I 
111TH CONGRESS 
1ST SESSION H. R. 4138 
To amend title XVIII of the Social Security Act to provide for an update 
under the Medicare physician fee schedule, to be fully paid for through 
medical liability reform, a pathway for biosimilar biological products, 
and other means. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 19, 2009 
Mr. GINGREY of Georgia (for himself, Mr. CASSIDY, Mr. FLEMING, Mr. 
BOOZMAN, Mr. HERGER, Mr. SESSIONS, Mr. CULBERSON, Mr. HALL of 
Texas, Mr. WHITFIELD, Mr. SHIMKUS, Mr. BUYER, Mrs. MYRICK, Mr. 
PAULSEN, Mr. ROONEY, Ms. GRANGER, Mr. ROSKAM, Mrs. BLACKBURN, 
Mr. PRICE of Georgia, and Mr. ROE of Tennessee) introduced the fol-
lowing bill; which was referred to the Committee on Energy and Com-
merce, and in addition to the Committees on Ways and Means and the 
Judiciary, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to provide 
for an update under the Medicare physician fee schedule, 
to be fully paid for through medical liability reform, 
a pathway for biosimilar biological products, and other 
means. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medicare SGR Improvement and Reform Act of 2009’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—ENSURING CONTINUED ACCESS TO PHYSICIANS IN 
MEDICARE 
Sec. 101. Improving Medicare physician payments. 
Sec. 102. Statement of policy. 
TITLE II—DEFICIT PROTECTION AND FISCAL RESPONSIBILITY 
Subtitle A—Enacting Real Medical Liability Reform 
Sec. 201. Encouraging speedy resolution of claims. 
Sec. 202. Compensating patient injury. 
Sec. 203. Maximizing patient recovery. 
Sec. 204. Additional health benefits. 
Sec. 205. Punitive damages. 
Sec. 206. Authorization of payment of future damages to claimants in health 
care lawsuits. 
Sec. 207. Definitions. 
Sec. 208. Effect on other laws. 
Sec. 209. State flexibility and protection of states’ rights. 
Sec. 210. Applicability; effective date. 
Subtitle B—Application of Medicare Improvement Fund 
Sec. 211. Application of Medicare Improvement Fund. 
Subtitle C—Pathway for Biosimilar Biological Products 
Sec. 221. Licensure pathway for biosimilar biological products. 
Sec. 222. Fees relating to biosimilar biological products. 
Sec. 223. Amendments to certain patent provisions. 
Subtitle D—Administrative Simplification 
Sec. 231. Administrative simplification. 
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TITLE I—ENSURING CONTINUED 
ACCESS TO PHYSICIANS IN 
MEDICARE 
SEC. 101. IMPROVING MEDICARE PHYSICIAN PAYMENTS. 
Section 1848(d) of the Social Security Act (42 U.S.C. 
1395w–4(d)) is amended by adding at the end the fol-
lowing new paragraphs: 
‘‘(10) 2 PERCENT ANNUAL UPDATE FOR YEARS 
2010 THROUGH 2013.— 
‘‘(A) IN GENERAL.—Subject to paragraphs 
(7)(B), (8)(B), and (9)(B) and subparagraph 
(B), in lieu of the update to the single conver-
sion factor established in paragraph (1)(C) that 
would otherwise apply for each of 2010, 2011, 
2012, and 2013, the update to the single con-
version factor shall be 2 percent. 
‘‘(B) NO
EFFECT
ON
COMPUTATION
OF 
CONVERSION
FACTOR
FOR
2014
AND
SUBSE-
QUENT
YEARS.—The conversion factor under 
this subsection shall be computed under para-
graph (1)(A) for 2014 and subsequent years as 
if subparagraph (A) had never applied, subject 
to paragraph (11). 
‘‘(11) UPDATE FOR 2014 AND POSSIBLE SUBSE-
QUENT YEARS THROUGH 2019.— 
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‘‘(A) IN GENERAL.—Subject to paragraphs 
(7)(B), (8)(B), and (9)(B) and subparagraph 
(B), in lieu of the update to the single conver-
sion factor established in paragraph (1)(C) that 
would otherwise apply for 2014 and, at the Sec-
retary’s discretion, for subsequent years ending 
not later than 2019, the update to the single 
conversion factor shall be such percentage for 
each such year as the Secretary determines will 
result in additional expenditures under this title 
in the aggregate for all such years of 
$26,400,000,000. Not later than October 1, 
2013, the Secretary shall establish by regula-
tion the method the Secretary will use in allo-
cating the $26,400,000,000 under the previous 
sentence between 2014 and subsequent years. 
Such allocation shall be designed in a manner 
so that the single conversion factor for a year 
is not less than 79 percent of the conversion 
factor for the previous year. 
‘‘(B) LIMITED EFFECT ON COMPUTATION 
OF
CONVERSION
FACTOR
FOR
SUBSEQUENT 
YEARS.—The conversion factor under this sub-
section shall be computed under paragraph 
(1)(A) for subsequent years as if subparagraph 
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(A) had never applied, but taking into account 
the aggregate additional increase in expendi-
tures permitted under such subparagraph.’’. 
SEC. 102. STATEMENT OF POLICY. 
It is the policy of the Federal Government that the 
sustainable growth rate formula, upon which physician 
payments are based for the Medicare program, should be 
permanently repealed and replaced with a reimbursement 
policy that pays doctors an amount reflecting the true cost 
of services provided in a high-quality and efficient manner 
and uses a fiscally responsibly funding mechanism. 
TITLE II—DEFICIT PROTECTION 
AND FISCAL RESPONSIBILITY 
Subtitle A—Enacting Real Medical 
Liability Reform 
SEC. 201. ENCOURAGING SPEEDY RESOLUTION OF CLAIMS. 
The time for the commencement of a health care law-
suit shall be 3 years after the date of manifestation of 
injury or 1 year after the claimant discovers, or through 
the use of reasonable diligence should have discovered, the 
injury, whichever occurs first. In no event shall the time 
for commencement of a health care lawsuit exceed 3 years 
after the date of manifestation of injury unless tolled for 
any of the following— 
(1) upon proof of fraud; 
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(2) intentional concealment; or 
(3) the presence of a foreign body, which has no 
therapeutic or diagnostic purpose or effect, in the 
person of the injured person. 
Actions by a minor shall be commenced within 3 years 
from the date of the alleged manifestation of injury except 
that actions by a minor under the full age of 6 years shall 
be commenced within 3 years of manifestation of injury 
or prior to the minor’s 8th birthday, whichever provides 
a longer period. Such time limitation shall be tolled for 
minors for any period during which a parent or guardian 
and a health care provider or health care organization 
have committed fraud or collusion in the failure to bring 
an action on behalf of the injured minor. 
SEC. 202. COMPENSATING PATIENT INJURY. 
(a) UNLIMITED AMOUNT OF DAMAGES FOR ACTUAL 
ECONOMIC LOSSES IN HEALTH CARE LAWSUITS.—In any 
health care lawsuit, nothing in this subtitle shall limit a 
claimant’s recovery of the full amount of the available eco-
nomic damages, notwithstanding the limitation in sub-
section (b). 
(b) ADDITIONAL NONECONOMIC DAMAGES.—In any 
health care lawsuit, the amount of noneconomic damages, 
if available, may be as much as $250,000, regardless of 
the number of parties against whom the action is brought 
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or the number of separate claims or actions brought with 
respect to the same injury. 
(c) NO DISCOUNT OF AWARD FOR NONECONOMIC 
DAMAGES.—For purposes of applying the limitation in 
subsection (b), future noneconomic damages shall not be 
discounted to present value. The jury shall not be in-
formed about the maximum award for noneconomic dam-
ages. An award for noneconomic damages in excess of 
$250,000 shall be reduced either before the entry of judg-
ment, or by amendment of the judgment after entry of 
judgment, and such reduction shall be made before ac-
counting for any other reduction in damages required by 
law. If separate awards are rendered for past and future 
noneconomic damages and the combined awards exceed 
$250,000, the future noneconomic damages shall be re-
duced first. 
(d) FAIR SHARE RULE.—In any health care lawsuit, 
each party shall be liable for that party’s several share 
of any damages only and not for the share of any other 
person. Each party shall be liable only for the amount of 
damages allocated to such party in direct proportion to 
such party’s percentage of responsibility. Whenever a 
judgment of liability is rendered as to any party, a sepa-
rate judgment shall be rendered against each such party 
for the amount allocated to such party. For purposes of 
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this section, the trier of fact shall determine the propor-
tion of responsibility of each party for the claimant’s 
harm. 
SEC. 203. MAXIMIZING PATIENT RECOVERY. 
(a) COURT SUPERVISION OF SHARE OF DAMAGES 
ACTUALLY PAID TO CLAIMANTS.—In any health care law-
suit, the court shall supervise the arrangements for pay-
ment of damages to protect against conflicts of interest 
that may have the effect of reducing the amount of dam-
ages awarded that are actually paid to claimants. In par-
ticular, in any health care lawsuit in which the attorney 
for a party claims a financial stake in the outcome by vir-
tue of a contingent fee, the court shall have the power 
to restrict the payment of a claimant’s damage recovery 
to such attorney, and to redirect such damages to the 
claimant based upon the interests of justice and principles 
of equity. In no event shall the total of all contingent fees 
for representing all claimants in a health care lawsuit ex-
ceed the following limits— 
(1) 40 percent of the first $50,000 recovered by 
the claimant(s). 
(2) 331⁄3 percent of the next $50,000 recovered 
by the claimant(s). 
(3) 25 percent of the next $500,000 recovered 
by the claimant(s). 
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(4) 15 percent of any amount by which the re-
covery by the claimant(s) is in excess of $600,000. 
(b) APPLICABILITY.—The limitations in this section 
shall apply whether the recovery is by judgment, settle-
ment, mediation, arbitration, or any other form of alter-
native dispute resolution. In a health care lawsuit involv-
ing a minor or incompetent person, a court retains the 
authority to authorize or approve a fee that is less than 
the maximum permitted under this section. The require-
ment for court supervision in the first two sentences of 
subsection (a) applies only in civil actions. 
SEC. 204. ADDITIONAL HEALTH BENEFITS. 
In any health care lawsuit involving injury or wrong-
ful death, any party may introduce evidence of collateral 
source benefits. If a party elects to introduce such evi-
dence, any opposing party may introduce evidence of any 
amount paid or contributed or reasonably likely to be paid 
or contributed in the future by or on behalf of the oppos-
ing party to secure the right to such collateral source bene-
fits. No provider of collateral source benefits shall recover 
any amount against the claimant or receive any lien or 
credit against the claimant’s recovery or be equitably or 
legally subrogated to the right of the claimant in a health 
care lawsuit involving injury or wrongful death. This sec-
tion shall apply to any health care lawsuit that is settled 
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as well as a health care lawsuit that is resolved by a fact 
finder. This section shall not apply to section 1862(b) (42 
U.S.C. 1395y(b)) or section 1902(a)(25) (42 U.S.C. 
1396a(a)(25)) of the Social Security Act. 
SEC. 205. PUNITIVE DAMAGES. 
(a) IN GENERAL.—Punitive damages may, if other-
wise permitted by applicable State or Federal law, be 
awarded against any person in a health care lawsuit only 
if it is proven by clear and convincing evidence that such 
person acted with malicious intent to injure the claimant, 
or that such person deliberately failed to avoid unneces-
sary injury that such person knew the claimant was sub-
stantially certain to suffer. In any health care lawsuit 
where no judgment for compensatory damages is rendered 
against such person, no punitive damages may be awarded 
with respect to the claim in such lawsuit. No demand for 
punitive damages shall be included in a health care lawsuit 
as initially filed. A court may allow a claimant to file an 
amended pleading for punitive damages only upon a mo-
tion by the claimant and after a finding by the court, upon 
review of supporting and opposing affidavits or after a 
hearing, after weighing the evidence, that the claimant has 
established by a substantial probability that the claimant 
will prevail on the claim for punitive damages. At the re-
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quest of any party in a health care lawsuit, the trier of 
fact shall consider in a separate proceeding— 
(1) whether punitive damages are to be award-
ed and the amount of such award; and 
(2) the amount of punitive damages following a 
determination of punitive liability. 
If a separate proceeding is requested, evidence relevant 
only to the claim for punitive damages, as determined by 
applicable State law, shall be inadmissible in any pro-
ceeding to determine whether compensatory damages are 
to be awarded. 
(b) DETERMINING AMOUNT
OF PUNITIVE DAM-
AGES.— 
(1) FACTORS
CONSIDERED.—In determining 
the amount of punitive damages, if awarded, in a 
health care lawsuit, the trier of fact shall consider 
only the following— 
(A) the severity of the harm caused by the 
conduct of such party; 
(B) the duration of the conduct or any 
concealment of it by such party; 
(C) the profitability of the conduct to such 
party; 
(D) the number of products sold or med-
ical procedures rendered for compensation, as 
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the case may be, by such party, of the kind 
causing the harm complained of by the claim-
ant; 
(E) any criminal penalties imposed on such 
party, as a result of the conduct complained of 
by the claimant; and 
(F) the amount of any civil fines assessed 
against such party as a result of the conduct 
complained of by the claimant. 
(2) MAXIMUM AWARD.—The amount of punitive 
damages, if awarded, in a health care lawsuit may 
be as much as $250,000 or as much as two times 
the amount of economic damages awarded, which-
ever is greater. The jury shall not be informed of 
this limitation. 
SEC. 206. AUTHORIZATION OF PAYMENT OF FUTURE DAM-
AGES TO CLAIMANTS IN HEALTH CARE LAW-
SUITS. 
(a) IN GENERAL.—In any health care lawsuit, if an 
award of future damages, without reduction to present 
value, equaling or exceeding $50,000 is made against a 
party with sufficient insurance or other assets to fund a 
periodic payment of such a judgment, the court shall, at 
the request of any party, enter a judgment ordering that 
the future damages be paid by periodic payments. In any 
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health care lawsuit, the court may be guided by the Uni-
form Periodic Payment of Judgments Act promulgated by 
the National Conference of Commissioners on Uniform 
State Laws. 
(b) APPLICABILITY.—This section applies to all ac-
tions which have not been first set for trial or retrial be-
fore the effective date of this subtitle. 
SEC. 207. DEFINITIONS. 
In this subtitle: 
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution 
system’’ or ‘‘ADR’’ means a system that provides 
for the resolution of health care lawsuits in a man-
ner other than through a civil action brought in a 
State or Federal court. 
(2) CLAIMANT.—The term ‘‘claimant’’ means 
any person who brings a health care lawsuit, includ-
ing a person who asserts or claims a right to legal 
or equitable contribution, indemnity, or subrogation, 
arising out of a health care liability claim or action, 
and any person on whose behalf such a claim is as-
serted or such an action is brought, whether de-
ceased, incompetent, or a minor. 
(3) COLLATERAL
SOURCE
BENEFITS.—The 
term ‘‘collateral source benefits’’ means any amount 
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paid or reasonably likely to be paid in the future to 
or on behalf of the claimant, or any service, product, 
or other benefit provided or reasonably likely to be 
provided in the future to or on behalf of the claim-
ant, as a result of the injury or wrongful death, pur-
suant to— 
(A) any State or Federal health, sickness, 
income-disability, accident, or workers’ com-
pensation law; 
(B) any health, sickness, income-disability, 
or accident insurance that provides health bene-
fits or income-disability coverage; 
(C) any contract or agreement of any 
group, organization, partnership, or corporation 
to provide, pay for, or reimburse the cost of 
medical, hospital, dental, or income-disability 
benefits; and 
(D) any other publicly or privately funded 
program. 
(4) 
COMPENSATORY
DAMAGES.—The 
term 
‘‘compensatory 
damages’’ 
means 
objectively 
verifiable monetary losses incurred as a result of the 
provision of, use of, or payment for (or failure to 
provide, use, or pay for) health care services or med-
ical products, such as past and future medical ex-
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penses, loss of past and future earnings, cost of ob-
taining domestic services, loss of employment, and 
loss of business or employment opportunities, dam-
ages for physical and emotional pain, suffering, in-
convenience, physical impairment, mental anguish, 
disfigurement, loss of enjoyment of life, loss of soci-
ety and companionship, loss of consortium (other 
than loss of domestic service), hedonic damages, in-
jury to reputation, and all other nonpecuniary losses 
of any kind or nature. The term ‘‘compensatory 
damages’’ includes economic damages and non-
economic damages, as such terms are defined in this 
section. 
(5) CONTINGENT FEE.—The term ‘‘contingent 
fee’’ includes all compensation to any person or per-
sons which is payable only if a recovery is effected 
on behalf of one or more claimants. 
(6) ECONOMIC DAMAGES.—The term ‘‘economic 
damages’’ means objectively verifiable monetary 
losses incurred as a result of the provision of, use 
of, or payment for (or failure to provide, use, or pay 
for) health care services or medical products, such as 
past and future medical expenses, loss of past and 
future earnings, cost of obtaining domestic services, 
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loss of employment, and loss of business or employ-
ment opportunities. 
(7) 
HEALTH
CARE
LAWSUIT.—The 
term 
‘‘health care lawsuit’’ means any health care liability 
claim concerning the provision of health care goods 
or services or any medical product affecting inter-
state commerce, or any health care liability action 
concerning the provision of health care goods or 
services or any medical product affecting interstate 
commerce, brought in a State or Federal court or 
pursuant to an alternative dispute resolution system, 
against a health care provider, a health care organi-
zation, or the manufacturer, distributor, supplier, 
marketer, promoter, or seller of a medical product, 
regardless of the theory of liability on which the 
claim is based, or the number of claimants, plain-
tiffs, defendants, or other parties, or the number of 
claims or causes of action, in which the claimant al-
leges a health care liability claim. Such term does 
not include a claim or action which is based on 
criminal liability; which seeks civil fines or penalties 
paid to Federal, State, or local government; or which 
is grounded in antitrust. 
(8) HEALTH
CARE
LIABILITY
ACTION.—The 
term ‘‘health care liability action’’ means a civil ac-
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tion brought in a State or Federal court or pursuant 
to an alternative dispute resolution system, against 
a health care provider, a health care organization, or 
the manufacturer, distributor, supplier, marketer, 
promoter, or seller of a medical product, regardless 
of the theory of liability on which the claim is based, 
or the number of plaintiffs, defendants, or other par-
ties, or the number of causes of action, in which the 
claimant alleges a health care liability claim. 
(9) HEALTH
CARE
LIABILITY
CLAIM.—The 
term ‘‘health care liability claim’’ means a demand 
by any person, whether or not pursuant to ADR, 
against a health care provider, health care organiza-
tion, or the manufacturer, distributor, supplier, mar-
keter, promoter, or seller of a medical product, in-
cluding, but not limited to, third-party claims, cross- 
claims, counter-claims, or contribution claims, which 
are based upon the provision of, use of, or payment 
for (or the failure to provide, use, or pay for) health 
care services or medical products, regardless of the 
theory of liability on which the claim is based, or the 
number of plaintiffs, defendants, or other parties, or 
the number of causes of action. 
(10) HEALTH CARE ORGANIZATION.—The term 
‘‘health care organization’’ means any person or en-
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tity which is obligated to provide or pay for health 
benefits under any health plan, including any person 
or entity acting under a contract or arrangement 
with a health care organization to provide or admin-
ister any health benefit. 
(11) HEALTH
CARE
PROVIDER.—The term 
‘‘health care provider’’ means any person or entity 
required by State or Federal laws or regulations to 
be licensed, registered, or certified to provide health 
care services, and being either so licensed, reg-
istered, or certified, or exempted from such require-
ment by other statute or regulation. 
(12) HEALTH CARE GOODS OR SERVICES.—The 
term ‘‘health care goods or services’’ means any 
goods or services provided by a health care organiza-
tion, provider, or by any individual working under 
the supervision of a health care provider, that relates 
to the diagnosis, prevention, or treatment of any 
human disease or impairment, or the assessment or 
care of the health of human beings. 
(13) MALICIOUS
INTENT
TO
INJURE.—The 
term ‘‘malicious intent to injure’’ means inten-
tionally causing or attempting to cause physical in-
jury other than providing health care goods or serv-
ices. 
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(14) MEDICAL PRODUCT.—The term ‘‘medical 
product’’ means a drug, device, or biological product 
intended for humans, and the terms ‘‘drug’’, ‘‘de-
vice’’, and ‘‘biological product’’ have the meanings 
given such terms in sections 201(g)(1) and 201(h) 
of the Federal Food, Drug and Cosmetic Act (21 
U.S.C. 321(g)(1) and (h)) and section 351(a) of the 
Public Health Service Act (42 U.S.C. 262(a)), re-
spectively, including any component or raw material 
used therein, but excluding health care services. 
(15) 
NONECONOMIC
DAMAGES.—The 
term 
‘‘noneconomic damages’’ means damages for phys-
ical and emotional pain, suffering, inconvenience, 
physical impairment, mental anguish, disfigurement, 
loss of enjoyment of life, loss of society and compan-
ionship, loss of consortium (other than loss of do-
mestic service), hedonic damages, injury to reputa-
tion, and all other nonpecuniary losses of any kind 
or nature. 
(16) PUNITIVE DAMAGES.—The term ‘‘punitive 
damages’’ means damages awarded, for the purpose 
of punishment or deterrence, and not solely for com-
pensatory purposes, against a health care provider, 
health care organization, or a manufacturer, dis-
tributor, or supplier of a medical product. Punitive 
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damages are neither economic nor noneconomic 
damages. 
(17) RECOVERY.—The term ‘‘recovery’’ means 
the net sum recovered after deducting any disburse-
ments or costs incurred in connection with prosecu-
tion or settlement of the claim, including all costs 
paid or advanced by any person. Costs of health care 
incurred by the plaintiff and the attorneys’ office 
overhead costs or charges for legal services are not 
deductible disbursements or costs for such purpose. 
(18) STATE.—The term ‘‘State’’ means each of 
the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, 
Guam, American Samoa, the Northern Mariana Is-
lands, the Trust Territory of the Pacific Islands, and 
any other territory or possession of the United 
States, or any political subdivision thereof. 
SEC. 208. EFFECT ON OTHER LAWS. 
(a) VACCINE INJURY.— 
(1) To the extent that title XXI of the Public 
Health Service Act establishes a Federal rule of law 
applicable to a civil action brought for a vaccine-re-
lated injury or death— 
(A) this subtitle does not affect the appli-
cation of the rule of law to such an action; and 
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(B) any rule of law prescribed by this sub-
title in conflict with a rule of law of such title 
XXI shall not apply to such action. 
(2) If there is an aspect of a civil action 
brought for a vaccine-related injury or death to 
which a Federal rule of law under title XXI of the 
Public Health Service Act does not apply, then this 
subtitle or otherwise applicable law (as determined 
under this subtitle) will apply to such aspect of such 
action. 
(b) OTHER FEDERAL LAW.—Except as provided in 
this section, nothing in this subtitle shall be deemed to 
affect any defense available to a defendant in a health care 
lawsuit or action under any other provision of Federal law. 
SEC. 
209. 
STATE 
FLEXIBILITY 
AND 
PROTECTION 
OF 
STATES’ RIGHTS. 
(a) HEALTH CARE LAWSUITS.—The provisions gov-
erning health care lawsuits set forth in this subtitle pre-
empt, subject to subsections (b) and (c), State law to the 
extent that State law prevents the application of any pro-
visions of law established by or under this subtitle. The 
provisions governing health care lawsuits set forth in this 
subtitle supersede chapter 171 of title 28, United States 
Code, to the extent that such chapter— 
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(1) provides for a greater amount of damages 
or contingent fees, a longer period in which a health 
care lawsuit may be commenced, or a reduced appli-
cability or scope of periodic payment of future dam-
ages, than provided in this subtitle; or 
(2) prohibits the introduction of evidence re-
garding collateral source benefits, or mandates or 
permits subrogation or a lien on collateral source 
benefits. 
(b) PROTECTION OF STATES’ RIGHTS AND OTHER 
LAWS.—(1) Any issue that is not governed by any provi-
sion of law established by or under this subtitle (including 
State standards of negligence) shall be governed by other-
wise applicable State or Federal law. 
(2) This subtitle shall not preempt or supersede any 
State or Federal law that imposes greater procedural or 
substantive protections for health care providers and 
health care organizations from liability, loss, or damages 
than those provided by this subtitle or create a cause of 
action. 
(c) STATE FLEXIBILITY.—No provision of this sub-
title shall be construed to preempt— 
(1) any State law (whether effective before, on, 
or after the date of the enactment of this Act) that 
specifies a particular monetary amount of compen-
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satory or punitive damages (or the total amount of 
damages) that may be awarded in a health care law-
suit, regardless of whether such monetary amount is 
greater or lesser than is provided for under this sub-
title, notwithstanding section 202(a); or 
(2) any defense available to a party in a health 
care lawsuit under any other provision of State or 
Federal law. 
SEC. 210. APPLICABILITY; EFFECTIVE DATE. 
This subtitle shall apply to any health care lawsuit 
brought in a Federal or State court, or subject to an alter-
native dispute resolution system, that is initiated on or 
after the date of the enactment of this Act, except that 
any health care lawsuit arising from an injury occurring 
prior to the date of the enactment of this Act shall be 
governed by the applicable statute of limitations provisions 
in effect at the time the injury occurred. 
Subtitle B—Application of 
Medicare Improvement Fund 
SEC. 211. APPLICATION OF MEDICARE IMPROVEMENT 
FUND. 
Section 1898(b)(1) of the Social Security Act (42 
U.S.C. 1395iii(b)(1)) is amended by striking ‘‘for services 
furnished’’ and all that follows and inserting ‘‘for services 
furnished on or after January 1, 2010, $0.’’. 
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Subtitle C—Pathway for Biosimilar 
Biological Products 
SEC. 221. LICENSURE PATHWAY FOR BIOSIMILAR BIOLOGI-
CAL PRODUCTS. 
(a) LICENSURE OF BIOLOGICAL PRODUCTS AS BIO-
SIMILAR
OR INTERCHANGEABLE.—Section 351 of the 
Public Health Service Act (42 U.S.C. 262) is amended— 
(1) in subsection (a)(1)(A), by inserting ‘‘under 
this subsection or subsection (k)’’ after ‘‘biologics li-
cense’’; and 
(2) by adding at the end the following: 
‘‘(k) LICENSURE OF BIOLOGICAL PRODUCTS AS BIO-
SIMILAR OR INTERCHANGEABLE.— 
‘‘(1) IN GENERAL.—Any person may submit an 
application for licensure of a biological product 
under this subsection. 
‘‘(2) CONTENT.— 
‘‘(A) IN GENERAL.— 
‘‘(i) REQUIRED
INFORMATION.—An 
application submitted under this subsection 
shall include information demonstrating 
that— 
‘‘(I) the biological product is bio-
similar to a reference product based 
upon data derived from— 
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‘‘(aa) analytical studies that 
demonstrate that the biological 
product is highly similar to the 
reference 
product 
notwith-
standing minor differences in 
clinically inactive components; 
‘‘(bb) animal studies (includ-
ing the assessment of toxicity); 
and 
‘‘(cc) a clinical study or 
studies (including the assessment 
of immunogenicity and phar-
macokinetics 
or 
pharmacodynamics) that are suf-
ficient to demonstrate safety, pu-
rity, and potency in 1 or more 
appropriate conditions of use for 
which the reference product is li-
censed and intended to be used 
and for which licensure is sought 
for the biological product; 
‘‘(II) the biological product and 
reference product utilize the same 
mechanism or mechanisms of action 
for the condition or conditions of use 
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prescribed, recommended, or sug-
gested in the proposed labeling, but 
only to the extent the mechanism or 
mechanisms of action are known for 
the reference product; 
‘‘(III) the condition or conditions 
of use prescribed, recommended, or 
suggested in the labeling proposed for 
the biological product have been pre-
viously approved for the reference 
product; 
‘‘(IV) the route of administra-
tion, the dosage form, and the 
strength of the biological product are 
the same as those of the reference 
product; and 
‘‘(V) the facility in which the bio-
logical product is manufactured, proc-
essed, packed, or held meets stand-
ards designed to assure that the bio-
logical product continues to be safe, 
pure, and potent. 
‘‘(ii) 
DETERMINATION
BY
SEC-
RETARY.—The Secretary may determine, 
in the Secretary’s discretion, that an ele-
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ment described in clause (i)(I) is unneces-
sary in an application submitted under this 
subsection. 
‘‘(iii) ADDITIONAL
INFORMATION.— 
An application submitted under this sub-
section— 
‘‘(I) shall include publicly avail-
able information regarding the Sec-
retary’s previous determination that 
the reference product is safe, pure, 
and potent; and 
‘‘(II) may include any additional 
information in support of the applica-
tion, including publicly available infor-
mation with respect to the reference 
product or another biological product. 
‘‘(B) INTERCHANGEABILITY.—An applica-
tion (or a supplement to an application) sub-
mitted under this subsection may include infor-
mation demonstrating that the biological prod-
uct meets the standards described in paragraph 
(4). 
‘‘(3) EVALUATION BY SECRETARY.—Upon re-
view of an application (or a supplement to an appli-
cation) submitted under this subsection, the Sec-
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retary shall license the biological product under this 
subsection if— 
‘‘(A) the Secretary determines that the in-
formation submitted in the application (or the 
supplement) is sufficient to show that the bio-
logical product— 
‘‘(i) is biosimilar to the reference 
product; or 
‘‘(ii) meets the standards described in 
paragraph (4), and therefore is inter-
changeable with the reference product; and 
‘‘(B) the applicant (or other appropriate 
person) consents to the inspection of the facility 
that is the subject of the application, in accord-
ance with subsection (c). 
‘‘(4) SAFETY
STANDARDS
FOR
DETERMINING 
INTERCHANGEABILITY.—Upon review of an applica-
tion submitted under this subsection or any supple-
ment to such application, the Secretary shall deter-
mine the biological product to be interchangeable 
with the reference product if the Secretary deter-
mines that the information submitted in the applica-
tion (or a supplement to such application) is suffi-
cient to show that— 
‘‘(A) the biological product— 
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‘‘(i) is biosimilar to the reference 
product; and 
‘‘(ii) can be expected to produce the 
same clinical result as the reference prod-
uct in any given patient; and 
‘‘(B) for a biological product that is ad-
ministered more than once to an individual, the 
risk in terms of safety or diminished efficacy of 
alternating or switching between use of the bio-
logical product and the reference product is not 
greater than the risk of using the reference 
product without such alternation or switch. 
‘‘(5) GENERAL RULES.— 
‘‘(A) ONE REFERENCE PRODUCT PER AP-
PLICATION.—A biological product, in an appli-
cation submitted under this subsection, may not 
be evaluated against more than 1 reference 
product. 
‘‘(B) REVIEW.—An application submitted 
under this subsection shall be reviewed by the 
division within the Food and Drug Administra-
tion that is responsible for the review and ap-
proval of the application under which the ref-
erence product is licensed. 
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‘‘(C) RISK EVALUATION AND MITIGATION 
STRATEGIES.—The authority of the Secretary 
with respect to risk evaluation and mitigation 
strategies under the Federal Food, Drug, and 
Cosmetic Act shall apply to biological products 
licensed under this subsection in the same man-
ner as such authority applies to biological prod-
ucts licensed under subsection (a). 
‘‘(D) RESTRICTIONS ON BIOLOGICAL PROD-
UCTS
CONTAINING
DANGEROUS
INGREDI-
ENTS.—If information in an application sub-
mitted under this subsection, in a supplement 
to such an application, or otherwise available to 
the Secretary shows that a biological product— 
‘‘(i) is, bears, or contains a select 
agent or toxin listed in section 73.3 or 
73.4 of title 42, section 121.3 or 121.4 of 
title 9, or section 331.3 of title 7, Code of 
Federal Regulations (or any successor reg-
ulations); or 
‘‘(ii) is, bears, or contains a controlled 
substance in schedule I or II of section 
202 of the Controlled Substances Act, as 
listed in part 1308 of title 21, Code of 
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Federal Regulations (or any successor reg-
ulations); 
the Secretary shall not license the biological 
product under this subsection unless the Sec-
retary determines, after consultation with ap-
propriate national security and drug enforce-
ment agencies, that there would be no increased 
risk to the security or health of the public from 
licensing such biological product under this sub-
section. 
‘‘(6) EXCLUSIVITY FOR FIRST INTERCHANGE-
ABLE
BIOLOGICAL
PRODUCT.—Upon review of an 
application submitted under this subsection relying 
on the same reference product for which a prior bio-
logical product has received a determination of inter-
changeability for any condition of use, the Secretary 
shall not make a determination under paragraph (4) 
that the second or subsequent biological product is 
interchangeable for any condition of use until the 
earlier of— 
‘‘(A) 1 year after the first commercial 
marketing of the first interchangeable bio-
similar biological product to be approved as 
interchangeable for that reference product; 
‘‘(B) 18 months after— 
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‘‘(i) a final court decision on all pat-
ents in suit in an action instituted under 
subsection (l)(5) against the applicant that 
submitted the application for the first ap-
proved interchangeable biosimilar biological 
product; or 
‘‘(ii) the dismissal with or without 
prejudice of an action instituted under sub-
section (l)(5) against the applicant that 
submitted the application for the first ap-
proved interchangeable biosimilar biological 
product; or 
‘‘(C)(i) 42 months after approval of the 
first interchangeable biosimilar biological prod-
uct if the applicant that submitted such appli-
cation has been sued under subsection (l)(5) 
and such litigation is still ongoing within such 
42-month period; or 
‘‘(ii) 18 months after approval of the first 
interchangeable biosimilar biological product if 
the applicant that submitted such application 
has not been sued under subsection (l)(5). 
For purposes of this paragraph, the term ‘final court 
decision’ means a final decision of a court from 
which no appeal (other than a petition to the United 
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States Supreme Court for a writ of certiorari) has 
been or can be taken. 
‘‘(7) EXCLUSIVITY
FOR
REFERENCE
PROD-
UCT.— 
‘‘(A) EFFECTIVE DATE OF BIOSIMILAR AP-
PLICATION APPROVAL.—Approval of an applica-
tion under this subsection may not be made ef-
fective by the Secretary until the date that is 
12 years after the date on which the reference 
product was first licensed under subsection (a). 
‘‘(B) FILING
PERIOD.—An application 
under this subsection may not be submitted to 
the Secretary until the date that is 4 years 
after the date on which the reference product 
was first licensed under subsection (a). 
‘‘(C) FIRST
LICENSURE.—Subparagraphs 
(A) and (B) shall not apply to a license for or 
approval of— 
‘‘(i) a supplement for the biological 
product that is the reference product; or 
‘‘(ii) a subsequent application filed by 
the same sponsor or manufacturer of the 
biological product that is the reference 
product (or a licensor, predecessor in inter-
est, or other related entity) for— 
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‘‘(I) a change (not including a 
modification to the structure of the bi-
ological product) that results in a new 
indication, route of administration, 
dosing schedule, dosage form, delivery 
system, delivery device, or strength; or 
‘‘(II) a modification to the struc-
ture of the biological product that 
does not result in a change in safety, 
purity, or potency. 
‘‘(8) PEDIATRIC STUDIES.— 
‘‘(A) EXCLUSIVITY.—If, before or after li-
censure of the reference product under sub-
section (a) of this section, the Secretary deter-
mines that information relating to the use of 
such product in the pediatric population may 
produce health benefits in that population, the 
Secretary makes a written request for pediatric 
studies (which shall include a timeframe for 
completing such studies), the applicant or hold-
er of the approved application agrees to the re-
quest, such studies are completed using appro-
priate formulations for each age group for 
which the study is requested within any such 
timeframe, and the reports thereof are sub-
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mitted and accepted in accordance with section 
505A(d)(3) of the Federal Food, Drug, and 
Cosmetic Act the period referred to in para-
graph (7)(A) of this subsection is deemed to be 
12 years and 6 months rather than 12 years. 
‘‘(B) EXCEPTION.—The Secretary shall 
not extend the period referred to in subpara-
graph (A) of this paragraph if the determina-
tion under section 505A(d)(3) of the Federal 
Food, Drug, and Cosmetic Act is made later 
than 9 months prior to the expiration of such 
period. 
‘‘(C) APPLICATION
OF
CERTAIN
PROVI-
SIONS.—The provisions of subsections (a), (d), 
(e), (f), (h), (j), (k), and (l) of section 505A of 
the Federal Food, Drug, and Cosmetic Act 
shall apply with respect to the extension of a 
period under subparagraph (A) of this para-
graph to the same extent and in the same man-
ner as such provisions apply with respect to the 
extension of a period under subsection (b) or 
(c) of section 505A of the Federal Food, Drug, 
and Cosmetic Act. 
‘‘(9) GUIDANCE DOCUMENTS.— 
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‘‘(A) IN
GENERAL.—The Secretary may, 
after opportunity for public comment, issue 
guidance in accordance, except as provided in 
subparagraph (B)(i), with section 701(h) of the 
Federal Food, Drug, and Cosmetic Act with re-
spect to the licensure of a biological product 
under this subsection. Any such guidance may 
be general or specific. 
‘‘(B) PUBLIC COMMENT.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall provide the public an opportunity to 
comment on any proposed guidance issued 
under subparagraph (A) before issuing 
final guidance. 
‘‘(ii) INPUT REGARDING MOST VALU-
ABLE GUIDANCE.—The Secretary shall es-
tablish a process through which the public 
may provide the Secretary with input re-
garding priorities for issuing guidance. 
‘‘(C) NO REQUIREMENT FOR APPLICATION 
CONSIDERATION.—The 
issuance 
(or 
non- 
issuance) of guidance under subparagraph (A) 
shall not preclude the review of, or action on, 
an application submitted under this subsection. 
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‘‘(D) REQUIREMENT FOR PRODUCT CLASS- 
SPECIFIC
GUIDANCE.—If the Secretary issues 
product class-specific guidance under subpara-
graph (A), such guidance shall include a de-
scription of— 
‘‘(i) the criteria that the Secretary will 
use to determine whether a biological prod-
uct is highly similar to a reference product 
in such product class; and 
‘‘(ii) the criteria, if available, that the 
Secretary will use to determine whether a 
biological product meets the standards de-
scribed in paragraph (4). 
‘‘(E) CERTAIN PRODUCT CLASSES.— 
‘‘(i) GUIDANCE.—The Secretary may 
indicate in a guidance document that the 
science and experience, as of the date of 
such guidance, with respect to a product or 
product class (not including any recom-
binant protein) does not allow approval of 
an application for a license as provided 
under this subsection for such product or 
product class. 
‘‘(ii) MODIFICATION OR REVERSAL.— 
The Secretary may issue a subsequent 
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guidance document under subparagraph 
(A) to modify or reverse a guidance docu-
ment under clause (i). 
‘‘(iii) NO
EFFECT
ON
ABILITY
TO 
DENY
LICENSE.—Clause (i) shall not be 
construed to require the Secretary to ap-
prove a product with respect to which the 
Secretary has not indicated in a guidance 
document that the science and experience, 
as described in clause (i), does not allow 
approval of such an application. 
‘‘(10) NAMING.—The Secretary shall ensure 
that the labeling and packaging of each biological 
product licensed under this subsection bears a name 
that uniquely identifies the biological product and 
distinguishes it from the reference product and any 
other biological products licensed under this sub-
section following evaluation against such reference 
product. 
‘‘(l) PATENT NOTICES; RELATIONSHIP TO FINAL AP-
PROVAL.— 
‘‘(1) DEFINITIONS.—For the purposes of this 
subsection, the term— 
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‘‘(A) ‘biosimilar product’ means the bio-
logical product that is the subject of the appli-
cation under subsection (k); 
‘‘(B) ‘relevant patent’ means a patent 
that— 
‘‘(i) expires after the date specified in 
subsection (k)(7)(A) that applies to the 
reference product; and 
‘‘(ii) could reasonably be asserted 
against the applicant due to the unauthor-
ized making, use, sale, or offer for sale 
within the United States, or the importa-
tion into the United States of the bio-
similar product, or materials used in the 
manufacture of the biosimilar product, or 
due to a use of the biosimilar product in 
a method of treatment that is indicated in 
the application; 
‘‘(C) ‘reference product sponsor’ means the 
holder of an approved application or license for 
the reference product; and 
‘‘(D) ‘interested third party’ means a per-
son other than the reference product sponsor 
that owns a relevant patent, or has the right to 
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commence or participate in an action for in-
fringement of a relevant patent. 
‘‘(2) HANDLING OF CONFIDENTIAL INFORMA-
TION.—Any entity receiving confidential information 
pursuant to this subsection shall designate one or 
more individuals to receive such information. Each 
individual so designated shall execute an agreement 
in accordance with regulations promulgated by the 
Secretary. The regulations shall require each such 
individual to take reasonable steps to maintain the 
confidentiality of information received pursuant to 
this subsection and use the information solely for 
purposes authorized by this subsection. The obliga-
tions imposed on an individual who has received con-
fidential information pursuant to this subsection 
shall continue until the individual returns or de-
stroys the confidential information, a court imposes 
a protective order that governs the use or handling 
of the confidential information, or the party pro-
viding the confidential information agrees to other 
terms or conditions regarding the handling or use of 
the confidential information. 
‘‘(3) PUBLIC NOTICE BY SECRETARY.—Within 
30 days of acceptance by the Secretary of an appli-
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cation filed under subsection (k), the Secretary shall 
publish a notice identifying— 
‘‘(A) the reference product identified in the 
application; and 
‘‘(B) the name and address of an agent 
designated by the applicant to receive notices 
pursuant to paragraph (4)(B). 
‘‘(4) EXCHANGES CONCERNING PATENTS.— 
‘‘(A) 
EXCHANGES
WITH
REFERENCE 
PRODUCT SPONSOR.— 
‘‘(i) Within 30 days of the date of ac-
ceptance of the application by the Sec-
retary, the applicant shall provide the ref-
erence product sponsor with a copy of the 
application and information concerning the 
biosimilar product and its production. This 
information shall include a detailed de-
scription of the biosimilar product, its 
method of manufacture, and the materials 
used in the manufacture of the product. 
‘‘(ii) Within 60 days of the date of re-
ceipt of the information required to be pro-
vided under clause (i), the reference prod-
uct sponsor shall provide to the applicant 
a list of relevant patents owned by the ref-
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erence product sponsor, or in respect of 
which the reference product sponsor has 
the right to commence an action of in-
fringement or otherwise has an interest in 
the patent as such patent concerns the bio-
similar product. 
‘‘(iii) If the reference product sponsor 
is issued or acquires an interest in a rel-
evant patent after the date on which the 
reference product sponsor provides the list 
required by clause (ii) to the applicant, the 
reference product sponsor shall identify 
that patent to the applicant within 30 days 
of the date of issue of the patent, or the 
date of acquisition of the interest in the 
patent, as applicable. 
‘‘(B) 
EXCHANGES
WITH
INTERESTED 
THIRD PARTIES.— 
‘‘(i) At any time after the date on 
which the Secretary publishes a notice for 
an application under paragraph (3), any 
interested third party may provide notice 
to the designated agent of the applicant 
that the interested third party owns or has 
rights under 1 or more patents that may 
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by clause (iii), the interested third party 
shall identify that patent within 30 days of 
the date of issue of the patent, or the date 
of acquisition of the interest in the patent, 
as applicable. 
‘‘(C) IDENTIFICATION OF BASIS FOR IN-
FRINGEMENT.—For any patent identified under 
clause (ii) or (iii) of subparagraph (A) or under 
clause (iii) or (iv) of subparagraph (B), the ref-
erence product sponsor or the interested third 
party, as applicable— 
‘‘(i) shall explain in writing why the 
sponsor or the interested third party be-
lieves the relevant patent would be in-
fringed by the making, use, sale, or offer 
for sale within the United States, or im-
portation into the United States, of the 
biosimilar product or by a use of the bio-
similar product in treatment that is indi-
cated in the application; 
‘‘(ii) may specify whether the relevant 
patent is available for licensing; and 
‘‘(iii) shall specify the number and 
date of expiration of the relevant patent. 
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‘‘(D) CERTIFICATION BY APPLICANT CON-
CERNING
IDENTIFIED
RELEVANT
PATENTS.— 
Not later than 45 days after the date on which 
a patent is identified under clause (ii) or (iii) of 
subparagraph (A) or under clause (iii) or (iv) of 
subparagraph (B), the applicant shall send a 
written statement regarding each identified pat-
ent to the party that identified the patent. Such 
statement shall either— 
‘‘(i) state that the applicant will not 
commence marketing of the biosimilar 
product and has requested the Secretary to 
not grant final approval of the application 
before the date of expiration of the noticed 
patent; or 
‘‘(ii) provide a detailed written expla-
nation setting forth the reasons why the 
applicant believes— 
‘‘(I) the making, use, sale, or 
offer for sale within the United 
States, or the importation into the 
United States, of the biosimilar prod-
uct, or the use of the biosimilar prod-
uct in a treatment indicated in the ap-
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plication, would not infringe the pat-
ent; or 
‘‘(II) the patent is invalid or un-
enforceable. 
‘‘(5) ACTION
FOR
INFRINGEMENT
INVOLVING 
REFERENCE PRODUCT SPONSOR.—If an action for 
infringement concerning a relevant patent identified 
by the reference product sponsor under clause (ii) or 
(iii) of paragraph (4)(A), or by an interested third 
party under clause (iii) or (iv) of paragraph (4)(B), 
is brought within 60 days of the date of receipt of 
a statement under paragraph (4)(D)(ii), and the 
court in which such action has been commenced de-
termines the patent is infringed prior to the date ap-
plicable under subsection (k)(7)(A) or (k)(8), the 
Secretary shall make approval of the application ef-
fective on the day after the date of expiration of the 
patent that has been found to be infringed. If more 
than one such patent is found to be infringed by the 
court, the approval of the application shall be made 
effective on the day after the date that the last such 
patent expires. 
‘‘(6) NOTIFICATION OF AGREEMENTS.— 
‘‘(A) REQUIREMENTS.— 
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‘‘(i) 
AGREEMENT
BETWEEN
BIO-
SIMILAR
PRODUCT
APPLICANT
AND
REF-
ERENCE
PRODUCT
SPONSOR.—If a bio-
similar product applicant under subsection 
(k) and the reference product sponsor 
enter into an agreement described in sub-
paragraph (B), the applicant and sponsor 
shall each file the agreement in accordance 
with subparagraph (C). 
‘‘(ii) 
AGREEMENT
BETWEEN
BIO-
SIMILAR PRODUCT APPLICANTS.—If 2 or 
more biosimilar product applicants submit 
an application under subsection (k) for bio-
similar products with the same reference 
product and enter into an agreement de-
scribed in subparagraph (B), the appli-
cants shall each file the agreement in ac-
cordance with subparagraph (C). 
‘‘(B) SUBJECT MATTER OF AGREEMENT.— 
An agreement described in this subparagraph— 
‘‘(i) is an agreement between the bio-
similar product applicant under subsection 
(k) and the reference product sponsor or 
between 2 or more biosimilar product ap-
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plicants under subsection (k) regarding the 
manufacture, marketing, or sale of— 
‘‘(I) the biosimilar product (or 
biosimilar products) for which an ap-
plication was submitted; or 
‘‘(II) the reference product; 
‘‘(ii) includes any agreement between 
the biosimilar product applicant under sub-
section (k) and the reference product spon-
sor or between 2 or more biosimilar prod-
uct applicants under subsection (k) that is 
contingent upon, provides a contingent 
condition for, or otherwise relates to an 
agreement described in clause (i); and 
‘‘(iii) excludes any agreement that 
solely concerns— 
‘‘(I) purchase orders for raw ma-
terial supplies; 
‘‘(II) equipment and facility con-
tracts; 
‘‘(III) employment or consulting 
contracts; or 
‘‘(IV) packaging and labeling 
contracts. 
‘‘(C) FILING.— 
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‘‘(i) IN
GENERAL.—The text of an 
agreement required to be filed by subpara-
graph (A) shall be filed with the Assistant 
Attorney General and the Federal Trade 
Commission not later than— 
‘‘(I) 10 business days after the 
date on which the agreement is exe-
cuted; and 
‘‘(II) prior to the date of the first 
commercial marketing of, for agree-
ments 
described 
in 
subparagraph 
(A)(i), the biosimilar product that is 
the subject of the application or, for 
agreements described in subparagraph 
(A)(ii), any biosimilar product that is 
the subject of an application described 
in such subparagraph. 
‘‘(ii) IF
AGREEMENT
NOT
REDUCED 
TO TEXT.—If an agreement required to be 
filed by subparagraph (A) has not been re-
duced to text, the persons required to file 
the agreement shall each file written de-
scriptions of the agreement that are suffi-
cient to disclose all the terms and condi-
tions of the agreement. 
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‘‘(iii) CERTIFICATION.—The chief ex-
ecutive officer or the company official re-
sponsible for negotiating any agreement re-
quired to be filed by subparagraph (A) 
shall include in any filing under this para-
graph a certification as follows: ‘I declare 
under penalty of perjury that the following 
is true and correct: The materials filed 
with the Federal Trade Commission and 
the Department of Justice under section 
351(l)(6) of the Public Health Service Act, 
with respect to the agreement referenced in 
this certification: (1) represent the com-
plete, final, and exclusive agreement be-
tween the parties; (2) include any ancillary 
agreements that are contingent upon, pro-
vide a contingent condition for, or are oth-
erwise related to, the referenced agree-
ment; and (3) include written descriptions 
of any oral agreements, representations, 
commitments, or promises between the 
parties that are responsive to such section 
and have not been reduced to writing.’. 
‘‘(D) DISCLOSURE
EXEMPTION.—Any in-
formation or documentary material filed with 
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the Assistant Attorney General or the Federal 
Trade Commission pursuant to this paragraph 
shall be exempt from disclosure under section 
552 of title 5, United States Code, and no such 
information or documentary material may be 
made public, except as may be relevant to any 
administrative or judicial action or proceeding. 
Nothing in this subparagraph prevents disclo-
sure of information or documentary material to 
either body of the Congress or to any duly au-
thorized committee or subcommittee of the Con-
gress. 
‘‘(E) ENFORCEMENT.— 
‘‘(i) CIVIL
PENALTY.—Any person 
that violates a provision of this paragraph 
shall be liable for a civil penalty of not 
more than $11,000 for each day on which 
the violation occurs. Such penalty may be 
recovered in a civil action— 
‘‘(I) brought by the United 
States; or 
‘‘(II) brought by the Federal 
Trade Commission in accordance with 
the procedures established in section 
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16(a)(1) of the Federal Trade Com-
mission Act. 
‘‘(ii) COMPLIANCE
AND
EQUITABLE 
RELIEF.—If any person violates any provi-
sion of this paragraph, the United States 
district court may order compliance, and 
may grant such other equitable relief as 
the court in its discretion determines nec-
essary or appropriate, upon application of 
the Assistant Attorney General or the Fed-
eral Trade Commission. 
‘‘(F) RULEMAKING.—The Federal Trade 
Commission, with the concurrence of the Assist-
ant Attorney General and by rule in accordance 
with section 553 of title 5, United States Code, 
consistent with the purposes of this para-
graph— 
‘‘(i) may define the terms used in this 
paragraph; 
‘‘(ii) may exempt classes of persons or 
agreements from the requirements of this 
paragraph; and 
‘‘(iii) may prescribe such other rules 
as may be necessary and appropriate to 
carry out the purposes of this paragraph. 
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‘‘(G) SAVINGS CLAUSE.—Any action taken 
by the Assistant Attorney General or the Fed-
eral Trade Commission, or any failure of the 
Assistant Attorney General or the Commission 
to take action, under this paragraph shall not 
at any time bar any proceeding or any action 
with respect to any agreement between a bio-
similar product applicant under subsection (k) 
and the reference product sponsor, or any 
agreement between biosimilar product appli-
cants under subsection (k), under any other 
provision of law, nor shall any filing under this 
paragraph constitute or create a presumption of 
any violation of any competition laws.’’. 
(b) DEFINITIONS.—Section 351(i) of the Public 
Health Service Act (42 U.S.C. 262(i)) is amended— 
(1) by striking ‘‘In this section, the term ‘bio-
logical product’ means’’ and inserting the following: 
‘‘In this section: 
‘‘(1) The term ‘biological product’ means’’; 
(2) in paragraph (1), as so designated, by in-
serting ‘‘protein (except any chemically synthesized 
polypeptide),’’ after ‘‘allergenic product,’’; and 
(3) by adding at the end the following: 
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‘‘(2) The term ‘biosimilar’ or ‘biosimilarity’, in 
reference to a biological product that is the subject 
of an application under subsection (k), means— 
‘‘(A) that the biological product is highly 
similar to the reference product notwith-
standing minor differences in clinically inactive 
components; and 
‘‘(B) there are no clinically meaningful dif-
ferences between the biological product and the 
reference product in terms of the safety, purity, 
and potency of the product. 
‘‘(3) The term ‘interchangeable’ or ‘inter-
changeability’, in reference to a biological product 
that is shown to meet the standards described in 
subsection (k)(4), means that the biological product 
may be substituted for the reference product without 
the intervention of the health care provider who pre-
scribed the reference product. 
‘‘(4) The term ‘reference product’ means the 
single biological product licensed under subsection 
(a) against which a biological product is evaluated in 
an application submitted under subsection (k).’’. 
(c) PRODUCTS PREVIOUSLY APPROVED UNDER SEC-
TION 505.— 
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(1) REQUIREMENT TO FOLLOW SECTION 351.— 
Except as provided in paragraph (2), an application 
for a biological product shall be submitted under 
section 351 of the Public Health Service Act (42 
U.S.C. 262) (as amended by this Act). 
(2) EXCEPTION.—An application for a biologi-
cal product may be submitted under section 505 of 
the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 355) if— 
(A) such biological product is in a product 
class for which a biological product in such 
product class is the subject of an application 
approved under such section 505 not later than 
the date of enactment of this Act; and 
(B) such application— 
(i) has been submitted to the Sec-
retary of Health and Human Services (re-
ferred to in this Act as the ‘‘Secretary’’) 
before the date of enactment of this Act; 
or 
(ii) is submitted to the Secretary not 
later than the date that is 10 years after 
the date of enactment of this Act. 
(3) LIMITATION.—Notwithstanding paragraph 
(2), an application for a biological product may not 
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be submitted under section 505 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 355) if there is 
another biological product approved under sub-
section (a) of section 351 of the Public Health Serv-
ice Act that could be a reference product with re-
spect to such application (within the meaning of 
such section 351) if such application were submitted 
under subsection (k) of such section 351. 
(4) DEEMED APPROVED UNDER SECTION 351.— 
An approved application for a biological product 
under section 505 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355) shall be deemed to be 
a license for the biological product under such sec-
tion 351 on the date that is 10 years after the date 
of enactment of this Act. 
(5) DEFINITIONS.—For purposes of this sub-
section, the term ‘‘biological product’’ has the mean-
ing given such term under section 351 of the Public 
Health Service Act (42 U.S.C. 262) (as amended by 
this Act). 
SEC. 222. FEES RELATING TO BIOSIMILAR BIOLOGICAL 
PRODUCTS. 
Subparagraph (B) of section 735(1) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 379g(1)) is 
amended by inserting ‘‘, including licensure of a biological 
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product under section 351(k) of such Act’’ before the pe-
riod at the end. 
SEC. 223. AMENDMENTS TO CERTAIN PATENT PROVISIONS. 
(a) Section 271(e)(2) of title 35, United States Code 
is amended— 
(1) in subparagraph (A), by striking ‘‘or’’ after 
‘‘patent,’’; 
(2) in subparagraph (B), by adding ‘‘or’’ after 
the comma at the end; 
(3) by inserting the following after subpara-
graph (B): 
‘‘(C) 
a 
statement 
under 
section 
351(l)(4)(D)(ii) of the Public Health Service 
Act,’’; and 
(4) in the matter following subparagraph (C) 
(as added by paragraph (3)), by inserting before the 
period the following: ‘‘, or if the statement described 
in subparagraph (C) is provided in connection with 
an application to obtain a license to engage in the 
commercial manufacture, use, or sale of a biological 
product claimed in a patent or the use of which is 
claimed in a patent before the expiration of such 
patent’’. 
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(b) Section 271(e)(4) of title 35, United States Code, 
is amended by striking ‘‘in paragraph (2)’’ in both places 
it appears and inserting ‘‘in paragraph (2)(A) or (2)(B)’’. 
Subtitle D—Administrative 
Simplification 
SEC. 231. ADMINISTRATIVE SIMPLIFICATION. 
(a) OPERATING RULES FOR HEALTH INFORMATION 
TRANSACTIONS.— 
(1) DEFINITION OF OPERATING RULES.—Sec-
tion 1171 of the Social Security Act (42 U.S.C. 
1320d) is amended by adding at the end the fol-
lowing: 
‘‘(9) OPERATING RULES.—The term ‘operating 
rules’ means the necessary business rules and guide-
lines for the electronic exchange of information that 
are not defined by a standard or its implementation 
specifications as adopted for purposes of this part.’’. 
(2) OPERATING
RULES
AND
COMPLIANCE.— 
Section 1173 of the Social Security Act (42 U.S.C. 
1320d–2) is amended— 
(A) in subsection (a)(2), by adding at the 
end the following new subparagraph: 
‘‘(J) Electronic funds transfers.’’; and 
(B) by adding at the end the following new 
subsections: 
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‘‘(g) OPERATING RULES.— 
‘‘(1) IN GENERAL.—The Secretary shall adopt 
a single set of operating rules for each transaction 
described in subsection (a)(2) with the goal of cre-
ating as much uniformity in the implementation of 
the electronic standards as possible. Such operating 
rules shall be consensus-based and reflect the nec-
essary business rules affecting health plans and 
health care providers and the manner in which they 
operate pursuant to standards issued under Health 
Insurance Portability and Accountability Act of 
1996. 
‘‘(2) OPERATING
RULES
DEVELOPMENT.—In 
adopting operating rules under this subsection, the 
Secretary shall rely on recommendations for oper-
ating rules developed by a qualified nonprofit entity, 
as selected by the Secretary, that meets the fol-
lowing requirements: 
‘‘(A) The entity focuses its mission on ad-
ministrative simplification. 
‘‘(B) The entity demonstrates an estab-
lished multi-stakeholder and consensus-based 
process for development of operating rules, in-
cluding representation by or participation from 
health plans, health care providers, vendors, rel-
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evant Federal agencies, and other standard de-
velopment organizations. 
‘‘(C) The entity has established a public 
set of guiding principles that ensure the oper-
ating rules and process are open and trans-
parent. 
‘‘(D) The entity coordinates its activities 
with the HIT Policy Committee and the HIT 
Standards Committee (as established under 
title XXX of the Public Health Service Act) 
and complements the efforts of the Office of the 
National Healthcare Coordinator and its related 
health information exchange goals. 
‘‘(E) The entity incorporates national 
standards, including the transaction standards 
issued under Health Insurance Portability and 
Accountability Act of 1996. 
‘‘(F) The entity supports nondiscrimina-
tion and conflict of interest policies that dem-
onstrate a commitment to open, fair, and non-
discriminatory practices. 
‘‘(G) The entity allows for public review 
and updates of the operating rules. 
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‘‘(3) REVIEW
AND
RECOMMENDATIONS.—The 
National Committee on Vital and Health Statistics 
shall— 
‘‘(A) review the operating rules developed 
by a nonprofit entity described under paragraph 
(2); 
‘‘(B) determine whether such rules rep-
resent a consensus view of the health care in-
dustry and are consistent with and do not alter 
current standards; 
‘‘(C) evaluate whether such rules are con-
sistent with electronic standards adopted for 
health information technology; and 
‘‘(D) submit to the Secretary a rec-
ommendation as to whether the Secretary 
should adopt such rules. 
‘‘(4) IMPLEMENTATION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
adopt operating rules under this subsection, by 
regulation in accordance with subparagraph 
(C), following consideration of the rules devel-
oped by the non-profit entity described in para-
graph (2) and the recommendation submitted 
by the National Committee on Vital and Health 
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Statistics under paragraph (3)(D) and having 
ensured consultation with providers. 
‘‘(B) ADOPTION
REQUIREMENTS; EFFEC-
TIVE DATES.— 
‘‘(i) ELIGIBILITY
FOR
A
HEALTH 
PLAN AND HEALTH CLAIM STATUS.—The 
set of operating rules for transactions for 
eligibility for a health plan and health 
claim status shall be adopted not later 
than July 1, 2011, in a manner ensuring 
that such rules are effective not later than 
January 1, 2013, and may allow for the 
use of a machine readable identification 
card. 
‘‘(ii) ELECTRONIC FUNDS TRANSFERS 
AND HEALTH CARE PAYMENT AND REMIT-
TANCE
ADVICE.—The set of operating 
rules for electronic funds transfers and 
health care payment and remittance advice 
shall be adopted not later than July 1, 
2012, in a manner ensuring that such 
rules are effective not later than January 
1, 2014. 
‘‘(iii) OTHER
COMPLETED
TRANS-
ACTIONS.—The set of operating rules for 
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the remainder of the completed trans-
actions described in subsection (a)(2), in-
cluding health claims or equivalent encoun-
ter 
information, 
enrollment 
and 
disenrollment in a health plan, health plan 
premium payments, and referral certifi-
cation and authorization, shall be adopted 
not later than July 1, 2014, in a manner 
ensuring that such rules are effective not 
later than January 1, 2016. 
‘‘(C) EXPEDITED RULEMAKING.—The Sec-
retary shall promulgate an interim final rule 
applying any standard or operating rule rec-
ommended by the National Committee on Vital 
and Health Statistics pursuant to paragraph 
(3). The Secretary shall accept public comments 
on any interim final rule published under this 
subparagraph for 60 days after the date of such 
publication. 
‘‘(h) COMPLIANCE.— 
‘‘(1) HEALTH PLAN CERTIFICATION.— 
‘‘(A) ELIGIBILITY FOR A HEALTH PLAN, 
HEALTH
CLAIM
STATUS, ELECTRONIC
FUNDS 
TRANSFERS, HEALTH CARE PAYMENT AND RE-
MITTANCE ADVICE.—Not later than December 
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31, 2013, a health plan shall file a statement 
with the Secretary, in such form as the Sec-
retary may require, certifying that the data and 
information systems for such plan are in com-
pliance with any applicable standards (as de-
scribed under paragraph (7) of section 1171) 
and operating rules (as described under para-
graph (9) of such section) for electronic funds 
transfers, eligibility for a health plan, health 
claim status, and health care payment and re-
mittance advice, respectively. 
‘‘(B) 
OTHER
COMPLETED
TRANS-
ACTIONS.—Not later than December 31, 2015, 
a health plan shall file a statement with the 
Secretary, in such form as the Secretary may 
require, certifying that the data and informa-
tion systems for such plan are in compliance 
with any applicable standards and operating 
rules for the remainder of the completed trans-
actions described in subsection (a)(2), including 
health claims or equivalent encounter informa-
tion, enrollment and disenrollment in a health 
plan, health plan premium payments, and refer-
ral certification and authorization, respectively. 
A health plan shall provide the same level of 
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documentation to certify compliance with such 
transactions as is required to certify compliance 
with the transactions specified in subparagraph 
(A). 
‘‘(2) DOCUMENTATION
OF
COMPLIANCE.—A 
health plan shall provide the Secretary, in such form 
as the Secretary may require, with adequate docu-
mentation of compliance with the standards and op-
erating rules described under paragraph (1). A 
health plan shall not be considered to have provided 
adequate documentation and shall not be certified as 
being in compliance with such standards, unless the 
health plan— 
‘‘(A) demonstrates to the Secretary that 
the plan conducts the electronic transactions 
specified in paragraph (1) in a manner that 
fully complies with the regulations of the Sec-
retary; and 
‘‘(B) provides documentation showing that 
the plan has completed end-to-end testing for 
such transactions with their partners, such as 
hospitals and physicians. 
‘‘(3) SERVICE CONTRACTS.—A health plan shall 
be required to comply with any applicable certifi-
cation and compliance requirements (and provide the 
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Secretary with adequate documentation of such com-
pliance) under this subsection for any entities that 
provide services pursuant to a contract with such 
health plan. 
‘‘(4) CERTIFICATION
BY
OUTSIDE
ENTITY.— 
The Secretary may contract with an independent, 
outside entity to certify that a health plan has com-
plied with the requirements under this subsection, 
provided that the certification standards employed 
by such entities are in accordance with any stand-
ards or rules issued by the Secretary. 
‘‘(5) COMPLIANCE WITH REVISED STANDARDS 
AND RULES.—A health plan (including entities de-
scribed under paragraph (3)) shall comply with the 
certification and documentation requirements under 
this subsection for any interim final rule promul-
gated by the Secretary under subsection (i) that 
amends any standard or operating rule described 
under paragraph (1) of this subsection. A health 
plan shall comply with such requirements not later 
than the effective date of the applicable interim final 
rule. 
‘‘(6) AUDITS
OF
HEALTH
PLANS.—The Sec-
retary shall conduct periodic audits to ensure that 
health plans (including entities described under 
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paragraph (3)) are in compliance with any standards 
and operating rules that are described under para-
graph (1). 
‘‘(i) REVIEW AND AMENDMENT OF STANDARDS AND 
RULES.— 
‘‘(1) ESTABLISHMENT.—Not later than Janu-
ary 1, 2014, the Secretary shall establish a review 
committee (as described under paragraph (4)). 
‘‘(2) EVALUATIONS AND REPORTS.— 
‘‘(A) HEARINGS.—Not later than April 1, 
2014, and not less than biennially thereafter, 
the Secretary, acting through the review com-
mittee, shall conduct hearings to evaluate and 
review the existing standards and operating 
rules established under this section. 
‘‘(B) REPORT.—Not later than July 1, 
2014, and not less than biennially thereafter, 
the 
review 
committee 
shall 
provide 
rec-
ommendations for updating and improving such 
standards and rules. The review committee 
shall recommend a single set of operating rules 
per transaction standard and maintain the goal 
of creating as much uniformity as possible in 
the implementation of the electronic standards. 
‘‘(3) INTERIM FINAL RULEMAKING.— 
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‘‘(A) IN GENERAL.—Any recommendations 
to amend existing standards and operating 
rules that have been approved by the review 
committee and reported to the Secretary under 
paragraph (2)(B) shall be adopted by the Sec-
retary through promulgation of an interim final 
rule not later than 90 days after receipt of the 
committee’s report. 
‘‘(B) PUBLIC COMMENT.— 
‘‘(i) PUBLIC COMMENT PERIOD.—The 
Secretary shall accept public comments on 
any interim final rule published under this 
paragraph for 60 days after the date of 
such publication. 
‘‘(ii) EFFECTIVE DATE.—The effective 
date of any amendment to existing stand-
ards or operating rules that is adopted 
through an interim final rule published 
under this paragraph shall be 25 months 
following the close of such public comment 
period. 
‘‘(4) REVIEW COMMITTEE.— 
‘‘(A) DEFINITION.—For the purposes of 
this subsection, the term ‘review committee’ 
means a committee within the Department of 
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Health and Human services that has been des-
ignated by the Secretary to carry out this sub-
section, including— 
‘‘(i) the National Committee on Vital 
and Health Statistics; or 
‘‘(ii) any appropriate committee as de-
termined by the Secretary. 
‘‘(B) COORDINATION
OF
HIT
STAND-
ARDS.—In developing recommendations under 
this subsection, the review committee shall con-
sider the standards approved by the Office of 
the National Coordinator for Health Informa-
tion Technology. 
‘‘(j) PENALTIES.— 
‘‘(1) PENALTY FEE.— 
‘‘(A) IN GENERAL.—Not later than April 
1, 2014, and annually thereafter, the Secretary 
shall assess a penalty fee (as determined under 
subparagraph (B)) against a health plan that 
has failed to meet the requirements under sub-
section (h) with respect to certification and doc-
umentation of compliance with the standards 
(and their operating rules) as described under 
paragraph (1) of such subsection. 
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‘‘(B) FEE AMOUNT.—Subject to subpara-
graphs (C), (D), and (E), the Secretary shall 
assess a penalty fee against a health plan in the 
amount of $1 per covered life until certification 
is complete. The penalty shall be assessed per 
person covered by the plan for which its data 
systems for major medical policies are not in 
compliance and shall be imposed against the 
health plan for each day that the plan is not in 
compliance with the requirements under sub-
section (h). 
‘‘(C) ADDITIONAL
PENALTY
FOR
MIS-
REPRESENTATION.—A health plan that know-
ingly provides inaccurate or incomplete informa-
tion in a statement of certification or docu-
mentation of compliance under subsection (h) 
shall be subject to a penalty fee that is double 
the amount that would otherwise be imposed 
under this subsection. 
‘‘(D) 
ANNUAL
FEE
INCREASE.—The 
amount of the penalty fee imposed under this 
subsection shall be increased on an annual basis 
by the annual percentage increase in total na-
tional health care expenditures, as determined 
by the Secretary. 
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‘‘(E) PENALTY LIMIT.—A penalty fee as-
sessed against a health plan under this sub-
section shall not exceed, on an annual basis— 
‘‘(i) an amount equal to $20 per cov-
ered life under such plan; or 
‘‘(ii) an amount equal to $40 per cov-
ered life under the plan if such plan has 
knowingly provided inaccurate or incom-
plete information (as described under sub-
paragraph (C)). 
‘‘(F) DETERMINATION OF COVERED INDI-
VIDUALS.—The Secretary shall determine the 
number of covered lives under a health plan 
based upon the most recent statements and fil-
ings that have been submitted by such plan to 
the Securities and Exchange Commission. 
‘‘(2) NOTICE AND DISPUTE PROCEDURE.—The 
Secretary shall establish a procedure for assessment 
of penalty fees under this subsection that provides a 
health plan with reasonable notice and a dispute res-
olution procedure prior to provision of a notice of as-
sessment by the Secretary of the Treasury (as de-
scribed under paragraph (4)(B)). 
‘‘(3) PENALTY FEE REPORT.—Not later than 
May 1, 2014, and annually thereafter, the Secretary 
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shall provide the Secretary of the Treasury with a 
report identifying those health plans that have been 
assessed a penalty fee under this subsection. 
‘‘(4) COLLECTION OF PENALTY FEE.— 
‘‘(A) IN GENERAL.—The Secretary of the 
Treasury, acting through the Financial Man-
agement Service, shall administer the collection 
of penalty fees from health plans that have been 
identified by the Secretary in the penalty fee re-
port provided under paragraph (3). 
‘‘(B) NOTICE.—Not later than August 1, 
2014, and annually thereafter, the Secretary of 
the Treasury shall provide notice to each health 
plan that has been assessed a penalty fee by the 
Secretary under this subsection. Such notice 
shall include the amount of the penalty fee as-
sessed by the Secretary and the due date for 
payment of such fee to the Secretary of the 
Treasury (as described in subparagraph (C)). 
‘‘(C) PAYMENT DUE DATE.—Payment by a 
health plan for a penalty fee assessed under 
this subsection shall be made to the Secretary 
of the Treasury not later than November 1, 
2014, and annually thereafter. 
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‘‘(D) 
UNPAID
PENALTY
FEES.—Any 
amount of a penalty fee assessed against a 
health plan under this subsection for which pay-
ment has not been made by the due date pro-
vided under subparagraph (C) shall be— 
‘‘(i) increased by the interest accrued 
on such amount, as determined pursuant 
to the underpayment rate established 
under section 6601 of the Internal Rev-
enue Code of 1986; and 
‘‘(ii) treated as a past-due, legally en-
forceable debt owed to a Federal agency 
for purposes of section 6402(d) of the In-
ternal Revenue Code of 1986. 
‘‘(E) ADMINISTRATIVE
FEES.—Any fee 
charged or allocated for collection activities con-
ducted by the Financial Management Service 
will be passed on to a health plan on a pro-rata 
basis and added to any penalty fee collected 
from the plan.’’. 
(b) PROMULGATION OF RULES.— 
(1) UNIQUE HEALTH PLAN IDENTIFIER.—The 
Secretary shall promulgate a final rule to establish 
a unique health plan identifier (as described in sec-
tion 1173(b) of the Social Security Act (42 U.S.C. 
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1320d–2(b))) based on the input of the National 
Committee of Vital and Health Statistics. The Sec-
retary may do so on an interim final basis and such 
rule shall be effective not later than October 1, 
2012. 
(2) ELECTRONIC FUNDS TRANSFER.—The Sec-
retary shall promulgate a final rule to establish a 
standard for electronic funds transfers (as described 
in section 1173(a)(2)(J) of the Social Security Act, 
as added by subsection (a)(2)(A)). The Secretary 
may do so on an interim final basis and shall adopt 
such standard not later than January 1, 2012, in a 
manner ensuring that such standard is effective not 
later than January 1, 2014. 
(c) EXPANSION OF ELECTRONIC TRANSACTIONS IN 
MEDICARE.—Section 1862(a) of the Social Security Act 
(42 U.S.C. 1395y(a)) is amended— 
(1) in paragraph (23), by striking the ‘‘or’’ at 
the end; 
(2) in paragraph (24), by striking the period 
and inserting ‘‘; or’’; and 
(3) by inserting after paragraph (24) the fol-
lowing new paragraph: 
‘‘(25) not later than January 1, 2014, for 
which the payment is other than by electronic funds 
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transfer (EFT) or an electronic remittance in a form 
as specified in ASC X12 835 Health Care Payment 
and Remittance Advice or subsequent standard.’’. 
(d) MEDICARE
AND MEDICAID COMPLIANCE RE-
PORTS.—Not later than July 1, 2013, the Secretary of 
Health and Human Services shall submit a report to the 
Chairs and Ranking Members of the Committee on Ways 
and Means and the Committee on Energy and Commerce 
of the House of Representatives and the Chairs and Rank-
ing Members of the Committee on Health, Education, 
Labor, and Pensions and the Committee on Finance of 
the Senate on the extent to which the Medicare program 
and providers that serve beneficiaries under that program, 
and State Medicaid programs and providers that serve 
beneficiaries under those programs, transact electronically 
in accordance with transaction standards issued under the 
Health Insurance Portability and Accountability Act of 
1996, part C of title XI of the Social Security Act, and 
regulations promulgated under such Acts. 
Æ 
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