IB 
Union Calendar No. 19
108TH CONGRESS 
1ST SESSION 
H. R. 663
[Report No. 108–28] 
To amend title IX of the Public Health Service Act to provide for the 
improvement of patient safety and to reduce the incidence of events 
that adversely affect patient safety, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 11, 2003
Mr. BILIRAKIS (for himself, Mr. BROWN of Ohio, Mr. TAUZIN, Mr. DINGELL, 
Mr. BARTON of Texas, Mr. WAXMAN, Mr. UPTON, Mr. MARKEY, Mr. 
GREENWOOD, Mr. TOWNS, Mr. BURR, Mr. PALLONE, Mr. WHITFIELD, 
Mr. GORDON, Mr. NORWOOD, Mr. DEUTSCH, Mr. TERRY, Mr. RUSH, Mr. 
ROGERS of Michigan, Mr. ENGEL, Mr. WYNN, Ms. MCCARTHY of Mis-
souri, Mr. STRICKLAND, Mrs. CAPPS, Mr. JOHN, and Ms. HARMAN) in-
troduced the following bill; which was referred to the Committee on En-
ergy and Commerce 
MARCH 6, 2003
Additional sponsors: Mr. ISSA, Ms. ESHOO, Mr. GREEN of Texas, and Mr. 
STUPAK
MARCH 6, 2003
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on February 11, 2003] 
A BILL 
To amend title IX of the Public Health Service Act to
provide for the improvement of patient safety and to 
reduce the incidence of events that adversely affect pa-
tient safety, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Patient Safety and 
Quality Improvement Act’’. 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress finds as follows: 
(1) In 1999, the Institute of Medicine released a 
report entitled ‘‘To Err Is Human’’ that described 
medical errors as the 8th leading cause of death in the 
United States, with as many as 98,000 people dying 
as a result of medical errors each year. 
(2) To address these deaths and injuries due to 
medical errors, the health care system must identify 
and learn from such errors so that systems of care can 
be improved. 
(3) Myriad public and private patient safety 
initiatives have begun. The Quality Interagency Co-
ordination Task Force has recommended steps to im-
prove patient safety that may be taken by each Fed-
eral agency involved in health care and activities re-
lating to these steps are ongoing.
(4) The Department of Health and Human Serv-
ices has initiated several patient safety projects. The 
Joint Commission on Accreditation of Healthcare Or-
ganizations issued a patient safety standard that 
went into effect on July 1, 2001, and the peer review 
organizations are conducting ongoing studies of clin-
ical performance measurement of care delivered to 
beneficiaries under the medicare program under title 
XVIII of the Social Security Act. 
(5) Several steps can be taken now to improve 
patient safety. For example, according to the Centers 
for Disease Control and Prevention, hand washing is 
the single most important means of preventing the 
spread of infection. Repeated studies indicate that 
lack of or improper hand washing still contributes 
significantly to disease transmission in health care 
settings. Working with experts from the private sector, 
the Centers for Disease Control and Prevention has 
drafted ‘‘Guidelines for Hand Hygiene in Healthcare 
Settings’’ setting forth recommendations to promote 
improved hand hygiene practices and reduce trans-
mission of pathogenic microorganisms to patients and 
personnel in health care settings. 
(6) According to the Centers for Disease Control 
and Prevention, nosocomial infections affect approxi-
mately 2 million patients annually in acute care fa-
cilities in the United States at an estimated direct 
patient care cost of approximately $3.5 billion each 
year. 
(7) The Congress encourages the continuation 
and acceleration of private sector efforts to take im-
mediate steps to improve patient safety and recog-
nizes the need for action in the public sector to com-
plement these efforts. 
(8) The research on patient safety unequivocally 
calls for a learning environment, where providers will 
feel safe to report health care errors, in order to im-
prove patient safety. 
(9) Voluntary data gathering systems are more 
supportive than mandatory systems in creating the 
learning environment referred to in paragraph (8) as 
stated in the Institute of Medicine’s report. 
(10) Promising patient safety reporting systems 
have been established throughout the United States, 
and the best ways to structure and use these systems 
are currently being determined, largely through 
projects funded by the Agency for Healthcare Research 
and Quality. 
(11) Many organizations currently collecting pa-
tient safety information have expressed a need for
protections that will allow them to review protected 
information so that they may collaborate in the devel-
opment and implementation of patient safety im-
provement strategies. Currently, the State peer review 
protections provide inadequate conditions to allow the 
sharing of information to promote patient safety. 
(12) In 2001, the Institute of Medicine released 
a report entitled ‘‘Crossing the Quality Chasm’’ that 
found that the United States health care system does 
not consistently deliver high-quality care to patients. 
(b) PURPOSES.—The purposes of this Act are—
(1) to encourage a culture of safety and quality 
in the United States health care system by providing 
for a health care errors reporting system that both 
protects information and improves patient safety and 
quality of health care; and 
(2) to ensure accountability by raising standards 
and expectations for continuous quality improvements 
in patient safety through the actions of the Secretary 
of Health and Human Services. 
SEC. 3. AMENDMENTS TO PUBLIC HEALTH SERVICE ACT. 
(a) IN GENERAL.—Title IX of the Public Health Serv-
ice Act (42 U.S.C. 299 et seq.) is amended—
(1) in section 912(c), by inserting ‘‘, in accord-
ance with part C,’’ after ‘‘The Director shall’’;
(2) by redesignating part C as part D;
(3) by redesignating sections 921 through 928, as 
sections 931 through 938, respectively; 
(4) in section 938(1) (as so redesignated), by 
striking ‘‘921’’ and inserting ‘‘931’’; and 
(5) by inserting after part B the following: 
‘‘PART C—PATIENT SAFETY IMPROVEMENT 
‘‘SEC. 921. DEFINITIONS. 
‘‘In this part: 
‘‘(1) IDENTIFIABLE
INFORMATION.—The term 
‘identifiable information’ means information that is 
presented in a form and manner that allows the iden-
tification of any provider, patient, or reporter of pa-
tient safety work product. With respect to patients, 
such information includes any individually identifi-
able health information as that term is defined in the 
regulations promulgated pursuant to section 264(c) of 
the Health Insurance Portability and Accountability 
Act of 1996 (Public Law 104–191; 110 Stat. 2033). 
‘‘(2) 
NONIDENTIFIABLE
INFORMATION.—The 
term ‘nonidentifiable information’ means information 
that is presented in a form and manner that prevents 
the identification of any provider, patient, or reporter 
of patient safety work product. With respect to pa-
tients, such information must be de-identified con-
sistent with the regulations promulgated pursuant to 
section 264(c) of the Health Insurance Portability 
and Accountability Act of 1996 (Public Law 104–191; 
110 Stat. 2033). 
‘‘(3) PATIENT
SAFETY
EVALUATION
SYSTEM.—
The term ‘patient safety evaluation system’ means a 
process that involves the collection, management, or 
analysis of information for submission to or by a pa-
tient safety organization. 
‘‘(4) PATIENT SAFETY ORGANIZATION.—The term 
‘patient safety organization’ means a private or pub-
lic organization or component thereof that is certified, 
through a process to be determined by the Secretary 
under section 925, to perform each of the following ac-
tivities: 
‘‘(A) The conduct, as the organization or 
component’s primary activity, of efforts to im-
prove patient safety and the quality of health 
care delivery. 
‘‘(B) The collection and analysis of patient 
safety work product that is submitted by pro-
viders. 
‘‘(C) The development and dissemination of 
evidence-based information to providers with re-
spect to improving patient safety, such as rec-
ommendations, protocols, or information regard-
ing best practices. 
‘‘(D) The utilization of patient safety work 
product to carry out activities limited to those 
described under this paragraph and for the pur-
poses of encouraging a culture of safety and of 
providing direct feedback and assistance to pro-
viders to effectively minimize patient risk. 
‘‘(E) The maintenance of confidentiality 
with respect to identifiable information. 
‘‘(F) The provision of appropriate security 
measures with respect to patient safety work 
product. 
‘‘(G) The submission of nonidentifiable in-
formation to the Agency consistent with stand-
ards established by the Secretary under section 
923(b) for any National Patient Safety Data-
base. 
‘‘(5) PATIENT SAFETY WORK PRODUCT.—
‘‘(A) The term ‘patient safety work product’ 
means any document or communication (includ-
ing any information, report, record, memo-
randum, analysis, deliberative work, statement, 
or root cause analysis) that—
‘‘(i) except as provided in subpara-
graph (B), is developed by a provider for 
the purpose of reporting to a patient safety 
organization, and is reported to a patient 
safety organization; 
‘‘(ii) is created by a patient safety or-
ganization; or 
‘‘(iii) would reveal the deliberations or 
analytic process of a patient safety evalua-
tion system (as defined in paragraph (3)). 
‘‘(B)(i) Patient safety work product de-
scribed in subparagraph (A)(i)—
‘‘(I) does not include any separate in-
formation described in clause (ii); and 
‘‘(II) shall not be construed to include 
such separate information merely by reason 
of inclusion of a copy of the document or 
communication involved in a submission to, 
or the fact of submission of such a copy to, 
a patient safety organization. 
‘‘(ii) Separate information described in this 
clause is a document or communication (includ-
ing a patient’s medical record or any other pa-
tient or hospital record) that is developed or
maintained, or exists, separately from any pa-
tient safety evaluation system. 
‘‘(C) Information available from sources 
other than a patient safety work product under 
this section may be discovered or admitted in a 
civil or administrative proceeding, if discover-
able or admissible under applicable law. 
‘‘(6) PROVIDER.—The term ‘provider’ means—
‘‘(A) an individual or entity licensed or 
otherwise authorized under State law to provide 
health care services, including—
‘‘(i) a hospital, nursing facility, com-
prehensive outpatient rehabilitation facility, 
home health agency, and hospice program; 
‘‘(ii) a physician, physician assistant, 
nurse practitioner, clinical nurse specialist, 
certified nurse midwife, psychologist, cer-
tified social worker, registered dietitian or 
nutrition professional, physical or occupa-
tional therapist, or other individual health 
care practitioner; 
‘‘(iii) a pharmacist; and 
‘‘(iv) a renal dialysis facility, ambula-
tory surgical center, pharmacy, physician 
or health care practitioner’s office, long-
term care facility, behavioral health residen-
tial treatment facility, clinical laboratory, 
or community health center; or 
‘‘(B) any other person or entity specified in 
regulations by the Secretary after public notice 
and comment. 
‘‘SEC. 922. PRIVILEGE FOR PATIENT SAFETY WORK PROD-
UCT. 
‘‘(a) PRIVILEGE.—Notwithstanding any other provi-
sion of law and subject to subsection (c), patient safety work 
product shall not be—
‘‘(1) subject to a civil or administrative sub-
poena or order; 
‘‘(2) subject to discovery in connection with a 
civil or administrative proceeding; 
‘‘(3) subject to disclosure pursuant to section 552 
of title 5, United States Code (commonly known as 
the Freedom of Information Act), or any other simi-
lar Federal or State law; 
‘‘(4) required to be admitted as evidence or other-
wise disclosed in any State or Federal civil or admin-
istrative proceeding; or 
‘‘(5) if the patient safety work product is identi-
fiable information and is received by a national ac-
creditation organization in its capacity as a patient 
safety organization—
‘‘(A) used by a national accreditation orga-
nization in an accreditation action against the 
provider that reported the information; 
‘‘(B) shared by such organization with its 
survey team; or 
‘‘(C) required as a condition of accredita-
tion by a national accreditation association. 
‘‘(b) REPORTER PROTECTION.—
‘‘(1) IN
GENERAL.—A provider may not use 
against an individual in an adverse employment ac-
tion described in paragraph (2) the fact that the indi-
vidual in good faith reported information—
‘‘(A) to the provider with the intention of 
having the information reported to a patient 
safety organization; or 
‘‘(B) directly to a patient safety organiza-
tion. 
‘‘(2) ADVERSE EMPLOYMENT ACTION.—For pur-
poses of this subsection, an ‘adverse employment ac-
tion’ includes—
‘‘(A) the failure to promote an individual or 
provide any other employment-related benefit for 
which the individual would otherwise be eligible;
‘‘(B) an adverse evaluation or decision 
made in relation to accreditation, certification, 
credentialing, or licensing of the individual; and 
‘‘(C) a personnel action that is adverse to 
the individual concerned. 
‘‘(3) REMEDIES.—Any provider that violates this 
subsection shall be subject to a civil monetary penalty 
of not more than $20,000 for each such violation in-
volved. Such penalty shall be imposed and collected in 
the same manner as civil money penalties under sub-
section (a) of section 1128A of the Social Security Act 
are imposed and collected. 
‘‘(c) DISCLOSURES.—Nothing in this section prohibits 
any of the following disclosures: 
‘‘(1) Voluntary disclosure of nonidentifiable in-
formation. 
‘‘(2) Voluntary disclosure of identifiable infor-
mation by a provider or patient safety organization, 
if such disclosure—
‘‘(A) is authorized by the provider for the 
purposes of improving quality and safety; 
‘‘(B) is to an entity or person subject to the 
requirements of section 264(c) of the Health In-
surance Portability and Accountability Act of 
1996 (Public Law 104–191; 110 Stat. 2033), or
any regulation promulgated under such section; 
and 
‘‘(C) is not in conflict with such section or 
any regulation promulgated under such section. 
‘‘(3) Disclosure as required by law by a provider 
to the Food and Drug Administration, or on a vol-
untary basis by a provider to a federally established 
patient safety program, with respect to an Adminis-
tration-regulated product or activity for which that 
entity has responsibility, for the purposes of activities 
related to the quality, safety, or effectiveness of such 
Administration-regulated product or activity. 
‘‘(4) Disclosures of patient safety work product 
in accordance with this part by a provider to a pa-
tient safety organization. 
‘‘(d) EFFECT OF TRANSFER, DISCLOSURE.—The fol-
lowing shall not be treated as a waiver of any privilege 
or protection established under this part: 
‘‘(1) The transfer of any patient safety work 
product between a provider and a patient safety orga-
nization. 
‘‘(2) Disclosure of patient safety work product as 
described in subsection (c). 
‘‘(3) The unauthorized disclosure of patient safe-
ty work product.
‘‘(e) PENALTY.—
‘‘(1) PROHIBITION.—Except as provided in this 
part, and subject to paragraphs (2) and (4), it shall 
be unlawful for any person to disclose patient safety 
work product in violation of this section, if such dis-
closure constitutes a negligent or knowing breach of 
confidentiality. 
‘‘(2) RELATION TO HIPAA.—The penalty under 
paragraph (3) for a disclosure in violation of para-
graph (1) does not apply if the person would be sub-
ject to a penalty under section 264(c) of the Health 
Insurance Portability and Accountability Act of 1996 
(Public Law 104–191; 110 Stat. 2033), or any regu-
lation promulgated under such section, for the same 
disclosure. 
‘‘(3) AMOUNT.—Any person who violates para-
graph (1) shall be subject to a civil monetary penalty 
of not more than $10,000 for each such violation in-
volved. Such penalty shall be imposed and collected in 
the same manner as civil money penalties under sub-
section (a) of section 1128A of the Social Security Act 
are imposed and collected. 
‘‘(4) SUBSEQUENT DISCLOSURE.—Paragraph (1) 
applies only to the first person that breaches confiden-
tiality with respect to particular patient safety work 
product. 
‘‘(f) RELATION TO HIPAA.—
‘‘(1) IN GENERAL.—For purposes of applying the 
regulations promulgated pursuant to section 264(c) of 
the Health Insurance Portability and Accountability 
Act of 1996 (Public Law 104–191; 110 Stat. 2033)—
‘‘(A) patient safety organizations shall be 
treated as business associates; and 
‘‘(B) activities of such organizations de-
scribed in section 921(4) in relation to a pro-
vider are deemed to be health care operations (as 
defined in such regulations) of the provider. 
‘‘(2) RULE OF CONSTRUCTION.—Nothing in this 
section shall be construed to alter or affect the imple-
mentation of such regulations or such section 264(c). 
‘‘(g) NO LIMITATION OF OTHER PRIVILEGES.—Noth-
ing in this section shall be construed to affect privileges, 
including peer review and confidentiality protections, that 
are otherwise available under Federal or State laws. 
‘‘(h) NO LIMITATION ON CONTRACTS.—Nothing in this 
section shall be construed to limit the power of a provider 
and a patient safety organization, or a patient safety orga-
nization and the Agency or any National Patient Safety 
Database, consistent with the provisions of this Act and
other applicable law, to enter into a contract requiring 
greater confidentiality or delegating authority to make an 
authorized disclosure. 
‘‘(i) RELATION
TO STATE REPORTING REQUIRE-
MENTS.—Nothing in this part shall be construed as pre-
empting or otherwise affecting any State law requiring a 
provider to report information, including information de-
scribed in section 921(5)(B), that is not patient safety work 
product. 
‘‘(j) CONTINUATION
OF PRIVILEGE.—Patient safety 
work product of an organization that is certified as a pa-
tient safety organization shall continue to be privileged and 
confidential, in accordance with this section, if the organi-
zation’s certification is terminated or revoked or if the orga-
nization otherwise ceases to qualify as a patient safety orga-
nization. 
‘‘(k) REPORTS ON STRATEGIES TO IMPROVE PATIENT 
SAFETY.—
‘‘(1) DRAFT REPORT.—Not later than the date 
that is 18 months after any National Patient Safety 
Database is operational, the Secretary, in consulta-
tion with the Director, shall prepare a draft report on 
effective strategies for reducing medical errors and in-
creasing patient safety. The draft report shall include 
any measure determined appropriate by the Secretary
to encourage the appropriate use of such strategies, 
including use in any federally funded programs. The 
Secretary shall make the draft report available for 
public comment and submit the draft report to the In-
stitute of Medicine for review. 
‘‘(2) FINAL
REPORT.—Not later than 1 year 
after the date described in paragraph (1), the Sec-
retary shall submit a final report to the Congress that 
includes, in an appendix, any findings by the Insti-
tute of Medicine concerning research on the strategies 
discussed in the draft report and any modifications 
made by the Secretary based on such findings. 
‘‘SEC. 923. NATIONAL DATABASE. 
‘‘(a) AUTHORITY.—
‘‘(1) IN
GENERAL.—In conducting activities 
under this part, the Secretary shall provide for the es-
tablishment and maintenance of a database to receive 
relevant nonidentifiable patient safety work product, 
and may designate entities to collect relevant non-
identifiable patient safety work product that is volun-
tarily reported by patient safety organizations upon 
the request of the Secretary. Any database established 
or designated under this paragraph may be referred 
to as a ‘National Patient Safety Database’.
‘‘(2) USE
OF
INFORMATION.—Information re-
ported to any National Patient Safety Database shall 
be used to analyze national and regional statistics, 
including trends and patterns of health care errors. 
The information resulting from such analyses may be 
included in the annual quality reports prepared 
under section 913(b)(2). 
‘‘(3) ADVISORY ROLE.—The Secretary shall pro-
vide scientific support to patient safety organizations, 
including the dissemination of methodologies and evi-
dence-based information related to root causes and 
quality improvement. 
‘‘(b) STANDARDS.—In establishing or designating a 
database under subsection (a)(1), the Secretary shall, in 
consultation with representatives of patient safety organiza-
tions, the provider community, and the health information 
technology industry, determine common formats for the vol-
untary reporting of nonidentifiable patient safety work 
product, including necessary elements, common and con-
sistent definitions, and a standardized computer interface 
for the processing of the work product. To the extent prac-
ticable, such standards shall be consistent with the adminis-
trative simplification provisions of part C of title XI of the 
Social Security Act.
‘‘(c) CERTAIN METHODOLOGIES FOR COLLECTION.—
The Secretary shall ensure that the methodologies for the 
collection of nonidentifiable patient safety work product for 
any National Patient Safety Database include the meth-
odologies developed or recommended by the Patient Safety 
Task Force of the Department of Health and Human Serv-
ices. 
‘‘(d) FACILITATION OF INFORMATION EXCHANGE.—To 
the extent practicable, the Secretary may facilitate the di-
rect link of information between providers and patient safe-
ty organizations and between patient safety organizations 
and any National Patient Safety Database. 
‘‘(e) RESTRICTION ON TRANSFER.—Only nonidentifi-
able information may be transferred to any National Pa-
tient Safety Database. 
‘‘SEC. 924. TECHNICAL ASSISTANCE. 
‘‘(a) IN GENERAL.—The Secretary, acting through the 
Director, may—
‘‘(1) provide technical assistance to patient safe-
ty organizations, and to States with reporting sys-
tems for health care errors; and 
‘‘(2) provide guidance on the type of data to be 
voluntarily submitted to any National Patient Safety 
Database.
‘‘(b) ANNUAL MEETINGS.—Assistance provided under 
subsection (a) may include annual meetings for patient 
safety organizations to discuss methodology, communica-
tion, information collection, or privacy concerns. 
‘‘SEC. 925. CERTIFICATION OF PATIENT SAFETY ORGANIZA-
TIONS. 
‘‘(a) IN GENERAL.—Not later than 6 months after the 
date of enactment of the Patient Safety and Quality Im-
provement Act, the Secretary shall establish a process for 
certifying patient safety organizations. 
‘‘(b) PROCESS.—The process established under sub-
section (a) shall include the following: 
‘‘(1) Certification of patient safety organizations 
by the Secretary or by such other national or State 
governmental organizations as the Secretary deter-
mines appropriate. 
‘‘(2) If the Secretary allows other governmental 
organizations to certify patient safety organizations 
under paragraph (1), the Secretary shall establish a 
process for approving such organizations. Any such 
approved organization shall conduct certifications 
and reviews in accordance with this section. 
‘‘(3) A review of each certification under para-
graph (1) (including a review of compliance with 
each criterion in this section and any related imple-
menting standards as determined by the Secretary 
through rulemaking) not less often than every 3 years, 
as determined by the Secretary. 
‘‘(4) Revocation of any such certification by the 
Secretary or other such governmental organization 
that issued the certification, upon a showing of cause. 
‘‘(c) CRITERIA.—A patient safety organization must 
meet the following criteria as conditions of certification: 
‘‘(1) The mission of the patient safety organiza-
tion is to conduct activities that are to improve pa-
tient safety and the quality of health care delivery 
and is not in conflict of interest with the providers 
that contract with the patient safety organization. 
‘‘(2) The patient safety organization has appro-
priately qualified staff, including licensed or certified 
medical professionals. 
‘‘(3) The patient safety organization, within any 
2 year period, contracts with more than 1 provider 
for the purpose of receiving and reviewing patient 
safety work product. 
‘‘(4) The patient safety organization is not a 
component of a health insurer or other entity that of-
fers a group health plan or health insurance coverage. 
‘‘(5) The patient safety organization is managed, 
controlled, and operated independently from any pro-
vider that contracts with the patient safety organiza-
tion for reporting patient safety work product. 
‘‘(6) To the extent practical and appropriate, the 
patient safety organization collects patient safety 
work product from providers in a standardized man-
ner that permits valid comparisons of similar cases 
among similar providers. 
‘‘(d) ADDITIONAL CRITERIA FOR COMPONENT ORGANI-
ZATIONS.—If a patient safety organization is a component 
of another organization, the patient safety organization 
must, in addition to meeting the criteria described in sub-
section (c), meet the following criteria as conditions of cer-
tification: 
‘‘(1) The patient safety organization maintains 
patient safety work product separately from the rest 
of the organization, and establishes appropriate secu-
rity measures to maintain the confidentiality of the 
patient safety work product. 
‘‘(2) The patient safety organization does not 
make an unauthorized disclosure under this Act of 
patient safety work product to the rest of the organi-
zation in breach of confidentiality. 
‘‘(3) The mission of the patient safety organiza-
tion does not create a conflict of interest with the rest 
of the organization.’’.
(b) AUTHORIZATION
OF APPROPRIATIONS.—Section 
937 of the Public Health Service Act (as redesignated by 
subsection (a)) is amended by adding at the end the fol-
lowing: 
‘‘(e) PATIENT SAFETY AND QUALITY IMPROVEMENT.—
For the purpose of carrying out part C, there are authorized 
to be appropriated such sums as may be necessary for each 
of the fiscal years 2004 through 2008.’’. 
SEC. 4. PROMOTING THE DIFFUSION AND INTEROPER-
ABILITY OF INFORMATION TECHNOLOGY SYS-
TEMS INVOLVED WITH HEALTH CARE DELIV-
ERY. 
(a) VOLUNTARY STANDARDS.—
(1) IN
GENERAL.—Not later than 18 months 
after the date of the enactment of this Act, the Sec-
retary of Health and Human Services (in this section 
referred to as the ‘‘Secretary’’) shall—
(A) develop or adopt voluntary national 
standards that promote the interoperability of 
information technology systems involved with 
health care delivery, including but not limited to 
computerized physician order entry; 
(B) in developing or adopting such stand-
ards, take into account—
(i) the ability of such systems to cap-
ture and aggregate clinically specific data 
to enable evidence-based medicine and other 
applications that promote the electronic ex-
change of patient medical record informa-
tion; and 
(ii) the cost that meeting such stand-
ards would have on providing health care in 
the United States and the increased effi-
ciencies in providing such care achieved 
under the standards; 
(C) in developing or adopting such stand-
ards and to the extent practicable, test the effi-
cacy, usability, and scalability of proposed inter-
operability standards within a variety of clinical 
settings, including an urban academic medical 
center, a rural hospital, a community health cen-
ter, and a community hospital; and 
(D) submit a report to the Congress con-
taining recommendations on such standards. 
(2) CONSULTATION.—In developing or adopting 
standards under paragraph (1)(A), the Secretary 
shall consider the recommendations of the National 
Committee on Vital Health Statistics for the stand-
ardization of message formatting, coding, and vocabu-
lary for interoperability of information technology 
systems involved with health care delivery. The Sec-
retary shall consult with representatives of the health 
information technology industry and the provider 
community who are involved with the development of 
interoperability standards. 
(b) UPDATES.—The Secretary shall provide for the on-
going review and periodic updating of the standards devel-
oped under subsection (a). 
SEC. 5. REQUIRED USE OF PRODUCT IDENTIFICATION 
TECHNOLOGY. 
The Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
301 et seq.) is amended—
(1) in section 502, by adding at the end the fol-
lowing: 
‘‘(w) If it is a drug or biological product, unless it 
includes a unique product identifier for the drug or biologi-
cal product as required by regulations under section 
510(q).’’; and 
(2) in section 510, by adding at the end the fol-
lowing: 
‘‘(q)(1) The Secretary shall issue, and may periodi-
cally revise, regulations requiring the manufacturer of any 
drug or biological product that is subject to regulation by 
the Food and Drug Administration, or the packager or la-
beler of a drug or biological product that is subject to regu-
lation by the Food and Drug Administration, to include 
a unique product identifier on the packaging of the drug 
or biological product. 
‘‘(2) For purposes of this subsection, the term ‘unique 
product identifier’ means an identification that—
‘‘(A) is affixed by the manufacturer, labeler, or 
packager to each drug or biological product described 
in paragraph (1) at each packaging level; 
‘‘(B) uniquely identifies the item and meets the 
standards required by this section; and 
‘‘(C) can be read by a scanning device or other 
technology acceptable to the Secretary. 
‘‘(3) A unique product identifier required by regula-
tions issued or revised under paragraph (1) shall be based 
on—
‘‘(A) the National Drug Code maintained by the 
Food and Drug Administration; 
‘‘(B) commercially accepted standards estab-
lished by organizations that are accredited by the 
American National Standards Institute, such as the 
Health Industry Business Communication Council or 
the Uniform Code Council; or 
‘‘(C) other identification formats that the Sec-
retary deems appropriate.
‘‘(4) The Secretary may, at the Secretary’s discretion, 
waive the requirements of this section, or add additional 
provisions that are necessary to safeguard the public 
health.’’. 
SEC. 6. GRANTS FOR ELECTRONIC PRESCRIPTION PRO-
GRAMS. 
(a) GRANTS.—
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) may make grants to qualified practi-
tioners for the purpose of establishing electronic pre-
scription programs. 
(2) MATCHING FUNDS.—
(A) IN GENERAL.—With respect to the costs 
of establishing an electronic prescription pro-
gram, a condition for the receipt of a grant 
under paragraph (1) is that the qualified practi-
tioner involved agree to make available (directly 
or through donations from public or private enti-
ties) non-Federal contributions toward such costs 
in an amount that is not less than 50 percent 
of such costs. 
(B) DETERMINATION OF AMOUNT CONTRIB-
UTED.—Non-Federal contributions required in 
subparagraph (A) may be in cash or in kind,
fairly evaluated, including equipment or services. 
Amounts provided by the Federal Government, 
or services assisted or subsidized to any signifi-
cant extent by the Federal Government, may not 
be included in determining the amount of such 
non-Federal contributions. 
(b) STUDY.—
(1) IN GENERAL.—The Secretary, acting through 
the Director of the Agency for Healthcare Research 
and Quality, shall support a study to assess existing 
scientific evidence regarding the effectiveness and cost-
effectiveness of the use of electronic prescription pro-
grams intended to improve the efficiency of prescrip-
tion ordering and the safe and effective use of pre-
scription drugs. The study shall address the following: 
(A) The ability of such programs to reduce 
medical errors and improve the quality and safe-
ty of patient care. 
(B) The impact of the use of such programs 
on physicians, pharmacists, and patients, in-
cluding such factors as direct and indirect costs, 
changes in productivity, and satisfaction. 
(C) The effectiveness of strategies for over-
coming barriers to the use of electronic prescrip-
tion programs.
(2) REPORT.—The Secretary shall ensure that, 
not later than 18 months after the date of the enact-
ment of this Act, a report containing the findings of 
the study under paragraph (1) is submitted to the ap-
propriate committees of the Congress. 
(3) DISSEMINATION
OF
FINDINGS.—The Sec-
retary shall disseminate the findings of the study 
under paragraph (1) to appropriate public and pri-
vate entities. 
(c) DEVELOPMENT OF MODEL.—The Secretary, acting 
through the Director of the Agency for Healthcare Research 
and Quality, may develop an Internet-based mathematical 
model that simulates the cost and effectiveness of electronic 
prescription programs for qualified practitioners. The 
model may be designed to allow qualified practitioners to 
estimate, through an interactive interface, the impact of 
electronic prescribing on their practices, including the re-
duction in drug-related health care errors. 
(d) DEFINITIONS.—For purposes of this section: 
(1) The term ‘‘electronic prescription pro-
gram’’—
(A) means a program for the electronic sub-
mission and processing of prescriptions; and 
(B) includes the hardware (including com-
puters and other electronic devices) and software
programs for the electronic submission of pre-
scriptions to pharmacies, the processing of such 
submissions by pharmacies, and decision-support 
programs. 
(2) The term ‘‘qualified practitioner’’ means a 
practitioner licensed by law to administer or dispense 
prescription drugs. 
SEC. 7. GRANTS TO HOSPITALS AND OTHER HEALTH CARE 
PROVIDERS 
FOR 
INFORMATION 
TECH-
NOLOGIES. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall make grants to hospitals and other health 
care providers (but not more than 1 grant to any 1 hospital 
or provider) to pay the costs of acquiring or implementing 
information technologies whose purposes are—
(1) to improve quality of care and patient safety; 
and 
(2) to reduce adverse events and health care com-
plications resulting from medication errors. 
(b) SPECIAL
CONSIDERATION.—In making grants 
under subsection (a), the Secretary shall give special consid-
eration to applicants who seek to promote the following:
(1) Interoperability across hospital services or 
departments using standards developed or adopted by 
the Secretary under section 4. 
(2) Electronic communication of patient data 
across the spectrum of health care delivery. 
(3) Computerized physician order entry or bar 
coding applications. 
(4) Electronic communication of patient data in 
hospitals that provide services to underserved or low-
income populations. 
(5) Improved clinical decisionmaking through 
acquisition and implementation of decision-support 
technologies. 
(c) CERTAIN GRANT CONDITIONS.—A condition for the 
receipt of a grant under subsection (a) is that the applicant 
involved meet the following requirements: 
(1) The applicant agrees to carry out a program 
to measure, analyze, and report patient safety and 
medical errors at the hospital or other health care 
provider involved, to submit to the Secretary a de-
scription of the methodology that will be used, and to 
have such program in effect as soon as practicable 
after the application for the grant is approved, with-
out regard to whether information technologies under 
the grant have been implemented.
(2) The applicant has arranged for an evalua-
tion that addresses the effectiveness and cost-effective-
ness of the information technology for which the grant 
is provided and its impact on the quality and safety 
of patient care, submitted the evaluation plan to the 
Secretary, and received approval from the Secretary 
of the applicant’s methodology. 
(3) The applicant has or is developing a patient 
safety evaluation system (as that term is defined in 
section 921 of the Public Health Service Act (as 
amended by section 3)) for reporting health care er-
rors to a patient safety organization. 
(4) The applicant agrees to provide the Secretary 
with such information as the Secretary may require 
regarding the use of funds under this program or its 
impact. 
(5) The applicant provides assurances satisfac-
tory to the Secretary that any information technology 
planned, acquired, or implemented with grant funds 
under this section will be part of an information pro-
gram that—
(A) carries out the purposes described in 
subsection (a); and
(B) is comprehensive or will be expanded to 
become comprehensive, regardless of whether Fed-
eral assistance is available for such expansion. 
(d) TECHNICAL ASSISTANCE TO GRANTEES.—The Sec-
retary, acting through the Director of the Agency for 
Healthcare Research and Quality, shall provide technical 
assistance to applicants and grantees to ensure the appro-
priate evaluation of the information technologies for which 
grants are awarded under this section, such as—
(1) reviewing and providing technical assistance 
on the applicant’s proposed evaluation; 
(2) developing mechanisms to ensure ongoing 
communications between grantees and evaluators to 
facilitate the identification and resolution of problems 
as they arise, ensure mutual learning, and promote 
the rapid dissemination of information; 
(3) reviewing the interim and final reports re-
quired under subsection (e); and 
(4) disseminating evidence-based information in 
interim and final reports to patient safety organiza-
tions, as appropriate. 
(e) EVALUATION REPORTS BY GRANTEE.—A condition 
for the receipt of a grant under subsection (a) is that the 
applicant agree to submit an interim and a final report 
to the Secretary in accordance with this subsection.
(1) INTERIM REPORT.—Not later than 1 year 
after the implementation of information technologies 
under the grant is completed, the applicant will sub-
mit an interim report to the Secretary describing the 
initial effectiveness of such technologies in carrying 
out the purposes described in subsection (a). 
(2) FINAL REPORT.—Not later than 3 years after 
the implementation of information technologies under 
the grant is completed, the applicant will submit a 
final report to the Secretary describing the effective-
ness and cost-effectiveness of such technologies and ad-
dressing other issues determined to be important in 
carrying out the purposes described in subsection (a). 
(3) RELATION TO DISBURSEMENT OF GRANT.—
In disbursing a grant under subsection (a), the Sec-
retary shall withhold 1⁄3 of the grant until the grantee 
submits to the Secretary the report required in para-
graph (1). 
(f) REPORTS BY SECRETARY.—
(1) INTERIM REPORTS.—
(A) IN GENERAL.—Through the fiscal year 
preceding the fiscal year in which the final re-
port under paragraph (2) is prepared, the Sec-
retary shall submit to the Committee on Energy 
and Commerce of the House of Representatives
and the Committee on Health, Education, Labor, 
and Pensions of the Senate periodic reports on 
the grant program under subsection (a). Such re-
ports shall be submitted not less frequently than 
once each fiscal year, beginning with fiscal year 
2004. 
(B) CONTENTS.—A report under subpara-
graph (A) shall include information on—
(i) the number of grants made; 
(ii) the nature of the projects for which 
funding is provided under the grant pro-
gram; 
(iii) the geographic distribution of 
grant recipients; and 
(iv) such other matters as the Sec-
retary determines appropriate. 
(2) FINAL REPORT.—Not later than 180 days 
after the date on which the last of the reports is due 
under subsection (e)(2), the Secretary shall submit a 
final report to the committees referred to in para-
graph (1)(A) on the grant program under subsection 
(a), together with such recommendations for legisla-
tion and administrative action as the Secretary deter-
mines appropriate. 
(g) DEFINITIONS.—For purposes of this section:
(1) The term ‘‘costs’’, with respect to information 
technologies referred to in subsection (a), includes 
total expenditures incurred for—
(A) purchasing, leasing, and installing com-
puter software and hardware, including hand-
held computer technologies; 
(B) making improvements to existing com-
puter software and hardware; and 
(C) purchasing or leasing communications 
capabilities necessary for clinical data access, 
storage, and exchange. 
(2) The term ‘‘health care provider’’ has the same 
meaning given to the term ‘‘provider’’ in section 921 
of the Public Health Services Act (as amended by this 
Act). 
(h) TERMINATION OF GRANT AUTHORITIES.—The au-
thority of the Secretary to make grants under subsection 
(a) terminates upon the expiration of fiscal year 2011. 
(i) MATCHING FUNDS.—
(1) IN GENERAL.—With respect to the costs of a 
grant to be carried out under this section, such grant 
may be made only if the applicant agrees to make 
available (directly or through donations from public 
or private entities) non-Federal contributions toward 
such costs in an amount that is not less than 50 per-