Administrative Simplification Compliance Act
PL 107-105 (H.R.3323), enacted 12/27/2001

PUBLIC LAW 107-105—DEC. 27, 2001 
115 STAT. 1003 
Public Law 107-
107th Congress 
-105 
An Act 
To ensure that covered entities comply with the standards for electronic health 
care transactions and code sets adopted under part C of title XI of the Social 
Security Act, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Administrative SimpHfication 
Compliance Act". 
SEC. 2. EXTENSION OF DEADLINE FOR COVERED ENTITIES SUBMIT-
TING COMPLIANCE PLANS. 
(a) IN GENERAL.— 
(1) EXTENSION.—Subject to paragraph (2), notwithstanding 
section 1175(b)(1)(A) of the Social Security Act (42 U.S.C. 
1320d-4(b)(l)(A)) and section 162.900 of title 45, Code of Fed-
eral Regulations, a health care provider, health plan (other 
than a small health plan), or a health care clearinghouse shall 
not be considered to be in noncompliance with the applicable 
requirements of subparts I through R of part 162 of title 45, 
Code of Federal Regulations, before October 16, 2003. 
(2) CONDITION.—Paragraph (1) shall apply to a person 
described in such paragraph only if, before October 16, 2002, 
the person submits to the Secretary of Health and Human 
Services a plan of how the person will come into compliance 
with the requirements described in such paragraph not later 
than October 16, 2003. Such plan shall be a summary of the 
following: 
(A) An analysis reflecting the extent to which, and 
the reasons why, the person is not in compliance. 
(B) A budget, schedule, work plan, and implementation 
strategy for achieving compliance. 
(C) Whether the person plans to use or might use 
a contractor or other vendor to assist the person in 
achieving compliance. 
(D) A timeframe for testing that begins not later than 
April 16, 2003. 
(3) ELECTRONIC SUBMISSION.—Plans described in paragraph 
(2) may be submitted electronically. 
(4) MODEL FORM.—Not later than March 31, 2002, the 
Secretary of Health and Human Services shall promulgate a 
model form that persons may use in drafting a plan described 
in paragraph (2). The promulgation of such form shall be made 
Dec. 27, 2001 
[H.R. 3323] 
Administrative 
Simplification 
Compliance Act. 
42 u s e 1305 
note. 
42 u s e 1320d-4 
note. 
115 STAT. 1004 
PUBLIC LAW 107-105—DEC. 27, 2001 
without regard to chapter 35 of title 44, United States Code 
(commonly known as the "Paperwork Reduction Act"). 
(5) ANALYSIS OF PLANS; REPORTS ON SOLUTIONS.— 
(A) ANALYSIS OF PLANS.— 
(i) FURNISHING OF PLANS.—Subject to subpara-
graph (D), the Secretary of Health and Human Services 
shall furnish the National Committee on Vital and 
Health Statistics with a sample of the plans submitted 
under paragraph (2) for analysis by such Committee. 
(ii) ANALYSIS.—The National Committee on Vital 
and Health Statistics shall analyze the sample of the 
plans furnished under clause (i). 
(B) REPORTS ON SOLUTIONS.—The National Committee 
on Vital and Health Statistics shall regularly publish, and 
widely disseminate to the public, reports containing effec-
tive solutions to compliance problems identified in the plans 
analyzed under subparagraph (A). Such reports shall not 
relate specifically to any one plan but shall be written 
for the purpose of assisting the maximum number of per-
sons to come into compliance by addressing the most 
common or challenging problems encountered by persons 
submitting such plans. 
(C) CONSULTATION.—In carrying out this paragraph, 
the National Committee on Vital and Health Statistics 
shall consult with each organization— 
(i) described in section 1172(c)(3)(B) of the Social 
Security Act (42 U.S.C. 1320d-l(c)(3)(B)); or 
(ii) designated by the Secretary of Health and 
Human Services under section 162.910(a) of title 45, 
Code of Federal Regulations. 
(D) PROTECTION OF CONFIDENTIAL INFORMATION.— 
(i) IN GENERAL.—The Secretary of Health and 
Human Services shall ensure that any material pro-
vided under subparagraph (A) to the National Com-
mittee on Vital and Health Statistics or any organiza-
tion described in subparagraph (C) is redacted so as 
to prevent the disclosure of any— 
(I) trade secrets; 
(II) commercial or financial information that 
is privileged or confidential; and 
(III) other information the disclosure of which 
would constitute a clearly unwarranted invasion 
of personal privacy. 
(ii) CONSTRUCTION.—Nothing in clause (i) shall be 
construed to affect the application of section 552 of 
title 5, United States Code (commonly known as the 
"Freedom of Information Act"), including the exceptions 
from disclosure provided under subsection (b) of such 
section. 
(6) ENFORCEMENT THROUGH EXCLUSION FROM PARTICIPA-
TION IN MEDICARE.— 
(A) IN GENERAL.—In the case of a person described 
in paragraph (1) who fails to submit a plan in accordance 
with paragraph (2), and who is not in compliance with 
the applicable requirements of subparts I through R of 
part 162 of title 45, Code of Federal Regulations, on or 
after October 16, 2002, the person may be excluded at 
PUBLIC LAW 107-105—DEC. 27, 2001 
115 STAT. 1005 
the discretion of the Secretary of Health and Human Serv-
ices from participation (including under part C or as a 
contractor under sections 1816, 1842, and 1893) in title 
XVin of the Social Security Act (42 U.S.C. 1395 et seq.). 
(B) PROCEDURE.—The provisions of section 1128A of 
the Social Security Act (42 U.S.C. 1320a-7a) (other than 
the first and second sentences of subsection (a) and sub-
section (b)) shall apply to an exclusion under this paragraph 
in the same manner as such provisions apply with respect 
to an exclusion or proceeding under section 1128A(a) of 
such Act. 
(C) CONSTRUCTION.—The availability of an exclusion 
under this paragraph shall not be construed to affect the 
imposition of penalties under section 1176 of the Social 
Security Act (42 U.S.C. 1320d-5). 
(D) NONAPPLICABILITY TO COMPLYING PERSONS.—The 
exclusion under subparagraph (A) shall not apply to a 
person who— 
(i) submits a plan in accordance with paragraph 
(2); or 
(ii) who is in compliance with the applicable 
requirements of subparts I through R of part 162 of 
title 45, Code of Federal Regulations, on or before 
October 16, 2002. 
(b) SPECIAL RULES.— 
(1) RULES OF CONSTRUCTION.—Nothing in this section shall 
be construed— 
(A) as modifying the October 16, 2003, deadline for 
a small health plan to comply with the requirements of 
subparts I through R of part 162 of title 45, Code of 
Federal Regulations; or 
(B) as modifying— 
(i) the April 14, 2003, deadline for a health care 
provider, a health plan (other than a small health 
plan), or a health care clearinghouse to comply with 
the requirements of subpart E of part 164 of title 
45, Code of Federal Regulations; or 
(ii) the April 14, 2004, deadline for a small health 
plan to comply with the requirements of such subpart. 
(2) APPLICABILITY OF PRIVACY STANDARDS BEFORE COMPLI-
ANCE DEADLINE FOR INFORMATION TRANSACTION STANDARDS.— 
(A) IN GENERAL.—Notwithstanding any other provision 
of law, during the period that begins on April 14, 2003, 
and ends on October 16, 2003, a health care provider 
or, subject to subparagraph (B), a health care clearing-
house, that transmits any health information in electronic 
form in connection with a transaction described in subpara-
graph (C) shall comply with the requirements of subpart 
E of part 164 of title 45, Code of Federal Regulations, 
without regard to whether the transmission meets the 
standards required by part 162 of such title. 
(B) APPLICATION TO HEALTH CARE CLEARINGHOUSES.— 
For purposes of this paragraph, during the period described 
in subparagraph (A), an entity that processes or facilitates 
the processing of information in connection with a trans-
action described in subparagraph (C) and that otherwise 
would be treated as a health care clearinghouse shall be 
115 STAT. 1006 
PUBLIC LAW 107-105—DEC. 27, 2001 
treated as a health care clearinghouse without regard to 
whether the processing or facilitation produces (or is 
required to produce) standard data elements or a standard 
transaction as required by part 162 of title 45, Code of 
Federal Regulations. 
(C) 
TRANSACTIONS 
DESCRIBED.—The 
transactions 
described in this subparagraph are the following: 
(i) A health care claims or equivalent encounter 
information transaction. 
(ii) A health care payment and remittance advice 
transaction. 
(iii) A coordination of benefits transaction, 
(iv) A health care claim status transaction. 
(v) An enrollment and disenrollment in a health 
plan transaction. 
(vi) An eligibility for a health plan transaction, 
(vii) A health plan premium pa3anents transaction, 
(viii) A referral certification £ind authorization 
transaction, 
(c) DEFINITIONS.—In this section— 
(1) the terms "health care provider", "health plan", and 
"health care clearinghouse" have the meaning given those terms 
in section 1171 of the Social Security Act (42 U.S.C. 1320d) 
and section 160.103 of title 45, Code of Federal Regulations; 
(2) the terms "small health plan" and "tr8insaction" have 
the meaning given those terms in section 160.103 of title 45, 
Code of Federal Regulations; and 
(3) the terms "heedth care cledms or equivalent encounter 
information transaction", "health care payment and remittance 
advice transaction", "coordination of benefits transaction", 
"health 
care claim status transaction", 
"enrollment and 
disenrollment in a health plan transaction", "eligibility for a 
health plan trguisaction", "health plan premium payments 
transaction", and "referral certification and authorization trans-
action" have the meanings given those terms in sections 
162.1101, 162.1601, 162.1801, 162.1401, 162.1501, 162.1201, 
162.1701, and 162.1301 of title 45, Code of Federal Regulations, 
respectively. 
SEC. 3. REQUIRING ELECTRONIC SUBMISSION OF MEDICARE CLAIMS. 
(a) IN GENERAL.—Section 1862 of the Social Security Act (42 
U.S.C. 1395y) is amended— 
(1) in subsection (a)— 
(A) by striking "or" at the end of paragraph (20); 
(B) by striking the period at the end of psiragraph 
(21) and inserting "; or"; and 
(C) by inserting after pareigraph (21) the following 
new paragraph: 
"(22) subject to subsection (h), for which a claim is sub-
mitted other than in an electronic form specified by the Sec-
retary."; and 
(2) by inserting after subsection (g) the following new sub-
section: 
"(h)(1) The Secretary— 
"(A) shall waive the application of subsection (a)(22) in 
cases in which— 
PUBLIC LAW 107-105—DEC. 27, 2001 
115 STAT. 1007 
"(i) there is no method available for the submission 
of claims in an electronic form; or 
"(ii) the entity submitting the claim is a small provider 
of services or supplier; and 
"(B) may waive the application of such subsection in such 
unusual cases as the Secretary finds appropriate. 
"(2) For purposes of this subsection, the term 'small provider 
of services or supplier' means— 
"(A) a provider of services with fewer than 25 full-time 
equivalent employees; or 
"(B) a physician, practitioner, facility, or supplier (other 
than provider of services) with fewer than 10 full-time equiva-
lent employees.". 
(b) EFFECTIVE DATE.—The amendments made by subsection 42 use I395y 
(a) shall apply to claims submitted on or after October 16, 2003. i^o^. 
SEC. 4. CLARIFICATION 
WITH RESPECT TO APPLICABILITY OF 
ADMINISTRATIVE SIMPLIFICATION REQUIREMENTS TO 
MEDICARE+CHOICE ORGANIZATIONS. 
Section 1171(5)(D) of the Social Security Act (42 U.S.C. 
1320d(5)(D)) is amended by striking "Part A or part B" and inserting 
"Parts A, B, or C". 
SEC. 5. AUTHORIZATION OF APPROPRIATIONS FOR IMPLEMENTATION 
OF REGIHATIONS. 
(a) IN GENERAL.—Subject to subsection (b), and in addition 
to any other amounts that may be authorized to be appropriated, 
there are authorized to be appropriated a total of $44,200,000, 
for— 
(1) technical assistance, education and outreach, and 
enforcement activities related to subparts I through R of part 
162 of title 45, Code of Federal Regulations; and 
(2) adopting the standards required to be adopted under 
section 1173 of the Social Security Act (42 U.S.C. 1320d-2). 
(b) REDUCTIONS.— 
(1) MODEL FORM 14 DAYS LATE.—If the Secretary fails to 
promulgate the model form described in section 1(a)(4) by the 
date that is 14 days after the deadline described in such section, 
the amount referred to in subsection (a) shsdl be reduced by 
25 percent. 
(2) MODEL FORM 30 DAYS LATE.—If the Secretary fails to 
promulgate the model form described in section 1(a)(4) by the 
date that is 30 days after the deadline described in such section, 
the amount referred to in subsection (a) shall be reduced by 
50 percent. 
(3) MODEL FORM 45 DAYS LATE.—If the Secretary fails to 
promulgate the model form described in section 1(a)(4) by the 
date that is 45 days after the deadline described in such section, 
the amount referred to in subsection (a) shall be reduced by 
75 percent. 
(4) MODEL FORM 60 DAYS LATE.—If the Secretary fails to 
promulgate the model form described in section 1(a)(4) by the 
date that is 60 days after the deadline described in such section. 
115 STAT. 1008 
PUBLIC LAW 107-105—DEC. 27, 2001 
the amount referred to in subsection (a) shall be reduced by 
100 percent. 
Approved December 27, 2001. 
LEGISLATIVE HISTORY—H.R. 3323 (S. 1684): 
CONGRESSIONAL RECORD, Vol. 147 (2001): 
Dec. 4, considered and passed House. 
Dec. 12, considered and passed Senate.