SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Faircare Act’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings. 
Sec. 3. Definitions. 
TITLE I—DEMOGRAPHIC DATA COLLECTION 
Sec. 101. Data on race, ethnicity, highest education level attained, and primary 
language. 
Sec. 102. Revision of HIPAA claims standards. 
TITLE II—IMPROVED COLLECTION OF QUALITY DATA 
Sec. 201. Authority of Agency for Healthcare Research and Quality. 
‘‘PART C—IMPROVED COLLECTION OF QUALITY DATA 
‘‘Sec. 921. General authority of the Agency to determine measures. 
‘‘Sec. 922. Use of hospital-specific measures. 
‘‘Sec. 923. Outpatient-specific measures. 
‘‘Sec. 924. Ranking of measures. 
‘‘Sec. 925. Advisory Committee on Quality. 
‘‘Sec. 926. Updates of conditions. 
‘‘Sec. 927. Reporting of measures. 
‘‘Sec. 928. Voluntary submission of data. 
‘‘Sec. 929. Authorization of appropriations. 
Sec. 202. Office of national healthcare disparities and quality. 
TITLE III—FAIRCARE HOSPITAL PROGRAM 
Sec. 301. Faircare hospital program. 
Sec. 302. Technical assistance grants. 
TITLE IV—COMMUNITY HEALTH CENTERS. 
Sec. 401. Authority of Bureau of Primary Health Care to develop new report-
ing standards. 
Sec. 402. Faircare designation for health centers. 
Sec. 403. Grants for technical assistance. 
Sec. 404. Health disparity collaboratives. 
TITLE V—REACH 2010 
Sec. 501. Expansion of REACH 2010 
TITLE VI—MALPRACTICE INSURANCE RELIEF 
Sec. 601. Refundable tax credit for the cost of malpractice insurance for certain 
providers.
Sec. 602. Grants to non-profit hospitals. 
Sec. 603. Grants for research into quality of care and medical errors. 
Sec. 604. Authorization of appropriations. 
SEC. 2. FINDINGS. 
(a) EVIDENCE OF HEALTHCARE DISPARITIES.—With 
respect to evidence of healthcare disparities, Congress 
makes the following findings: 
(1) Healthcare disparities affect the lives, 
health, and livelihood of Americans, and increase the 
overall cost of health care in the United States. 
(2) Minority patients with chronic diseases have 
been found less likely to receive the necessary serv-
ices required to manage effectively these illnesses, 
such as routine blood pressure checks or eye exami-
nations, and are less likely to receive treatments to 
cure these conditions, such as heart surgeries or kid-
ney transplants. 
(3) Studies have shown that non-English speak-
ing patients report more satisfaction with health en-
counters and have better health outcomes after en-
counters with healthcare providers who speak their 
primary language. 
(4) The Institute of Medicine’s report ‘‘In the 
Nation’s Compelling Interest’’, concluded that racial 
and ethnic minority healthcare providers are signifi-
cantly more likely than their white peers to serve mi-
nority and medically underserved communities,
thereby helping to improve problems of limited mi-
nority access to care. 
(5) Data from the National Center for Health 
Statistics demonstrates that minorities are less likely 
to receive routine cancer screenings even when they 
do have health insurance and access to healthcare 
providers, and once diagnosed with cancer, elderly 
minority patients are also less likely to receive ap-
propriate treatment for pain associated with cancer. 
(b) 
EVIDENCE
OF
INCONSISTENCIES
IN 
HEALTHCARE QUALITY.—With respect to evidence of in-
consistencies in healthcare quality, Congress makes the 
following findings: 
(1) Inconsistent healthcare quality threatens 
the health of all Americans regardless of race, eth-
nicity, or socio-economic status. 
(2) Studies by the RAND Corporation have 
shown that all patients in the United States have 
only a 55 percent possibility of receiving clinically 
appropriate care in the healthcare setting, despite 
the fact that the United States spends twice as 
much as other industrialized countries on health 
care. 
(3) The control of hypertension is essential to 
reducing mortality from heart disease, stroke, and
diabetes complications, yet, only 23 percent of Amer-
icans with hypertension are adequately treated. 
(4) About 1 in 5 elderly Americans are pre-
scribed inappropriate medications. 
(5) Only 21 percent of Americans with diabetes 
get all recommended checkups. 
(6) One of the safest, simplest, and most cost- 
effective ways to reduce cancer morbidity and mor-
tality is to increase screening rates for selected can-
cers including colorectal cancers, yet, less than half 
of men and women over the age of 50 report screen-
ing for colorectal cancers. 
(7) In the United States, over 1⁄4 of infants and 
toddlers of all races and ethnicities do not receive all 
recommended vaccines. 
(8) Breakthroughs in treatments have enabled 
more patients to survive and live better, yet too 
many of these treatments are not being administered 
to all those who can benefit from them. 
SEC. 3. DEFINITIONS. 
In this Act: 
(1) HEALTH
DISPARITY
POPULATIONS.—The 
term ‘‘health disparity populations’’ has the meaning 
given that term in section 485E(d) of the Public 
Health Service Act (42 U.S.C. 287c–31(d)).
(2) RACIAL AND ETHNIC MINORITY.—The term 
‘‘racial and ethnic minority’’ has the meaning given 
the term ‘‘racial and ethnic minority group’’ in sec-
tion 1707(g)(1) of the Public Health Service Act (42 
U.S.C. 300u–6(g)(1)). 
TITLE I—DEMOGRAPHIC DATA 
COLLECTION 
SEC. 101. DATA ON RACE, ETHNICITY, HIGHEST EDUCATION 
LEVEL ATTAINED, AND PRIMARY LANGUAGE. 
(a) PURPOSE.—It is the purpose of this section to 
promote data collection and reporting by race, ethnicity, 
highest education level attained, and primary language 
among federally supported health programs. 
(b) AMENDMENT.—Part B of title II of the Public 
Health Service Act (42 U.S.C. 238 et seq.) is amended 
by adding at the end the following: 
‘‘SEC. 249. DATA ON RACE, ETHNICITY, HIGHEST EDU-
CATION LEVEL ATTAINED, AND PRIMARY 
LANGUAGE. 
‘‘(a) REQUIREMENTS.— 
‘‘(1) IN
GENERAL.—Each health-related pro-
gram operated by or that receives funding or reim-
bursement, in whole or in part, either directly or in-
directly from the Department of Health and Human
Services shall, in accordance with the schedule de-
scribed in subsection (e)— 
‘‘(A) require the collection, by the agency 
or program involved, of data on the race, eth-
nicity, highest education level attained, and pri-
mary language of each applicant for and recipi-
ent of health-related assistance under such pro-
gram— 
‘‘(i) using, at a minimum, the cat-
egories for race and ethnicity described in 
the 1997 Office of Management and Budg-
et Standards for Maintaining, Collecting, 
and Presenting Federal Data on Race and 
Ethnicity; 
‘‘(ii) using the standards developed 
under subsection (d) for the collection of 
language data; 
‘‘(iii) where practicable, collecting 
data for additional population groups if 
such groups can be aggregated into the 
minimum race and ethnicity categories as 
defined by the Office of Management and 
Budget; and 
‘‘(iv) where practicable, through self- 
reporting;
‘‘(1) under the same privacy protections as the 
Secretary applies to other health data under the reg-
ulations promulgated under section 264(c) of the 
Health Insurance Portability and Accountability Act 
of 1996 (Public Law 104–191; 110 Stat. 2033) re-
lating to the privacy of individually identifiable 
health information and other protections; and 
‘‘(2) from all inappropriate internal use by any 
entity that collects, stores, or receives the data, in-
cluding use of such data in determinations of eligi-
bility (or continued eligibility) in health plans, and 
from other inappropriate uses, as defined by the 
Secretary. 
‘‘(c) COMPLIANCE WITH STANDARDS.—Data col-
lected under subsection (a) shall be obtained, maintained, 
and presented (including for reporting purposes) in ac-
cordance with, at a minimum, the 1997 Office of Manage-
ment and Budget Standards for Maintaining, Collecting, 
and Presenting Federal Data on Race and Ethnicity. 
‘‘(d) LANGUAGE
COLLECTION
STANDARDS.—Not 
later than 1 year after the date of enactment of this sec-
tion, the Director of the Office of Minority Health, in con-
sultation with the Office for Civil Rights of the Depart-
ment of Health and Human Services, shall develop and
disseminate Standards for the Classification of Federal 
Data on Preferred Written and Spoken Language. 
‘‘(e) SCHEDULE OF COMPLIANCE.—Data collection 
under subsection (a) shall be required within the following 
time periods: 
‘‘(1) With respect to medicare-related data 
(under title XVIII of the Social Security Act), such 
data shall be collected not later than 2 years after 
the date of enactment of this section, including data 
related to— 
‘‘(A) the Medicare Hospital Quality Initia-
tive; 
‘‘(B) the Center for Medicare and Med-
icaid Services Abstraction or Reporting Tools 
(referred to in this section as ‘CART’); 
‘‘(C) all CART equivalent private data-
bases used to submit data for the Medicare 
Hospital Quality Initiative or medicare billing 
(including data for both medicare and non- 
medicare patients); and 
‘‘(D) all medicare billing communications. 
‘‘(2) With respect to data that is not currently 
mandated or collected and reported by the medicaid 
and State Children’s Health Insurance Program 
(under titles XIX and XXI of the Social Security
Act), such data shall be collected not later than 4 
years after the date of enactment of this section. 
‘‘(3) With respect to data relating to biomedical 
and health services research that is described in sub-
section (a), such data shall be collected not later 
than 6 years after the date of enactment of this sec-
tion. 
‘‘(4) With respect to data relating to all other 
programs described in subsection (a), such data 
shall be collected not later than 6 years after the 
date of enactment of this section. 
‘‘(f) TECHNICAL ASSISTANCE FOR THE COLLECTION 
AND REPORTING OF DATA.— 
‘‘(1) IN GENERAL.—The Secretary may, either 
directly or through grant or contract, provide tech-
nical assistance to enable a healthcare program or 
an entity operating under such program to comply 
with the requirements of this section. 
‘‘(2) TYPES OF ASSISTANCE.—Assistance pro-
vided under this subsection may include assistance 
to— 
‘‘(A) enhance or upgrade information tech-
nology that will facilitate race, ethnicity, highest 
education level attained, and primary language 
data collection and analysis;
‘‘(B) improve methods for health data col-
lection and analysis including additional popu-
lation groups beyond the Office of Management 
and Budget categories if such groups can be 
aggregated into the minimum race and ethnicity 
categories; 
‘‘(C) develop mechanisms for submitting 
collected data subject to existing privacy and 
confidentiality regulations; and 
‘‘(D) develop educational programs to in-
form health insurance issuers, health plans, 
health providers, health-related agencies, and 
the general public that data collection and re-
porting by race, ethnicity, and preferred lan-
guage are legal and essential for eliminating 
health and healthcare disparities. 
‘‘(g) GRANTS FOR DATA COLLECTION BY COMMU-
NITY HEALTH CENTERS AND HOSPITALS.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Administrator of the Centers for Medi-
care & Medicaid Services and the Administrator of 
the Health Resources and Services Administration, 
is authorized to award grants for the conduct of 100 
demonstration programs, 50 percent of which shall 
be conducted by community health centers and 50
percent of which shall be conducted by hospitals, to 
enhance the ability of such centers and hospitals to 
collect, analyze, and report the data required under 
subsection (a). 
‘‘(2) ELIGIBILITY.—To be eligible to receive a 
grant under paragraph (1), a community health cen-
ter or hospital shall— 
‘‘(A) prepare and submit to the Secretary 
an application at such time, in such manner, 
and containing such information as the Sec-
retary may require; and 
‘‘(B) provide assurances that the commu-
nity health center or hospital will use, at a min-
imum, the racial and ethnic categories and the 
standards for collection described in the 1997 
Office of Management and Budget Standards 
for Maintaining, Collecting, and Presenting 
Federal Data on Race and Ethnicity and avail-
able standards for language. 
‘‘(3) ACTIVITIES.—A grantee shall use amounts 
received under a grant under paragraph (1) to— 
‘‘(A) collect, analyze, and report data by 
race, ethnicity, highest education level attained, 
and primary language for patients served by the 
hospital (including emergency room patients
and patients served on an outpatient basis) or 
community health center; 
‘‘(B) enhance or upgrade computer tech-
nology that will facilitate racial, ethnic, highest 
education level attained, and primary language 
data collection and analysis; 
‘‘(C) provide analyses of disparities in 
health and healthcare, including specific disease 
conditions, diagnostic and therapeutic proce-
dures, or outcomes; 
‘‘(D) improve health data collection and 
analysis for additional population groups be-
yond the Office of Management and Budget 
categories if such groups can be aggregated into 
the minimum race and ethnicity categories; 
‘‘(E) develop mechanisms for sharing col-
lected data subject to privacy and confiden-
tiality regulations; 
‘‘(F) develop educational programs to in-
form health insurance issuers, health plans, 
health providers, health-related agencies, pa-
tients, enrollees, and the general public that 
data collection, analysis, and reporting by race, 
ethnicity, and preferred language are legal and
tients, enrollees, and the general public that 
data collection, analysis, and reporting by race, 
ethnicity, and preferred language are legal and 
essential for eliminating disparities in health 
and healthcare; and 
‘‘(G) develop quality assurance systems de-
signed to track disparities and quality improve-
ment systems designed to eliminate disparities. 
‘‘(4) COMMUNITY
HEALTH
CENTER; 
HOS-
PITAL.—In this subsection: 
‘‘(A) COMMUNITY HEALTH CENTER.—The 
term ‘community health center’ means a feder-
ally qualified health center as defined in section 
1861(aa)(4) of the Social Security Act. 
‘‘(B) 
HOSPITAL.—The 
term 
‘hospital’ 
means a hospital participating in the prospec-
tive payment system under section 1886 of the 
Social Security Act and that is submitting qual-
ity indicators data in accordance with section 
1886(b)(3)(B)(vii)(II) of the Social Security 
Act. 
‘‘(h) DEFINITION.—In this section, the term ‘health- 
related program’ means a program—
health services research, and other programs des-
ignated by the Secretary. 
‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section, 
$50,000,000 for fiscal year 2005, and such sums as may 
be necessary for each of fiscal years 2006 through 2015.’’. 
SEC. 102. REVISION OF HIPAA CLAIMS STANDARDS. 
(a) IN GENERAL.—Not later than 1 year after the 
date of enactment of this Act, the Secretary of Health and 
Human Services shall revise the regulations promulgated 
under part C of title XI of the Social Security Act (42 
U.S.C. 1320d et seq.), as added by the Health Insurance 
Portability and Accountability Act of 1996 (Public Law 
104–191), relating to the collection of data on race, eth-
nicity, highest education level attained, and primary lan-
guage in a health-related transaction to require— 
(1) the use, at a minimum, of the categories for 
race and ethnicity described in the 1997 Office of 
Management and Budget Standards for Maintain-
ing, Collecting, and Presenting Federal Data on 
Race and Ethnicity; 
(2) the establishment of new data code sets for 
highest education level attained and primary lan-
guage; and
(3) the designation of the racial, ethnic, highest 
education level attained, and primary language code 
sets as ‘‘required’’ for claims and enrollment data. 
(b) DISSEMINATION.—The Secretary of Health and 
Human Services shall disseminate the new standards de-
veloped under subsection (a) to all health entities that are 
subject to the regulations described in such subsection and 
provide technical assistance with respect to the collection 
of the data involved. 
(c) COMPLIANCE.—Not later than 1 year after the 
final promulgation of the regulations developed under sub-
section (a), the Secretary of Health and Human Services 
shall require that health entities comply with such stand-
ards. 
(d) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section, 
such sums as may be necessary for each of fiscal years 
2005 through 2015. 
TITLE II—IMPROVED 
COLLECTION OF QUALITY DATA 
SEC. 201. AUTHORITY OF AGENCY FOR HEALTHCARE RE-
SEARCH AND QUALITY. 
Title IX of the Public Health Service Act (42 U.S.C. 
299 et seq.) is amended— 
(1) by redesignating part C as part D;
(2) by redesignating sections 921 through 928, 
as sections 931 through 938, respectively; 
(3) in section 938(1) (as so redesignated), by 
striking ‘‘921’’ and inserting ‘‘931’’; and 
(4) by inserting after part B the following: 
‘‘PART C—IMPROVED COLLECTION OF QUALITY 
DATA 
‘‘SEC. 921. GENERAL AUTHORITY OF THE AGENCY TO DE-
TERMINE MEASURES. 
‘‘(a) IN GENERAL.—The Agency, in consultation with 
the Centers for Medicare & Medicaid Services, the Health 
Resources and Services Administration, the Office for 
Civil Rights of the Department of Health and Human 
Services, and the Office of Minority Health, shall have the 
authority to develop a new set of quality measures for each 
of the most common treatment settings. Such settings 
shall include, but not be limited to, hospitals, outpatient 
facilities, community health centers, long term care facili-
ties, and other independent health care facilities. 
‘‘(b) REQUIREMENTS.—The quality measures devel-
oped under subsection (a) shall— 
‘‘(1) as closely as possible reflect the healthcare 
priority areas determined by the Institute of Medi-
cine, the National Quality Forum, the Quality Initia-
tive, and other healthcare quality and health care
disparity organizations as determined by the Sec-
retary; 
‘‘(2) reflect the Institute of Medicine’s goal of 
inclusiveness, improvability, and impact, addressing 
pervasive health and healthcare problems that 
produce a high level of morbidity and mortality, that 
disproportionally affect health disparity populations, 
and that have the potential for improvement with 
the consistent application of proven medical inter-
ventions; and 
‘‘(3) where practical, employ process measures 
of care. 
‘‘SEC. 922. USE OF HOSPITAL-SPECIFIC MEASURES. 
‘‘(a) DEVELOPMENT.— 
‘‘(1) IN GENERAL.—The Agency, in conjunction 
with the Centers for Medicare & Medicaid Services, 
shall develop a set of hospital quality measures. 
‘‘(2) USE.—The Secretary shall ensure that the 
Hospital Quality Initiative and the Robust Project 
Measures of the Centers for Medicare & Medicaid 
Services, and other Centers for Medicare & Medicaid 
Services directed quality initiatives use the hospital 
quality measures developed under paragraph (1). 
‘‘(b) SUBMISSION.—The information required under 
the measures developed under subsection (a) shall be sub-
mitted in accordance with section 1886(b)(3)(B)(vii) ex-
cept that any reference to ‘2007’ shall be deemed to be 
a reference to ‘2015’. 
‘‘SEC. 923. OUTPATIENT-SPECIFIC MEASURES. 
‘‘(a) IN GENERAL.—The Agency, in conjunction with 
the Bureau of Primary Health Care within the Health Re-
sources and Services Administration, shall develop a set 
of outpatient quality measures. Such measures may be 
used as a supplement to existing demographic or quality 
reporting instruments or other quality reporting instru-
ments utilized by the Health Resources and Services Ad-
ministration. 
‘‘(b) VOLUNTARY SUBMISSION.—Submission of the 
supplementary information required under the measures 
developed under subsection (a) shall be voluntary. 
‘‘(c) DISCRETIONARY USE.—The measures developed 
under subsection (a) may be used as appropriate by the 
Hospital Quality Initiative and the Robust Project Meas-
ures and other Centers for Medicare & Medicaid Services- 
directed quality initiatives. 
‘‘SEC. 924. RANKING OF MEASURES. 
‘‘The Agency shall— 
‘‘(1) determine which of the quality measures 
developed under this part have the greatest potential 
to remedy healthcare disparities;
‘‘(2) rank such quality measures according to 
such potential; and 
‘‘(3) rank such quality measures separately as 
applicable to hospitals and outpatients. 
‘‘SEC. 925. ADVISORY COMMITTEE ON QUALITY. 
‘‘(a) IN GENERAL.—The Agency shall establish an 
Advisory Committee on Quality (referred to in this section 
as the ‘Advisory Committee’) to recommend quality indica-
tors for all quality data sets developed under this section. 
The Agency may designate a governmental or nongovern-
mental committee existing on the date of enactment of this 
part to serve as the Advisory Committee so long as the 
membership requirements of subsection (b) are complied 
with. 
‘‘(b) MEMBERSHIP.—The Advisory Committee shall 
be composed of not less than 10 members, including— 
‘‘(1) the Director; 
‘‘(2) the Administrator of the Centers for Medi-
care & Medicaid Services; 
‘‘(3) the Director of the Centers for Disease 
Control and Prevention; 
‘‘(4) the Administrator of the Health Resources 
and Services Administration;
‘‘(5) the Director of the Office of Minority 
Health of the Department of Health and Human 
Services; 
‘‘(6) the Director of the Office for Civil Rights 
of the Department of Health and Human Services; 
‘‘(7) the Director of the Indian Health Service; 
‘‘(8) the chairperson of the Institute of Medi-
cine National Roundtable on Healthcare Quality or 
other representatives of the Institute of Medicine; 
‘‘(9) the chairperson of the National Quality 
Forum; 
‘‘(10) the Director of the Joint Commission on 
Accreditation of Healthcare Organizations; 
‘‘(11) a representative of the Quality Initiative; 
and 
‘‘(12) other members to be appointed by the 
Secretary to represent other private, public, and 
non-profit stakeholders from medicine, healthcare, 
patient groups, and academia, who shall serve for a 
term of 3 years, and shall include a mix of different 
professions and broad geographic and culturally di-
verse representation. 
‘‘(c) DUTIES.—The Advisory Committee shall— 
‘‘(1) for each 3 year period beginning with fis-
cal year 2005, report to the Agency recommenda-
tions of quality indicators for all quality data sets 
described in this part; 
‘‘(2) in making the recommendations described 
in paragraph (1), focus on how best to integrate the 
findings of the Institute of Medicine, the National 
Quality Forum, the Quality Initiative, and other 
healthcare quality and healthcare disparity organiza-
tions as determined by the Secretary into quality 
measures that can be used in carrying out sections 
922 and 923; and 
‘‘(3) address issues of continuity of care be-
tween ambulatory care and inpatient settings to the 
maximum extent practicable. 
‘‘SEC. 926. UPDATES OF CONDITIONS. 
‘‘(a) IN GENERAL.—At least once during every 3-year 
period beginning in fiscal year 2006, the Secretary shall 
direct the Agency to update the list of measures as de-
scribed in sections 922 and 923. Such updates shall be 
based on recommendations of the Advisory Committee es-
tablished under section 925 and determined in consulta-
tion with the Centers for Medicare & Medicaid Services 
and the Health Resources and Services Administration. 
‘‘(b) REQUIREMENT.—For each period in which an 
update is undertaken under subsection (a), the Agency 
shall ensure that the recommendations referred to such
subsection include measures for at least 4 additional con-
ditions identified by the Institute of Medicine National 
Roundtable on Healthcare Quality, or measures developed 
by other healthcare disparity or healthcare quality organi-
zations as determined by the Secretary, and not addressed 
by the quality reporting initiatives administered by the 
Secretary on the date of enactment of this part. The re-
quirement of this section shall apply until there are meas-
ures for all Institute of Medicine priority areas. 
‘‘SEC. 927. REPORTING OF MEASURES. 
‘‘(a) IN GENERAL.—Not later than 5 years after the 
date of enactment of the Faircare Act, the Secretary shall 
enter into a contract with the Institute of Medicine to 
produce a report on the effectiveness of the quality meas-
ures developed by the Agency under this part in accurately 
assessing the quality of healthcare and healthcare dispari-
ties present in hospitals, community health centers, and 
other appropriate health care settings. Such report shall 
evaluate the progress made in improving the quality and 
consistency of healthcare and reducing healthcare dispari-
ties. 
‘‘(b) MANNER OF REPORTING.—All data reported 
under the Faircare Act (including data reported under 
this part) shall, to the maximum extent practicable, be re-
ported by race, ethnicity, primary language, and highest 
educational level attained in accordance with section 249. 
‘‘SEC. 928. EFFECTIVENESS RESEARCH GRANTS. 
‘‘The Office of Minority Health shall have the author-
ity to award grants to study the effectiveness of all meas-
ures and programs established under this part. The Office 
shall recommend ways to improve such measure and pro-
grams and to implement the findings of the study con-
ducted under section 927. 
‘‘SEC. 929. PROTECTION OF DATA. 
‘‘(a) RULE OF CONSTRUCTION.—Nothing in this part 
shall be construed to permit the use of information col-
lected under this part in a manner that would adversely 
affect any individual providing any such information. 
‘‘(b) PROTECTION OF DATA.—The Secretary shall 
ensure (through the promulgation of regulations or other-
wise) that all data collected pursuant to this part is pro-
tected— 
‘‘(1) under the same privacy protections as the 
Secretary applies to other health data under the reg-
ulations promulgated under section 264(c) of the 
Health Insurance Portability and Accountability Act 
of 1996 (Public Law 104–191; 110 Stat. 2033) re-
lating to the privacy of individually identifiable 
health information and other protections; and
‘‘(2) from all inappropriate internal use by any 
entity that collects, stores, or receives the data, in-
cluding use of such data in determinations of eligi-
bility (or continued eligibility) in health plans, and 
from other inappropriate uses, as defined by the 
Secretary. 
‘‘SEC. 929A. AUTHORIZATION OF APPROPRIATIONS. 
‘‘There is authorized to be appropriated to carry out 
this section, $5,000,000 for each of fiscal years 2005 
through 2007, and such sums as may be necessary for 
each of fiscal years 2008 through 2015.’’. 
SEC. 202. OFFICE OF NATIONAL HEALTHCARE DISPARITIES 
AND QUALITY. 
Part A of title IX of the Public Health Service Act 
(42 U.S.C. 299 et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 904. OFFICE OF NATIONAL HEALTHCARE DISPARI-
TIES AND QUALITY. 
‘‘(a) IN GENERAL.—There is established within the 
Agency an Office of National Healthcare Disparities and 
Quality (referred to in this section as the ‘Office’). Such 
Office shall administer the development and submission of 
the annual National Healthcare Disparities Report (under 
section 903(a)(6)) and the National Healthcare Quality
Report (under section 913(b)(2)) and carry out any other 
activities determined appropriate by the Secretary. 
‘‘(b) NATIONAL
HEALTHCARE
DISPARITIES
AND 
QUALITY REPORTS.— 
‘‘(1) REPORTING
REQUIREMENTS.—Not later 
than 1 year after the date of enactment of this sec-
tion, and annually thereafter, the Office, in consulta-
tion with the Advisory Committee under section 925, 
the Office of Minority Health, and the Office for 
Civil Rights of the Department of Health and 
Human Services, shall submit to the Secretary, the 
appropriate committees of Congress, and the pub-
lic— 
‘‘(A) a report on the disparities in 
healthcare which shall include data using the 
quality measures developed by the Agency 
under part C; and 
‘‘(B) a report on general healthcare qual-
ity. 
‘‘(2) LIMITATIONS.—The reports under para-
graph (1) shall not identify individual hospitals or 
healthcare providers but shall include regional and 
State level data. To the maximum extent practicable, 
such reports shall—
‘‘(A) indicate variations in healthcare qual-
ity between States and regions; and 
‘‘(B) to the maximum extent practicable, 
include data reported by race, ethnicity, pri-
mary language, and highest educational level 
attained in accordance with section 249. 
‘‘(3) AVAILABILITY.—The Office shall make 
such reports available to States, tribal organizations, 
and territorial governments upon request. 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection, $10,000,000 for each of fiscal years 
2005 through 2007, and such sums as may be nec-
essary for each of fiscal years 2008 through 2015. 
‘‘(c) ACTIVITIES RELATING TO BEST PRACTICES.— 
‘‘(1) 
REPORT.—The 
Office 
of 
National 
Healthcare Disparities and Quality shall annually 
publish a report that describes the specific activities 
undertaken by Faircare Level I institutions, as des-
ignated under section 330P of this Act or section 
1898(b) of the Social Security Act, that have re-
sulted in a decrease in healthcare disparities or im-
proved quality. Such reports shall include rec-
ommendations for carrying out such activities at 
other healthcare institutions.
‘‘(2) CONFERENCE.—In conjunction with the 
publication of each report under paragraph (1), Of-
fice of National Healthcare Disparities and Quality 
shall hold an annual conference at which personnel 
from the Faircare institutions described in para-
graph (1) can interact, advise, and consult with 
other healthcare institutions. 
‘‘(3) TECHNICAL ASSISTANCE.—The Office of 
National Healthcare Disparities and Quality shall 
offer technical assistance to healthcare institutions 
in reducing healthcare disparities, including through 
the dissemination of information through the Office 
Internet website, the development of an electronic 
mail list of best practices, the maintenance of a 
database and clearinghouse of best practices, and 
through other activities determined appropriate by 
the Office. 
‘‘(4) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection, $5,000,000 for each of fiscal years 
2005 to 2007, and such sums as may be necessary 
for each of fiscal years 2008 through 2015.’’.
TITLE III—FAIRCARE HOSPITAL 
PROGRAM 
SEC. 301. FAIRCARE HOSPITAL PROGRAM. 
(a) PURPOSES.—The purposes of this section are 
to— 
(1) require the Administrator of the Center for 
Medicare & Medicaid Services to— 
(A) determine which hospitals have suc-
cessfully reduced healthcare disparities between 
health disparity populations and other patients 
and improved healthcare quality based on the 
Hospital Quality Initiative measures established 
by the Agency for Healthcare Research and 
Quality under part C of title IX of the Public 
Health Service Act, as added by title II; 
(B) verify the accuracy of the data sub-
mitted by such hospitals for purposes of being 
designated as a Faircare Hospital; and 
(C) designate such hospitals as Faircare 
hospitals; and 
(2) provide such hospitals with increased pay-
ments under the medicare program. 
(b) PROGRAM.—Title XVIII of the Social Security 
Act, as amended by section 1016 of the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act of 2003
(Public Law 108–173; 117 Stat. 2447), is amended by 
adding at the end the following new section: 
‘‘PERFORMANCE INCENTIVE PAYMENT PROGRAM 
‘‘SEC. 1898. (a) ESTABLISHMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall estab-
lish a program under which financial incentive pay-
ments are made in accordance with subsection (c) to 
subsection (d) hospitals (as defined in paragraph 
(2)) that have been designated under subsection (b). 
‘‘(2) SUBSECTION (d) HOSPITAL.—In this sec-
tion, the term ‘subsection (d) hospital’ has the 
meaning given that term in section 1886(d)(1)(B). 
‘‘(b) DESIGNATION OF FAIRCARE HOSPITALS.— 
‘‘(1) IN
GENERAL.—For each of fiscal years 
2006 through 2014, the Secretary shall designate 
subsection (d) hospitals as follows: 
‘‘(A) LEVEL III FAIRCARE HOSPITAL.—The 
Secretary shall designate a subsection (d) hos-
pital as a Level III Faircare hospital if the fol-
lowing requirements are met: 
‘‘(i) The subsection (d) hospital sub-
mitted data described in section 249 of the 
Public Health Service Act and part C of 
title IX of such Act to the Secretary in 
such form and manner and at such time 
specified by the Secretary under such sec-
tion and part and all such data submitted 
relating to patient quality includes data on 
the race, ethnicity, highest education level 
attained, and primary language of such pa-
tients. 
‘‘(ii) The Secretary determines that 
the subsection (d) hospital has improved 
the rate of delivery of high quality care 
during the 24-month period preceding such 
determination. A hospital shall be deter-
mined to meet the requirement in the pre-
ceding sentence if the Secretary determines 
that the hospital has increased the fre-
quency of appropriate care for the majority 
of the applicable measures during such 24- 
month period by at least 5 percentage 
points within each such measure. 
‘‘(B) LEVEL II FAIRCARE HOSPITAL.—The 
Secretary shall designate a subsection (d) hos-
pital as a Level II Faircare hospital if the fol-
lowing requirements are met: 
‘‘(i) The requirements described in 
clauses (i) and (ii) of subparagraph (A) 
are met.
‘‘(ii) The Secretary determines that 
the subsection (d) hospital, during the 24- 
month period preceding such determina-
tion, has made a significant reduction in 
the disparities in the treatment of health 
disparity populations relative to other pa-
tients for— 
‘‘(I) the majority of the applica-
ble measures; or 
‘‘(II) all of the 25 percent high-
est ranked applicable measures, as 
ranked 
for 
their 
importance 
for 
healthcare equity by the Agency for 
Healthcare 
Research 
and 
Quality 
under section 925 of the Public 
Health Service Act. 
‘‘(C) LEVEL I FAIRCARE HOSPITAL.—The 
Secretary shall designate a subsection (d) hos-
pital as a Level I Faircare hospital if the fol-
lowing requirements are met: 
‘‘(i) The requirement described in 
subparagraph (A)(i) is met. 
‘‘(ii) Either— 
‘‘(I) the requirement described in 
subparagraph (A)(ii) is met; or
‘‘(II) the Secretary determines 
that the frequency of appropriate care 
provided by the subsection (d) hos-
pital for each applicable measure is at 
least 10 percentage points greater 
than the national average for the fre-
quency of appropriate care for each 
applicable measure. 
‘‘(iii) The Secretary determines that 
the subsection (d) hospital, during the 24- 
month period preceding such determina-
tion, has had no significant disparity in the 
treatment of health disparity populations 
relative to other patients for all of the 75 
percent highest ranked applicable meas-
ures, as ranked for their importance for 
healthcare equity by the Agency for 
Healthcare Research and Quality under 
section 925 of the Public Health Service 
Act. 
‘‘(2) APPLICABLE
MEASURES
DEFINED.—For 
purposes of this subsection, the term ‘applicable 
measures’ means the Hospital Quality Initiative 
measures established by the Agency for Healthcare
Research and Quality under part C of title IX of the 
Public Health Service Act. 
‘‘(3) HEALTH
DISPARITY
POPULATION
DE-
FINED.—For purposes of this subsection, the term 
‘health disparity population’ has the meaning given 
that term in section 485E(d) of the Public Health 
Service Act. 
‘‘(b) FINANCIAL INCENTIVE PAYMENTS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2) 
and subsection (d), for purposes of subclauses (XIX) 
and (XX) of section 1886(b)(3)(B)(i) for each of fis-
cal years 2007 through 2015, in the case of a sub-
section (d) hospital that has been designated under 
subsection (b) for a fiscal year, the Secretary shall 
increase the applicable percentage increase for the 
subsequent fiscal year for such hospital— 
‘‘(A) in the case of a Level I Faircare hos-
pital, by 4 percentage points (or 8 percentage 
points in the case of such a hospital who is also 
described in subparagraph (B) of section 
1923(b)(1)(B)); 
‘‘(B) in the case of a Level II Faircare 
hospital, by 2 percentage points (or 4 percent-
age points in the case of such a hospital who
is also described in subparagraph (B) of section 
1923(b)(1)(B)); and 
‘‘(C) in the case of a Level III Faircare 
hospital, by 1 percentage point (or 2 percentage 
points in the case of such a hospital who is also 
described in subparagraph (B) of section 
1923(b)(1)(B)). 
‘‘(2) REDUCTION
IN
FINANCIAL
INCENTIVE 
PAYMENTS
IF
INSUFFICIENT
FUNDING
AVAIL-
ABLE.—If the Secretary estimates that the total 
amount of increased payments under paragraph (1) 
for a fiscal year will exceed the funding available 
under subsection (d) for such increased payments 
for the fiscal year, the Secretary shall proportion-
ately reduce the percentage points described in sub-
paragraphs (A), (B), and (C) of paragraph (1) in 
order to eliminate such excess. 
‘‘(3) INCREASED
PAYMENT
NOT
BUILT
INTO 
THE
BASE.—Any increased payment under para-
graph (1) shall only apply to the fiscal year involved 
and the Secretary shall not take into account any 
such increased payment in computing the applicable 
percentage increase under clause (i)(XIX) for a sub-
sequent fiscal year.
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated for making payments 
under subsection (b) such sums as may be necessary for 
each of fiscal years 2007 through 2015.’’. 
SEC. 302. TECHNICAL ASSISTANCE GRANTS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall provide technical assistance to eligi-
ble entities for the conduct of demonstration projects to 
improve the quality of healthcare and to reduce healthcare 
disparities. 
(b) ELIGIBILITY.—To be eligible to receive technical 
assistance under subsection (a), an entity shall— 
(1) be a hospital— 
(A) that, by legal mandate or explicitly 
adopted mission, provides patients with access 
to services regardless of their ability to pay; 
(B) that provides care or treatment for a 
substantial number of patients who are unin-
sured, are receiving assistance under a State 
program under title XIX of the Social Security 
Act, or are members of health disparity popu-
lations, as determined by the Secretary; and 
(C)(i) with respect to which, not less than 
50 percent of the entity’s patient population is 
made up of racial and ethnic minorities; or
(ii) that serves a disproportionate percent-
age of local, minority racial and ethnic patients, 
or that has a patient population, at least 50 
percent of which is limited English proficient; 
and 
(2) prepare and submit to the Secretary an ap-
plication at such time, in such manner, and con-
taining such information as the Secretary may re-
quire. 
(c) TYPES OF ASSISTANCE.—The type of technical 
assistance that may be provided under this section shall 
be determined by the Centers for Medicare & Medicaid 
Services. Such assistance may include competitively 
awarded grants and other forms of assistance. 
(d) USE OF ASSISTANCE.—Assistance provided under 
this section shall be used to improve healthcare quality 
or to reduce healthcare disparities. 
(e) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section, 
such sums as may be necessary for each of fiscal years 
2005 through 2015.
TITLE IV—COMMUNITY HEALTH 
CENTERS 
SEC. 401. AUTHORITY OF BUREAU OF PRIMARY HEALTH 
CARE TO DEVELOP NEW REPORTING STAND-
ARDS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services, acting through the Bureau of Primary 
Health Care within the Health Resources and Services Ad-
ministration, shall have the authority to— 
(1) incorporate the outpatient measures of the 
Agency for Healthcare Research and Quality as de-
veloped under part C of title IX of the Public Health 
Service Act (as added by title II) into a supplement 
to existing demographic or quality reporting instru-
ments or other quality reporting instruments utilized 
by the Health Resources and Services Administra-
tion; 
(2) verify the submission of data under this 
title (and the amendments made by this title); and 
(3) award Faircare designations in accordance 
with section 339P of the Public Health Service Act 
(as added by section 402). 
(b) DISTRIBUTION.—Not later than 1 year after the 
date of enactment of this Act, the standards described in 
subsection (a) shall be designed and distributed to health
centers under section 339P of the Public Health Service 
Act (as added by section 402). 
SEC. 402. FAIRCARE DESIGNATION FOR HEALTH CENTERS. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.) is amended by adding at the end 
the following: 
‘‘SEC. 399P. FAIRCARE DESIGNATION FOR HEALTH CEN-
TERS. 
‘‘(a) DESIGNATION
OF FAIRCARE HEALTH CEN-
TERS.— 
‘‘(1) IN
GENERAL.—For each of fiscal years 
2006 through 2014, the Secretary shall designate 
health centers that receive Federal assistance as fol-
lows: 
‘‘(A) LEVEL III FAIRCARE HEALTH CEN-
TER.—The Secretary shall designate a health 
center as a Level III Faircare health center if 
the following requirements are met: 
‘‘(i) The health center submitted data 
described in section 249 and part C of title 
IX to the Secretary in such form and man-
ner and at such time specified by the Sec-
retary under such section and part and all 
such data submitted relating to patient 
quality includes data on the race, ethnicity,
highest education level attained, and pri-
mary language of such patients. 
‘‘(ii) The Secretary determines that 
the health center has improved the rate of 
delivery of high quality care during the 24- 
month period preceding such determina-
tion. A health center shall be determined 
to meet the requirement in the preceding 
sentence if the Secretary determines that 
the health center has increased the fre-
quency of appropriate care for the majority 
of the applicable measures during such 24- 
month period by at least 5 percentage 
points within each such measure. 
‘‘(B) LEVEL
II
FAIRCARE
HEALTH
CEN-
TER.—The Secretary shall designate a health 
center as a Level II Faircare health center if 
the following requirements are met: 
‘‘(i) The requirements described in 
clauses (i) and (ii) of subparagraph (A) 
are met. 
‘‘(ii) The Secretary determines that 
the health center, during the 24-month pe-
riod preceding such determination, has 
made a significant reduction in the dispari-
ties in the treatment of health disparity 
populations relative to other patients for— 
‘‘(I) the majority of the applica-
ble measures; or 
‘‘(II) all of the 25 percent high-
est ranked applicable measures, as 
ranked 
for 
their 
importance 
for 
healthcare equity by the Agency for 
Healthcare 
Research 
and 
Quality 
under section 925. 
‘‘(C) LEVEL
I
FAIRCARE
HEALTH
CEN-
TER.—The Secretary shall designate a health 
center as a Level I Faircare health center if the 
following requirements are met: 
‘‘(i) The requirement described sub-
paragraph (A)(i) is met. 
‘‘(ii) Either— 
‘‘(I) the requirement described in 
subparagraph (A)(ii) is met; or 
‘‘(II) the Secretary determines 
that the frequency of appropriate care 
provided by the health center for each 
applicable measure is at least 10 per-
centage points greater than the na-
tional average for the frequency of ap-
propriate care for each applicable 
measure. 
‘‘(iii) The Secretary determines that 
the health center, during the 24-month pe-
riod preceding such determination, has had 
no significant disparity in the treatment of 
health disparity populations relative to 
other patients for all of the 75 percent 
highest ranked applicable measures, as 
ranked for their importance for healthcare 
equity by the Agency for Healthcare Re-
search and Quality under section 925. 
‘‘(2) APPLICABLE
MEASURES
DEFINED.—For 
purposes of this subsection, the term ‘applicable 
measures’ means the measures determined applica-
ble under section 401(a) of the Faircare Act. 
‘‘(3) HEALTH
DISPARITY
POPULATION
DE-
FINED.—For purposes of this subsection, the term 
‘health disparity population’ has the meaning given 
that term in section 485E(d). 
‘‘(b) ELIGIBILITY FOR BONUSES.—A health center 
that is designated as a Faircare health center under sub-
section (a) shall be eligible for the following annual bo-
nuses in the fiscal year following the year in which the 
health center is designated as a Faircare health center
under this section, with respect to assistance received 
under Federal health care programs: 
‘‘(1) With respect to a health center that is des-
ignated as a Level III Faircare health center, the 
Secretary shall determine the amount of such bonus 
which shall not be less than $200,000. 
‘‘(2) With respect to a health center that is des-
ignated as a Level II Faircare health center, the 
Secretary shall determine the amount of such bonus 
which shall not be less than $300,000. 
‘‘(3) With respect to a health center that is des-
ignated as a Level I Faircare health center, the Sec-
retary shall determine the amount of such bonus 
which shall not be less than $500,000. 
‘‘(c) REDUCTION
IN FINANCIAL INCENTIVE PAY-
MENTS IF INSUFFICIENT FUNDING AVAILABLE.—If the 
Secretary estimates that the total amount of bonuses 
under subsection (b) for a fiscal year will exceed the fund-
ing available under subsection (e) for such bonuses for the 
fiscal year, the Secretary shall proportionately reduce the 
amount of the bonus payments described in paragraphs 
(1), (2), and (3) of subsection (b) in order to eliminate 
such excess. 
‘‘(d) DEFINITION.—For purposes of this section, the 
term ‘health center’ means a Federally qualified health