment and operation, of telemedicine projects that are
consistent with the purposes of this part.
‘‘(b) APPLICATIONS.—
‘‘(1) SUBMISSION.—To apply for a grant under
this section for any fiscal year, a rural health care
provider or a rural health care network shall submit
an application to the Secretary in accordance with
the procedures established by the Secretary. The
Secretary shall establish a deadline for the submis-
sion of applications under this paragraph for each
fiscal year.
‘‘(2) CRITERIA FOR APPROVAL.—The Secretary
may not approve an application submitted under
paragraph (1) unless the application includes assur-
ances satisfactory to the Secretary that funds re-
ceived under this section will be used for 1 or more
of the following purposes:
‘‘(A) To develop or acquire, through lease
or purchase, computer hardware, computer soft-
ware, audio equipment, video equipment, com-
puter network equipment, telecommunications
transmission facilities, telecommunications ter-
minal equipment, interactive video equipment,
data terminal equipment, or other facilities or
equipment consistent with the purposes of this
part.
‘‘(B) To develop or acquire instructional
programming consistent with the purposes of
this part.
‘‘(C) To receive technical assistance or in-
struction with respect to the development or use
of such facilities, equipment, or instructional
programming.
‘‘(D) Such other purposes as may be ap-
proved by the Secretary consistent with the
purposes of this part.
‘‘(3) PETITIONS
FOR
RECONSIDERATION
AND
REAPPLICATIONS.—
‘‘(A) IN GENERAL.—With respect to an ap-
plication submitted under paragraph (1) that is
disapproved under this subsection, the applicant
may submit to the Secretary—
‘‘(i) a petition for reconsideration of
the application; and
‘‘(ii) an application that conforms to
the requirements of this subsection.
‘‘(B) DEADLINES.—The Secretary shall es-
tablish a deadline for the submission of peti-
tions for reconsideration and reapplications
under this paragraph for each fiscal year. The
Secretary shall approve or disapprove each such
petition and reapplication before the termi-
nation of the 60-day period beginning on the
date of such submission.
‘‘(c) PREFERENCES IN AWARDING GRANTS.—
‘‘(1) IN GENERAL.—In awarding grants under
this section, the Secretary shall give preference to
applicants that are not using any of the tele-
communications technologies or other technologies
described in section 1711(1) at the time the appli-
cant submits an application under subsection (b).
‘‘(2) PREFERENCES
AMONG
NETWORKS.—Ex-
cept as provided in paragraph (4), in awarding
grants under this section to rural health care net-
works, the Secretary shall give preference to net-
works that demonstrate, through the membership of
the network, broad geographic representation of
rural areas in the State or States in which the net-
work intends to establish and develop a project with
funds received under this section.
‘‘(d) GRANTS RESERVED FOR HEALTH CARE PRO-
VIDERS AND SMALL HEALTH CARE NETWORKS.—At least
40 percent of the grants made by the Secretary under this
section shall be made to rural health care providers or
rural health care networks with 10 or fewer members.
‘‘SEC. 1713. GRANTS FOR DEVELOPMENT OF ADVANCED
TELEMEDICINE PROJECTS.
‘‘(a) IN GENERAL.—The Secretary may make grants
under this section to applicant groups consisting of 2 or
more rural health care networks for the purposes of elec-
tronically linking existing telemedicine projects established
by such networks and further developing such linked
projects in a manner that is consistent with the purposes
of this part.
‘‘(b) APPLICATIONS.—
‘‘(1) SUBMISSION.—To apply for a grant under
this section for any fiscal year, a group consisting of
2 or more rural health care networks shall submit
an application to the Secretary in accordance with
the procedures established by the Secretary. The
Secretary shall establish a deadline for the submis-
sion of applications under this paragraph for each
fiscal year.
‘‘(2) CRITERIA FOR APPROVAL.—The Secretary
may not approve an application submitted by a
group under paragraph (1) unless the application in-
cludes assurances satisfactory to the Secretary
that—
‘‘(A) the group, through the membership
of the networks that are part of the group,
broadly geographically represents rural areas in
the State or States in which the group intends
to link and develop telemedicine projects with
funds received under this section; and
‘‘(B) funds received under this section will
be used for 1 or more of the following purposes:
‘‘(i) To develop or acquire, through
lease or purchase, computer hardware,
computer software, audio equipment, video
equipment, computer network equipment,
telecommunications transmission facilities,
telecommunications terminal equipment,
interactive video equipment, data terminal
equipment, or other facilities or equipment
consistent with the purposes of this part.
‘‘(ii) To develop or acquire instruc-
tional programming consistent with the
purposes of this part.
‘‘(iii) To receive technical assistance
or instruction with respect to the develop-
ment or use of such facilities, equipment,
or instructional programming.
‘‘(iv) Such other purposes as may be
approved by the Secretary consistent with
the purposes of this part.
‘‘(3) PETITIONS
FOR
RECONSIDERATION
AND
REAPPLICATIONS.—
‘‘(A) IN GENERAL.—With respect to an ap-
plication submitted under paragraph (1) that is
disapproved under this subsection, the applicant
may submit to the Secretary—
‘‘(i) a petition for reconsideration of
the application; and
‘‘(ii) an application that conforms to
the requirements of this subsection.
‘‘(B) DEADLINES.—The Secretary shall es-
tablish a deadline for the submission of peti-
tions for reconsideration and reapplications
under this paragraph for each fiscal year. The
Secretary shall approve or disapprove each such
petition and reapplication before the termi-
nation of the 60-day period beginning on the
date of such submission.
‘‘(c) PREFERENCE
IN
AWARDING
GRANTS.—In
awarding grants under this section, the Secretary shall
give preference to groups that—
‘‘(1) demonstrate that each of the rural health
care networks that is a part of the group was cre-
ated more than 1 year before the date on which the
application was submitted by the group; and
‘‘(2) provide assurances satisfactory to the Sec-
retary that the group will use funds received under
this section to provide a broad range of health care
and educational services through the telemedicine
projects linked and developed using such funds.
‘‘SEC. 1714. REVIEW AND SANCTIONS.
‘‘The Secretary shall review at least annually the
compliance of a person receiving a grant under this part
with the provisions of this part. The Secretary shall estab-
lish a procedure for determining whether such a person
has failed to comply substantially within the provisions of
this part and the sanctions to be imposed for any such
noncompliance.
‘‘SEC. 1715. ANNUAL REPORT.
‘‘The Secretary shall include in the annual report
under section 1705 a description of the activities carried
out under this part.
‘‘SEC. 1716. REGULATIONS.
‘‘The Secretary may issue any regulations necessary
to carry out this part.
‘‘SEC. 1717. DEFINITIONS.
‘‘For purposes of this part:
‘‘(1) COMPUTER NETWORK EQUIPMENT.—The
term ‘computer network equipment’ means computer
hardware and software, terminals, signal conversion
equipment 
including 
both 
modulators 
and
demodulators, or related devices, used to commu-
nicate with other computers to process and exchange
data through a telecommunications network in which
signals are generated, modified, prepared for trans-
mission, or received, via telecommunications terminal
equipment and telecommunications transmission
facilities.
‘‘(2) DATA TERMINAL EQUIPMENT.—The term
‘data terminal equipment’ means equipment that
converts user information into data signals for
transmission, or reconverts the received data signals
into user information, and is normally found on the
terminal of a circuit and on the premises of the end
user.
‘‘(3) FIBER
OPTIC
CABLE.—The term ‘fiber
optic cable’ means a bundle of optical transmission
elements or waveguides usually consisting of fiber
core and fiber cladding that can guide a lightwave
and that are incorporated into an assembly of
materials that provide tensile strength and external
protection.
‘‘(4) HEALTH
CARE
PROVIDER.—The term
‘health care provider’ means a person who is li-
censed, certified, registered, or otherwise authorized
by law to provide health care in the ordinary course
of business or practice of a profession.
‘‘(5) INTERACTIVE
VIDEO
EQUIPMENT.—The
term ‘interactive video equipment’ means equipment
used to produce and prepare for transmission audio
and visual signals from at least 2 distant locations
in order that individuals at such locations can ver-
bally and visually communicate with each other.
Such equipment includes monitors, other display de-
vices, cameras or other recording devices, audio pick-
up devices, and related equipment.
‘‘(6) RURAL AREA.—The term ‘rural area’ has
the 
meaning 
given 
such 
term 
in 
section
1866(d)(2)(D) of the Social Security Act.
‘‘(7) RURAL
HEALTH
CARE
NETWORK.—The
term ‘rural health care network’ means a group of
rural health care providers that have entered into a
formal relationship with each other or with health
care providers in an area that is not a rural area for
the purpose of improving the delivery of health care
in a rural area, or for the purpose of improving the
access of their patients to the services of a
telemedicine project.
‘‘(8) RURAL
HEALTH
CARE
PROVIDER.—The
term ‘rural health care provider’ means a health
care provider who provides health care in a rural
area.
‘‘(9) TELECOMMUNICATIONS TERMINAL EQUIP-
MENT.—The term ‘telecommunications terminal
equipment’ means the assembly of telecommuni-
cations equipment at the end of a circuit, normally
located on the premises of the end user, that inter-
faces with telecommunications transmission facilities
and that is used to modify, convert, encode, or oth-
erwise prepare signals to be transmitted via such
telecommunications equipment or that is used to
modify, reconvert, or carry signals received from
such facilities, the purpose of which is to accomplish
the goal for which the circuit was established.
‘‘(10) TELECOMMUNICATIONS
TRANSMISSION
FACILITIES.—The term ‘telecommunications trans-
mission facilities’ means facilities that transmit, re-
ceive, or carry data between telecommunications ter-
minal equipment at each end of a telecommuni-
cations circuit or path. Such facilities include micro-
wave antennae, relay stations and towers, other tele-
communications antennae, fiber optic cables and re-
peaters, coaxial cables, communication satellite
ground station complexes, copper cable electronic
equipment associated with telecommunications trans-
missions, and similar items as defined by the
Secretary.
‘‘SEC. 1718. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to carry out
this part such sums as may be necessary for each of the
fiscal years 1995 through 1998.’’.
TITLE II—HEALTH CARE DATA
INTERCHANGE SYSTEM
SEC. 201. ESTABLISHMENT OF HEALTH CARE DATA INTER-
CHANGE SYSTEM.
(a) IN GENERAL.—In accordance with the procedures
provided in this title, there shall be established a health
care data interchange system the purpose of which is to
make health care data available on a uniform basis to all
participants in the health care system.
(b) GENERAL REQUIREMENTS FOR SYSTEM.—The
system described in subsection (a) shall ensure—
(1) the integration of all participants in the
health care system;
(2) the use of uniform processes which will per-
mit participants in the health care system to com-
municate electronically for the submission and re-
ceipt of health care data;
(3) the privacy of individuals who are patients
receiving health care services and the confidentiality
of information in the data interchange system;
(4) that the data in the system is verifiable,
timely, accurate, reliable, useful, complete, relevant,
time and date stamped, and comparable; and
(5) an overall reduction in the administrative
burdens and costs of the health care system, an
overall increase in the productivity, effectiveness,
and efficiency of the system, and an overall increase
in the quality of care furnished by the system.
(c) GENERAL IMPLEMENTATION.—The system de-
scribed in subsection (a) shall be implemented through—
(1) the development of proposed regulations as
provided under section 202 by the Health Care Data
Panel established under section 213 (referred to in
this title as the ‘‘Panel’’); and
(2) the development of final regulations through
the Office of Management and Budget (referred to
in this title as ‘‘OMB’’) as provided under section
203.
SEC. 202. DEVELOPMENT OF PROPOSED REGULATIONS BY
PANEL.
(a) IN GENERAL.—The Panel shall, in consultation
with the National Health Informatics Commission estab-
lished under section 214, develop proposed regulations for
the implementation and ongoing operation of an inte-
grated electronic health care data interchange system that
are based on the operating standards, conventions, re-
quirements, and procedures for the system established, se-
lected, or developed by the Panel under sections 204
through 210.
(b) REQUIREMENTS RELATING TO PROPOSED REGU-
LATIONS.—The proposed regulations developed under sub-
section (a) shall—
(1) be submitted to OMB not later than 30
days after the date on which the Panel is required
to establish, select, or develop any of such operating
standards, conventions, requirements, and proce-
dures for the system; and
(2) provide that the general requirements for
the system referred to in section 201(b) are met.
(c) MODIFICATIONS.—The Panel shall continuously
monitor the implementation of the regulations promul-
gated by OMB under section 203 and shall submit to
OMB any proposed modifications to such regulations de-
termined appropriate by the Panel. The requirements of
section 203 shall apply to any such proposed modifications
in the same manner as such requirements apply to the
proposed regulations initially submitted by the Panel.
SEC. 203. PROMULGATION AND IMPLEMENTATION OF PRO-
POSED REGULATIONS BY OMB.
(a) PROMULGATION OF REGULATIONS.—OMB shall
promulgate regulations based on the proposed regulations
submitted under section 202 within 90 days after the date
such proposed regulations are submitted.
(b) APPLICABILITY.—
(1) IN GENERAL.—The regulations promulgated
by OMB shall apply to all participants in the health
care system.
(2) SPECIAL RULE REGARDING THE MEDICARE
PROGRAM.—The Secretary may incorporate the ca-
pabilities of the common working file used in the
medicare program under title XVIII of the Social
Security Act into a uniform working file system de-
veloped and operated according to the regulations
referred to in subsection (a).
(c) COMPLIANCE WITH REGULATIONS.—
(1) IN GENERAL.—Not later than 1 year after
the date on which any regulations (other than the
regulations described in paragraph (2)) are promul-
gated by OMB, all participants in the health care
system shall be required to comply with such regula-
tions.
(2) COMPREHENSIVE QUALITY MEASUREMENT
DATA.—Not later than 2 years after the date on
which any regulations relating to standards, conven-
tions, and requirements for comprehensive quality
measurement data (as described in subsection
204(e)(3)) are promulgated by OMB, all partici-
pants in the health care system shall be required to
comply with such regulations.
SEC. 204. SELECTION AND ESTABLISHMENT OF DATA AND
TRANSACTION STANDARDS, CONVENTIONS,
AND REQUIREMENTS FOR THE DATA INTER-
CHANGE SYSTEM.
(a) IN GENERAL.—The Panel, in consultation with
the American National Standards Institute (referred to in
this title as ‘‘ANSI’’), shall select and establish data and
transaction standards, conventions, and requirements that
permit the electronic interchange of any health care data
the Panel determines necessary for the efficient and effec-
tive administration of the health care system.
(2) any participant in the health care system
who does not have such capability shall be required
to transmit and receive data through a health care
information clearinghouse or a health care value-
added network that is certified under the procedure
established pursuant to section 211.
(d) ADDITIONAL REQUIREMENTS.—
(1) IN
GENERAL.—The proposed regulations
developed by the Panel shall provide that no partici-
pant in the health care system shall be permitted to
establish data requirements in addition to such
standards, conventions, and requirements established
by the Panel and included in regulations promul-
gated by OMB—
(A) unless 2 or more participants volun-
tarily establish such additional requirements
and the requirements meet all of the privacy
and confidentiality standards developed by the
Panel under this title and included in any regu-
lations promulgated by OMB; or
(B) unless a waiver is granted under para-
graph (2) to establish such additional require-
ments.
(2) CONDITIONS FOR WAIVERS.—
(A) IN GENERAL.—The proposed regula-
tions developed by the Panel shall provide that
any participant in the health care system may
request a waiver to establish additional data re-
quirements.
(B) CONSIDERATION
OF
WAIVER
RE-
QUESTS.—The proposed regulations developed
by the Panel shall provide that no waiver shall
be granted under this paragraph unless the en-
tity granting such waiver considers the value of
the additional data to be exchanged for re-
search or other purposes determined appro-
priate by the Panel, the administrative cost of
the additional data requirements, the burden of
the additional data requirements, and the bur-
den of the timing of the imposition of the addi-
tional data requirements.
(C) CERTAIN REQUESTS FOR WAIVERS.—
The proposed regulations developed by the
Panel shall provide that if a participant in the
health care system attempts to impose addi-
tional data requirements on any other such par-
ticipant, the participant on which such require-
ments are being imposed may contact the Sec-
retary. The Panel shall develop a procedure
under which any participant in the health care
system contacting the Secretary under the pre-
ceding sentence shall remain anonymous. The
Secretary shall notify the participant imposing
the additional data requirements that such re-
quirements may not be imposed on any other
participant unless such other participant volun-
tarily agrees to such requirements or a waiver
is obtained under this paragraph.
(e) TIMETABLE
FOR STANDARDS, CONVENTIONS,
AND REQUIREMENTS.—
(1) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS RELATING TO FINANCIAL AND ADMINISTRA-
TIVE
TRANSACTIONS.—Not later than 9 months
after the date of the enactment of this title, the
Panel shall develop data and transaction standards,
conventions, and requirements for the following
items relating to the financing and administration of
health care:
(A) Enrollment.
(B) Eligibility.
(C) Payment and remittance advice.
(D) Claims.
(E) Claims status.
(F) Coordination of benefits.
(G) Crossover billing.
(H) First report of injury.
(I) Standardized claim attachments.
(J) Any other items relating to the financ-
ing and administration of health care delivery.
(2) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS RELATING TO INITIAL QUALITY MEASURE-
MENT INDICATORS.—Not later than 12 months after
the date of the enactment of this title, the Panel
shall develop data and transaction standards, con-
ventions, and requirements for participants in the
health care system to transmit data derived from the
financial and administrative transactions data de-
scribed in paragraph (1) on quality measurement,
utilization monitoring, risk assessment, patient satis-
faction, outcomes, and access.
(3) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS
RELATING
TO
COMPREHENSIVE
QUALITY
MEASUREMENT DATA.—Not later than 24 months
after the date of the enactment of this title, the
Panel shall develop standards, conventions, and re-
quirements for participants in the health care sys-
tem to transmit comprehensive data collected at the
site of care on quality measurement, utilization mon-
itoring, risk assessment, patient satisfaction, out-
comes, and access.
(4) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS
RELATING
TO
DATA
ON
PATIENT
CARE
RECORDS.—Not later than 36 months after the date
of the enactment of this title, the Panel shall develop
standards, conventions, and requirements related to
the inclusion of data from patient care records into
the health care data interchange system, including
standards, conventions, and requirements on the
identification of the origin of any data from such
records that is included in such system.
(5) STANDARDS, CONVENTIONS, AND REQUIRE-
MENTS FOR THE CENTERS FOR DISEASE CONTROL
AND PREVENTION.—Not later than 36 months after
the date of the enactment of this title, the Panel, in
collaboration with the Centers for Disease Control
and Prevention (referred to in this title as the
‘‘CDCP’’) and in consultation with State depart-
ments of health, shall develop standards, conven-
tions, and requirements for the electronic inter-
change of data on vital health statistics collected by
CDCP or the States or any other such data as
CDCP determines appropriate.
(f) WAIVERS OF COMPLIANCE.—
(1) FINANCIAL
AND
ADMINISTRATIVE
TRANS-
ACTIONS.—The proposed regulations developed by
the Panel shall provide that any of the data and
transaction standards, conventions, and require-
ments relating to financial and administrative trans-
actions developed by the Panel under subsection
(e)(1) may be waived until January 1, 1995, for a
health care provider that—
(A) does not have access to a health care
information clearinghouse or a health care
value-added network, is in the process of devel-
oping a system that complies with such stand-
ards, 
conventions, 
and 
requirements, 
and
executes an agreement with the appropriate
regulatory entity that such provider will meet
such standards, conventions, and requirements
by a specified date (not later than January 1,
1995); or
(B) is a small rural hospital (as defined by
the Panel and included in regulations promul-
gated by OMB).
(2) COMPREHENSIVE QUALITY MEASUREMENT
DATA.—The proposed regulations developed by the
Panel shall provide that any of the data and trans-
action standards, conventions, and requirements re-
lating to comprehensive quality measurement data
developed by the Panel under subsection (e)(3) may
be waived until January 1, 1998, for a health care
provider that—
(A) does not have access to a health care
information clearinghouse or a health care
value-added network, is in the process of devel-
oping a system that complies with such stand-
ards, 
conventions, 
and 
requirements, 
and
executes an agreement with the appropriate
regulatory entity that such provider will meet
such standards and requirements by a specified
date (not later than January 1, 1998); or
(B) agrees to obtain from such provider’s
records the data elements that are needed to
meet the standards and requirements developed
under subsection (e)(3) and agrees to subject
the provider’s data transfer process to a quality
assurance program that is satisfactory to the
appropriate regulatory entity.
SEC. 205. STANDARDS FOR OPERATION OF A UNIFORM
WORKING FILE.
Not later than 24 months after the date of the enact-
ment of this title the Panel shall establish standards for
the development and operation of a uniform working file
system that is national in scope. Such standards shall en-
sure—
(1) that all participants in the health care sys-
tem may be linked electronically (directly or indi-
rectly) to the uniform working file system;
(2) that any privacy and confidentiality stand-
ards established by the Panel under section 208 are
satisfied;
(3) that the uniform working file system im-
proves the efficiency and effectiveness of the admin-
istration of the health care system, including health
care quality measurement;
(4) the interoperability of the uniform working
file system by—
(A) supporting the data and transaction
standards, conventions, and requirements se-
lected and established by the Panel; and
(B) making use of such standards, conven-
tions, and requirements; and
(5) the support of any other requirements se-
lected or established by the Panel.
SEC. 206. CODE SETS FOR SYSTEM.
Not later than 9 months after the date of the enact-
ment of this title, the Panel shall select and establish code
sets that are maintained by private and public entities as
the Panel’s official code sets for use in a national uniform
working file system. The proposed regulations developed
by the Panel shall provide that any changes or updates
to such code sets that are established or requested by the
private or public entity which maintains the code set—
(1) shall preserve the informational value of
data retained either within the uniform working file
system or within the information systems of parties
making use of the data and transactions standards,
conventions, and requirements;
(2) shall include instructions on how existing
data containing such codes is to be converted or
translated so as to preserve its value;
(3) shall be incorporated into the official code
set in such a manner as to minimize the disruption
to the national uniform working file system and min-
imize the cost to all entities within the system for
reprogramming to accommodate such changes or up-
dates; and
(4) shall be implemented—
(A) only after at least 90 days advance no-
tice has been provided to participants in the
health care system; and
(B) no more frequently than on an annual
basis.
SEC. 207. ESTABLISHMENT OF UNIQUE IDENTIFIERS.
(a) IN GENERAL.—Not later than 9 months after the
date of the enactment of this title, the Panel shall develop
unique identifiers for each participant in the health care
system.
(b) SPECIAL RULES.—
(1) INDIVIDUALS.—Each individual shall have a
unique identifier developed by the Panel.
(2) HEALTH PLANS OR PROVIDERS.—In devel-
oping unique identifiers for each health plan or pro-
vider, the Panel shall take into account multiple uses
for such identifiers and shall consider multiple phys-
ical locations and specialty classifications for provid-
ers. The unique identifiers for health plans or pro-
viders may be based on the system used under title
XVIII of the Social Security Act on the date of the
enactment of this title.
SEC. 208. PRIVACY AND CONFIDENTIALITY STANDARDS.
(a) IN GENERAL.—Not later than 9 months after the
date of the enactment of this title, the Panel, after taking
into consideration the Insurance Information and Privacy
Protection Model Act of the National Association of Insur-
ance Commissioners, other model legislation, and inter-
national guidelines, shall develop requirements that pro-
tect the privacy of participants in the health care system
and ensure the confidentiality of information in the data
interchange system.
(b) PRINCIPLES CONSIDERED.—In developing the re-
quirements referred to in subsection (a), the Panel shall
take into consideration the following principles:
(1) Information relating to an identifiable or
identified individual should be collected only to the
extent necessary to carry out the purpose for which
the information is collected.
(2) Information relating to an identifiable or
identified individual collected for a particular pur-
pose should generally not be used for another pur-
pose without the individual’s informed consent un-
less the pooling of information renders an individ-
ual’s data unidentifiable.
(3) Information relating to an identifiable or
identified individual should be disposed of when no
longer necessary to carry out the purpose for which
it was collected, unless the pooling of information
renders an individual’s data unidentifiable.
(4) Methods to ensure the verifiability, timeli-
ness, accuracy, reliability, utility, completeness, rel-
evance, and comparability of information relating to
an identifiable or identified individual should be
instituted.
(5) An individual should be notified in advance
of the collection of information relating to such indi-
vidual with regard to—
(A) whether the furnishing of information
is mandatory or voluntary;
(B) the recordkeeping practices with re-
spect to any information provided; and
(C) the uses to be made of any information
provided.
(6) If informed consent is necessary for the in-
tended primary or secondary use of information re-
lating to an identifiable or identified individual, the
individual should be provided the opportunity to re-
ject such uses at the time the information is col-
lected, except where such uses are necessary to com-
ply with law.
(7) An individual should be permitted to inspect
and correct any information which concerns such in-
dividual and should be able to obtain information on
how such information is being used.
SEC. 209. TRANSFER OF INFORMATION BETWEEN HEALTH
PLANS.
Not later than 9 months after the date of the enact-
ment of this title, the Panel shall develop rules and proce-
dures—
(1) for determining the financial liability of
health plans when health care benefits are payable
under two or more health plans; and
(2) concerning the transfer among health plans
of appropriate official data sets needed to carry out
the coordination of benefits, the sequential process-
ing of claims, and other health data as determined
necessary by the Panel for individuals who have
more than 1 health plan, according to the priorities
established under the rules and procedures estab-
lished under paragraph (1).
SEC. 210. FINES AND PENALTIES FOR FAILURE TO COMPLY.
(a) DEVELOPMENT BY THE PANEL.—
(1) COMPLIANCE WITH STANDARDS FOR PRI-
VACY
AND
CONFIDENTIALITY.—Not later than 9
months after the date of the enactment of this title,
the Panel shall develop civil fines and penalties, as
determined appropriate by the Panel, to enforce any
of the requirements developed by the Panel under
section 208 relating to privacy and confidentiality.
The civil fines and penalties developed by the Panel
under this paragraph shall not be less than $1,000
for each violation.
(2) 
COMPLIANCE
WITH
OTHER
REQUIRE-
MENTS.—
(A) IN
GENERAL.—Not later than 9
months after the date of the enactment of this
title, the Panel shall develop civil fines and pen-
alties, as determined appropriate by the Panel,
to enforce any of the requirements developed by
the Panel under this title other than the re-
quirements related to privacy and confidential-
ity. The civil fines and penalties developed by
the Panel under this paragraph shall not exceed
$100 for each violation.
(B) LIMITATIONS.—
(i) PENALTIES NOT TO APPLY WHERE
NONCOMPLIANCE NOT DISCOVERED EXER-
CISING REASONABLE DILIGENCE.—No civil
fine or penalty developed by the Panel
under this paragraph shall be imposed if it
is established that the person liable for the
fine or penalty did not know, and by exer-
cising reasonable diligence would not have
known, that such person failed to comply
with any of the requirements described in
subparagraph (A).
(ii) PENALTIES
NOT
TO
APPLY
TO
COMPLIANCE FAILURES CORRECTED WITH-
IN 30 DAYS.—No civil fine or penalty devel-
oped by the Panel under this paragraph
shall be imposed if—
(I) the failure to comply was due
to reasonable cause and not to willful
neglect, and
(II) the failure to comply is cor-
rected during the 30-day period begin-
ning on the 1st date the person liable
for the fine or penalty knew, or by ex-
ercising reasonable diligence would
have known, that the failure to com-
ply occurred.
(iii) WAIVER.—In the case of a failure
to comply which is due to reasonable cause
and not to willful neglect, any civil fine or
penalty developed by the Panel under this
paragraph may be waived to the extent
that the payment of such fine or penalty
would be excessive relative to the compli-
ance failure involved.
(b) LEGISLATIVE PROPOSAL ON CERTAIN CRIMINAL
FINES AND PENALTIES.—Not later than 12 months after
the date of the enactment of this title, the Panel shall sub-
mit to Congress a legislative proposal relating to any
criminal fines and penalties determined appropriate by the
Panel to enforce any of the requirements developed by the
Panel under section 208 relating to privacy and
confidentiality.
SEC. 
211. 
OVERSIGHT 
OF 
UNIFORM 
WORKING 
FILE,
HEALTH 
CARE 
INFORMATION 
CLEARING-
HOUSES, AND VALUE-ADDED NETWORKS.
(a) PERIODIC REVIEWS.—Not later than 9 months
after the date of the enactment of this title, the Secretary
shall establish a procedure for the periodic review of busi-
ness practices, performance, and fees with respect to the
uniform working file and each health care information
clearinghouse and value-added network to ensure that
such entities are not taking unfair advantage of partici-
pants in the health care system through the application
of any regulations promulgated by OMB.
(b) CERTIFICATION PROCEDURE.—Not later than 12
months after the date of the enactment of this title, the
Panel shall establish a certification procedure for the uni-
form working file, health care information clearinghouses,
and value-added networks. The requirements for certifi-
cation shall include—
(1) adherence to the data and transaction
standards and requirements and the privacy and
confidentiality standards included in any regulations
promulgated by OMB;
(2) making public standardized indicators of
performance such as accessibility, transaction re-
sponsiveness, administrative efficiency, reliability,
dependability, and any other indicators determined
appropriate by the Secretary; and
(3) any other requirements determined appro-
priate by the Secretary.
SEC. 212. ANNUAL REPORTS TO CONGRESS.
(a) IN GENERAL.—The Panel shall annually prepare
and submit to Congress a report on—
(1) the status of the data interchange system,
including the system’s ability to provide data on
cost, quality, and patient satisfaction;
(2) the savings and costs of implementing the
data interchange system; and
(3) any legislative recommendations related to
the data interchange system.
(b) AVAILABILITY TO THE PUBLIC.—Any informa-
tion in the report submitted to Congress under subsection
(a) shall be made available to the public unless such infor-
mation may not be disclosed by law.
SEC. 213. HEALTH CARE DATA PANEL.
(a) ESTABLISHMENT.—There is established a panel
to be known as the Health Care Data Panel.
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Panel shall be composed
of the following members:
(A) The Secretary.
(B) The Secretary of Defense.
(C) The Secretary of Veterans Affairs.
(D) A representative of the Agency for
Health Care Policy and Research.
(E) A representative of the National Insti-
tute of Standards and Technology.
(F) A representative of the National Tele-
communication and Information Administra-
tion.
(G) 6 additional Federal officers deter-
mined appropriate by the Secretary.
(2) CHAIR.—The Secretary shall be the Chair
of the Panel.
(c) MEETINGS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Panel shall meet at the call of the
Chair.
(2) INITIAL
AND
SUBSEQUENT
MEETINGS.—
The Panel shall hold a meeting not later than 30
days after the date of the enactment of this section
and at least annually thereafter.
(3) QUORUM.—A majority of the members of
the Panel shall constitute a quorum, but a lesser
number of members may hold hearings.
(d) POWERS OF THE PANEL.—
(1) HEARINGS.—The Panel may hold such
hearings, sit and act at such times and places, take
such testimony, and receive such evidence as the
Panel considers advisable to carry out the purposes
of this section.
(2) INFORMATION FROM FEDERAL AGENCIES.—
The Panel may secure directly from any Federal de-
partment or agency such information as the Panel
considers necessary to carry out the provisions of
this section. Upon request of the Chair of the Panel,
the head of such department or agency shall furnish
such information to the Panel.
(3) POSTAL SERVICES.—The Panel may use the
United States mails in the same manner and under
the same conditions as other departments and agen-
cies of the Federal Government.
(4) GIFTS.—The Panel may accept, use, and
dispose of gifts or donations of services or property.
(e) PANEL PERSONNEL MATTERS.—
(1) COMPENSATION OF MEMBERS.—Members of
the Panel shall serve without compensation in addi-
tion to that received for their services as officers or
employees of the Federal Government.
(2) STAFF.—
(A) DETAIL
OF
GOVERNMENT
EMPLOY-
EES.—Upon the request of the Chair, any Fed-
eral Government employee may be detailed to
the Panel without reimbursement, and such de-
tail shall be without interruption or loss of civil
service status or privilege.
(B) CONTRACTS.—The Chair may enter
into contracts or other arrangements that may
be necessary for the Panel to perform its
duties.
(C) INTERNAL ORGANIZATION.—The Chair
may prescribe such rules as the Chair deter-
mines necessary with respect to the internal or-
ganization of the Panel.
SEC. 214. NATIONAL HEALTH INFORMATICS COMMISSION.
(a) APPOINTMENT.—The Panel shall provide for ap-
pointment of a National Health Informatics Commission
(referred to in this section as the ‘‘Commission’’) to advise
the Panel on its activities.
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Commission shall con-
sist of 15 members. The Panel shall designate 1
member of the Commission as the Chair.
(2) EXPERTISE.—Members of the Commission
shall be individuals who—
(A) represent different professions and dif-
ferent geographic areas, including urban and
rural areas;
(B) represent Federal or State government
health programs;
(C) represent applicable standard-setting
groups, including the National Uniform Billing
Committee, the Uniform Claim Form Task
Force, American National Standards Institute,
and the Healthcare Informatics Standards
Planning Panel;
(D) represent consumers of health care
services; and
(E) have expertise in—
(i) electronic data interchange of
health care information and computerized
information systems associated with the
operation and administration of matters
relating to health care;
(ii) the provision and financing of
health care;
(iii) 
conducting 
and 
interpreting
health economics research;
(iv) research and development of tech-
nological and scientific advances in health
care;
(v) health care eligibility, enrollment,
and claims administration;
(vi) health care financial management;
(vii) health care reimbursement; or
(viii) health care outcomes research.
(3) TERMS.—The Chair shall serve on the Com-
mission at the pleasure of the Panel. Each other
member of the Commission shall be appointed for a
term of 5 years, except with respect to the members
first appointed—
(A) 3 members shall be appointed for a
term of 1 year;
(B) 3 members shall be appointed for
terms of 2 years;
(C) 3 members shall be appointed for
terms of 3 years;
(D) 3 members shall be appointed for
terms of 4 years; and
(E) 2 members shall be appointed for
terms of 5 years.
(4) VACANCIES.—
(A) IN GENERAL.—A vacancy on the Com-
mission shall be filled in the manner in which
the original appointment was made and shall be
subject to any conditions which applied with re-
spect to the original appointment.
(B) FILLING UNEXPIRED TERM.—An indi-
vidual chosen to fill a vacancy shall be ap-
pointed for the unexpired term of the member
replaced.
(C) EXPIRATION OF TERMS.—The term of
any member shall not expire before the date on
which the member’s successor takes office.
(c) MEETINGS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Commission shall meet at the call of
the Chair.
(2) INITIAL MEETING.—No later than 30 days
after the date on which all members of the Commis-
sion have been appointed, the Commission shall hold
its first meeting.
(3) QUORUM.—A majority of the members of
the Commission shall constitute a quorum, but a
lesser number of members may hold hearings.
(d) DUTIES.—
(1) IN GENERAL.—Not later than 60 days prior
to any date on which the Panel is required to select,
establish, or develop any requirements relating to
the data interchange system, the Commission shall
make recommendations to the Panel with respect to
the issues relating to such requirements.
(2) ADDITIONAL STUDIES AND PROJECTS.—As
directed by the Panel, the Commission shall under-
take such studies and projects as the Panel may
deem necessary.
(e) POWERS OF THE COMMISSION.—
(1) HEARINGS.—The Commission may hold
such hearings, sit and act at such times and places,
take such testimony, and receive such evidence as
the Commission considers advisable to carry out the
purposes of this section.
(2) INFORMATION FROM FEDERAL AGENCIES.—
The Commission may secure directly from any Fed-
eral department or agency such information as the
Commission considers necessary to carry out the
provisions of this section. Upon request of the Chair,
the head of such department or agency shall furnish
such information to the Commission.
(3) POSTAL SERVICES.—The Commission may
use the United States mails in the same manner and
under the same conditions as other departments and
agencies of the Federal Government.
(4) GIFTS.—The Commission may accept, use,
and dispose of gifts or donations of services or prop-
erty.
(f) COMMISSION PERSONNEL MATTERS.—
(1) COMPENSATION OF MEMBERS.—Each mem-
ber of the Commission who is not an officer or em-
ployee of the Federal Government shall be com-
pensated at a rate equal to the daily equivalent of
the annual rate of basic pay prescribed for level IV
of the Executive Schedule under section 5315 of title
5, United States Code, for each day (including travel
time) during which such member is engaged in the
performance of the duties of the Commission. All
members of the Commission who are officers or em-
ployees of the United States shall serve without com-
pensation in addition to that received for their serv-
ices as officers or employees of the United States.
(2) TRAVEL EXPENSES.—The members of the
Commission shall be allowed travel expenses, includ-
ing per diem in lieu of subsistence, at rates author-
ized for employees of agencies under subchapter I of
chapter 57 of title 5, United States Code, while
away from their homes or regular places of business
in the performance of services for the Commission.
(3) STAFF.—
(A) IN GENERAL.—The Chair may, with-
out regard to civil service laws and regulations,
appoint and terminate such personnel as may
be necessary to enable the Commission to per-
form its duties.
(B) COMPENSATION.—The Chair may fix
the compensation of personnel without regard
to the provisions of chapter 51 and subchapter
III of chapter 53 of title 5, United States Code,
relating to classification of positions and Gen-
eral Schedule pay rates, except that the rate of
pay for the personnel may not exceed the rate
payable for level V of the Executive Schedule
under section 5316 of such title.
(C) DETAIL
OF
GOVERNMENT
EMPLOY-
EES.—Any Federal Government employee may
be detailed to the Commission without reim-
bursement, and such detail shall be without