(b) CONSTRUCTION.—Nothing in this title shall be
construed as limiting the benefits that may be offered as
part of a group health plan or health insurance coverage.
SEC. 147. LEVEL PLAYING FIELD FOR PROVIDERS.
Nothing in this subtitle may be construed to require
or prohibit the use of a particular class of provider, among
the providers that are legally authorized to provide such
treatment.
Subtitle F—Standards and Certifi-
cation; Enforcement; Preemp-
tion; General Provisions
SEC. 151. ESTABLISHMENT OF STANDARDS.
(a) ROLE OF NAIC.—
(1) IN GENERAL.—The Secretary shall request
the NAIC to develop, within 9 months after the date
of the enactment of this Act, model regulations that
specify standards with respect to the requirements of
this subtitle as applicable to carriers and health in-
surance coverage.
(2) REVIEW OF STANDARDS.—If the NAIC de-
velops recommended regulations specifying such
standards within such period, the Secretary shall re-
view the standards. Such review shall be completed
within 60 days after the date the regulations are de-
veloped. Unless the Secretary determines within
such period that the standards do not meet the re-
quirements, such standards shall serve as the stand-
ards under this subtitle, with such amendments as
the Secretary deems necessary.
(b) CONTINGENCY.—If the NAIC does not develop
such model regulations within such period or the Secretary
determines that such regulations do not specify standards
that meet the requirements described in subsection (a),
the Secretary shall specify, within 15 months after the
date of the enactment of this Act, standards to carry out
those requirements.
SEC. 152. APPLICATION OF STANDARDS TO CARRIERS
THROUGH STATES.
(a) APPLICATION OF STANDARDS.—
(1) IN GENERAL.—Each State shall submit to
the Secretary, by the deadline specified in paragraph
(2), a report on steps the State is taking to imple-
ment and enforce the standards established under
section 151 with respect to carriers and health in-
surance coverage offered or renewed not later than
such deadline.
(2) DEADLINE
FOR
REPORT.—The deadline
under this paragraph is 1 year after the date the
standards are established under section 151.
(b) FEDERAL ROLE.—
(1) NOTICE OF DEFICIENCY.—If the Secretary
determines that a State has failed to submit a report
by the deadline specified under subsection (a)(2) or
finds that the State has not implemented and pro-
vided adequate enforcement of the standards estab-
lished under section 151, the Secretary shall notify
the State and provide the State a period of 60 days
in which to submit such report or to implement and
enforce such standards.
(2) IMPLEMENTATION OF ALTERNATIVE.—
(A) IN GENERAL.—If, after such 60-day
period, the Secretary finds that such a failure
has not been corrected, the Secretary shall pro-
vide for such mechanism for the implementation
and enforcement of such standards in the State
as the Secretary determines to be appropriate.
(B) EFFECTIVE PERIOD.—Such implemen-
tation and enforcement shall take effect with
respect to carriers, and health insurance cov-
erage offered or renewed, on or after 3 months
after the date of the Secretary’s finding under
subparagraph (A), and until the date the Sec-
retary finds that such a failure has been cor-
rected.
SEC. 153. APPLICATION TO GROUP HEALTH PLANS.
(a) IN GENERAL.—Subject to subsection (b), sections
151 and 152 shall apply to group health plans providing
health coverage in the same manner as they apply to car-
riers providing health insurance coverage.
(b) SUBSTITUTION OF REFERENCES.—For purposes
of subsection (a), any reference in section 151 or 152 to—
(1) a State or the Secretary of Health and
Human Services is deemed a reference to the Sec-
retary of Labor, and
(2) a carrier or health insurance coverage is
deemed a reference to a group health plan and
health coverage, respectively.
SEC. 154. ENFORCEMENT.
(a) ENFORCEMENT BY DEPARTMENT OF LABOR FOR
EMPLOYERS AND GROUP HEALTH PLANS.—
(1) IN GENERAL.—For purposes of part 5 of
subtitle B of title I of the Employee Retirement In-
come Security Act of 1974, the provisions of this
title insofar as they relate to group health plans or
employers shall be deemed to be provisions of title
I of such Act irrespective of exclusions under section
4(b) of such Act.
(2) REGULATORY AUTHORITY.—With respect to
the regulatory authority of the Secretary of Labor
under this subtitle pursuant to paragraph (1), sec-
tion 505 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1135) shall apply.
(b) ENFORCEMENT
BY
EXCISE
TAX
FOR
CAR-
RIERS.—
(1) IN GENERAL.—Chapter 43 of the Internal
Revenue Code of 1986 (relating to qualified pension
plans, etc.) is amended by adding at the end thereof
the following new section:
‘‘SEC. 4980C. FAILURE OF CARRIER TO COMPLY WITH
HEALTH INSURANCE STANDARDS.
‘‘(a) IMPOSITION OF TAX.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax on the failure of a carrier to comply with the re-
quirements applicable to the carrier under parts 1
through 4 of subtitle A and subtitle B of title I of
the Health Insurance Affordability Act of 1996.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to a failure by a carrier in a State if the Sec-
retary of Health and Human Services determines
that the State has in effect a regulatory enforcement
mechanism that provides adequate sanctions with re-
spect to such a failure by such a carrier.
‘‘(b) AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the amount of the tax imposed by subsection (a)
shall be $100 for each day during which such failure
persists for each individual to which such failure re-
lates. A rule similar to the rule of section
4980B(b)(3) shall apply for purposes of this section.
‘‘(2) LIMITATION.—The amount of the tax im-
posed by subsection (a) for a carrier with respect to
health insurance coverage shall not exceed 25 per-
cent of the amounts received for such coverage dur-
ing the period such failure persists.
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid by the carrier.
‘‘(d) EXCEPTIONS.—
‘‘(1) CORRECTIONS WITHIN 30 DAYS.—No tax
shall be imposed by subsection (a) by reason of any
failure if—
‘‘(A) such failure was due to reasonable
cause and not to willful neglect, and
‘‘(B) such failure is corrected within the
30-day period beginning on the earliest date the
carrier knew, or exercising reasonable diligence
would have known, that such failure existed.
‘‘(2) WAIVER BY SECRETARY.—In the case of a
failure which is due to reasonable cause and not to
willful neglect, the Secretary may waive part or all
of the tax imposed by subsection (a) to the extent
that payment of such tax would be excessive relative
to the failure involved.
‘‘(e) DEFINITIONS.—For purposes of this section, the
terms ‘health insurance coverage’ and ‘carrier’ have the
respective meanings given such terms in section 193 of
the Health Insurance Affordability Act of 1996.’’
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 43 of such Code is amended by
adding at the end thereof the following new item:
‘‘Sec. 4980C. Failure of carrier to comply with health insurance
standards.’’
SEC. 155. LIMITATION ON SELF INSURANCE FOR SMALL EM-
PLOYERS.
A single employer plan (as defined in section
3(40)(B) of the Employee Retirement Income Security
Act of 1974) may not offer health coverage other than
through a carrier unless the plan has at least 100 eligible
employees.
Subtitle G—Definitions; General
Provisions
SEC. 191. GENERAL DEFINITIONS.
For purposes of this Act:
(1) APPLICABLE
REGULATORY
AUTHORITY.—
The term ‘‘applicable regulatory authority’’ means,
with respect to a carrier operating in a State—
(A) the State insurance commissioner, or
(B) the Secretary, in the case described in
section 152(b)(2).
(2) FAMILY MEMBER.—
(A) IN GENERAL.—Individuals are consid-
ered to be members of a family if—
(i) they are married, or
(ii) they have a legal parent-to-child
relationship (whether by natural birth or
adoption), if the child is—
(I) under 19 years of age,
(II) is under 25 years of age and
a full-time student, or
(III) an unmarried dependent re-
gardless of age who is incapable of
self-support because of mental or
physical disability which existed before
age 22.
(B) SPECIAL RULES.—Family members—
(i) include an adopted child and a rec-
ognized natural child;
(ii) include a stepchild or foster child
with respect to an individual but only if
the child lives with the individual in a reg-
ular parent-child relationship; and
(iii) include such other children as the
Secretary may specify, but shall not in-
clude an emancipated minor.
(3) PRISONER.—The term ‘‘prisoner’’ means,
as specified by the Secretary, an individual during a
period of imprisonment under Federal, State, or
local authority after conviction as an adult.
(4) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
(5) STATE.—The term ‘‘State’’ means the 50
States, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, American Samoa, and the
Northern Mariana Islands.
SEC. 192. DEFINITIONS RELATING TO EMPLOYMENT.
(a) APPLICATION OF ERISA DEFINITIONS.—Except
as otherwise provided in this Act, terms used in this Act
shall have the meanings applicable to such terms under
section 3 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1002).
(b) ADDITIONAL DEFINITIONS.—For purposes of this
title:
(1) COUNTABLE EMPLOYEE.—The term ‘‘count-
able employee’’ means, with respect to an employer
for a month, any employee other than an employee
whose normal work week is less than 10 hours.
(2) LARGE EMPLOYER.—The term ‘‘large em-
ployer’’ means an employer that is not a small em-
ployer (as defined in paragraph (4)).
(3) QUALIFYING EMPLOYEE.—
(A) IN GENERAL.—The term ‘‘qualifying
employee’’ means, with respect to an employer
for a month, any employee other than—
(i) a part-time, seasonal, or temporary
employee (as defined in subparagraph
(B)); or
(ii) an employee who is a child de-
scribed in section 191(2)(A)(ii).
(B) PART-TIME, 
SEASONAL, 
OR
TEM-
PORARY EMPLOYEE DEFINED.—For purposes of
subparagraph (A), the term ‘‘part-time, sea-
sonal, or temporary employee’’ means any of
the following employees with respect to a
month:
(i) CERTAIN
PART-TIME
EMPLOY-
EES.—Any employee whose normal work
week is reasonably expected as of the first
day of such month to be less than 20
hours.
(ii) SEASONAL
OR
TEMPORARY
EM-
PLOYEES.—Any employee who is not rea-
sonably expected as of the first day of such
month to be employed by the employer for
a period of 120 consecutive days during
any 365-day period that includes such first
day.
(iii) DELAY FOR CERTAIN PART-TIME
EMPLOYEES.—Any employee whose normal
work week is reasonably expected as of the
first day of such month to be at least 20
hours, but less than 35 hours, and the nor-
mal work week of the employee during the
preceding 3 months was less than 20
hours.
(4) SMALL EMPLOYER.—The term ‘‘small em-
ployer’’ means, with respect to a calendar year, an
employer that normally employs more than 1 but
less than 100 countable employees on a typical busi-
ness day. For the purposes of this paragraph, the
term ‘‘employee’’ includes a self-employed individual.
For purposes of determining if an employer is a
small employer, rules similar to the rules of sub-
section (b) and (c) of section 414 of the Internal
Revenue Code of 1986 shall apply.
SEC. 193. DEFINITIONS RELATING TO HEALTH COVERAGE,
PLANS, AND CARRIERS.
Except as otherwise provided, for purposes of this
Act:
(1) 
BENCHMARK
COVERAGE.—The 
term
‘‘benchmark coverage’’ means the standard option of
the Blue Cross-Blue Shield plan offered under the
Federal Employees Health Benefits Program under
chapter 89 of title 5, United States Code, as in ef-
fect during 1994.
(2) CARRIER.—The term ‘‘carrier’’ means a li-
censed insurance company, an entity offering pre-
paid hospital or medical services, and a health main-
tenance organization, and includes a similar organi-
zation regulated under State law for solvency.
(3) CLASS OF FAMILY COVERAGE.—The term
‘‘class of family coverage’’ means the 4 classes de-
scribed in section 121(a)(3).
(4) FAIR RATING AREA.—The term ‘‘fair rating
area’’ means a geographic area identified by a State
for purposes of section 121(a)(2).
(5) GROUP HEALTH PLAN.—The term ‘‘group
health plan’’ means an employee welfare benefit plan
providing medical care (as defined in section 213(d)
of the Internal Revenue Code of 1986) to partici-
pants or beneficiaries directly or through insurance,
reimbursement, or otherwise, but does not include
any type of coverage excluded from the definition of
a health insurance coverage under paragraph (7)(B).
(6) HEALTH
COVERAGE.—The term ‘‘health
coverage’’ means health insurance coverage provided
by a carrier or medical care provided under a group
health plan.
(7) HEALTH INSURANCE COVERAGE.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘‘health insurance
coverage’’ means any hospital or medical service
policy or certificate, hospital or medical service
plan contract, or health maintenance organiza-
tion group contract offered by a carrier.
(B) EXCEPTION.—Such term does not in-
clude any of the following (or any combination
of the following):
(i) Coverage only for accident, dental,
vision, disability income, or long-term care
insurance, or any combination thereof.
(ii) Medicare supplemental health in-
surance.
(iii) Coverage issued as a supplement
to liability insurance.
(iv) Liability insurance, including gen-
eral liability insurance and automobile li-
ability insurance.
(v) Workers’ compensation or similar
insurance.
(vi) Automobile medical-payment in-
surance.
(vii) Coverage for a specified disease
or illness.
(viii) A hospital or fixed indemnity
policy.
(ix) Coverage provided exclusively to
individuals who are not eligible individuals.
(8) HEALTH
MAINTENANCE
ORGANIZATION.—
The term ‘‘health maintenance organization’’ in-
cludes, as defined in standards established under
section 143, an organization that provides health in-
surance coverage which meets specified standards
and under which health services are offered to be
provided on a prepaid, at-risk basis primarily
through a defined set of providers.
(9) INDIVIDUAL/SMALL GROUP MARKET.—The
term ‘‘individual/small group market’’ means the in-
surance market offered—
(A) to individuals seeking health insurance
coverage on behalf of themselves (and their de-
pendents) insofar as no employer is seeking
such coverage on behalf of the individual, and
(B) to small employers seeking health in-
surance coverage on behalf of their employees
(and their dependents),
regardless of whether or not such coverage is made
available directly or through a multiple employer
welfare arrangement, association, or otherwise.
(10) MANAGED CARE ARRANGEMENTS.—
(A) MANAGED CARE ARRANGEMENT.—The
term ‘‘managed care arrangement’’ means, with
respect to a group health plan or under health
insurance coverage, an arrangement under such
plan or coverage under which providers agree to
provide items and services covered under the ar-
rangement to individuals covered under the
plan or who have such coverage.
(B) 
PROVIDER
NETWORK.—The 
term
‘‘provider network’’ means, with respect to a
group health plan or health insurance coverage,
providers who have entered into an agreement
described in subparagraph (A).
(11) MULTIPLE
EMPLOYER
WELFARE
AR-
RANGEMENT.—The term ‘‘multiple employer welfare
arrangement’’ shall have the meaning applicable
under section 3(40) of the Employee Retirement In-
come Security Act of 1974.
(12) NAIC.—The term ‘‘NAIC’’ means the Na-
tional Association of Insurance Commissioners.
(13) OPTIONS.—Each of the following is a
‘‘type of coverage option’’ in relation to standard
coverage:
(A) FEE-FOR-SERVICE OPTION.—Standard
coverage is considered to provide a ‘‘fee-for-
service option’’ if, regardless of whether covered
individuals may receive benefits through a pro-
vider network, benefits with respect to the cov-
ered items and services in the coverage are
made available for such items and services pro-
vided through any lawful provider of such cov-
ered items and services and payment is made to
such a provider whether or not there is a con-
tractual arrangement between the provider and
the carrier or plan.
(B) MANAGED
CARE
OPTION.—Standard
coverage is considered to provide a ‘‘managed
care option’’ if benefits with respect to the cov-
ered items and services in the coverage are
made available exclusively through a provider
network, except in the case of emergency serv-
ices and as otherwise required under law.
(C) POINT-OF-SERVICE OPTION.—Standard
coverage is considered to provide a ‘‘point-of-
service option’’ if the benefits with respect to
covered items and services in the coverage are
made available principally through a managed
care arrangement, with the choice of the en-
rollee to obtain such benefits for items and
services provided through any lawful provider of
such covered items and services. The coverage
may provide for different cost sharing schedules
based on whether the items and services are
provided through such an arrangement or out-
side such an arrangement.
(14) QUALIFIED
HEALTH
COVERAGE.—The
term ‘‘qualified health coverage’’ has the meaning
given such term in section 141.
(15) STANDARD COVERAGE.—The term ‘‘stand-
ard coverage’’ means coverage provided consistent
with section 142(a).
(16) STATE COMMISSIONER OF INSURANCE.—
The term ‘‘State commissioner of insurance’’ in-
cludes a State superintendent of insurance.
SEC. 194. DEFINITIONS RELATING TO RESIDENCE AND IM-
MIGRATION STATUS.
Except as otherwise provided, for purposes of this
Act:
(1) ALIEN
PERMANENTLY
RESIDING
IN
THE
UNITED STATES UNDER COLOR OF LAW.—The term
‘‘alien permanently residing in the United States
under color of law’’ means an alien lawfully admitted
for permanent residence (within the meaning of sec-
tion 101(a)(20) of the Immigration and Nationality
Act), and includes any of the following (such status
not having changed):
(A) An alien who is admitted as a refugee
under section 207 of the Immigration and Na-
tionality Act.
(B) An alien who is granted asylum under
section 208 of such Act.
(C) An alien whose deportation is withheld
under section 243(h) of such Act.
(D) An alien whose deportation is sus-
pended pursuant to section 244 of such Act.
(E) An alien who is granted conditional
entry pursuant to section 203(a)(7) of such Act
as in effect before April 1, 1980.
(F) An alien who is admitted for tem-
porary residence under section 210, 210A, or
245A of such Act.
(G) An alien who is within a class of aliens
lawfully present in the United States pursuant
to any other provision of such Act, if (i) the At-
torney General determines that the continued
presence of such class of aliens serves a human-
itarian or other compelling public interest, and
(ii) the Secretary determines that such interest
would be further served by treating each such
alien within such class as a ‘‘legal permanent
resident’’ for purposes of this Act or who has
been granted extended voluntary departure as a
member of a nationality group.
(H) An alien who is the spouse or unmar-
ried child under 21 years of age of a citizen of
the United States, or the parent of such a citi-
zen if the citizen is over 21 years of age, and
with respect to whom an application for adjust-
ment to lawful permanent residence is pending.
(I) An alien within such other classification
of permanent resident aliens as the Secretary
may establish by regulation.
(2) LONG-TERM
NONIMMIGRANT.—The term
‘‘long-term nonimmigrant’’ means a nonimmigrant
described in subparagraph (E), (H), (I), (K), (L),
(N), (O), (Q), or (R) of section 101(a)(15) of the
Immigration and Nationality Act.
(3) 
QUALIFYING
INDIVIDUAL.—The 
term
‘‘qualifying individual’’ means, an individual who is
a resident of the United States, who is not a pris-
oner, and is—
(A) a citizen or national of the United
States;
(B) an alien permanently residing in the
United States under color of law (as defined in
paragraph (1)); or
(C) a long-term nonimmigrant (as defined
in paragraph (2)).
SEC. 195. EFFECTIVE DATES.
The requirements of this title shall apply with respect
to—
(1) group health plans for plan years beginning
on or after January 1, 1997, and
(2) carriers (with respect to coverage other than
under a group health plan) as of January 1, 1997.
TITLE II—ADMINISTRATIVE
SIMPLIFICATION
SEC. 200. PURPOSE.
It is the purpose of this title to improve the efficiency
and effectiveness of the health care system, including the
medicare program under title XVIII of the Social Security
Act and the medicaid program under title XIX of such
Act, by encouraging the development of a health informa-
tion network through the adoption of standards and the
establishment of requirements for the electronic trans-
mission of certain health information.
SEC. 201. DEFINITIONS.
For purposes of this title:
(1) CODE SET.—The term ‘‘code set’’ means
any set of codes used for encoding data elements,
such as tables of terms, medical concepts, medical
diagnostic codes, or medical procedure codes.
(2) COORDINATION OF BENEFITS.—The term
‘‘coordination of benefits’’ means determining and
coordinating the financial obligations of plan spon-
sors when health care benefits are payable by more
than one such sponsor.
(3) HEALTH INFORMATION.—The term ‘‘health
information’’ means any information that relates to
the past, present, or future physical or mental health
or condition or functional status of an individual,
the provision of health care to an individual, or pay-
ment for the provision of health care to an individ-
ual.
(4) HEALTH
INFORMATION
NETWORK.—The
term ‘‘health information network’’ means the health
information system that is formed through the appli-
cation of the requirements and standards established
under this title.
(5) HEALTH
INFORMATION
NETWORK
SERV-
ICE.—The term ‘‘health information network serv-
ice’’—
(A) means a private entity or an entity op-
erated by a State that enters into contracts—
(i) to process or facilitate the process-
ing of nonstandard data elements of health
information into standard data elements;
(ii) to provide the means by which
persons are connected to the health infor-
mation network for purposes of meeting
the requirements of this title, including the
holding of standard data elements of
health information;
(iii) to provide authorized access to
health information through the health in-
formation network; or
(iv) to provide specific information
processing services, such as automated co-
ordination of benefits and claims trans-
action routing; and
(B) includes a health information security
organization.
(6) HEALTH INFORMATION SECURITY ORGANI-
ZATION.—The term ‘‘health information security or-
ganization’’ means a private entity or an entity oper-
ated by a State that accesses standard data elements
of health information through the health information
network, processes such information into non-identi-
fiable health information, and may store such infor-
mation.
(7) HEALTH
PROVIDER.—The term ‘‘health
provider’’ includes a provider of services (as defined
in section 1861(u) of the Social Security Act), a pro-
vider of medical or other health services (as defined
in section 1861(s) of such Act), and any other per-
son (other than a plan sponsor) furnishing health
care items or services.
(8) INDIVIDUALLY IDENTIFIABLE HEALTH IN-
FORMATION.—The term ‘‘individually identifiable
health information’’ means health information in the
health information network—
(A) that identifies an individual who is the
subject of the information; or
(B) with respect to which there is a rea-
sonable basis to believe that the information
can be used to identify such an individual.
(9) 
NONIDENTIFIABLE
HEALTH
INFORMA-
TION.—The term ‘‘nonidentifiable health informa-
tion’’ means health information that is not individ-
ually identifiable health information.
(10) PLAN SPONSOR.—The term ‘‘plan spon-
sor’’ means—
(A) a carrier (as defined in section 193(2))
providing health insurance coverage (as defined
in section 193(7));
(B) a group health plan;
(C) an association or other entity which es-
tablishes or maintains a multiple employer wel-
fare 
arrangement 
(as 
defined 
in 
section
193(11)) providing benefits consisting of medi-
cal care described in section 607(1) of the Em-
ployee Retirement Income Security Act of 1974;
and
(D) a State, or the Federal Government,
acting in a capacity as a provider of health ben-
efits to eligible individuals that is equivalent to
that of a carrier.
(11) STANDARD.—The term ‘‘standard’’, when
used with reference to a transaction or to data ele-
ments of health information, means that the trans-
action or data elements meet any standard adopted
by the Secretary under subtitle A that applies to the
transaction or data elements.
Subtitle A—Standards for Data
Elements and Transactions
SEC. 211. GENERAL REQUIREMENTS ON SECRETARY.
(a) IN GENERAL.—The Secretary shall adopt stand-
ards and modifications to standards under this subtitle
that are—
(1) consistent with the objective of reducing the
costs of providing and paying for health care; and
(2) in use and generally accepted, developed, or
modified by the standard-setting organizations ac-
credited by the American National Standard Insti-
tute.
(b) INITIAL STANDARDS.—The Secretary may de-
velop an expedited process for the adoption of initial
standards under this part.
(c) PROTECTION OF COMMERCIAL INFORMATION.—
In adopting standards under this part, the Secretary may
not require disclosure of trade secrets or confidential com-
mercial information by any person.
SEC. 212. STANDARDS FOR DATA ELEMENTS OF HEALTH IN-
FORMATION.
(a) IN GENERAL.—The Secretary shall adopt stand-
ards necessary to make uniform and compatible for elec-
tronic transmission through the health information net-
work the data elements of any health information that the
Secretary determines is appropriate for transmission in
connection with a transaction described in section 221.
(b) ADDITIONS.—The Secretary may make additions
to any set of data elements adopted under subsection (a)
as the Secretary determines appropriate in a manner that
minimizes the disruption and cost of compliance with such
additions.
(c) CERTAIN DATA ELEMENTS.—
(1) UNIQUE HEALTH IDENTIFIERS.—The Sec-
retary shall establish a system to provide for a
standard unique health identifier for each individual,
employer, plan sponsor, and health provider for use
in the health care system.
(2) CODE SETS.—
(A) IN GENERAL.—The Secretary, in con-
sultation with experts from the private sector
and Federal agencies, shall—
(i) select code sets for appropriate
data elements from among the code sets
that have been developed by private and
public entities; or
(ii) establish code sets for such data
elements if no code sets for the data ele-
ments have been developed.
(B) DISTRIBUTION.—The Secretary shall
establish efficient and low-cost procedures for
distribution of code sets and modifications to
code sets.
SEC. 213. INFORMATION TRANSACTION STANDARDS.
(a) IN GENERAL.—The Secretary shall adopt tech-
nical standards that are consistent with the health infor-
mation network privacy standards adopted under section
214 relating to the method by which standard data ele-
ments of health information may be transmitted electroni-
cally, including standards with respect to the format in
which such data elements may be transmitted.
(b) SPECIAL RULE FOR COORDINATION OF BENE-
FITS.—Any standard adopted by the Secretary under
paragraph (1) that relates to coordination of benefits shall
provide that a claim for reimbursement for health services
furnished shall be tested, by an algorithm specified by the
Secretary, against all records of enrollment and eligibility
for the individual who received such services that are avail-
able to the recipient of the claim through the health infor-
mation network to determine any primary and secondary
obligors for payment.
(c) ELECTRONIC SIGNATURE.—The Secretary, in co-
ordination with the Secretary of Commerce, shall promul-
gate regulations specifying procedures for the electronic
transmission and authentication of signatures, compliance
with which shall be deemed to satisfy State and Federal
statutory requirements for written signatures with respect
to transactions described in section 221 and written signa-
tures on health records and prescriptions.
(d) STANDARDS FOR CLAIMS FOR CLINICAL LABORA-
TORY TESTS.—The standards under this section shall pro-
vide that claims for clinical laboratory tests for which ben-
efits are payable by a plan sponsor shall be submitted di-
rectly by the person or entity that performed (or super-
vised the performance of) the tests to the sponsor in a
manner consistent with (and subject to such exceptions
as are provided under) the requirement for direct submis-
sion of such claims under the medicare program.
SEC. 214. HEALTH INFORMATION NETWORK PRIVACY
STANDARDS.
The Secretary shall adopt standards respecting the
privacy of individually identifiable health information that
is in the health information network. Such standards shall
include standards concerning at least the following:
(1) The rights of an individual who is the sub-
ject of such information.
(2) The procedures to be established for the ex-
ercise of such rights.
(3) The uses and disclosures of such informa-
tion that are authorized or required.
(4) Safeguards for the security of such informa-
tion and adequate security practices.
SEC. 215. TIMETABLES FOR ADOPTION OF STANDARDS.
(a) INITIAL STANDARDS FOR DATA ELEMENTS.—
The Secretary shall adopt standards relating to—
(1) the data elements for the information de-
scribed in section 212(a) not later than 9 months
after the date of the enactment of this Act (except
in the case of standards with respect to data ele-
ments for claims attachments, which shall be adopt-
ed not later than 24 months after the date of the
enactment of this Act); and
(2) any addition to a set of data elements, in
conjunction with making such an addition.
(b) INITIAL PRIVACY STANDARDS.—The Secretary
shall adopt standards relating to the privacy of individ-
ually identifiable health information in the health informa-
tion network under section 214 not later than 12 months
after the date of the enactment of this Act.
(c) INITIAL STANDARDS FOR INFORMATION TRANS-
ACTIONS.—The Secretary shall adopt standards relating
to information transactions under section 213 not later
than 18 months after the date of the enactment of this
Act (except in the case of standards for claims attach-
ments, which shall be adopted not later than 24 months
after the date of the enactment of this Act).
(d) MODIFICATIONS TO STANDARDS.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the Secretary shall review the standards
adopted under this subtitle and shall adopt modified
standards as determined appropriate, but not more
frequently than once every 6 months. Any modifica-
tion to standards shall be completed in a manner
which minimizes the disruption to, and costs of com-
pliance incurred by, a plan sponsor, health provider,
or health plan purchasing organization that is re-
quired to comply with subtitle B.
(2) SPECIAL RULES.—
(A) MODIFICATIONS
DURING
FIRST
12-
MONTH PERIOD.—Except with respect to addi-
tions and modifications to code sets under sub-
paragraph (B), the Secretary may not adopt
any modification to a standard adopted under
this subtitle during the 12-month period begin-
ning on the date the standard is adopted, un-
less the Secretary determines that the modifica-
tion is necessary in order to permit a plan spon-
sor, a health provider, or a health plan purchas-
ing organization to comply with subtitle B.
(B) ADDITIONS
AND
MODIFICATIONS
TO
CODE SETS.—
(i) IN GENERAL.—The Secretary shall
ensure that procedures exist for the rou-
tine maintenance, testing, enhancement,
and expansion of code sets.
(ii) ADDITIONAL
RULES.—If a code
set is modified under this subsection, the
modified code set shall include instructions
on how data elements that were encoded
prior to the modification are to be con-
verted or translated so as to preserve the
value of the data elements. Any modifica-
tion to a code set under this subsection
shall be implemented in a manner that
minimizes the disruption to, and costs of
compliance incurred by, a plan sponsor,
health provider, or health plan purchasing
organization that is required to comply
with subtitle B.
(e) EVALUATION
OF STANDARDS.—The Secretary
may establish a process to measure or verify the consist-
ency of standards adopted or modified under this part.
Such process may include demonstration projects and
analyses of the cost of implementing such standards and
modifications.
Subtitle B—Requirements with Re-
spect to Certain Transactions
and Information
SEC. 221. STANDARD TRANSACTIONS AND INFORMATION.
(a) TRANSACTIONS BY SPONSORS.—
(1) TRANSACTIONS
WITH
PROVIDERS.—If a
plan sponsor conducts any of the transactions de-
scribed in paragraph (3) with a health provider—
(A) the transaction shall be a standard
transaction; and
(B) the health information transmitted by
the sponsor to the provider or by the provider
to the sponsor in connection with the trans-
action shall be in the form of standard data ele-
ments.
(2) TRANSACTIONS WITH SPONSORS.—If a plan
sponsor conducts any of the transactions described
in paragraph (3) with another plan sponsor—
(A) the transaction shall be a standard
transaction; and
(B) the health information transmitted by
either sponsor in connection with the trans-
action shall be in the form of standard data ele-
ments.
(3) TRANSACTIONS.—The transactions referred
to in paragraphs (1) and (2) are the following:
(A) Verification of eligibility for benefits.
(B) Coordination of benefits.
(C) Claim submission.
(D) Claim attachment submission.
(E) Claim status notification.
(F) Claim status verification.
(G) Claim adjudication.
(H) Payment and remittance advice.
(I) Certification or authorization of a re-
ferral to a health provider who is not part of a
provider network.
(b) USE OF HEALTH INFORMATION NETWORK SERV-
ICES.—A plan sponsor, a health provider, or a health plan
purchasing organization may comply with any provision
of this section by entering into an agreement or other ar-
rangement with a health information network service cer-
tified under section 231 pursuant to which the service un-
dertakes the duties applicable to the sponsor, provider, or
organization under the provision.
SEC. 222. ACCESSING HEALTH INFORMATION FOR AUTHOR-
IZED PURPOSES.
(a) PROCUREMENT RULE FOR GOVERNMENT AGEN-
CIES.—
(1) IN GENERAL.—A health information secu-
rity organization that is certified under section 231
shall make available to a Federal or State agency,
pursuant to a cost-type contract (as defined under
the Federal Acquisition Regulation), any non-identi-
fiable health information, including non-identifiable
health information that is derived from individually
identifiable health information, that—
(A) is certified under section 231; and
(B) requests the information.
SEC. 223. ENSURING AVAILABILITY OF INFORMATION.
The Secretary shall establish a procedure under
which a plan sponsor or health provider that does not have
the ability to transmit standard data elements directly,
and does not have access to a health information network
service certified under section 231, may comply with the
provisions of this part.
SEC. 224. TIMETABLES FOR COMPLIANCE WITH REQUIRE-
MENTS.
(a) INITIAL COMPLIANCE.—
(1) IN GENERAL.—Not later than 12 months
after the date on which standards are adopted under
subtitle A with respect to a type of transaction, or
data elements for a type of health information, a
plan sponsor, health provider, or health plan pur-
chasing organization shall comply with the require-
ments of this subtitle with respect to such trans-
action or information.
(2) ADDITIONAL DATA ELEMENTS.—Not later
than 12 months after the date on which the Sec-
retary adopts an addition to a set of data elements
for health information under section 212, a plan
sponsor, health provider, or health plan purchasing
organization shall comply with the requirements of
this subtitle using such data elements.
(b) COMPLIANCE WITH MODIFIED STANDARDS.—
(1) IN GENERAL.—If the Secretary adopts a
modified standard under section 215(c), a plan
sponsor, health provider, or health plan purchasing
organization shall comply with the modified standard
at such time as the Secretary determines appro-
priate, taking into account the time needed to com-
ply due to the nature and extent of the modification.
(2) SPECIAL RULE.—In the case of a modifica-
tion to a standard that does not occur within the 12-
month period beginning on the date the standard is
adopted, the time determined appropriate by the
Secretary under paragraph (1) may not be—
(A) earlier than the last day of the 90-day
period beginning on the date the modified
standard is adopted; or
(B) later than the last day of the 12-
month period beginning on the date the modi-
fied standard is adopted.
Subtitle C—Miscellaneous
Provisions
SEC. 231. STANDARDS AND CERTIFICATION FOR HEALTH
INFORMATION NETWORK SERVICES.
(a) STANDARDS
FOR OPERATION.—The Secretary
shall establish standards with respect to the operation of
health information network services, including standards
ensuring that such services—
(1) develop, operate, and cooperate with one an-
other to form the health information network;
(2) meet all of the standards adopted under
subtitle A that are applicable to the services;
(3) make public information concerning their
performance, as measured by uniform indicators
such as accessibility, transaction responsiveness, ad-
ministrative efficiency, reliability, dependability, and
any other indicator determined appropriate by the
Secretary; and
(4) if they are part of a larger organization,
have policies and procedures in place which isolate
their activities with respect to processing informa-
tion in a manner that prevents access to such infor-
mation by such larger organization.
(b) CERTIFICATION BY THE SECRETARY.—
(1) ESTABLISHMENT.—Not later than 18
months after the date of the enactment of this Act,
the Secretary shall establish a certification proce-
dure for health information network services which
ensures that certified services are qualified to meet
the requirements of this title and the standards es-
tablished by the Secretary under this section. Such
certification procedure shall be implemented in a
manner that minimizes the costs and delays of oper-
ations for such services.
(2) APPLICATION.—Each entity desiring to be
certified as a health information network service
shall apply to the Secretary for certification in a
form and manner determined appropriate by the
Secretary.
(3) AUDITS AND REPORTS.—The procedure es-
tablished under paragraph (1) shall provide for au-
dits by the Secretary and reports by an entity cer-
tified under this section as the Secretary determines
appropriate in order to monitor such entity’s compli-
ance with the requirements of this title and the
standards established by the Secretary under this
section.
(4) RECERTIFICATION.—A health information
network service shall be recertified under this sub-
section at least every 3 years.
(c) LOSS OF CERTIFICATION.—
(1) MANDATORY
TERMINATION.—Except as
provided in paragraph (2), if a health information
network service violates a health information net-
work privacy standard adopted under section 214
that is applicable to the service, its certification
under this section shall be terminated unless the
Secretary determines that appropriate corrective ac-
tion has been taken.
(2) CONDITIONAL
CERTIFICATION—The Sec-
retary may establish a procedure under which a
health information network service may remain cer-
tified on a conditional basis if the service is operat-
ing consistently with a plan intended to correct any
violations described in paragraph (1). Such proce-
dure may provide for the appointment of a trustee
to continue operation of the service until the require-
ments for full certification are met.
(d) CERTIFICATION
BY PRIVATE ENTITIES.—The
Secretary may designate private entities to conduct the
certification procedures established by the Secretary under
this section. A health information network service certified
by such an entity in accordance with such designation
shall be considered to be certified by the Secretary.
(e) INFORMATION HELD BY HEALTH INFORMATION
NETWORK SERVICES.—If a health information network
service certified under this section loses its certified status
or takes any action that would threaten the continued
availability of the standard data elements of health infor-
mation held by such service, such data elements shall be
transferred to another health information network service
certified under this section that has been designated by
the Secretary.
SEC. 232. IMPOSITION OF ADDITIONAL REQUIREMENTS.
(a) IN GENERAL.—Except as provided in subsection
(c), after the Secretary has established standards under
section 212 that are necessary to make uniform and com-
patible for electronic transmission the data elements that
the Secretary determines are appropriate for transmission
in connection with a transaction described in subtitle B,
an individual or entity may not require an individual or
entity, to provide in any manner any additional data ele-
ment in connection with—
(1) the transaction; or
(2) an inquiry with respect to the transaction.
(b) TRANSMISSION METHOD.—Except as provided in
subsection (c), after the Secretary has established stand-
ards under section 213 relating to the method by which
data elements that the Secretary determines are appro-
priate for transmission in connection with a transaction
described in subtitle B may be transmitted electronically,
an individual or entity may not require an individual or
entity to transmit any data element in a manner inconsist-
ent with the standards in connection with—
(1) the transaction; or
(2) an inquiry with respect to the transaction.
(c) EXCEPTION.—Subsections (a) and (b) do not
apply if—
(1) an individual or entity voluntarily agrees to
provide the additional data element; or
(2) a waiver is granted under subsection (d) to
permit the requirement to be imposed.
(d) CONDITIONS FOR WAIVERS.—
(1) IN GENERAL.—An individual or entity may
request a waiver from the Secretary in order to im-
pose on an individual or entity a requirement other-
wise prohibited under subsection (a) or (b). Subject
to paragraph (2), the Secretary may grant such a
waiver.
(2) CONSIDERATION OF WAIVER REQUESTS.—A
waiver may not be granted under this subsection to
impose an otherwise prohibited requirement unless
the Secretary determines that the value of any addi-
tional information to be provided under the require-
ment for research or other purposes significantly
outweighs the administrative cost of the imposition
of the requirement, taking into account the burden
of the timing of the imposition of the requirement.
(e) ANONYMOUS REPORTING.—If an individual or en-
tity attempts to impose on an individual or entity a re-
quirement prohibited under subsection (a) or (b), the indi-
vidual or entity on whom the requirement is being imposed
may contact the Secretary. The Secretary shall develop a
procedure under which an individual or entity that con-
tacts the Secretary under the preceding sentence shall re-
main anonymous. The Secretary shall notify the individual
or entity imposing the requirement that the requirement
may not be imposed unless the other individual or entity
voluntarily agrees to such requirement or a waiver is ob-
tained under subsection (d).
SEC. 233. EFFECT ON STATE LAW.
(a) IN GENERAL.—Except as otherwise provided in
this section, a provision, requirement, or standard under
this title shall supersede any contrary provision of State
law.
(b) STATE ‘‘QUILL AND PEN’’ LAWS.—A State may
not establish, continue in effect, or enforce any provision
of State law that requires medical or health plan records
(including billing information) to be maintained or trans-
mitted in written rather than electronic form, except
where the Secretary determines that the provision is nec-
essary to prevent fraud and abuse, with respect to con-
trolled substances, or for other purposes.
(c) PUBLIC HEALTH REPORTING.—Nothing in this
title shall be construed to invalidate or limit the authority,
power, or procedures established under any law providing
for the reporting of disease or injury, child abuse, birth,
or death, public health surveillance, or public health inves-
tigation or intervention.
(d) PUBLIC USE FUNCTIONS.—Nothing in this title
shall be construed to limit the authority of a Federal or
State agency to make non-identifiable health information
available for public use.
(e) PAYMENT FOR HEALTH CARE SERVICES OR PRE-
MIUMS.—Nothing in this title shall be construed to pro-
hibit a consumer from paying for health care items or
services, or plan or health insurance coverage premiums,
by debit, credit, or other payment cards or numbers or
other electronic payment means.
TITLE III—ANTITRUST
SEC. 301. PUBLICATION OF ANTITRUST GUIDELINES ON AC-
TIVITIES OF HEALTH PLANS.
(a) IN GENERAL.—The Attorney General shall pro-
vide for the development and publication of explicit guide-
lines on the application of antitrust laws to the activities
of health plans. The guidelines shall be designed to facili-
tate development and operation of plans, consistent with
the antitrust laws.
(b) REVIEW PROCESS.—The Attorney General shall
establish a review process under which the administrator
or sponsor of a health plan (or organization that proposes
to administer or sponsor a health plan) may submit a re-
quest to the Attorney General to obtain a prompt opinion
(but in no event later than 90 days after the Attorney
General receives the request) from the Department of Jus-
tice on the plan’s conformity with the Federal antitrust
laws.
(c) DEFINITIONS.—In this section—
(1) the term ‘‘antitrust laws’’—
(A) has the meaning given it in subsection
(a) of the first section of the Clayton Act (15
U.S.C. 12(a)), except that such term includes
section 5 of the Federal Trade Commission Act
(15 U.S.C. 45) to the extent such section ap-
plies to unfair methods of competition, and
(B) includes any State law similar to the
laws referred to in subparagraph (A); and
(2) the term ‘‘health plan’’ means any contract
or arrangement under which an entity bears all or
part of the cost of providing health care items and
services, including a hospital or medical expense in-
curred policy or certificate, hospital or medical serv-
ice plan contract, or health maintenance subscriber
contract, but does not include—
(A) coverage only for accident, dental, vi-
sion, disability, or long term care, medicare
supplemental health insurance, or any combina-
tion thereof,
(B) coverage issued as a supplement to li-
ability insurance,
(C) workers’ compensation or similar in-
surance, or
(D) automobile medical-payment insur-
ance.
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