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109th Congress                                            Rept. 109-601
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     Part II

======================================================================
 
          HEALTH INFORMATION TECHNOLOGY PROMOTION ACT OF 2006

                                _______
                                

 July 26, 2006.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Thomas, from the Committee on Ways and Means, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4157]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Ways and Means, to whom was referred the 
bill (H.R. 4157) to amend the Social Security Act to encourage 
the dissemination, security, confidentiality, and usefulness of 
health information technology, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Introduction....................................................11
     A. Purpose and Summary..........................................11
     B. Background...................................................14
     C. Legislative History..........................................14
 II. Explanation of Provisions.......................................15
III. Votes of the Committee..........................................24
 IV. Budget Effects of the Bill......................................27
     A. Committee Estimate of Budgetary Effects......................27
     B. Budget Authority and Tax Expenditures........................28
     C. Cost Estimate Prepared by the Congressional Budget Office....28
  V. Other Matters to be Discussed Under the Rules of the House......38
     A. Committee Oversight Findings and Recommendations.............38
     B. Statement of General Performance Goals and Objectives........39
     C. Constitutional Authority Statement...........................39
     D. Information Relating to Unfunded Mandates....................39
 VI. Changes in Existing Law Made by the Bill, as Reported...........39
VII. Views...........................................................48
  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Health Information 
Technology Promotion Act of 2006''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Office of the National Coordinator for Health Information 
Technology.
Sec. 3. Safe harbors for provision of health information technology and 
services to health care professionals.
Sec. 4. Commonality and variation in health information laws and 
regulations.
Sec. 5. Implementing modern coding system; application under part A of 
the Medicare program.
Sec. 6. Procedures to ensure timely updating of standards that enable 
electronic exchanges.
Sec. 7. Report on the American Health Information Community.
Sec. 8. Strategic plan for coordinating implementation of health 
information technology.
Sec. 9. Promotion of telehealth services.

SEC. 2. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION 
                    TECHNOLOGY.

  (a) In General.--Title II of the Public Health Service Act is amended 
by adding at the end the following new part:

                ``PART D--HEALTH INFORMATION TECHNOLOGY

``SEC. 271. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION 
                    TECHNOLOGY.

  ``(a) Establishment.--There is established within the Department of 
Health and Human Services an Office of the National Coordinator for 
Health Information Technology that shall be headed by the National 
Coordinator for Health Information Technology (referred to in this 
section as the `National Coordinator'). The National Coordinator shall 
be appointed by the President and shall report directly to the 
Secretary. The National Coordinator shall be paid at a rate equal to 
the rate of basic pay for level IV of the Executive Schedule.
  ``(b) Goals of Nationwide Interoperable Health Information Technology 
Infrastructure.--The National Coordinator shall perform the duties 
under subsection (c) in a manner consistent with the development of a 
nationwide interoperable health information technology infrastructure 
that--
          ``(1) improves health care quality, reduces medical errors, 
        increases the efficiency of care, and advances the delivery of 
        appropriate, evidence-based health care services;
          ``(2) promotes wellness, disease prevention, and management 
        of chronic illnesses by increasing the availability and 
        transparency of information related to the health care needs of 
        an individual for such individual;
          ``(3) ensures that appropriate information necessary to make 
        medical decisions is available in a usable form at the time and 
        in the location that the medical service involved is provided;
          ``(4) produces greater value for health care expenditures by 
        reducing health care costs that result from inefficiency, 
        medical errors, inappropriate care, and incomplete information;
          ``(5) promotes a more effective marketplace, greater 
        competition, greater systems analysis, increased choice, 
        enhanced quality, and improved outcomes in health care 
        services;
          ``(6) improves the coordination of information and the 
        provision of such services through an effective infrastructure 
        for the secure and authorized exchange and use of health care 
        information; and
          ``(7) ensures that the confidentiality of individually 
        identifiable health information of a patient is secure and 
        protected.
  ``(c) Duties of National Coordinator.--
          ``(1) Strategic planner for interoperable health information 
        technology.--The National Coordinator shall maintain, direct, 
        and oversee the continuous improvement of a strategic plan to 
        guide the nationwide implementation of interoperable health 
        information technology in both the public and private health 
        care sectors consistent with subsection (b).
          ``(2) Principal advisor to hhs.--The National Coordinator 
        shall serve as the principal advisor of the Secretary on the 
        development, application, and use of health information 
        technology, and coordinate the health information technology 
        programs of the Department of Health and Human Services.
          ``(3) Coordinator of federal government activities.--
                  ``(A) In general.--The National Coordinator shall 
                serve as the coordinator of Federal Government 
                activities relating to health information technology.
                  ``(B) Specific coordination functions.--In carrying 
                out subparagraph (A), the National Coordinator shall 
                provide for--
                          ``(i) the development and approval of 
                        standards used in the electronic creation, 
                        maintenance, or exchange of health information; 
                        and
                          ``(ii) the certification and inspection of 
                        health information technology products, 
                        exchanges, and architectures to ensure that 
                        such products, exchanges, and architectures 
                        conform to the applicable standards approved 
                        under clause (i).
                  ``(C) Use of private entities.--The National 
                Coordinator shall, to the maximum extent possible, 
                contract with or recognize private entities in carrying 
                out subparagraph (B).
                  ``(D) Uniform application of standards.--A standard 
                approved under subparagraph (B)(i) for use in the 
                electronic creation, maintenance, or exchange of health 
                information shall preempt a standard adopted under 
                State law, regulation, or rule for such a use.
          ``(4) Intragovernmental coordinator.--The National 
        Coordinator shall ensure that health information technology 
        policies and programs of the Department of Health and Human 
        Services are coordinated with those of relevant executive 
        branch agencies and departments with a goal to avoid 
        duplication of effort and to ensure that each agency or 
        department conducts programs within the areas of its greatest 
        expertise and its mission in order to create a national 
        interoperable health information system capable of meeting 
        national public health needs effectively and efficiently.
          ``(5) Advisor to omb.--The National Coordinator shall provide 
        to the Director of the Office of Management and Budget comments 
        and advice with respect to specific Federal health information 
        technology programs.
  ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section 
for each of fiscal years 2006 through 2010.''.
  (b) Treatment of Executive Order 13335.--Executive Order 13335 shall 
not have any force or effect after the date of the enactment of this 
Act.
  (c) Transition From ONCHIT Under Executive Order.--
          (1) In general.--All functions, personnel, assets, 
        liabilities, administrative actions, and statutory reporting 
        requirements applicable to the old National Coordinator or the 
        Office of the old National Coordinator on the date before the 
        date of the enactment of this Act shall be transferred, and 
        applied in the same manner and under the same terms and 
        conditions, to the new National Coordinator and the Office of 
        the new National Coordinator as of the date of the enactment of 
        this Act.
          (2) Acting national coordinator.--Before the appointment of 
        the new National Coordinator, the old National Coordinator 
        shall act as the National Coordinator for Health Information 
        Technology until the office is filled as provided in section 
        271(a) of the Public Health Service Act, as added by subsection 
        (a). The President may appoint the old National Coordinator as 
        the new National Coordinator.
          (3) Definitions.--For purposes of this subsection:
                  (A) New national coordinator.--The term ``new 
                National Coordinator'' means the National Coordinator 
                for Health Information Technology appointed under 
                section 271(a) of the Public Health Service Act, as 
                added by subsection (a).
                  (B) Old national coordinator.--The term ``old 
                National Coordinator'' means the National Coordinator 
                for Health Information Technology appointed under 
                Executive Order 13335.

SEC. 3. SAFE HARBORS FOR PROVISION OF HEALTH INFORMATION TECHNOLOGY AND 
                    SERVICES TO HEALTH CARE PROFESSIONALS.

  (a) For Civil Penalties.--Section 1128A(b) of the Social Security Act 
(42 U.S.C. 1320a-7a(b)) is amended by adding at the end the following 
new paragraph:
  ``(4)(A) For purposes of this subsection, a payment described in 
paragraph (1) does not include any nonmonetary remuneration (in the 
form of health information technology and related services) made on or 
after the HIT effective date (as defined in subparagraph (B)(ii)) by a 
hospital or critical access hospital to a physician if the following 
requirements are met:
          ``(i) The provision of such remuneration is made without a 
        condition that--
                  ``(I) limits or restricts the use of the health 
                information technology to services provided by the 
                physician to individuals receiving services at the 
                location of the hospital or critical access hospital 
                providing such technology;
                  ``(II) limits or restricts the use of the health 
                information technology in conjunction with other health 
                information technology; or
                  ``(III) takes into account the volume or value of 
                referrals (or other business generated) by the 
                physician to the hospital or critical access hospital.
          ``(ii) Such remuneration is arranged for in a written 
        agreement that is signed by a representative of the hospital or 
        critical access hospital and by the physician and that 
        specifies the remuneration made and states that the provision 
        of such remuneration is made for the primary purpose of better 
        coordination of care or improvement of health care quality or 
        efficiency.
  ``(B) For purposes of subparagraph (A) and sections 1128B(b)(3)(J) 
and 1877(e)(9)--
          ``(i) the term `health information technology' means 
        hardware, software, license, intellectual property, equipment, 
        or other information technology (including new versions, 
        upgrades, and connectivity) or related services used for the 
        electronic creation, maintenance, and exchange of clinical 
        health information; and
          ``(ii) the term `HIT effective date' means the date that is 
        180 days after the date of the enactment of this paragraph.''.
  (b) For Criminal Penalties.--Section 1128B(b)(3) of such Act (42 
U.S.C. 1320a-7b(b)(3)) is amended--
          (1) in subparagraph (G), by striking ``and'' at the end;
          (2) in the subparagraph (H) as added by section 237(d) of the 
        Medicare Prescription Drug, Improvement, and Modernization Act 
        of 2003 (Public Law 108-173; 117 Stat. 2213)--
                  (A) by moving such subparagraph 2 ems to the left; 
                and
                  (B) by striking the period at the end and inserting a 
                semicolon;
          (3) in the subparagraph (H) added by section 431(a) of such 
        Act (117 Stat. 2287)--
                  (A) by redesignating such subparagraph as 
                subparagraph (I);
                  (B) by moving such subparagraph 2 ems to the left; 
                and
                  (C) by striking the period at the end and inserting 
                ``; and''; and
          (4) by adding at the end the following new subparagraph:
          ``(J) any nonmonetary remuneration (in the form of health 
        information technology, as defined in section 
        1128A(b)(4)(B)(i), and related services) solicited or received 
        by a person on or after the HIT effective date (as defined in 
        section 1128A(b)(4)(B)(ii)) (or offered or paid to a person on 
        or after such date) if--
                  ``(i) such remuneration is solicited or received (or 
                offered or paid) without a condition that--
                          ``(I) limits or restricts the use of the 
                        health information technology to services 
                        provided by the person to individuals receiving 
                        services at the location of the entity 
                        providing such technology;
                          ``(II) limits or restricts the use of the 
                        health information technology in conjunction 
                        with other health information technology; or
                          ``(III) takes into account the volume or 
                        value of referrals (or other business 
                        generated) by the person to the entity 
                        providing such technology; and
                  ``(ii) such remuneration is arranged for in a written 
                agreement that is signed by a representative of the 
                entity and by the physician and that specifies the 
                remuneration made and states that the provision of such 
                remuneration is made for the primary purpose of better 
                coordination of care or improvement of health care 
                quality or efficiency.''.
  (c) For Limitation on Certain Physician Referrals.--Section 1877(e) 
of such Act (42 U.S.C. 1395nn(e)) is amended by adding at the end the 
following new paragraph:
          ``(9) Information technology and services.--Any nonmonetary 
        remuneration (in the form of health information technology, as 
        defined in section 1128A(b)(4)(B)(i), and related services) 
        made on or after the HIT effective date (as defined in section 
        1128A(b)(4)(B)(ii)) by an entity to a physician if the 
        following requirements are met:
                  ``(A) The provision of such remuneration is made 
                without a condition that--
                          ``(i) limits or restricts the use of the 
                        health information technology to services 
                        provided by the physician to individuals 
                        receiving services at the location of the 
                        entity providing such technology;
                          ``(ii) limits or restricts the use of the 
                        health information technology in conjunction 
                        with other health information technology; or
                          ``(iii) takes into account the volume or 
                        value of referrals (or other business 
                        generated) by the physician to the entity 
                        providing such technology.
                  ``(B) Such remuneration is arranged for in a written 
                agreement that is signed by a representative of the 
                entity and by the physician and that specifies the 
                remuneration made and states that the provision of such 
                remuneration is made for the primary purpose of better 
                coordination of care or improvement of health care 
                quality or efficiency.''.
  (d) Regulation, Effective Date, and Effect on State Laws.--
          (1) Regulations.--Not later than the HIT effective date, the 
        Secretary of Health and Human Services shall promulgate such 
        regulations as may be necessary to carry out the provisions of 
        this section.
          (2) HIT effective date defined.--For purposes of this 
        subsection and subsection (e), the term ``HIT effective date'' 
        has the meaning given such term in section 1128A(b)(4)(B)(ii) 
        of the Social Security Act, as added by subsection (a).
          (3) Preemption of state laws.--No State (as defined in 
        section 4(c)(3)) shall have in effect a State law that imposes 
        a criminal or civil penalty for a transaction described in 
        section 1128A(b)(4), 1128B(b)(3)(J), or 1877(e)(9) of the 
        Social Security Act, as added by this section, if the 
        conditions described in the respective section of such Act, 
        with respect to such transaction, are met.
  (e) Study and Report to Assess Effect of Safe Harbors and Exception 
on Health System.--
          (1) In general.--The Secretary of Health and Human Services 
        shall conduct a study to determine the impact of each of the 
        safe harbors and the exception described in paragraph (3). In 
        particular, the study shall examine the following:
                  (A) The effectiveness of each safe harbor and 
                exception in increasing the adoption of health 
                information technology.
                  (B) The types of health information technology 
                provided under each safe harbor and exception.
                  (C) The extent to which the financial or other 
                business relationships between providers under each 
                safe harbor or exception have changed as a result of 
                the safe harbor or exception in a way that affects the 
                health care system, affects choices available to 
                consumers, or affects health care expenditures.
          (2) Report.--Not later than three years after the HIT 
        effective date, the Secretary of Health and Human Services 
        shall submit to Congress a report on the study under paragraph 
        (1) and shall include such recommendations for changes in the 
        safe harbors and exception as the Secretary determines may be 
        appropriate.
          (3) Safe harbors and exception described.--For purposes of 
        this subsection, the safe harbors and exception described in 
        this paragraph are--
                  (A) the safe harbor under section 1128A(b)(4) of the 
                Social Security Act (42 U.S.C. 1320a-7a(b)(4)), as 
                added by subsection (a);
                  (B) the safe harbor under section 1128B(b)(3)(J) of 
                such Act (42 U.S.C. 1320a-7b(b)(3)(J)), as added by 
                subsection (b); and
                  (C) the exception under section 1877(e)(9) of such 
                Act (42 U.S.C. 1395nn(e)(9)), as added by subsection 
                (c).

SEC. 4. COMMONALITY AND VARIATION IN HEALTH INFORMATION LAWS AND 
                    REGULATIONS.

  (a) Study to Determine Impact of Variation and Commonality in State 
Health Information Laws and Regulations.--
          (1) In general.--For purposes of promoting the development of 
        a nationwide interoperable health information technology 
        infrastructure consistent with section 271(b) of the Public 
        Health Service Act (as added by section 2(a)), the Secretary of 
        Health and Human Services shall conduct a study of the impact 
        of variation in State security and confidentiality laws and 
        current Federal security and confidentiality standards on the 
        timely exchanges of health information in order to ensure the 
        availability of health information necessary to make medical 
        decisions at the location in which the medical care involved is 
        provided. Such study shall examine--
                  (A)(i) the degree of variation and commonality among 
                the requirements of such laws for States; and
                  (ii) the degree of variation and commonality between 
                the requirements of such laws and the current Federal 
                standards;
                  (B) insofar as there is variation among and between 
                such requirements, the strengths and weaknesses of such 
                requirements; and
                  (C) the extent to which such variation may adversely 
                impact the secure, confidential, and timely exchange of 
                health information among States, the Federal 
                government, and public and private entities, or may 
                otherwise impact the reliability of such information.
          (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary of Health and Human 
        Services shall submit to Congress a report on the study under 
        paragraph (1) and shall include in such report the following:
                  (A) Analysis of need for greater commonality.--A 
                determination by the Secretary on the extent to which 
                there is a need for greater commonality of the 
                requirements of State security and confidentiality laws 
                and current Federal security and confidentiality 
                standards to better protect or strengthen the security 
                and confidentiality of health information in the timely 
                exchange of health information among States, the 
                Federal government, and public and private entities.
                  (B) Recommendations for greater commonality.--Insofar 
                as the Secretary determines under subparagraph (A) that 
                there is a need for greater commonality of such 
                requirements, the extent to which (and how) the current 
                Federal standards should be changed, and the extent to 
                which (and how) the State laws should be conformed, in 
                order to provide the commonality needed to better 
                protect or strengthen the security and confidentiality 
                of health information in the timely exchange of health 
                information.
  (b) Implementation of Recommendations If Congress Fails to Act.--
          (1) In general.--If the conditions under paragraph (2) are 
        met, the Secretary shall, by regulation, modify the current 
        Federal security and confidentiality standards to the extent 
        that the Secretary determines it necessary in order to achieve 
        the needed degree of commonality to better protect or 
        strengthen the security and confidentiality of health 
        information in the timely exchange of health information. Such 
        a modification shall be based upon the recommendations 
        described in subsection (a)(2)(B), and if the Secretary 
        modifies a current Federal security and confidentiality 
        standard, the modified standard shall supersede (and the 
        Secretary shall limit the permissibility of) any State security 
        and confidentiality law that relates to (but is different from) 
        such standard.
          (2) Conditions.--The conditions under this paragraph are the 
        following:
                  (A) Need for greater commonality.--The Secretary 
                determines under subsection (a)(2)(A) that there is a 
                need for greater commonality in the requirements of 
                State security and confidentiality laws and current 
                Federal security and confidentiality standards to 
                better protect or strengthen the security and 
                confidentiality of health information in the timely 
                exchange of health information among States, the 
                Federal government, and public and private entities.
                  (B) Congressional failure to act.--The Congress fails 
                to enact, within 18 months after the date of receipt of 
                the report under subsection (a)(2), legislation that 
                specifically responds to the recommendations described 
                in subsection (a)(2)(B). Such legislation may include 
                any action described in paragraph (1) (relating to 
                modifying Federal security and confidentiality 
                standards).
          (3) Treatment of current laws and standards.--
                  (A) Continuation of current federal standards and 
                state laws permitted.--Nothing in this subsection shall 
                be construed as preventing the Secretary from 
                continuing to apply the current Federal security and 
                confidentiality standards and from permitting the 
                continuance of State security and confidentiality laws 
                if such standards are not modified.
                  (B) No preemption of state law unless rule adopted.--
                A State security and confidentiality law shall not be 
                preempted under paragraph (1), except to the extent the 
                Secretary limits the application of such law under such 
                paragraph. The Secretary's exercise of such authority 
                supercedes the provisions of section 1178(a) of the 
                Social Security Act (42 U.S.C. 1320d-7(a)) and section 
                264(c)(2) of the Health Insurance Portability and 
                Accountability Act of 1996 (42 U.S.C. 1320d-2 note).
  (c) Definitions.--For purposes of this section:
          (1) Current federal security and confidentiality standards.--
        The term ``current Federal security and confidentiality 
        standards'' means the Federal privacy standards established 
        pursuant to section 264(c) of the Health Insurance Portability 
        and Accountability Act of 1996 (42 U.S.C. 1320d-2 note) and 
        security standards established under section 1173(d) of the 
        Social Security Act.
          (2) Secretary.--The term ``Secretary'' means the Secretary of 
        Health and Human Services.
          (3) State.--The term ``State'' has the meaning given such 
        term when used in title XI of the Social Security Act, as 
        provided under section 1101(a) of such Act (42 U.S.C. 1301(a)).
          (4) State security and confidentiality laws.--The term 
        ``State security and confidentiality laws'' means State laws 
        and regulations relating to the privacy and confidentiality of 
        health information or to the security of such information.
  (d) Conforming Amendments.--
          (1) HIPAA.--Section 264(c)(2) of the Health Insurance 
        Portability and Accountability Act of 1996 (42 U.S.C. 1320d-2 
        note) is amended by striking ``A regulation'' and inserting 
        ``Subject to section 4(b) of the Health Information Technology 
        Promotion Act of 2006, a regulation''.
          (2) Title xi.--Section 1178(a) of the Social Security Act (42 
        U.S.C. 1320d-7(a)) is amended, in the matter preceding 
        paragraph (1), by inserting ``Subject to section 4(b) of the 
        Health Information Technology Promotion Act of 2006--'' after 
        ``General Effect.--''.

SEC. 5. IMPLEMENTING MODERN CODING SYSTEM; APPLICATION UNDER PART A OF 
                    THE MEDICARE PROGRAM.

  (a) Upgrading ASC X12 and NCPDP Standards.--
          (1) In general.--The Secretary of Health and Human Services 
        shall provide by notice published in the Federal Register for 
        the following replacements of standards to apply, including for 
        purposes of part A of title XVIII of such Act:
                  (A) Accredited standards committee x12 (asc x12) 
                standard.--The replacement of the Accredited Standards 
                Committee X12 (ASC X12) version 4010 adopted under 
                section 1173(a) of such Act (42 U.S.C. 1320d-2(a)) with 
                the ASC X12 version 5010, as reviewed by the National 
                Committee on Vital Health Statistics.
                  (B) National council for prescription drug programs 
                (ncpdp) telecommunications standards.--The replacement 
                of the National Council for Prescription Drug Programs 
                (NCPDP) Telecommunications Standards version 5.1 
                adopted under section 1173(a) of such Act (42 U.S.C. 
                1320d-2(a)) with whichever is the latest version (as 
                determined by the Secretary) of the NCPDP 
                Telecommunications Standards that has been approved by 
                such Council and reviewed by the National Committee on 
                Vital Health Statistics as of April 1, 2008.
          (2) Application.--The replacements made by paragraph (1) 
        shall apply, for purposes of section 1175(b)(2) of the Social 
        Security Act (42 U.S.C. 1320d-4(b)(2)), to transactions 
        occurring on or after April 1, 2009.
          (3) No judicial review.--The determination of the latest 
        version under paragraph (1)(B) shall not be subject to judicial 
        review.
  (b) Upgrading ICD Codes.--
          (1) In general.--The Secretary of Health and Human Services 
        shall provide by notice published in the Federal Register for 
        the replacement of the International Classification of 
        Diseases, 9th revision, Clinical Modification (ICD-9-CM) under 
        the regulation promulgated under section 1173(c) of the Social 
        Security Act (42 U.S.C. 1320d-2(c)), including for purposes of 
        part A of title XVIII of such Act, with both of the following:
                  (A) The International Classification of Diseases, 
                10th revision, Clinical Modification (ICD-10-CM).
                  (B) The International Classification of Diseases, 
                10th revision, Procedure Coding System (ICD-10-PCS).
          (2) Application .--The replacement made by paragraph (1) 
        shall apply, for purposes of section 1175(b)(2) of the Social 
        Security Act (42 U.S.C. 1320d-4(b)(2)), to services furnished 
        on or after October 1, 2009.
          (3) Rules of construction.--Nothing in paragraph (1) shall be 
        construed--
                  (A) as affecting the application of classification 
                methodologies or codes, such as CPT or HCPCS codes, 
                other than under the International Classification of 
                Diseases (ICD); or
                  (B) as superseding the authority of the Secretary of 
                Health and Human Services to maintain and modify the 
                coding set for ICD-10-CM and ICD-10-PCS, including 
                under the amendments made by section 6.
  (c) Application of Upgraded Standards Under Part a of the Medicare 
Program.--Section 1816 of the Social Security Act (42 U.S.C. 1395h) is 
amended by inserting after subsection (a) the following new subsection:
  ``(b) With respect to--
          ``(1) transactions under this part occurring on or after 
        April 1, 2009, all providers of services shall use ASC X12 
        version 5010 with respect to services provided under this part 
        in compliance with section 5(a) of the Health Information 
        Technology Promotion Act of 2006; and
          ``(2) services furnished on or after October 1, 2009--
                  ``(A) all providers of services shall use ICD-10-CM 
                codes with respect to services provided under this part 
                in compliance with section 5(b) of such Act; and
                  ``(B) hospitals shall use ICD-10-PCS codes (as well 
                as ICD-10-CM codes) with respect to inpatient hospital 
                services provided under this part in compliance with 
                such section.''.

SEC. 6. PROCEDURES TO ENSURE TIMELY UPDATING OF STANDARDS THAT ENABLE 
                    ELECTRONIC EXCHANGES.

  Section 1174(b) of the Social Security Act (42 U.S.C. 1320d-3(b)) is 
amended--
          (1) in paragraph (1)--
                  (A) in the first sentence, by inserting ``and in 
                accordance with paragraph (3)'' before the period; and
                  (B) by adding at the end the following new sentence: 
                ``For purposes of this subsection and section 
                1173(c)(2), the term `modification' includes a new 
                version or a version upgrade.''; and
          (2) by adding at the end the following new paragraph:
          ``(3) Expedited procedures for adoption of additions and 
        modifications to standards.--
                  ``(A) In general.--For purposes of paragraph (1), the 
                Secretary shall provide for an expedited upgrade 
                program (in this paragraph referred to as the `upgrade 
                program'), in accordance with this paragraph, to 
                develop and approve additions and modifications to the 
                standards adopted under section 1173(a) to improve the 
                quality of such standards or to extend the 
                functionality of such standards to meet evolving 
                requirements in health care.
                  ``(B) Publication of notices.--Under the upgrade 
                program:
                          ``(i) Voluntary notice of initiation of 
                        process.--Not later than 30 days after the date 
                        the Secretary receives a notice from a standard 
                        setting organization that the organization is 
                        initiating a process to develop an addition or 
                        modification to a standard adopted under 
                        section 1173, the Secretary shall publish a 
                        notice in the Federal Register that--
                                  ``(I) identifies the subject matter 
                                of the addition or modification;
                                  ``(II) provides a description of how 
                                persons may participate in the 
                                development process; and
                                  ``(III) invites public participation 
                                in such process.
                          ``(ii) Voluntary notice of preliminary draft 
                        of additions or modifications to standards.--
                        Not later than 30 days after the date the 
                        Secretary receives a notice from a standard 
                        setting organization that the organization has 
                        prepared a preliminary draft of an addition or 
                        modification to a standard adopted by section 
                        1173, the Secretary shall publish a notice in 
                        the Federal Register that--
                                  ``(I) identifies the subject matter 
                                of (and summarizes) the draft;
                                  ``(II) specifies the procedure for 
                                obtaining documentation for the draft;
                                  ``(III) provides a description of how 
                                persons may submit comments in writing 
                                and at any public hearing or meeting 
                                held by the organization on the draft; 
                                and
                                  ``(IV) invites submission of such 
                                comments and participation in such 
                                hearing or meeting.
                          ``(iii) Notice of proposed addition or 
                        modification to standards.--Not later than 30 
                        days after the date the Secretary receives a 
                        notice from a standard setting organization 
                        that the organization has a proposed addition 
                        or modification to a standard adopted under 
                        section 1173 that the organization intends to 
                        submit under subparagraph (D)(iii), the 
                        Secretary shall publish a notice in the Federal 
                        Register that contains, with respect to the 
                        proposed addition or modification, the 
                        information required in the notice under clause 
                        (ii) with respect to a preliminary draft of an 
                        addition or modification.
                          ``(iv) Construction.--Nothing in this 
                        paragraph shall be construed as requiring a 
                        standard setting organization to request the 
                        notices described in clauses (i) and (ii) with 
                        respect to an addition or modification to a 
                        standard in order to qualify for an expedited 
                        determination under subparagraph (C) with 
                        respect to a proposal submitted to the 
                        Secretary for adoption of such addition or 
                        modification.
                  ``(C) Provision of expedited determination.--Under 
                the upgrade program and with respect to a proposal by a 
                standard setting organization for an addition or 
                modification to a standard adopted under section 1173, 
                if the Secretary determines that the standard setting 
                organization developed such addition or modification in 
                accordance with the requirements of subparagraph (D) 
                and the National Committee on Vital and Health 
                Statistics recommends approval of such addition or 
                modification under subparagraph (E), the Secretary 
                shall provide for expedited treatment of such proposal 
                in accordance with subparagraph (F).
                  ``(D) Requirements.--The requirements under this 
                subparagraph with respect to a proposed addition or 
                modification to a standard by a standard setting 
                organization are the following:
                          ``(i) Request for publication of notice.--The 
                        standard setting organization submits to the 
                        Secretary a request for publication in the 
                        Federal Register of a notice described in 
                        subparagraph (B)(iii) for the proposed addition 
                        or modification.
                          ``(ii) Process for receipt and consideration 
                        of public comment.--The standard setting 
                        organization provides for a process through 
                        which, after the publication of the notice 
                        referred to under clause (i), the 
                        organization--
                                  ``(I) receives and responds to public 
                                comments submitted on a timely basis on 
                                the proposed addition or modification 
                                before submitting such proposed 
                                addition or modification to the 
                                National Committee on Vital and Health 
                                Statistics under clause (iii); and
                                  ``(II) makes publicly available a 
                                written explanation for its response in 
                                the proposed addition or modification 
                                to comments submitted on a timely 
                                basis.
                          ``(iii) Submittal of final proposed addition 
                        or modification to ncvhs.--After completion of 
                        the process under clause (ii), the standard 
                        setting organization submits the proposed 
                        addition or modification to the National 
                        Committee on Vital and Health Statistics for 
                        review and consideration under subparagraph 
                        (E). Such submission shall include information 
                        on the organization's compliance with the 
                        notice and comment requirements (and responses 
                        to those comments) under clause (ii).
                  ``(E) Hearing and recommendations by national 
                committee on vital and health statistics.--Under the 
                upgrade program, upon receipt of a proposal submitted 
                by a standard setting organization under subparagraph 
                (D)(iii) for the adoption of an addition or 
                modification to a standard, the National Committee on 
                Vital and Health Statistics shall provide notice to the 
                public and a reasonable opportunity for public 
                testimony at a hearing on such addition or 
                modification. The Secretary may participate in such 
                hearing in such capacity (including presiding ex 
                officio) as the Secretary shall determine appropriate. 
                Not later than 120 days after the date of receipt of 
                the proposal, the Committee shall submit to the 
                Secretary its recommendation to adopt (or not adopt) 
                the proposed addition or modification.
                  ``(F) Determination by secretary to accept or reject 
                national committee on vital and health statistics 
                recommendation.--
                          ``(i) Timely determination.--Under the 
                        upgrade program, if the National Committee on 
                        Vital and Health Statistics submits to the 
                        Secretary a recommendation under subparagraph 
                        (E) to adopt a proposed addition or 
                        modification, not later than 90 days after the 
                        date of receipt of such recommendation the 
                        Secretary shall make a determination to accept 
                        or reject the recommendation and shall publish 
                        notice of such determination in the Federal 
                        Register not later than 30 days after the date 
                        of the determination.
                          ``(ii) Contents of notice.--If the 
                        determination is to reject the recommendation, 
                        such notice shall include the reasons for the 
                        rejection. If the determination is to accept 
                        the recommendation, as part of such notice the 
                        Secretary shall promulgate the modified 
                        standard (including the accepted proposed 
                        addition or modification accepted) as a final 
                        rule under this subsection without any further 
                        notice or public comment period.
                          ``(iii) Limitation on consideration.--The 
                        Secretary shall not consider a proposal under 
                        this subparagraph unless the Secretary 
                        determines that the requirements of 
                        subparagraph (D) (including publication of 
                        notice and opportunity for public comment) have 
                        been met with respect to the proposal.
                  ``(G) Treatment as satisfying requirements for 
                notice-and-comment.--Any requirements under section 553 
                of title 5, United States Code, relating to notice and 
                an opportunity for public comment with respect to a 
                final rule promulgated under subparagraph (F) shall be 
                treated as having been met by meeting the requirements 
                of the notice and opportunity for public comment 
                provided under provisions of subparagraphs (B)(iii), 
                (D), and (E).
                  ``(H) No judicial review.--A final rule promulgated 
                under subparagraph (F) shall not be subject to judicial 
                review.''.

SEC. 7. REPORT ON THE AMERICAN HEALTH INFORMATION COMMUNITY.

  Not later than one year after the date of the enactment of this Act, 
the Secretary of Health and Human Services shall submit to Congress a 
report on the work conducted by the American Health Information 
Community (in this section referred to as ``AHIC''), as established by 
the Secretary. Such report shall include the following:
          (1) A description of the accomplishments of AHIC, with 
        respect to the promotion of the development of a nationwide 
        health information network and the increased adoption of health 
        information technology.
          (2) Information identifying the practices that are used to 
        protect health information and to guarantee confidentiality and 
        security of such information.
          (3) Information on the progress in--
                  (A) establishing uniform industry-wide health 
                information technology standards;
                  (B) achieving an internet-based nationwide health 
                information network;
                  (C) achieving interoperable electronic health record 
                adoption across health care providers; and
                  (D) making available technological and other 
                innovations to ensure the security and confidentiality 
                of health information in the promotion of health 
                information technology.
          (4) Recommendations for the transition of the AHIC to a 
        permanent entity, including--
                  (A) a schedule for such transition;
                  (B) options for structuring the entity as either a 
                public-private or private sector entity;
                  (C) the collaborative role of the Federal Government 
                in the entity; and
                  (D) the ongoing responsibilities of the entity, such 
                as providing the leadership and planning in 
                establishing standards, certifying health information 
                technology, and providing long-term governance for 
                health care transformation through technology.

SEC. 8. STRATEGIC PLAN FOR COORDINATING IMPLEMENTATION OF HEALTH 
                    INFORMATION TECHNOLOGY.

  (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Health and Human Services, in 
consultation with public and private entities involved in the area of 
health information technology, shall develop a strategic plan related 
to the need for coordination in such area.
  (b) Coordination of Specific Implementation Processes.--The strategic 
plan under subsection (a) shall address the need for coordination in 
the implementation of the following:
          (1) Health information technology standards.--Health 
        information technology standards approved under section 
        271(c)(3)(B)(i) of the Public Health Service Act, as added by 
        section 2.
          (2) HIPAA transaction standards.--Transaction standards under 
        section 1173(a) of the Social Security Act (42 U.S.C. 1320d-
        2(d)).
          (3) Updated icd codes.--The International Statistical 
        Classification of Diseases and Related Health Problems, 10th 
        revision, Clinical Modification (ICD-10-CM) and the 
        International Statistical Classification of Diseases and 
        Related Health Problems, 10th revision, Procedure Coding System 
        (ICD-10-PCS) described in section 5.
  (c) Coordination Among Specific Federal Entities.--The strategic plan 
under subsection (a) shall address any methods to coordinate, with 
respect to the electronic exchange of health information, actions taken 
by the following entities:
          (1) The Office of the National Coordinator for Health 
        Information Technology.
          (2) The American Health Information Community.
          (3) The Office of Electronic Standards and Security of the 
        Centers for Medicare and Medicaid Services.
          (4) The National Committee on Vital Health Statistics.
          (5) Any other entity involved in the electronic exchange of 
        health information that the Secretary determines appropriate.

SEC. 9. PROMOTION OF TELEHEALTH SERVICES.

  (a) Facilitating the Provision of Telehealth Services Across State 
Lines.--
          (1) In general.--The Secretary of Health and Human Services 
        shall, in coordination with representatives of States, 
        physicians, health care practitioners, and patient advocates, 
        encourage and facilitate the adoption of State reciprocity 
        agreements for practitioner licensure in order to expedite the 
        provision across State lines of telehealth services.
          (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the actions taken to carry out paragraph (1).
          (3) State defined.--In this subsection, the term ``State'' 
        has the meaning given that term for purposes of title XVIII of 
        the Social Security Act.
  (b) Use of Store and Forward Technology.--
          (1) Study.--The Secretary of Health and Human Services, 
        acting through the Director of the Office for the Advancement 
        of Telehealth, shall conduct a study on the use of store and 
        forward technologies (that provide for the asynchronous 
        transmission of health care information in single or multimedia 
        formats) in the provision of telehealth services for which 
        payment may be made under the Medicare program. Such study 
        shall include an assessment of the feasibility, advisability, 
        and the costs of expanding the use of such technologies for use 
        in the diagnosis and treatment of certain conditions.
          (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the study conducted under paragraph (1) and shall 
        include in such report such recommendations for legislation or 
        administration action as the Secretary determines appropriate.
  (c) Expansion of Telehealth Services.--
          (1) Study.--The Secretary of Health and Human Services, in 
        coordination with the Office for the Advancement of Telehealth, 
        the Agency for Healthcare Research and Quality, and the Centers 
        for Medicare and Medicaid Services, shall conduct a study to 
        determine the feasibility, advisability, and the costs of--
                  (A) including coverage and payment for home health-
                related telehealth services as part of home health 
                services under title XVIII of the Social Security Act; 
                and
                  (B) expanding the list of sites described in 
                paragraph (4)(C)(ii) of section 1834(m) of the Social 
                Security Act (42 U.S.C. 1395m(m)) to include county 
                mental health clinics or other publicly funded mental 
                health facilities for the purpose of payment under such 
                section for the provision of telehealth services at 
                such clinics or facilities.
          (2) Specifics of study.--Such study shall demonstrate whether 
        the changes described in subparagraphs (A) and (B) of paragraph 
        (1) will result in the following:
                  (A) Enhanced health outcomes for individuals with one 
                or more chronic conditions.
                  (B) Health outcomes for individuals furnished 
                telehealth services or home health-related telehealth 
                services that are at least comparable to the health 
                outcomes for individuals furnished similar items and 
                services by a health care provider at the same location 
                of the individual or at the home of the individual, 
                respectively.
                  (C) Facilitation of communication of more accurate 
                clinical information between health care providers.
                  (D) Closer monitoring of individuals by health care 
                providers.
                  (E) Overall reduction in expenditures for health care 
                items and services.
                  (F) Improved access to health care.
          (3) Home health-related telehealth services defined.--For 
        purposes of this subsection, the term ``home health-related 
        telehealth services'' means technology-based professional 
        consultations, patient monitoring, patient training services, 
        clinical observation, patient assessment, and any other health 
        services that utilize telecommunications technologies. Such 
        term does not include a telecommunication that consists solely 
        of a telephone audio conversation, facsimile, electronic text 
        mail, or consultation between two health care providers.
          (4) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the study conducted under subparagraph (1) and shall 
        include in such report such recommendations for legislation or 
        administration action as the Secretary determines appropriate.

                            I. INTRODUCTION


                         A. Purpose and Summary

    Broad use of information technology throughout the health 
care delivery system is essential to improve the quality and 
efficiency of health care delivery. The adoption of health 
information technology is increasingly necessary to deliver 
state of the art care to individuals with chronic illness to 
promote interoperability between private and public providers 
and payers. Efficiencies gained by the coordinated development 
of health information technology will accelerate and advance 
private and public efforts to improve quality of care and 
reduce health costs.
    The purpose of the Health Information Technology Promotion 
Act of 2006 (H.R. 4157) is to create the Office of the National 
Coordinator for Health Information Technology to accelerate and 
oversee the development of interoperability efforts in the 
public and private health care sectors and to coordinate 
Federal government activities relating to health information 
technology (IT). The bill would enable private sources of 
funding to finance physician adoption of health IT by providing 
exceptions and safe harbors in the fraud and abuse laws, and 
would provide for a study of state and federal security and 
confidentiality laws and regulations to ensure the protection 
of patient health information as the health system moves to 
electronic systems. In addition, the bill would direct the 
Secretary to modernize the procedure and diagnosis coding 
system, develop procedures to ensure timely updating of 
standards that enable electronic exchanges, study the use of 
telemedicine and telemonitoring services, and provide a report 
on the work conducted by the American Health Information 
Community and its role in the future. Finally, the bill would 
direct the Secretary to develop a strategic plan for 
coordinating implementation of health IT.
    Office of the National Coordinator for Health Information 
Technology.--This bill would codify the Office of the National 
Coordinator for Health IT (ONCHIT) in statute and clearly 
delineate its ongoing roles and responsibilities. The duties of 
the office would include: maintaining and updating the 
strategic plan to guide the nationwide implementation of 
interoperable health IT to improve health care quality, reduce 
medical errors, increase the efficiency of care, and advance 
the delivery of appropriate evidence-based health care 
services; and serving as the principal advisor to the Secretary 
of Health and Human Services (HHS) on the use of health IT.
    Duties of this office would also include serving as the 
coordinator of Federal government activities related to the 
development and maintenance of standards used in health 
information exchange and the certification and inspection of 
health IT products to ensure that such products conform to the 
standards noted above. Also, duties would include coordinating 
health IT policies and programs across Federal agencies and 
providing input and advice to the Office of Management and 
Budget regarding Federal health IT programs.
    Stark/Anti-Kickback Safe Harbors.--This bill would include 
statutory exceptions and safe harbors in physician self-
referral (``Stark'' laws) and anti-kickback laws that would 
allow hospitals, groups practices, and other entities to 
provide physicians with hardware, software, or IT training and 
support services that are used for the electronic exchange of 
health information.
    Further, donors of such technology may not impose 
conditions limiting its use by physicians to individuals who 
are also patients of the donor entity; nor can donors limit 
physicians' use of the technology in conjunction with other IT 
systems that physicians might utilize or condition donations 
based on the volume or value of referrals or business generated 
by the physician. This bill would also require written 
agreements regarding any remuneration, and would allow this 
exception to preempt state laws governing self-referral and 
anti-kickback provisions to ensure that the federal exception 
can be implemented. Any gift must be for the purpose of better 
coordination of care, to improve quality or improve efficiency.
    Privacy/Security Standards.--This bill would require the 
Secretary of HHS to conduct a study on the impact of variation 
between state security and confidentiality laws and federal 
security and confidentiality standards. The Secretary would 
report back to Congress within 18 months with recommendations 
on the extent to which federal standards should be modified to 
provide greater commonality in order to better protect or 
strengthen the security and confidentiality when exchanging 
health information.
    If Congress does not enact legislation 18 months after 
receipt of the study, the Secretary has the authority, but is 
not required, to modify federal security and confidentiality 
standards. Any modification in federal standards would 
supersede State law.
    Adoption of Modern Coding System.--This bill would require 
the Secretary to adopt the updated Health Insurance Portability 
and Accountability Act (HIPAA) transaction standard ASC X12 
5010 (to replace ASC X12 4010) for transactions occurring on or 
after April 1, 2009. The standard applies to claims 
transactions.
    This bill would also require the Secretary to update the 
National Council for Prescription Drug Programs (NCPDP) 
telecommunication standards to the latest version approved by 
the National Committee on Vital Health Statistics (NCVHS) as of 
April 1, 2009.
    The Secretary is also required to adopt, per the past 
recommendation of the National Committee on Vital Health 
Statistics (NCVHS), the ICD-10 coding system for transactions 
occurring on or after October 1, 2009. The standard applies to 
coding for diagnosis and procedures, but procedures only in 
inpatient hospital settings.
    Procedures to Ensure Timely Updating of Standards.--This 
bill would adopt an accelerated process for updating standards 
in order to keep pace with the development of technology. The 
Secretary is required to publish a notice in the Federal 
Register and to receive and to consider comments on proposed 
additions or modifications developed by a HIPAA standard 
setting organization and made to the NCVHS and the Designated 
Standard Maintenance Organization (DSMO). The NCVHS would then 
submit its recommendation to the Secretary within 120 days. The 
Secretary would either adopt or reject proposed modifications 
or additions to existing standards within 90 days if the NCVHS 
recommends the change.
    Report on the American Health Information Community.--This 
bill would require the Secretary of HHS to report back in one 
year on the activities of the American Health Information 
Community (AHIC), with recommendations for the ongoing 
structure and responsibilities of the entity.
    AHIC was formed to provide input and recommendations to HHS 
on how to make health records digital and interoperable, and 
assure that the privacy and security of those records are 
protected.
    Strategic Plan for Coordinating Implementation of Health 
Information Technology.--This bill would require the Secretary 
to develop a strategic plan to coordinate implementation 
efforts for health IT standards, HIPAA transaction standards, 
and new coding systems. This plan will address how activities 
would be coordinated between the Office of the National 
Coordinator for Health IT, the American Health Information 
Community, the Office of Electronic Standards and Security, and 
the National Committee for Vital Health Statistics.
    Promotion of Telehealth Services.--This bill would require 
the Secretary to encourage and facilitate the adoption of State 
licensure agreements in order to provide telehealth services 
across state lines. The Secretary would also be required to 
study the use of store and forward technology in the provision 
of telehealth services under the Medicare program and the 
expansion of telehealth services provided in home health 
agencies and county mental health clinics or other publicly 
funded mental health facilities.

                             B. Background

    It is intended that these provisions would coordinate, 
advance and speed the development and use of health IT with the 
goals of improving the quality of care delivered, reducing 
fraud and abuse and health care costs, and promoting the 
coordination of care to promote better health outcomes.

                         C. Legislative History

    During the 108th and 109th Congresses, the Subcommittee 
held a series of four hearings on health care information 
technology: June 17, 2004; July 22, 2004; July 27, 2005; and 
April 6, 2006. Subcommittee Chairman Nancy Johnson and Energy 
and Commerce Health Subcommittee Chairman Deal introduced the 
``Health Information Technology Promotion Act of 2005'' (H.R. 
4157) on October 27, 2005. The bill has been referred to the 
Committee on Ways and Means, and to the Committee on Energy and 
Commerce, in each case for consideration of such provisions as 
fall within the jurisdiction of the committee concerned.
    On June 17, 2004, the Ways and Means Subcommittee on Health 
held its first hearing on health care information technology 
and heard testimony from the National Health Information 
Technology Coordinator Dr. David Brailer and Dr. Robert 
Kolodner, Acting Chief Health Informatics Officer, Department 
of Veterans Affairs. A second panel consisted of Dr. Charles 
Safran, American Medical Informatics Association; Janet 
Marchibroda, eHealth Initiative; Dr. Marc Overhage, Indiana 
University; and Dr. Andrew Wiesenthal, Kaiser Permanente.
    The Subcommittee on Health held its second hearing on July 
22, 2004, on electronic prescribing and heard testimony from 
Dave McLean, RxHub; Craig Fuller, National Association of Chain 
Drug Stores; Dr. Thomas Sullivan, Women's Health Center 
Cardiology; and Dr. Jonathan Teich, Harvard University.
    The Subcommittee on Health held its third hearing on July 
27, 2005, on health care information technology and heard 
testimony from the National Health Information Technology 
Coordinator, Dr. David Brailer. A second panel consisted of Dr. 
Don Detmer, American Medical Informatics Association; Linda 
Kloss, American Health Information Management Association; Dr. 
Allen Weiss, Naples Community Hospital Healthcare System; Joy 
Pritts, Health Policy Institute; and Mary Grealy, Healthcare 
Leadership Council.
    The Subcommittee on Health held its final hearing in a 
series of four hearings on April 6, 2006, and heard testimony 
from the National Health Information Technology Coordinator, 
Dr. David Brailer; Lewis Morris, Inspector General, Department 
of HHS; and Dr. Simon Cohn, National Committee on Vital and 
Health Statistics. The second panel consisted of Brent Henry, 
Partners HealthCare System; Dr. Kenneth Kizer, Medsphere 
Systems Corporation; Joseph Smith, Arkansas Blue Cross Blue 
Shield; and Gloryanne Bryant, Catholic Healthcare West.

                     II. EXPLANATION OF PROVISIONS


              SECTION 1. SHORT TITLE AND TABLE OF CONTENTS

Current Law

    No provision.

Explanation of Provision

    The provision specifies the title of the Act as the Health 
Information Technology Promotion Act of 2006. The provision 
also includes a brief table of contents, which lists the Act's 
nine sections.

Effective Date

    No provision.

 SECTION 2. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION 
                               TECHNOLOGY

Current Law

    There are no existing statutory provisions regarding the 
current Office of the National Coordinator for Health 
Information Technology (ONCHIT) within the Department of Health 
and Human Services (HHS). ONCHIT was created by Executive Order 
13335, signed by the President on April 27, 2004. The National 
Coordinator was instructed to develop, maintain, and direct a 
strategic plan to guide the nationwide implementation of 
interoperable health IT in the public and private health care 
sectors. The National Coordinator was also required, within 90 
days, to report to the Secretary on progress towards the 
strategic plan. On July 21, 2004, the National Coordinator 
delivered that report, titled Strategic Framework: The Decade 
of Health Information Technology: Delivering Consumer-centric 
and Information-rich Health Care.
    On October 6, 2005, ONCHIT awarded: (1) a $3.3 million 
contract to the American National Standards Institute to 
convene a panel of standards development organizations to 
develop a harmonization process for achieving a widely accepted 
and useful set of interoperable health IT standards; and (2) a 
$2.7 million contract to the Certification Commission for 
Health Information Technology, a nonprofit organization created 
by three health IT industry associations, to develop a process 
for certifying electronic health records and the network 
components through which they interoperate.

Explanation of Provision

    The bill would establish within HHS an Office of the 
National Coordinator for Health Information Technology. The 
National Coordinator would be appointed by the President and 
report directly to the Secretary. The National Coordinator 
would be required to perform duties consistent with the 
development of a nationwide interoperable health IT 
infrastructure that, among other things, improves health care 
quality, promotes wellness, reduces health care costs, improves 
health information exchange, and ensures health information 
privacy and security. Those duties would include: (1) directing 
and overseeing the continuous improvement of a strategic plan 
to guide implementation of a nationwide interoperable health IT 
infrastructure; (2) acting as the principal advisor to the 
Secretary on health IT and coordinating all health IT programs 
within the department; (3) coordinating health IT activities 
across the federal government and, using private entities to 
the maximum extent possible, providing for the development of 
health IT standards and the certification of health IT 
products; and (4) advising the Director of the Office of 
Management and Budget on federal health IT programs.
    The bill would authorize, for each of FY 2006 through FY 
2010, such sums as may be necessary to carry out the activities 
of ONCHIT. Further, the bill would nullify Executive Order 
13335. Finally, the bill would provide for the transfer of all 
functions, personnel, assets, liabilities, administrative 
actions, and statutory reporting requirements applicable to the 
existing ONCHIT to the new ONCHIT created under the Act.

Reasons for Change

    No statutory position currently exists to coordinate health 
information technology initiatives for the federal government. 
The current Office of the National Coordinator for Health 
Information Technology was created by executive order. Congress 
should create a statutory position to ensure ongoing attention 
to health IT issues. This provision would codify the existing 
Office of the National Coordinator and specify its role in 
coordinating public/private partnerships to develop technology 
standards without creating a new government infrastructure to 
address the issue.
    There is also the ongoing effort towards rebuilding the 
health care system in Louisiana's Gulf Coast region. The 
Committee believes that the Gulf Coast area providers and 
payers should increase the use of electronic health records so 
that patients can receive quality care anywhere, particularly 
in emergency situations. After the hurricanes in 2005 and as a 
direct result of the significant loss of paper medical records, 
the State of Louisiana initiated a series of activities to 
connect patients to lost information. The State received a $3.7 
million grant from the ONCHIT to assist in the development of 
the Louisiana Health Information Exchange, which has 
successfully engaged stakeholders in Louisiana to prepare for 
the next hurricane season by creating a repository for 
patients' health information. The Committee believes the ONCHIT 
should continue to work with Louisiana stakeholders to develop 
a health information technology infrastructure that will allow 
all participating health care providers to contribute to an 
electronic patient record that can be accessed by any 
healthcare provider treating that patient.

Effective Date

    Upon enactment.

    SECTION 3. SAFE HARBORS FOR THE PROVISION OF HEALTH INFORMATION 
         TECHNOLOGY AND SERVICES TO HEALTH CARE PROFESSIONALS.

Current Law

    The federal anti-kickback statute (42 U.S.C. 1320a-7b(b)) 
prohibits an individual or entity from knowingly or willfully 
offering or accepting remuneration of any kind to induce 
apatient referral for, or purchase of, an item or service covered by 
any federal health care program. Violations of the law are punishable 
by up to five years in prison, criminal fines up to $25,000, 
administrative civil money penalties up to $50,000, and exclusion from 
participation in federal health care programs. HHS issues regulations 
designating specific safe harbors for various payment and business 
practices that would otherwise be implicated by the anti-kickback 
statute and subject to its criminal and civil prosecution.
    The Medicare physician self-referral (Stark) law (42 USC 
1395nn(e)) prohibits physicians from referring patients to any 
entity for certain health services if the physician has a 
financial relationship with the entity, and prohibits entities 
from billing for any services resulting from such referrals, 
unless an exception applies. On March 25, 2004, CMS issued an 
interim final rule creating several new Stark exceptions, 
including one for health IT items and services furnished by an 
entity to physicians to enable them to participate in 
``community-wide health information systems.''
    The Medicare Modernization Act (MMA; P.L. 108-173, Section 
101) instructed the Secretary to establish a safe harbor from 
penalties under the anti-kickback statute and an exception to 
the Stark law for the provision of health IT and training 
services used in electronic prescribing. That would allow, for 
example, a hospital to provide such technologies and services 
to its medical staff, and Medicare Advantage plans to provide 
such technologies and services to pharmacies and prescribing 
health care providers. Proposed regulations were issued on 
October 5, 2005. While the proposed safe harbor covers health 
IT used solely for e-prescribing, as instructed by MMA, the 
proposed Stark exception would apply more broadly to health IT 
for electronic health records, provided they include electronic 
prescribing as one component.

Explanation of Provision

    The bill would create a safe harbor from civil monetary 
penalties under the anti-kickback statute for health IT and 
related services provided by a hospital or critical access 
hospital (CAH) to a physician, subject to the following 
requirements. The provision of health IT and related services 
must be made pursuant to a written agreement specifying that 
the primary purpose of the remuneration is for better 
coordination of care or improvement of health care quality or 
efficiency, and without a condition that: (1) limits or 
restricts their use to services provided by the physician to 
individuals receiving services at the location of the hospital 
or CAH; (2) limits or restricts their use in conjunction with 
other health IT; or (3) takes into account the volume or value 
of referrals (or other business generated) by the physician to 
the hospital or CAH.
    The bill also would create a safe harbor from criminal 
penalties under the anti-kickback statute for health IT and 
related services solicited or received by a physician, subject 
to the same set of requirements. The provision of health IT and 
related services must be made pursuant to a written agreement 
between the physician and the entity providing the technology 
specifying that the primary purpose of the remuneration is for 
better coordination of care or improvement of health care 
quality or efficiency, and without a condition that: (1) limits 
or restricts their use to services provided by the physician to 
individuals receiving services at the location of the entity 
providing such technology; (2) limits or restricts their use in 
conjunction with other health IT; or (3) takes into account the 
volume or value of referrals (or other business generated) by 
the physician to the entity providing such technology.
    Finally, the bill would create an exception to the Stark 
law for health IT and related services provided by an entity to 
a physician, again subject to the same requirements. The 
provision of health IT and related services must be made 
pursuant to a written agreement between the physician and the 
entity providing the technology specifying that the primary 
purpose of the remuneration is for better coordination of care 
or improvement of health care quality or efficiency, and 
without a condition that: (1) limits or restricts their use to 
services provided by the physician to individuals receiving 
services at the location of the entity providing such 
technology; (2) limits or restricts their use in conjunction 
with other health IT; or (3) takes into account the volume or 
value of referrals (or other business generated) by the 
physician to the entity providing such technology.
    For the purposes of this section, health IT includes 
hardware, software, license, intellectual property, equipment, 
or other IT or related services used primarily for the 
electronic creation, maintenance, and exchange of clinical 
health information.
    The bill would require the Secretary, within 180 days of 
enactment, to promulgate implementing regulations. It also 
would preempt state laws that would otherwise penalize the 
provision of health IT and related services as described in 
this section. In addition, the bill would instruct the 
Secretary, within three years of enactment, to report to 
Congress on the impact of each of the safe harbors and the 
Stark exception on increasing health IT adoption and on the 
business relationships between providers. The Secretary would 
be required to include in the report recommendations for 
changes in the safe harbors and Stark exception, as may be 
appropriate.

Reasons for Change

    Currently, donations of health information technology are 
subject to the restrictions imposed under the fraud and abuse 
laws. The penalties for remuneration in the form of health 
information technology in violation of such laws are severe and 
include potential exclusion from federal programs. Current law 
has precluded the broad diffusion of health information 
technology that would improve care coordination, and the 
quality and efficiency of health care services. Accordingly, 
clear and broad exceptions to current law are necessary to 
promote IT diffusion. This provision would enable health care 
providers and other entities to donate health information 
technology without fear of violation.

Effective Date

    The amendments made by this section to the anti-kickback 
statute and the Stark law would take effect 180 days after 
enactment.

  SECTION 4. COMMONALITY AND VARIATION IN HEALTH INFORMATION LAWS AND 
                              REGULATIONS

Current Law

    Under the Administrative Simplification provisions of the 
Health Insurance Portability and Accountability Act (HIPAA, 
P.L. 104-191, 42 USC 1320d), Congress set a three-year deadline 
to enact health information privacy legislation. If, as turned 
out to be the case, the Congress was unable to enact such 
legislation before the deadline, the Secretary was instructed 
to promulgate regulations containing standards to protect the 
privacy of individually identifiable health information. Under 
the HIPAA privacy rule (45 CFR Parts 160, 164), which became 
effective for health care providers and most health plans in 
April 2003, all applicable state and federal laws must be 
complied with unless it is impossible to comply with both and 
if the state law is less protective of medical privacy.
    HIPAA also instructed the Secretary to develop security 
standards to safeguard electronic patient information against 
unauthorized access, use, and disclosure. The security 
standards (45 CFR Parts 160, 162, 164), which became effective 
for health care providers and most health plans in April 2005, 
preempt contrary state laws, except for exception 
determinations made by the Secretary. On October 6, 2005, 
ONCHIT awarded an $11.5 million contract to RTI International 
in association with the National Governors Association to 
assess variations in business policies and state laws that 
affect privacy and security practices that may pose challenges 
to the secure electronic exchange of health information, and to 
identify practical solutions for addressing such variation. 
State solutions and implementation plans are expected to be 
finalized in early 2007.

Explanation of Provision

    The bill would require the Secretary to study the degree of 
variation and commonality among state and federal (HIPAA) 
health information privacy and security requirements and 
examine how such variation may adversely impact the secure, 
confidential, and timely exchange of health information. The 
Secretary would have to report to Congress, within 18 months, 
on whether there is need for greater commonality among state 
and federal requirements and, if so, how federal standards 
should be changed to provide the commonality needed to better 
protect or strengthen the privacy and security of health 
information that is exchanged.
    The bill would give Congress 18 months following receipt of 
the Secretary's report to enact legislation to implement the 
report's recommendations, including modifying the HIPAA privacy 
and security standards. If Congress failed to act within that 
period, the Secretary could act, by regulation, to modify the 
HIPAA privacy and security standards based upon the report's 
recommendations. Such modified HIPAA standards would preempt 
any related, but contrary state law.

Reasons for Change

    There are currently numerous, and often conflicting, State 
and federal laws and regulations to protect the security and 
confidentiality of patient information. The lack of commonality 
makes compliance with laws difficult and limits the ability for 
patient information to be appropriately shared to ensure the 
best patient care. Congress needs additional information to 
determine whether commonality among federal standards and state 
laws is necessary. This provision would require the Secretary 
of HHS to conduct a study of the State and federal laws and 
regulations governing health information exchange and to assess 
the strengths and weaknesses of those laws and regulations. 
This study will provide an important opportunity for all 
interested parties to debate the issues of security and 
confidentiality that arise when discussing health IT, without 
mandating any future change to the existing regulatory 
framework.

Effective Date

    Upon enactment.

SECTION 5. IMPLEMENTING MODERN CODING SYSTEM; APPLICATION UNDER PART A 
                        OF THE MEDICARE PROGRAM

Current Law

    To support the growth of electronic record keeping and 
claims processing in the nation's health care system, HIPAA's 
Administrative Simplification provisions instructed the 
Secretary to adopt electronic format and data standards for 
several routine administrative transactions between health 
plans and health care providers (e.g., claims for payment). The 
Secretary was to rely on the recommendations of the National 
Committee on Vital and Health Statistics (NCVHS), consult with 
appropriate federal and state agencies and private 
organizations, and publish in the Federal Register any NCVHS 
recommendation regarding the adoption of a standard. Final 
standards for eight electronic transactions and for code sets 
to be used in those transactions (45 CFR Parts 160, 162) were 
issued in August 2000. The transactions standards include 
several Accredited Standards Committee X12 (ASC X12) version 
4010 standards, and the National Council for Prescription Drug 
Programs (NCPDP) Telecommunications Standards version 5.1. The 
code sets adopted by the Secretary include the International 
Statistical Classification of Diseases and Related Health 
Problems, 9th revision, Clinical Modification (ICD-9-CM).
    HIPAA also instructed the Secretary to review and, not more 
frequently than once a year, modify the Administrative 
Simplification standards. Again, the Secretary was to rely on 
the recommendations of the NCVHS and publish in the Federal 
Register any NCVHS recommendation regarding the modification of 
a standard. Any such modification must be completed in a manner 
that minimizes disruption and the cost of compliance. Regarding 
code sets (e.g., ICD codes), any modification must also include 
instructions for the conversion or translation of prior encoded 
data elements so as to preserve the informational value of the 
data.

Explanation of Provision

    The bill would require the Secretary to publish in the 
Federal Register a notice for the following modification of the 
HIPAA Administrative Simplification standards: (1) replacement 
of the ASC X12 version 4010 standards with version 5010; and 
(2) replacement of the NCPDP Telecommunications Standards 
version 5.1 with the latest version reviewed by the NCVHS as of 
April 1, 2008. The replacements would apply to electronic 
transactions, including those for services provided under 
Medicare Part A, occurring on or after April 1, 2009. 
Modification of the NCPDP standards would not be subject to 
judicial review.
    The bill also would require the Secretary to publish in the 
Federal Register a notice for the following modification of the 
HIPAA code sets: (1) replacement of ICD-9-CM with both the ICD-
10-CM and ICD-10-PCS (Procedure Coding System). The replacement 
would apply to services furnished on or after October 1, 2009, 
including under Medicare Part A.

Reasons for Change

    The current system for coding health information was 
developed in the 1970s and it is outdated, inaccurate and 
running out of codes. A more modern coding system exists and 
has been adopted by virtually all other first world nations. 
The new coding system allows providers to more accurately code 
diagnosis and procedures used in treating patients to ensure 
better health outcomes, increased efficiency, and higher 
quality. Updating the coding system is important to realizing 
the full benefits of health IT. HHS has full authority to 
require the move to an updated coding system, and this change 
has been recommended by the National Committee for Vital Health 
Statistics, but to date HHS has not acted.

Effective Date

    Upon enactment.

   SECTION 6. PROCEDURES TO ENSURE TIMELY UPDATING OF STANDARDS THAT 
                      ENABLE ELECTRONIC EXCHANGES

Current Law

    As previously noted, HIPAA instructed the Secretary to 
review and, not more frequently that once a year, modify the 
Administrative Simplification standards. Any such modification 
must be completed in a manner that minimizes disruption and the 
cost of compliance. Regarding code sets (e.g., ICD codes), any 
modification must also include instructions for the conversion 
or translation of prior encoded data elements so as to preserve 
the informational value of the data.

Explanation of Provision

    The bill would amend HIPAA's Administrative Simplification 
provisions to help expedite the adoption of additions and 
modifications to the electronic transactions standards, as 
follows. The Secretary would be required to publish a Federal 
Register notice within 30 days of receiving a notice from a 
standard setting organization that: (1) it is initiating the 
process of developing an addition or modification to an 
existing standard; (2) has prepared a preliminary draft of an 
addition or modification to an existing standard; or (3) has a 
proposed addition or modification that it intends to submit for 
review and consideration. In each instance, the published 
notice would provide the opportunity for public participation 
and comment. In the case of a proposed addition or 
modification, the bill would require the standard setting 
organization, having responded to public comment, to submit its 
proposal to both the Designated Standard Maintenance 
Organization (DSMO) and the NCVHS. The DSMO reviews the request 
with its constituent members (i.e., X12, NCPDP, HL7, NUBC, 
NUCC, and DeCC) concurrent to review by the NCVHS. The NCVHS 
would be required within 120 days to conduct a public hearing 
and submit its recommendation for adopting or rejecting the 
proposed addition or modification to the Secretary. The 
Secretary would then have 90 days to accept or reject the 
recommendation, and a further 30 days to publish a notice of 
such determination in the Federal Register. If the 
determination is to accept the NCVHS recommendation, the notice 
would include the modified standard as a final rule. The final 
rule would not be subject to judicial review.

Reason for Change

    The current HIPAA federal process to adopt updated or 
modified versions of transaction standards is slow, sometimes 
taking months or even years. The current process does not allow 
for the quick implementation of updated versions for HIPAA 
transactions that have already been adopted. This provision 
would allow for a more streamlined process to update or modify 
transaction standards, so as these standards continue to evolve 
over time, the federal process does not lag behind.

Enactment Date

    Upon enactment.

     SECTION 7. REPORT ON THE AMERICAN HEALTH INFORMATION COMMUNITY

Current Law

    On July 14, 2005, the Secretary announced the formation of 
the 17-member American Health Information Community (AHIC), a 
public-private body formed pursuant to the Federal Advisory 
Committee Act to provide input and recommendations on 
facilitating the transition to interoperable electronic health 
records in a market-led way. AHIC's charter terminates after 
two years, unless the Secretary renews it for a duration of no 
more than five years. The Secretary intends for AHIC to be 
succeeded within five years by a private-sector health 
information community initiative that, among other things, 
would set additional needed standards, certify new health 
information technology, and provide long-term governance for 
health care transformation.

Explanation of Provision

    The bill would require the Secretary, within one year of 
enactment, to report to Congress on the work conducted by AHIC, 
including: (1) its promotion of the development of a nationwide 
health information network and the adoption of health IT; and 
(2) progress in establishing nationwide health IT standards. 
The Secretary also would be required to include recommendations 
for the transition of AHIC to a permanent advisory entity.

Reason for Change

    AHIC was formed to provide input and recommendations to HHS 
on how to make health records digital and interoperable, and 
ensure that the privacy and security of those records are 
protected. It is important to understand the role AHIC plays in 
furthering the adoption of health IT and interoperability to 
justify the transition of AHIC to a permanent entity.

Effective Date

    Upon enactment.

  SECTION 8. STRATEGIC PLAN FOR COORDINATING IMPLEMENTATION OF HEALTH 
                         INFORMATION TECHNOLOGY

Current Law

    Pursuant to Executive Order 13335 (as described earlier), 
the National Coordinator for health IT, on July 21, 2004, 
released a strategic plan to guide the nationwide 
implementation of interoperable health IT in the pubic and 
private health care sectors.

Explanation of Provision

    The bill would require the Secretary, within 180 days of 
enactment and in coordination with entities involved in health 
IT, to develop a strategic plan for coordinating the 
implementation of health IT standards, HIPAA electronic 
transaction standards, and ICD-10 codes.

Reasons for Change

    HHS currently has numerous initiatives and offices involved 
in health information technology. The efforts of these offices 
need to be coordinated, and HHS must develop a strategic plan 
for moving forward in this area.

Effective Date

    Upon enactment.

              SECTION 9. PROMOTION OF TELEHEALTH SERVICES

Current Law

    Nearly a dozen federal agencies support telehealth 
activities. Within HHS, the Health Resources and Services 
Administration's Office for the Advancement of Telehealth (OAT) 
administers telehealth demonstration and evaluation programs, 
provides technical assistance and promotes best practices, and 
coordinates telehealth policies and activities across the 
federal government and with states and private-sector groups. 
Medicare covers telehealth services provided to beneficiaries 
at eligible health care facilities. Telehealth services that 
are eligible for reimbursement include consultations, office 
visits, individual psychotherapy and pharmacologic management 
delivered via a telecommunications system. Medicare does not 
cover home health services provided via a telecommunications 
system. A home health visit is defined in regulation (42 CFR 
409.48(c)) as an episode of personal contact with the 
beneficiary by staff of the home health agency.

Explanation of Provision

    The bill would require the Secretary, in coordination with 
state representatives and various stakeholders, to: (1) 
encourage and facilitate the adoption of reciprocal 
practitioner licensing agreements between states to promote 
telehealth; and (2) within 18 months, report to Congress on 
specific actions taken. The bill would further require the 
Secretary, acting through OAT, to: (1) study the use of store 
and forward technologies in telehealth services covered under 
Medicare; and (2) within 18 months, report to Congress with 
recommendations for legislation. Finally, the bill would 
require the Secretary, in coordination with OAT, AHRQ and CMS, 
to study the feasibility, advisability, and costs of: (1) 
providing coverage for telehealth services as part of home 
health services, including an evaluation on the equivalency of 
home health-related telehealth services to an in-person visit 
for purposes of eligibility and payment under Medicare; and (2) 
expanding the health care facilities at which Medicare-covered 
telehealth services are provided to include publicly funded 
mental health facilities. Within 18 months, the Secretary would 
be required to report to Congress with recommendations for 
legislation.

Reasons for Change

    Telehealth and telemonitoring services might enhance health 
outcomes for individuals with one or more chronic conditions, 
provide for comparable health outcomes to a face-to-face visit, 
facilitate better communication between providers, provide 
closer monitoring of patients, reduce overall healthcare costs, 
and improve access to care. These studies will help determine 
whether telehealth and telemonitoring services meet these 
objectives, and if so, would provide recommendations to enhance 
the provision or coverage of telehealth services under the 
Medicare program.

Effective Date

    Upon enactment.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 4157, the ``Health Information Technology 
Promotion Act of 2006.''

                       MOTION TO REPORT THE BILL

    The bill, H.R. 4157, as amended, was ordered favorably 
reported by a rollcall vote of 23 yeas to 17 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Shaw.......................        X   ........  .........  Mr. Stark........  ........        X
Mrs. Johnson...................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Herger.....................        X   ........  .........  Mr. Cardin.......  ........        X   .........
Mr. McCrery....................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Camp.......................        X   ........  .........  Mr. Lewis (GA)...  ........        X   .........
Mr. Ramstad....................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Jefferson....  ........        X   .........
Mr. English....................        X   ........  .........  Mr. Tanner.......  ........        X   .........
Mr. Hayworth...................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Weller.....................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Hulshof....................        X   ........  .........  Mr. Pomeroy......  ........        X   .........
Mr. Lewis (KY).................        X   ........  .........  Ms. Tubbs Jonesa.  ........        X   .........
Mr. Foley......................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Reynolds...................        X   ........  .........  Mr. Emanuel......  ........        X   .........
Mr. Ryan.......................        X
Mr. Cantor.....................        X
Mr. Linder.....................        X
Mr. Beauprez...................        X
Ms. Hart.......................        X
Mr. Chocola....................        X
Mr. Nunes......................        X
----------------------------------------------------------------------------------------------------------------

                          VOTES ON AMENDMENTS

    A rollcall vote was conducted on the following amendments 
to the Chairman's Amendment in the Nature of a Substitute.
    An amendment by Mr. Stark, which would which would strike 
section 3 of the Chairman's amendment was defeated by a 
rollcall vote of 17 yeas to 23 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Stark........        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. Lewis (GA)...        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Jefferson....        X   ........  .........
Mr. English....................  ........        X   .........  Mr. Tanner.......        X   ........  .........
Mr. Hayworth...................  ........        X   .........  Mr. Becerra......        X   ........  .........
Mr. Weller.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Mr. Hulshof....................  ........        X   .........  Mr. Pomeroy......        X   ........  .........
Mr. Lewis (KY).................  ........        X   .........  Ms. Tubbs Jones..        X   ........  .........
Mr. Foley......................  ........        X   .........  Mr. Thompson.....        X   ........  .........
Mr. Brady......................  ........        X   .........  Mr. Larson.......        X   ........  .........
Mr. Reynolds...................  ........        X   .........  Mr. Emanuel......        X   ........  .........
Mr. Ryan.......................  ........        X
Mr. Cantor.....................  ........        X
Mr. Linder.....................  ........        X
Mr. Beauprez...................  ........        X
Ms. Hart.......................  ........        X
Mr. Chocola....................  ........        X
Mr. Nunes......................  ........        X
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Emanuel, which would add a new section 
to assure the establishment and promotion of interoperability 
standards and certification and inspection processes and 
require the Federal Government to comply with standards when 
purchasing any new health information technology, was defeated 
by a rollcall vote of 17 yeas to 23 nays. The vote was as 
follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Stark........        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. Lewis (GA)...        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Jefferson....        X   ........  .........
Mr. English....................  ........        X   .........  Mr. Tanner.......        X   ........  .........
Mr. Hayworth...................  ........        X   .........  Mr. Becerra......        X   ........  .........
Mr. Weller.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Mr. Hulshof....................  ........        X   .........  Mr. Pomeroy......        X   ........  .........
Mr. Lewis (KY).................  ........        X   .........  Ms. Tubbs Jones..        X   ........  .........
Mr. Foley......................  ........        X   .........  Mr. Thompson.....        X   ........  .........
Mr. Brady......................  ........        X   .........  Mr. Larson.......        X   ........  .........
Mr. Reynolds...................  ........        X   .........  Mr. Emanuel......        X   ........  .........
Mr. Ryan.......................  ........        X
Mr. Cantor.....................  ........        X
Mr. Linder.....................  ........        X
Mr. Beauprez...................  ........        X
Ms. Hart.......................  ........        X
Mr. Chocola....................  ........        X
Mr. Nunes......................  ........        X
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Thompson which would direct the 
Secretary of Health and Human Services to establish a mechanism 
to fund through Medicare acquisition and support of health IT 
used by providers of health services, was defeated by a 
rollcall vote of 17 yeas to 23 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Stark........        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. Lewis (GA)...        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Jefferson....        X   ........  .........
Mr. English....................  ........        X   .........  Mr. Tanner.......        X   ........  .........
Mr. Hayworth...................  ........        X   .........  Mr. Becerra......        X   ........  .........
Mr. Weller.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Mr. Hulshof....................  ........        X   .........  Mr. Pomeroy......        X   ........  .........
Mr. Lewis (KY).................  ........        X   .........  Ms. Tubbs Jones..        X   ........  .........
Mr. Foley......................  ........        X   .........  Mr. Thompson.....        X   ........  .........
Mr. Brady......................  ........        X   .........  Mr. Larson.......        X   ........  .........
Mr. Reynolds...................  ........        X   .........  Mr. Emanuel......        X   ........  .........
Mr. Ryan.......................  ........        X
Mr. Cantor.....................  ........        X
Mr. Linder.....................  ........        X
Mr. Beauprez...................  ........        X
Ms. Hart.......................  ........        X
Mr. Chocola....................  ........        X
Mr. Nunes......................  ........        X
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Stark, which would disallow preemption 
of certain state laws related to privacy and allow individuals 
to seek damages from entities that improperly use or disclose 
identifiable health information, was defeated by a rollcall 
vote of 17 yeas to 23 nays. The vote was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Stark........        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. Lewis (GA)...        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Mr. Nussle.....................  ........        X   .........  Mr. McNulty......        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Jefferson....        X   ........  .........
Mr. English....................  ........        X   .........  Mr. Tanner.......        X   ........  .........
Mr. Hayworth...................  ........        X   .........  Mr. Becerra......        X   ........  .........
Mr. Weller.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Mr. Hulshof....................  ........        X   .........  Mr. Pomeroy......        X   ........  .........
Mr. Lewis (KY).................  ........        X   .........  Ms. Tubbs Jones..        X   ........  .........
Mr. Foley......................  ........        X   .........  Mr. Thompson.....        X   ........  .........
Mr. Brady......................  ........        X   .........  Mr. Larson.......        X   ........  .........
Mr. Reynolds...................  ........        X   .........  Mr. Emanuel......        X   ........  .........
Mr. Ryan.......................  ........        X
Mr. Cantor.....................  ........        X
Mr. Linder.....................  ........        X
Mr. Beauprez...................  ........        X
Ms. Hart.......................  ........        X
Mr. Chocola....................  ........        X
Mr. Nunes......................  ........        X
----------------------------------------------------------------------------------------------------------------

    An amendment by Messrs. Emanuel and Doggett, which would 
strike section 4 of the Chairman's amendment in the nature of a 
substitute, and replace it with provisions requiring the 
Secretary of Health and Human Services to modify privacy 
protections through regulations put forward as a result of the 
Health Insurance Portability and Accountability Act of 1996, 
was defeated by a rollcall vote of 17 yeas to 23 nays. The vote 
was as follows:

----------------------------------------------------------------------------------------------------------------
        Representatives             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas.....................  ........        X   .........  Mr. Rangel.......        X   ........  .........
Mr. Shaw.......................  ........        X   .........  Mr. Stark........        X   ........  .........
Mrs. Johnson...................  ........        X   .........  Mr. Levin........        X   ........  .........
Mr. Herger.....................  ........        X   .........  Mr. Cardin.......        X   ........  .........
Mr. McCrery....................  ........        X   .........  Mr. McDermott....        X   ........  .........
Mr. Camp.......................  ........        X   .........  Mr. Lewis (GA)...        X   ........  .........
Mr. Ramstad....................  ........        X   .........  Mr. Neal.........        X   ........  .........
Mr. Nussle.....................  ........  ........  .........  Mr. McNulty......        X   ........  .........
Mr. Johnson....................  ........        X   .........  Mr. Jefferson....        X   ........  .........
Mr. English....................  ........        X   .........  Mr. Tanner.......        X   ........  .........
Mr. Hayworth...................  ........        X   .........  Mr. Becerra......        X   ........  .........
Mr. Weller.....................  ........        X   .........  Mr. Doggett......        X   ........  .........
Mr. Hulshof....................  ........        X   .........  Mr. Pomeroy......        X   ........  .........
Mr. Lewis (KY).................  ........        X   .........  Ms. Tubbs Jones..        X   ........  .........
Mr. Foley......................  ........        X   .........  Mr. Thompson.....        X   ........  .........
Mr. Brady......................  ........        X   .........  Mr. Larson.......        X   ........  .........
Mr. Reynolds...................  ........        X   .........  Mr. Emanuel......        X   ........  .........
Mr. Ryan.......................  ........        X
Mr. Cantor.....................  ........        X
Mr. Linder.....................  ........        X
Mr. Beauprez...................  ........        X
Ms. Hart.......................  ........        X
Mr. Chocola....................  ........        X
Mr. Nunes......................  ........        X
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made concerning the effects on the budget of this bill, H.R. 
4157, as reported: The Committee fundamentally disagrees with 
the assessment of the Congressional Budget Office (CBO).
    The Committee believes H.R. 4157 will result in 
significantly reduced expenditures in both private and public 
sector health programs that are not reflected in the CBO 
estimate. The Committee believes CBO's assumption regarding 
baseline spending does not reflect the slow rate of adoption of 
health information technology, nor does it recognize how the 
legislation will speed the adoption and use of such technology.
    Even after the Committee highlighted numerous articles and 
academic studies on the benefits of health information 
technology on utilization of services, particularly lab 
services, CBO continues to believe the bill will result in 
increased utilization. Despite the bill's clear requirement 
that entities must enter into written agreements to improve the 
quality of care, to reduce medical errors and duplicative 
services, to promote quality or to enhance efficiency, CBO 
continues to believe volume of services would increase. In 
addition, the bill makes it illegal to condition gifts of 
donated technology on the value or volume of services. Legal 
experts and the Inspector General of the Department of Health 
and Human Services look at inappropriate indirect referral 
arrangements. CBO, however, believes such indirect arrangements 
will occur despite the legal prohibition in the legislation, 
and irrespective of the significant penalties under the Stark 
and anti-kickback statutes. CBO thus believes the provision 
will increase costs. The Committee fundamentally disagrees with 
this assessment and believes CBO has not provided any credible 
or material evidence to justify its claims.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that 
enactment of H.R. 4157 would provide new budget authority for 
the newly created Office of the National Coordinator for Health 
Information Technology. The Committee states the bill would not 
effect tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following report prepared by the CBO 
is provided.
                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 25, 2006.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4157, the Better 
Health Information System Act of 2006.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Tom Bradley.
            Sincerely,
                                          Donald B. Marron,
                                                   Acting Director.
    Enclosure.

H.R. 4157--Health Information Technology Promotion Act of 2006

    Summary: H.R. 4157 would amend the Public Health Service 
Act (PHSA) to codify the establishment and responsibilities of 
the Office of the National Coordinator for Health Information 
Technology (ONCHIT). In addition, the bill would modify the 
Social Security Act to:
           Establish ``safe harbors'' that would permit 
        gifts of health information technology that might 
        otherwise be subject to civil monetary penalties, 
        criminal penalties, or sanctions for violating the 
        prohibitions against certain types of inducements for 
        physician referrals; and
           Specify procedures for adopting updated 
        standards for the electronic exchange of health data, 
        and require that certain updated standards for coding 
        medical services be implemented in 2009.
    The amendments to the PHSA and the deadline for updated 
standards for coding medical services would affect spending 
subject to appropriation. Assuming appropriation of the 
necessary amounts, CBO estimates that implementing the bill 
would increase discretionary spending by $658 million over the 
2007-2011 period and reduce such spending by $150 million over 
the succeeding five years.
    Enacting the deadline for updated standards for coding 
medical services and the safe-harbor provisions would affect 
direct spending. CBO estimates those provisions would increase 
direct spending by $180 million over the 2007-2011 period and 
by $80 million during the following five years.
    CBO estimates that enacting the deadline for updated 
standards for coding medical services would reduce federal 
revenues by $26 million over the 2007-2011 period, and would 
increase federal revenues by $84 million over the succeeding 
five years. Social Security payroll taxes, which are off-
budget, account for about one-third of those amounts.
    H.R. 4157 would preempt, in some circumstances, certain 
state laws that govern the security and confidentiality of 
health information as well as laws that establish civil or 
criminal penalties for exchanging health information 
technology. Because those preemptions would limit the 
application of state laws, they would be intergovernmental 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that the costs of the mandates to states would be 
minimal and would not exceed the threshold established in UMRA 
($64 million in 2006, adjusted annually for inflation).
    Other provisions of the bill, notably new coding 
requirements and the safe-harbor provisions--for gifts of 
information technology, would affect states' spending, adding 
about $200 million to their costs over the 2007-2011 period. 
However, those provisions would not be intergovernmental 
mandates as defined in UMRA.
    The bill would impose private-sector mandates on health 
plans, providers, and clearing-houses by requiring them to 
adopt updated coding and transaction standards by specified 
future dates. CBO estimates that the direct cost of these 
provisions would exceed the threshold specified in UMRA for 
private-sector mandates ($128 million in 2006, adjusted 
annually for inflation) in the first three years following 
enactment of the bill.
    Estimated cost to the Federal Government: The estimated 
cost of H.R. 4157 is shown in the following table. The costs of 
this legislation fall within budget functions 550 (health) and 
570 (Medicare).

                                                        ESTIMATED BUDGETARY EFFECTS OF H.R. 4157
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             By fiscal year, in millions of dollars--
                                         ---------------------------------------------------------------------------------------------------------------
                                            2007     2008     2009     2010     2011     2012     2013     2014     2015     2016   2007-2011  2007-2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      CHANGES IN SPENDING SUBJECT TO APPROPRIATION

ONCHIT:
    Estimated Authorization Level.......      116      119      122      125        0        0        0        0        0        0       482        482
    Estimated Outlays...................       58       94      114      121       61       24        5        1        0        0       448        478
Medicare:
    Estimated Authorization Level.......        0      200       25       25     -200      -20        0        0        0        0        50         30
    Estimated Outlays...................        0       50       75       75       10      -70      -70      -40        0        0       210         30
Total, Changes in Discretionary
 Spending:
    Estimated Authorization Level.......      116      319      147      150     -200      -20        0        0        0        0       532        512
    Estimated Outlays...................       58      144      189      196       71      -46      -65      -39        0        0       658        508

                                                               CHANGES IN DIRECT SPENDING

Medicaid, Safe Harbors..................       10       15       15       15       20       20       20       25       25       25        75        190
Medicare, Safe Harbors..................       15       15       15       15       15       15       20       20       20       20        75        170
                                         ---------------------------------------------------------------------------------------------------------------
    Subtotal, Safe Harbors..............       25       30       30       30       35       35       40       45       45       45       150        360
Medicaid, ICD-10........................        5       20       25        5      -25      -40      -30      -25      -20      -15        30       -100
Total, Changes in Direct Spending              30       50       55       35       10       -5       10       20       25       30       180        260
 (Budget Authority and Outlays).........
                                                                   CHANGES IN REVENUE

Income and HI Payroll Taxes (on budget).       -2      -10      -14       -2       12       19       13       10        7        6       -16         39
Social Security Payroll Taxes (off-            -1       -6       -8       -1        6       10        7        5        4        3       -10         19
 budget)................................
                                         ---------------------------------------------------------------------------------------------------------------
    Total, Changes in Revenue...........       -3      -16      -22       -3       18       29       20       15       11        9       -26         58
--------------------------------------------------------------------------------------------------------------------------------------------------------
* = Increase or decrease of less than $500,000.
Notes: ICD-I0 = 10th revision of the International Classification of Diseases; HI = Hospital Insurance (Part A of Medicare); ONCHIT = Office of the
  National Coordinator for Health Information Technology.

    Basis of estimate: H.R. 4157 would amend the Public Health 
Service Act to codify the establishment and responsibilities of 
the Office of the National Coordinator for Health Information 
Technology, establish safe harbors for gifts of health 
information technology, and specify procedures and establish 
deadlines for adopting updated standards for the electronic 
exchange of health data.

               HEALTH INFORMATION TECHNOLOGY AND QUALITY

    On April 27, 2004, the President issued Executive Order 
13335, which established within the Office of the Secretary of 
Health and Human Services the position of National Coordinator 
of Health Information Technology, The Secretary subsequently 
established the Office of the National Coordinator of Health 
Information Technology to support the adoption of interoperable 
health information technology. Funding for ONCHIT totaled $62 
million for 2006: $43 million was appropriated to the office, 
and $19 million was reprogrammed from other activities. The 
President requested $116 million for ONCHIT for 2007.
    The National Coordinator for Health Information Technology 
serves as the senior advisor to the President and the Secretary 
of Health and Human Services on all health information 
technology programs and initiatives, and is responsible for:
           Developing and maintaining a strategic plan 
        to guide the nationwide implementation of electronic 
        health records in both the public and private health 
        care sectors;
           Coordinating spending by federal agencies 
        for health information technology programs and 
        initiatives; and
           Coordinating outreach activities to the 
        private sector on health information technology 
        matters.
    H.R. 4157 would codify the establishment and 
responsibilities of ONCHIT. The bill would require the 
Secretary to prepare reports on certain activities initiated 
pursuant to the executive order to promote the development of a 
nationwide health information network and on issues related to 
the development, operation, and implementation of state, 
regional, and community organizations that share and coordinate 
the deployment and use of health information technology (so-
called health information exchanges).
    The bill would authorize the appropriation for 2006 through 
2010 of such sums as are necessary to conduct ONCHIT's 
activities. Based on information provided by the Department of 
Health and Human Services (HHS), CBO estimates that funding the 
authorized activities would require the appropriation of about 
$116 million in 2007 and that funding requirements would grow 
with inflation in subsequent years. Assuming appropriation of 
those amounts, CBO estimates that ONCHIT's activities would 
cost $58 million in 2007, $448 million over the 2007-2011 
period, and $478 million over the 2007-2016 period.

        SAFE HARBORS FOR GIFTS OF HEALTH INFORMATION TECHNOLOGY

    H.R. 4157 would establish ``safe harbors'' for donations of 
health information technology that might otherwise be subject 
to civil monetary penalties, criminal penalties, or sanctions 
for violating the prohibitions on certain physician referrals. 
The bill would permit any entity to provide health information 
technology (hardware, software, or related services) to 
physicians. CBO estimates that provision would increase direct 
spending by $25 million in 2007, $150 million over the 2007-
2011 period, and $360 million over the 2007-2016 period; 
federal spending for Medicaid and Medicare would each account 
for about half of those increases.
    The Administration has identified the current application 
of those penalties and sanctions as an impediment to the 
success of efforts to promote the widespread adoption of 
interoperable health information technology. Accordingly, the 
HHS Office of the Inspector General and the Centers for 
Medicare & Medicaid Services (CMS), under authority existing in 
current law, are engaged in a rule-making process to establish 
safe harbors for gifts of health information technology that 
would balance enforcement of program-integrity rules with 
promotion of the adoption of interoperable health information 
technology. In the preliminary stage of the rule-making 
process, those offices described a framework that would limit:
           Entities eligible for the safe harbor (a 
        hospital may donate to members of its medical staff; a 
        group practice may donate to physicians who are members 
        of the group practice; and Medicare Advantage plans and 
        prescription drug plans may donate to their prescribing 
        physicians), and
           Eligible donations (software and related 
        training).
    It is likely that the final rules will specify a somewhat 
broader set of eligible entities and donations than the 
preliminary guidelines. In particular, we anticipate that 
hospitals and group practices will be allowed to donate to a 
broader set of physicians and that the eligible gifts will 
include some equipment.
    However, CBO expects that, based on concerns about program 
integrity, the final rules will establish a set of eligible 
entities that is narrower than those specified in the bill. 
Thus, clinical laboratories, imaging centers, suppliers of 
durable medical equipment, pharmaceutical manufacturers, and 
other entities that probably will not be eligible for the safe 
harbor under current law would qualify under the bill. Although 
the legislation would prohibit the contract between the donor 
and the physician from including a condition that links the 
gift of technology to the volume or value of referrals to the 
donor, CBO expects that, in some cases, that condition would be 
implicit (or would be perceived by the physician as being 
implicit). To the extent that a gift might lead to a shift of 
business from one provider to another, such a development would 
not affect the cost of the government's health care programs. 
But CBOestimates that, in aggregate, such donations by entities 
other than hospitals, group practices, Medicare Advantage plans, and 
prescription drug plans would lead to an increase in the volume of 
services that Medicare and state Medicaid programs pay for, thus 
increasing costs.
    Information furnished by CMS, the HHS Inspector General, 
and the Department of Justice indicates that some physicians 
who receive gifts of value from suppliers substantially 
increase the volume of services they order. CBO's estimate 
assumes that the number of physicians inclined to do so is 
quite small--less than 1 percent of practicing physicians. 
Moreover, CBO expects that many of those physicians would not 
receive donations of technology from donors who would be 
covered by the safe harbors under H.R. 4157 but not covered 
under current law. Accordingly, CBO's estimate ofthe additional 
direct spending for Medicare and Medicaid represents an 
increase in spending for services furnished by the newly-
protected categories of donors of less than one-tenth of a 
percent. (Total federal spending for such services in those two 
programs is estimated to total about $55 billion in 2006.)

           BUDGETARY EFFECTS OF HEALTH INFORMATION TECHNOLOGY

    CBO expects that the use of information technology in the 
health care sector will continue to grow under current law, and 
that expanded use of such technology will likely produce 
improvements in the quality of the health care provided to U.S. 
residents. In some cases, that improvement in the quality of 
health care might mean less use of medical services; in other 
cases, it might mean an increase in utilization.
    Under current law, CBO also expects that the expanded use 
of health information technology will likely result in 
increased efficiency in the health care system. That is, the 
use of information technology will result in more health 
benefits per dollar of spending than would otherwise be 
realized.
    Experts caution, however, that the evidence is mixed 
concerning whether those improvements in quality and efficiency 
will also result in lower spending for health care, either in 
the private sector or for government programs.\1\ In her recent 
testimony to the Senate Subcommittee on Technology, Innovation, 
and Competitiveness, Dr. Carolyn Clancy (Director of the Agency 
for Health Research and Quality) noted that, if poorly designed 
or implemented, health information technology will not bring 
those benefits, and in some cases may even lead to new medical 
errors and potential costs. She also noted that achieving 
improvements in health care and realizing potential cost 
savings will require real process change and will not result 
from simply acquiring and deploying hardware and software.
---------------------------------------------------------------------------
    \1\See, for example:
    Testimony of Carolyn Clancy, MD to the Subcommittee on Technology, 
Innovation and Competitiveness of the Senate Committee on Commerce, 
Science, and Transportation, June 21, 2006. (http://
commerce.senate.gov/public/XX--files/Clancy062106. pdf)
    Clifford Goodman, ``Savings In Electronic Medical Record Systems? 
Do It For The Quality'', Health Affairs, Sept/Oct. 2005. (http://
content.healthaffairs.org/cgi/content/full/24/5/1124)
    Paul B. Ginsburg, Ph.D., ``Controlling Health Care Costs'', New 
England Journal of Medicine, Oct 14, 2004. (http://content.nejm.org/
cgi/content/full/351/16/1591)
    Jaan Sidorov, ``It Ain't Necessarily So: The Electronic Health 
Record And The Unlikely Prospect Of Reducing Health Care Costs'', 
Health Affairs, July/August 2006. (http://content.healthaffairs.org/
cgi/reprint/25/4/1079)
    James Walker, ``Electronic Medical Records And Health Care 
Transformation'', Health Affairs, Sept./Oct 2005. (http://
content.healthaffairs.org/cgi/content/full/24/5/1118)
---------------------------------------------------------------------------
    To the extent that health information technology will 
result in lower spending for health care, much of those savings 
would not be passed through as a reduction in direct spending 
for federal programs--particularly Medicare--under current law. 
For example, two areas account for much of the potential 
savings reported in the literature: reductions in the cost of 
care during a hospital stay, and administrative savings for 
providers and claims processors. Under current law, Medicare's 
payment rates for hospital inpatient services are updated each 
year to reflect changes in general inflation rates, and do not 
reflect changes in the costs that hospitals incur (either for 
administrative activities or for providing health care 
services). Medicare might realize savings in the cost of 
processing claims. However, funding for Medicare's claims-
processing activities is subject to appropriation, so such 
savings could only be realized through the appropriations 
process.
    In preparing an estimate of the budgetary effect of 
legislation involving health information technology, CBO 
focuses on the extent to which the bill would change the rate 
at which the use of health technology will grow or how well 
that technology will be designed and implemented under current 
law. CBO then evaluates the extent to which those changes, in 
conjunction with other provisions in current law and in the 
proposed legislation, would affect direct spending.
    CBO estimates that enacting H.R. 4157 would not 
significantly affect either the rate at which the use of health 
technology will grow or how well that technology will be 
designed and implemented. Therefore, with the exception of the 
effects on spending described above, CBO estimates enacting the 
bill would have no effect on spending by the federal 
government.

          STANDARDS FOR THE ELECTRONIC EXCHANGE OF HEALTH DATA

    H.R. 4157 would require the Secretary of HHS to establish 
expedited procedures for adopting updates to standards that 
enable the electronic exchange of health data.
    The bill would require that two sets of standards apply to 
certain health information transactions by April 1, 2009: the 
``X12'' standards developed by the Accredited Standards 
Committee for electronic data interchange, and the updated 
telecommunication standards adopted by the National Council for 
Prescription Drug Programs. CBO estimates that implementing 
those provisions would not have a significant effect on federal 
spending.
    In addition, the bill would require health plans, 
providers, and clearinghouses to adopt the 10th revision of the 
International Classification of Diseases (ICD-10) by October 1, 
2009, for all services currently submitted for payment using 
codes specified in the 9th revision (ICD-9). Under current law, 
CBO expects that the ICD-10 standard will be adopted by the end 
of fiscal year 2012.
    Providers and health plans will incur costs for moving to 
ICD-10 no matter when the transition occurs. Many providers and 
health plans will purchase or upgrade computer hardware and 
software to handle the new codes, which are longer and contain 
alphanumeric characters. In addition, there will be costs to 
train people to use the new codes, and reductions in 
productivity while they become familiar with the new system.
    There also will be benefits of moving to ICD-10, although 
they are more difficult to estimate and are subject to greater 
uncertainty. The increased specificity and clinical detail of 
the new set of codes will reduce providers' and plans' costs. 
For example, the more accurate coding will lower processing 
costs through a reduction in the number of rejected claims that 
must be resubmitted. Also, the more detailed information 
included in the new codes may discourage improper or fraudulent 
claims, which would lower plans' costs. However, those savings 
will be relatively low in the first few years because error 
rates will be higher during an initial period of unfamiliarity 
with the new system, and new algorithms will need to be 
developed for detecting improper claims under the new system.
    Other changes could occur under the ICD-10 system that 
might be beneficial to patients and result in better health 
outcomes, but would not necessarily lower (and might even 
raise) health care costs. For example, more accurate payments 
for new procedures that would be possible under the new coding 
system might result in newer and more appropriate procedures 
being performed than under the old system. Health plans' costs 
would decrease to the extent that less costly procedures were 
performed, but would increase to the extent that more or more 
costly procedures were performed.
    CBO expects that implementing the ICD-10 system will result 
in costs to providers and health plans in the first few years, 
with benefits beginning later. The shift to an earlier 
implementation date under the bill would thus result in 
increased costs in the near term and subsequent savings that 
would be realized earlier than under current law. In addition, 
the reduced amount of time that providers and plans would have 
to adopt ICD-10 under the bill, combined with the transition to 
updated standards for claims and transactions that also will be 
occurring during that same time period, would increase costs as 
providers and health plans would have to compete for scarce 
resources such as programmers and consultants.
    Estimated Effect on Federal Revenues. CBO estimates that 
the net effect of accelerating implementation of the ICD-10 
system would be to increase the cost of private health care 
benefits and health insurance premiums in the near term, and 
decrease such costs in later years, compared to current law. 
The changes would be small--an increase of 0.03 percent in 
2008, followed by an even smaller decrease in later years. 
Because health care benefits generally are excluded from 
taxable incomes, H.R. 4157 would reduce federal tax revenues in 
the near term by increasing the share of employee compensation 
furnished as tax-excluded health benefits rather than as 
taxable wages and salaries. That pattern would be reversed in 
subsequent years. CBO estimates that enacting H.R. 4157 would 
reduce federal revenues by $3 million in 2007 and by $26 
million over the 2007-2011 period; it would increase revenues 
by $58 million over the 2007-2016 period. Social Security 
payroll taxes, which are off budget, account for about one-
third of those amounts.
    Estimated Effect on Direct Spending. The Medicaid program 
would be subject to a similar pattern of acceleration of both 
the costs of implementing the ICD-10 coding system and the 
subsequent realization of savings for health benefits. CBO 
estimates that provision would increase Medicaid spending by 
$30 million over the 2007-2011 period, and would reduce 
spending for Medicaid by $100 million over the 2007-2016 
period.
    CBO expects that accelerating the implementation of the 
ICD-10 coding system would not have a significant effect on 
direct spending for Medicare for two reasons. First, Medicare 
funding for processing claims--including the implementation and 
maintenance of claims-processing systems--is subject to 
appropriation. Second, under current law, the Medicare program 
recalibrates payment rates each year to ensure that coding 
changes are implemented on a budget-neutral basis.
    Estimated Effect on Spending Subject to Appropriation. 
Medicare's spending to implement, operate, and maintain 
claims--processing systems--including the cost of transition to 
the ICD-10 system--is subject to appropriation. In general, 
accelerating implementation of the ICD-10 system would shift 
implementation costs from the 2012-2016 period into the 2008-
2011 period. Assuming appropriation of the necessary amounts, 
CBO estimates that thecost to Medicare of implementing the ICD-
10 system in 2009 would be $210 million over the 2007-2011 period and 
$30 million over the 2007-2016 period.
    Estimated impact on state, local, and tribal governments: 
H.R. 4157 would preempt, in some circumstances, certain state 
laws that govern the security and confidentiality of health 
information as well as laws that establish civil or criminal 
penalties for exchanging health information technology. 
Although those preemptions would be intergovernmental mandates 
as defined in UMRA, CBO estimates that the costs of the 
mandates would be small and thus would not exceed the threshold 
established in UMRA ($64 million in 2006, adjusted annually for 
inflation).
    The bill would direct the Secretary of HHS to conduct a 
study of the variation in state security and confidentiality 
laws, compare the range of those laws with existing federal 
standards, and make recommendations to the Congress for 
establishing greater commonality among laws. If the Congress 
takes no action within 18 months after receiving the 
recommendations, they would become regulations with the force 
of law. The regulations would supersede any state security or 
confidentiality laws that relate to but are different from 
those standards. CBO estimates that this preemption would not 
significantly affect the budgets of state, local, or tribal 
governments because it would impose no duty on those 
governments that would result in additional spending or a loss 
of revenues.
    The bill also would change safe-harbor guidelines for the 
exchange of health information technology, and it would preempt 
state laws that would assess civil or criminal penalties on 
exchanges of information that the bill would allow. Although 
this preemption could affect the ability of states to assess 
penalties and collect revenues, CBO estimates that such losses 
would be small.

                             OTHER IMPACTS

    The bill would require health plans, providers, and 
clearing houses to adopt revisions to medical coding 
requirements by 2009. State, local, and tribal governments are 
excluded from the definitions of those entities in ERISA, and 
thus would not be directly subject to the required changes if 
they operate their own health plans for employees. However, 
from a practical perspective, they would have to comply in 
order for their health plans to be able to communicate 
information to providers, hospitals, other health plans, and 
clearing houses. CBO estimates that employee health plans of 
those governments would incur additional expenses of about $125 
million over the 2007-2011 period in order to meet the 2009 
deadline.
    Those five-year costs are net of savings that would begin 
to accrue to governments in 2011. In that year, savings are 
estimated to total about $20 million.
    The Medicaid program also would be subject to the new 
deadline, but because states have significant flexibility in 
that program to alter their programmatic and financial 
responsibilities to meet the new requirement, the change would 
not be an intergovernmental mandate as defined in UMRA. CBO 
estimates that state spending would increase by about $20 
million over the 2007-2011 period in order to meet the new 
coding deadline for Medicaid programs. Again, those five-year 
costs are net of savings that would begin to accrue in 2011.
    The safe-harbor provisions would result in additional 
spending by states for Medicaid totaling about $55 million over 
the 2007-2011 period, CBO estimates.
    Estimated impact on the private sector: The bill would 
impose private-sector mandates on health plans, providers, and 
clearing houses by requiring them to adopt updated coding and 
transaction standards by specified future dates. CBO estimates 
that the direct cost of these mandates would exceed the 
threshold specified in UMRA ($128 million in 2006, adjusted 
annually for inflation) in each of the first three years 
following enactment of the bill.
    First, the bill would require the adoption of the 10th 
revision of the International Classification of Diseases (ICD-
10) by October 1, 2009. Under current law, CBO expects that 
those updated standards will be adopted by the end of fiscal 
year 2012. CBO estimates the direct cost to the mandated 
entities would be $320 million in 2007, $470 million in 2008, 
$490 million in 2009, and $70 million in 2010. The new 
requirement would result in direct savings of $330 million in 
2011 (and additional amounts in later years) because a 
significant part of the adoption costs would be shifted to the 
earlier years under the bill.
    Second, the bill would require the adoption of updated 
standards for claims transactions by April 1, 2009. 
Specifically, health plans, providers, and clearing houses 
would be required to adopt updated versions of the Accredited 
Standards Committee X12 standards and the National Council for 
Prescription Drug Programs Telecommunication Standards. CBO 
expects that the deadline specified in the bill would be met 
under current law. Thus, the mandate would impose no additional 
costs on the mandated entities.
    Estimate Prepared by: Federal Costs: Tom Bradley, Jeanne De 
Sa, and Camile Williams; Impact on state, local and tribal 
governments: Leo Lex; Impact on the private sector: Stuart 
Hagen and Julie Lee.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee, based on public hearing testimony and 
information from the Administration, concluded that it is 
appropriate and timely to consider the bill as reported.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill H.R. 4157 makes de minimis authorization of funding.

                 C. Constitutional Authority Statement

    With respect to clause 3(d)(1) of rule XIII of the Rules of 
the House of Representatives, relating to Constitutional 
Authority, the Committee states that the Committee's action in 
reporting the bill is derived from Article 1 of the 
Constitution, Section 8 (`The Congress shall have power to lay 
and collect taxes, duties, imposts and excises, to pay the 
debts and to provide for * * * the general Welfare of the 
United States.')

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandate Act of 1995 (P.L. 104-4). The Committee 
has determined that the bill does not contain Federal mandates 
on the private sector. The Committee has determined that the 
bill does not impose a Federal intergovernmental mandate on 
State, local, or tribal governments.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                       PUBLIC HEALTH SERVICE ACT




           *       *       *       *       *       *       *
TITLE II--ADMINISTRATION AND MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *



                 PART D--HEALTH INFORMATION TECHNOLOGY

SEC. 271. OFFICE OF THE NATIONAL COORDINATOR FOR HEALTH INFORMATION 
                    TECHNOLOGY.

  (a) Establishment.--There is established within the 
Department of Health and Human Services an Office of the 
National Coordinator for Health Information Technology that 
shall be headed by the National Coordinator for Health 
Information Technology (referred to in this section as the 
``National Coordinator''). The National Coordinator shall be 
appointed by the President and shall report directly to the 
Secretary. The National Coordinator shall be paid at a rate 
equal to the rate of basic pay for level IV of the Executive 
Schedule.
  (b) Goals of Nationwide Interoperable Health Information 
Technology Infrastructure.--The National Coordinator shall 
perform the duties under subsection (c) in a manner consistent 
with the development of a nationwide interoperable health 
information technology infrastructure that--
          (1) improves health care quality, reduces medical 
        errors, increases the efficiency of care, and advances 
        the delivery of appropriate, evidence-based health care 
        services;
          (2) promotes wellness, disease prevention, and 
        management of chronic illnesses by increasing the 
        availability and transparency of information related to 
        the health care needs of an individual for such 
        individual;
          (3) ensures that appropriate information necessary to 
        make medical decisions is available in a usable form at 
        the time and in the location that the medical service 
        involved is provided;
          (4) produces greater value for health care 
        expenditures by reducing health care costs that result 
        from inefficiency, medical errors, inappropriate care, 
        and incomplete information;
          (5) promotes a more effective marketplace, greater 
        competition, greater systems analysis, increased 
        choice, enhanced quality, and improved outcomes in 
        health care services;
          (6) improves the coordination of information and the 
        provision of such services through an effective 
        infrastructure for the secure and authorized exchange 
        and use of health care information; and
          (7) ensures that the confidentiality of individually 
        identifiable health information of a patient is secure 
        and protected.
  (c) Duties of National Coordinator.--
          (1) Strategic planner for interoperable health 
        information technology.--The National Coordinator shall 
        maintain, direct, and oversee the continuous 
        improvement of a strategic plan to guide the nationwide 
        implementation of interoperable health information 
        technology in both the public and private health care 
        sectors consistent with subsection (b).
          (2) Principal advisor to hhs.--The National 
        Coordinator shall serve as the principal advisor of the 
        Secretary on the development, application, and use of 
        health information technology, and coordinate the 
        health information technology programs of the 
        Department of Health and Human Services.
          (3) Coordinator of federal government activities.--
                  (A) In general.--The National Coordinator 
                shall serve as the coordinator of Federal 
                Government activities relating to health 
                information technology.
                  (B) Specific coordination functions.--In 
                carrying out subparagraph (A), the National 
                Coordinator shall provide for--
                          (i) the development and approval of 
                        standards used in the electronic 
                        creation, maintenance, or exchange of 
                        health information; and
                          (ii) the certification and inspection 
                        of health information technology 
                        products, exchanges, and architectures 
                        to ensure that such products, 
                        exchanges, and architectures conform to 
                        the applicable standards approved under 
                        clause (i).
                  (C) Use of private entities.--The National 
                Coordinator shall, to the maximum extent 
                possible, contract with or recognize private 
                entities in carrying out subparagraph (B).
                  (D) Uniform application of standards.--A 
                standard approved under subparagraph (B)(i) for 
                use in the electronic creation, maintenance, or 
                exchange of health information shall preempt a 
                standard adopted under State law, regulation, 
                or rule for such a use.
          (4) Intragovernmental coordinator.--The National 
        Coordinator shall ensure that health information 
        technology policies and programs of the Department of 
        Health and Human Services are coordinated with those of 
        relevant executive branch agencies and departments with 
        a goal to avoid duplication of effort and to ensure 
        that each agency or department conducts programs within 
        the areas of its greatest expertise and its mission in 
        order to create a national interoperable health 
        information system capable of meeting national public 
        health needs effectively and efficiently.
          (5) Advisor to omb.--The National Coordinator shall 
        provide to the Director of the Office of Management and 
        Budget comments and advice with respect to specific 
        Federal health information technology programs.
  (d) Authorization of Appropriations.--There are authorized to 
be appropriated such sums as may be necessary to carry out this 
section for each of fiscal years 2006 through 2010.

           *       *       *       *       *       *       *

                              ----------                              


                          SOCIAL SECURITY ACT



           *       *       *       *       *       *       *
     TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE 
                             SIMPLIFICATION

Part A--General Provisions

           *       *       *       *       *       *       *


                        CIVIL MONETARY PENALTIES

  Sec. 1128A. (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (4)(A) For purposes of this subsection, a payment described 
in paragraph (1) does not include any nonmonetary remuneration 
(in the form of health information technology and related 
services) made on or after the HIT effective date (as defined 
in subparagraph (B)(ii)) by a hospital or critical access 
hospital to a physician if the following requirements are met:
          (i) The provision of such remuneration is made 
        without a condition that--
                  (I) limits or restricts the use of the health 
                information technology to services provided by 
                the physician to individuals receiving services 
                at the location of the hospital or critical 
                access hospital providing such technology;
                  (II) limits or restricts the use of the 
                health information technology in conjunction 
                with other health information technology; or
                  (III) takes into account the volume or value 
                of referrals (or other business generated) by 
                the physician to the hospital or critical 
                access hospital.
          (ii) Such remuneration is arranged for in a written 
        agreement that is signed by a representative of the 
        hospital or critical access hospital and by the 
        physician and that specifies the remuneration made and 
        states that the provision of such remuneration is made 
        for the primary purpose of better coordination of care 
        or improvement of health care quality or efficiency.
  (B) For purposes of subparagraph (A) and sections 
1128B(b)(3)(J) and 1877(e)(9)--
          (i) the term ``health information technology'' means 
        hardware, software, license, intellectual property, 
        equipment, or other information technology (including 
        new versions, upgrades, and connectivity) or related 
        services used for the electronic creation, maintenance, 
        and exchange of clinical health information; and
          (ii) the term ``HIT effective date'' means the date 
        that is 180 days after the date of the enactment of 
        this paragraph.

           *       *       *       *       *       *       *


   CRIMINAL PENALTIES FOR ACTS INVOLVING FEDERAL HEALTH CARE PROGRAMS

  Sec. 1128B. (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (3) Paragraphs (1) and (2) shall not apply to--
          (A) * * *

           *       *       *       *       *       *       *

          (G) the waiver or reduction by pharmacies (including 
        pharmacies of the Indian Health Service, Indian tribes, 
        tribal organizations, and urban Indian organizations) 
        of any cost-sharing imposed under part D of title 
        XVIII, if the conditions described in clauses (i) 
        through (iii) of section 1128A(i)(6)(A) are met with 
        respect to the waiver or reduction (except that, in the 
        case of such a waiver or reduction on behalf of a 
        subsidy eligible individual (as defined in section 
        1860D-14(a)(3)), section 1128A(i)(6)(A) shall be 
        applied without regard to clauses (ii) and (iii) of 
        that section); [and]
          (H) any remuneration between a federally qualified 
        health center (or an entity controlled by such a health 
        center) and an MA organization pursuant to a written 
        agreement described in section 1853(a)(4)[.];
          [(H)] (I) any remuneration between a health center 
        entity described under clause (i) or (ii) of section 
        1905(l)(2)(B) and any individual or entity providing 
        goods, items, services, donations, loans, or a 
        combination thereof, to such health center entity 
        pursuant to a contract, lease, grant, loan, or other 
        agreement, if such agreement contributes to the ability 
        of the health center entity to maintain or increase the 
        availability, or enhance the quality, of services 
        provided to a medically underserved population served 
        by the health center entity[.]; and
          (J) any nonmonetary remuneration (in the form of 
        health information technology, as defined in section 
        1128A(b)(4)(B)(i), and related services) solicited or 
        received by a person on or after the HIT effective date 
        (as defined in section 1128A(b)(4)(B)(ii)) (or offered 
        or paid to a person on or after such date) if--
                  (i) such remuneration is solicited or 
                received (or offered or paid) without a 
                condition that--
                          (I) limits or restricts the use of 
                        the health information technology to 
                        services provided by the person to 
                        individuals receiving services at the 
                        location of the entity providing such 
                        technology;
                          (II) limits or restricts the use of 
                        the health information technology in 
                        conjunction with other health 
                        information technology; or
                          (III) takes into account the volume 
                        or value of referrals (or other 
                        business generated) by the person to 
                        the entity providing such technology; 
                        and
                  (ii) such remuneration is arranged for in a 
                written agreement that is signed by a 
                representative of the entity and by the 
                physician and that specifies the remuneration 
                made and states that the provision of such 
                remuneration is made for the primary purpose of 
                better coordination of care or improvement of 
                health care quality or efficiency.

           *       *       *       *       *       *       *


Part C--Administrative Simplification

           *       *       *       *       *       *       *


                  TIMETABLES FOR ADOPTION OF STANDARDS

  Sec. 1174. (a) * * *
  (b) Additions and Modifications to Standards.--
          (1) In general.--Except as provided in paragraph (2), 
        the Secretary shall review the standards adopted under 
        section 1173, and shall adopt modifications to the 
        standards (including additions to the standards), as 
        determined appropriate, but not more frequently than 
        once every 12 months and in accordance with paragraph 
        (3). Any addition or modification to a standard shall 
        be completed in a manner which minimizes the disruption 
        and cost of compliance. For purposes of this subsection 
        and section 1173(c)(2), the term ``modification'' 
        includes a new version or a version upgrade.

           *       *       *       *       *       *       *

          (3) Expedited procedures for adoption of additions 
        and modifications to standards.--
                  (A) In general.--For purposes of paragraph 
                (1), the Secretary shall provide for an 
                expedited upgrade program (in this paragraph 
                referred to as the ``upgrade program''), in 
                accordance with this paragraph, to develop and 
                approve additions and modifications to the 
                standards adopted under section 1173(a) to 
                improve the quality of such standards or to 
                extend the functionality of such standards to 
                meet evolving requirements in health care.
                  (B) Publication of notices.--Under the 
                upgrade program:
                          (i) Voluntary notice of initiation of 
                        process.--Not later than 30 days after 
                        the date the Secretary receives a 
                        notice from a standard setting 
                        organization that the organization is 
                        initiating a process to develop an 
                        addition or modification to a standard 
                        adopted under section 1173, the 
                        Secretary shall publish a notice in the 
                        Federal Register that--
                                  (I) identifies the subject 
                                matter of the addition or 
                                modification;
                                  (II) provides a description 
                                of how persons may participate 
                                in the development process; and
                                  (III) invites public 
                                participation in such process.
                          (ii) Voluntary notice of preliminary 
                        draft of additions or modifications to 
                        standards.--Not later than 30 days 
                        after the date the Secretary receives a 
                        notice from a standard setting 
                        organization that the organization has 
                        prepared a preliminary draft of an 
                        addition or modification to a standard 
                        adopted by section 1173, the Secretary 
                        shall publish a notice in the Federal 
                        Register that--
                                  (I) identifies the subject 
                                matter of (and summarizes) the 
                                draft;
                                  (II) specifies the procedure 
                                for obtaining documentation for 
                                the draft;
                                  (III) provides a description 
                                of how persons may submit 
                                comments in writing and at any 
                                public hearing or meeting held 
                                by the organization on the 
                                draft; and
                                  (IV) invites submission of 
                                such comments and participation 
                                in such hearing or meeting.
                          (iii) Notice of proposed addition or 
                        modification to standards.--Not later 
                        than 30 days after the date the 
                        Secretary receives a notice from a 
                        standard setting organization that the 
                        organization has a proposed addition or 
                        modification to a standard adopted 
                        under section 1173 that the 
                        organization intends to submit under 
                        subparagraph (D)(iii), the Secretary 
                        shall publish a notice in the Federal 
                        Register that contains, with respect to 
                        the proposed addition or modification, 
                        the information required in the notice 
                        under clause (ii) with respect to a 
                        preliminary draft of an addition or 
                        modification.
                          (iv) Construction.--Nothing in this 
                        paragraph shall be construed as 
                        requiring a standard setting 
                        organization to request the notices 
                        described in clauses (i) and (ii) with 
                        respect to an addition or modification 
                        to a standard in order to qualify for 
                        an expedited determination under 
                        subparagraph (C) with respect to a 
                        proposal submitted to the Secretary for 
                        adoption of such addition or 
                        modification.
                  (C) Provision of expedited determination.--
                Under the upgrade program and with respect to a 
                proposal by a standard setting organization for 
                an addition or modification to a standard 
                adopted under section 1173, if the Secretary 
                determines that the standard setting 
                organization developed such addition or 
                modification in accordance with the 
                requirements of subparagraph (D) and the 
                National Committee on Vital and Health 
                Statistics recommends approval of such addition 
                or modification under subparagraph (E), the 
                Secretary shall provide for expedited treatment 
                of such proposal in accordance with 
                subparagraph (F).
                  (D) Requirements.--The requirements under 
                this subparagraph with respect to a proposed 
                addition or modification to a standard by a 
                standard setting organization are the 
                following:
                          (i) Request for publication of 
                        notice.--The standard setting 
                        organization submits to the Secretary a 
                        request for publication in the Federal 
                        Register of a notice described in 
                        subparagraph (B)(iii) for the proposed 
                        addition or modification.
                          (ii) Process for receipt and 
                        consideration of public comment.--The 
                        standard setting organization provides 
                        for a process through which, after the 
                        publication of the notice referred to 
                        under clause (i), the organization--
                                  (I) receives and responds to 
                                public comments submitted on a 
                                timely basis on the proposed 
                                addition or modification before 
                                submitting such proposed 
                                addition or modification to the 
                                National Committee on Vital and 
                                Health Statistics under clause 
                                (iii); and
                                  (II) makes publicly available 
                                a written explanation for its 
                                response in the proposed 
                                addition or modification to 
                                comments submitted on a timely 
                                basis.
                          (iii) Submittal of final proposed 
                        addition or modification to ncvhs.--
                        After completion of the process under 
                        clause (ii), the standard setting 
                        organization submits the proposed 
                        addition or modification to the 
                        National Committee on Vital and Health 
                        Statistics for review and consideration 
                        under subparagraph (E). Such submission 
                        shall include information on the 
                        organization's compliance with the 
                        notice and comment requirements (and 
                        responses to those comments) under 
                        clause (ii).
                  (E) Hearing and recommendations by national 
                committee on vital and health statistics.--
                Under the upgrade program, upon receipt of a 
                proposal submitted by a standard setting 
                organization under subparagraph (D)(iii) for 
                the adoption of an addition or modification to 
                a standard, the National Committee on Vital and 
                Health Statistics shall provide notice to the 
                public and a reasonable opportunity for public 
                testimony at a hearing on such addition or 
                modification. The Secretary may participate in 
                such hearing in such capacity (including 
                presiding ex officio) as the Secretary shall 
                determine appropriate. Not later than 120 days 
                after the date of receipt of the proposal, the 
                Committee shall submit to the Secretary its 
                recommendation to adopt (or not adopt) the 
                proposed addition or modification.
                  (F) Determination by secretary to accept or 
                reject national committee on vital and health 
                statistics recommendation.--
                          (i) Timely determination.--Under the 
                        upgrade program, if the National 
                        Committee on Vital and Health 
                        Statistics submits to the Secretary a 
                        recommendation under subparagraph (E) 
                        to adopt a proposed addition or 
                        modification, not later than 90 days 
                        after the date of receipt of such 
                        recommendation the Secretary shall make 
                        a determination to accept or reject the 
                        recommendation and shall publish notice 
                        of such determination in the Federal 
                        Register not later than 30 days after 
                        the date of the determination.
                          (ii) Contents of notice.--If the 
                        determination is to reject the 
                        recommendation, such notice shall 
                        include the reasons for the rejection. 
                        If the determination is to accept the 
                        recommendation, as part of such notice 
                        the Secretary shall promulgate the 
                        modified standard (including the 
                        accepted proposed addition or 
                        modification accepted) as a final rule 
                        under this subsection without any 
                        further notice or public comment 
                        period.
                          (iii) Limitation on consideration.--
                        The Secretary shall not consider a 
                        proposal under this subparagraph unless 
                        the Secretary determines that the 
                        requirements of subparagraph (D) 
                        (including publication of notice and 
                        opportunity for public comment) have 
                        been met with respect to the proposal.
                  (G) Treatment as satisfying requirements for 
                notice-and-comment.--Any requirements under 
                section 553 of title 5, United States Code, 
                relating to notice and an opportunity for 
                public comment with respect to a final rule 
                promulgated under subparagraph (F) shall be 
                treated as having been met by meeting the 
                requirements of the notice and opportunity for 
                public comment provided under provisions of 
                subparagraphs (B)(iii), (D), and (E).
                  (H) No judicial review.--A final rule 
                promulgated under subparagraph (F) shall not be 
                subject to judicial review.

           *       *       *       *       *       *       *


                          EFFECT ON STATE LAW

  Sec. 1178. (a) General Effect.--Subject to section 4(b) of 
the Health Information Technology Promotion Act of 2006--
          (1) * * *

           *       *       *       *       *       *       *


TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *


Part A--Hospital Insurance Benefits for the Aged and Disabled

           *       *       *       *       *       *       *


          PROVISIONS RELATING TO THE ADMINISTRATION OF PART A

  Sec. 1816. (a) * * *
  (b) With respect to--
          (1) transactions under this part occurring on or 
        after April 1, 2009, all providers of services shall 
        use ASC X12 version 5010 with respect to services 
        provided under this part in compliance with section 
        5(a) of the Health Information Technology Promotion Act 
        of 2006; and
          (2) services furnished on or after October 1, 2009--
                  (A) all providers of services shall use ICD-
                10-CM codes with respect to services provided 
                under this part in compliance with section 5(b) 
                of such Act; and
                  (B) hospitals shall use ICD-10-PCS codes (as 
                well as ICD-10-CM codes) with respect to 
                inpatient hospital services provided under this 
                part in compliance with such section.

           *       *       *       *       *       *       *


Part E--Miscellaneous Provisions

           *       *       *       *       *       *       *


               LIMITATION ON CERTAIN PHYSICIAN REFERRALS

  Sec. 1877. (a) * * *

           *       *       *       *       *       *       *

  (e) Exceptions Relating to Other Compensation Arrangements.--
The following shall not be considered to be a compensation 
arrangement described in subsection (a)(2)(B):
          (1) * * *

           *       *       *       *       *       *       *

          (9) Information technology and services.--Any 
        nonmonetary remuneration (in the form of health 
        information technology, as defined in section 
        1128A(b)(4)(B)(i), and related services) made on or 
        after the HIT effective date (as defined in section 
        1128A(b)(4)(B)(ii)) by an entity to a physician if the 
        following requirements are met:
                  (A) The provision of such remuneration is 
                made without a condition that--
                          (i) limits or restricts the use of 
                        the health information technology to 
                        services provided by the physician to 
                        individuals receiving services at the 
                        location of the entity providing such 
                        technology;
                          (ii) limits or restricts the use of 
                        the health information technology in 
                        conjunction with other health 
                        information technology; or
                          (iii) takes into account the volume 
                        or value of referrals (or other 
                        business generated) by the physician to 
                        the entity providing such technology.
                  (B) Such remuneration is arranged for in a 
                written agreement that is signed by a 
                representative of the entity and by the 
                physician and that specifies the remuneration 
                made and states that the provision of such 
                remuneration is made for the primary purpose of 
                better coordination of care or improvement of 
                health care quality or efficiency.

           *       *       *       *       *       *       *

                              ----------                              


SECTION 264 OF THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT 
                                OF 1996

SEC. 264. RECOMMENDATIONS WITH RESPECT TO PRIVACY OF CERTAIN HEALTH 
                    INFORMATION.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Regulations.--
          (1) * * *
          (2) Preemption.--[A regulation] Subject to section 
        4(b) of the Health Information Technology Promotion Act 
        of 2006, a regulation promulgated under paragraph (1) 
        shall not supercede a contrary provision of State law, 
        if the provision of State law imposes requirements, 
        standards, or implementation specifications that are 
        more stringent than the requirements, standards, or 
        implementation specifications imposed under the 
        regulation.

           *       *       *       *       *       *       *


                               VII. VIEWS


    DISSENTING VIEWS ON H.R. 4157--``HEALTH INFORMATION TECHNOLOGY 
                        PROMOTION ACT OF 2006''

    The promise of expanding the use of interoperable health 
information technology (IT) systems has been widely documented. 
Information technology applications in the field of health care 
are expected to yield greater efficiencies and save lives. 
Total system-wide savings from widespread adoption of health 
information technology are estimated to range from $81 billion 
to $160 billion per year when fully implemented.
    Unfortunately, H.R. 4157, as reported by the Committee on 
Ways and Means, will not advance the goal of a nationwide 
interoperable health information technology system. In fact, 
this legislation actually causes greater harm by squandering an 
important opportunity to establish a clear pathway to achieve 
interoperability standards and assure widespread adoption. 
Moreover, the bill will foster fraud, waste, and abuse in the 
Medicare program, and sets in motion a process to preempt state 
laws and regulations that protect the privacy and 
confidentiality of individually identifiable health 
information.
    A number of organizations representing consumers, providers 
and others wrote to express concerns with the Chairman's Mark 
and support for several of the Democratic amendments discussed 
below. Those letters have been inserted in the Record.

                     PRIVACY PROTECTIONS ARE ERODED

    H.R. 4157, as reported, undermines patients' right to 
privacy with respect to individually identifiable health 
information. While the legislation reported out of the 
Subcommittee on Health contained troubling provisions on 
privacy, the Chairman's Mark amended the reported bill with a 
provision that would ultimately clearly preempt state privacy 
laws that are stronger than the federal law. This is 
unacceptable.
    The federal privacy regulations that resulted from the 
Health Insurance Portability and Accountability Act of 1996 
(HIPAA) established a minimum level of protection at the 
federal level, while allowing continued application of more 
protective state laws. As required under the law, the Clinton 
Administration issued final regulations in 2000, after Congress 
was unable to agree on privacy legislation in the three years 
following the passage of HIPAA. The Bush Administration then 
suspended the rules after taking office in 2001, and proposed 
modifications and finalized new rules in 2002.
    HIPAA applies directly to only providers, insurers, and 
``health care clearinghouses,'' though others who use 
information from these ``covered entities'' are vicariously 
subject to HIPAA as ``business associates'' of the covered 
entities. Regulatory changes made by the Bush Administration in 
2002 authorize the use and disclosure without consent of 
virtually all identifiable health information in routine 
situations--e.g., for treatment, payment, or health care 
operations (e.g., quality improvement activities; underwriting; 
business planning and administration, certain fundraising for 
the benefit of the covered entity, etc.).
    Even with these weakened standards, enforcement is passive 
and virtually non-existent, relying almost exclusively on 
complaints to trigger investigations. According to the 
Administration, the Department of Health and Human Services 
(HHS) has been enforcing the privacy rule since April 2003, 
which is the date by which most entities were required to be in 
compliance, but no penalties have been levied. Plus, even if 
enforcement were more aggressive, the penalties apply only in 
narrow, egregious situations and only to covered entities, not 
to business associates or to individual employees who have 
actually engaged in the misconduct.
    HHS may impose civil money penalties on a covered entity of 
$1.00 per failure to comply, not to exceed $25,000 per year. 
However, HHS may not impose a fine if the violation did not 
involve willful neglect and the covered entity corrected the 
violation within 30 days of when it knew or should have known 
of the violation. In addition, criminal penalties are 
theoretically available. A covered entity who knowingly obtains 
or discloses protected health information could be fined 
$50,000 and face up to one year in prison; higher penalties and 
longer terms are available if the case involves false pretenses 
or the intent to sell, transfer, or use the information for 
commercial advantage, personal gain, or malicious harm. 
Regardless, it is important to note that available remedies 
under federal law, if applied, are provided to the government, 
not the individual whose information was disclosed or misused.
    Efforts to move toward an electronic environment need to 
enhance--not erode--confidentiality of individually 
identifiable health information and improve enforcement. 
Electronic systems make it easier, not harder, to accommodate 
different laws. Vendors or other software developers can build 
the various laws into the system, and update as needed. More 
uniformity may be desirable but would only be acceptable if it 
leads to an improvement for all, not an erosion for many.
    HIPAA was consciously designed as a floor upon which states 
could build. As such, its provisions are inadequate in many 
ways. States have a variety of laws that provide additional 
protections for certain sensitive information. Some states even 
provide for a right of action that allows individuals to pursue 
remedies when information is improperly used or disclosed. 
Careful consideration and public debate should occur before a 
weak federal standard is used to preempt stronger state laws. 
That has not occurred in this Committee.

        LACKS A TIMELINE FOR STANDARDS DEVELOPMENT AND ADOPTION

    To assure progress on the development of interoperability 
standards for health information technology, Congress needs to 
provide leadership and schedule a timeline for action. For more 
than a decade, adoption of standards has been stalled to 
protect proprietary interests. In such circumstances, it is 
necessary for the government to step in to assert the public's 
interest. Without uniform standards, systems are unable to 
communicate with one another and the potential benefits of 
expanding the use of technology in clinical practice remain out 
of reach.
    Although many standards have already been developed, few 
have been adopted because there is no incentive for providers 
or venders to adhere to particular standards. As a result, 
patients and taxpayers have been forced to wait to enjoy the 
benefits of an interoperable health information technology 
system. As it stands, HR 4157 does not establish a deadline or 
even a timeframe for adoption of standards. Accordingly, the 
legislation fails to lay the fundamental groundwork needed to 
move forward. The first step toward the vision of an 
interoperable system is to set a deadline by which standards 
have to be designated.

                            LACK OF FUNDING

    To spur adoption among providers, Congress should fund 
acquisition, support, and maintenance of information technology 
systems that meet the designated standards. At the same time, 
Congress should ensure that Medicare patients receive the full 
benefit of health information technology systems by requiring 
Medicare providers to use such systems. In addition, relevant 
technology purchased by the federal government and its 
contractors should also comply with the standards. The system-
wide savings expected from the more efficient health system 
will more than offset the initial investments.
    Unfortunately, HR 4157 fails to take these needed steps. 
There is nothing in the legislation that assures meaningful use 
of interoperable health technology. Absent widespread or near 
universal adoption, the potential savings and clinical benefits 
will never be fully realized. Even more alarming, because the 
legislation lacks funding and encourages providers to invest in 
technology that does not meet standards, HR 4157 could actually 
undermine the goal of widespread adoption by creating perverse 
incentives for investment in non-interoperable products just 
prior to the designation of needed standards. This could lead 
to further entrenchment and commitment to systems that may soon 
be rendered obsolete.

                    INCREASES WASTE, FRAUD AND ABUSE

    Rather than provide funding for acquisition and support of 
health information technology, the Chairman's bill presumes 
that providers themselves will supply equipment and services to 
other providers. In order to accommodate these relationships, 
section 3 of the bill creates several exceptions to Medicare's 
anti-fraud and abuse statutes. These provisions will increase 
Medicare's vulnerability to waste, fraud, and abuse, and will 
not result in the level of investment needed to materially 
advance the adoption of health information technology among 
hospitals and physician offices.
    Most hospitals do not have the capital resources necessary 
to purchase health information technology for physicians, and 
many physicians do not want to be beholden to hospitals or 
other entities for the provision of IT. Poor and rural 
communities will likely be left behind with this strategy, 
exacerbating health disparities in under-served populations.
    In testimony before the Subcommittee, a large health system 
that has been a prime advocate for the exception to limitations 
in the self-referral law admitted that the exception would only 
benefit a handful of providers that met very specific 
conditions. Other providers have privately admitted that they 
want to use information technology to tighten relationships 
with certain doctors or gain a competitive edge over other 
hospitals in the market.
    At the same time, physicians with privileges at multiple 
hospitals do not want to be locked into one hospital in their 
community, particularly when a hospital that has extra 
resources to purchase information technology is likely to 
already be more dominant. Conversely, forcing doctors to 
maneuver between multiple information technology systems to 
accommodate various hospitals in their community is 
inefficient, undesirable and not feasible. Furthermore, 
hospital-level systems may be inappropriate for physician 
practices, and physicians are rightfully concerned about 
hospitals ``owning'' their patients' data.
    Creating safe harbors that encourage purchase of 
information technology prior to the adoption and certification 
of standards, as this legislation would do, will exacerbate 
current problems relating to multiple systems that are not 
interoperable. It will also undermine interest in moving 
forward with compliant systems when standards are in place. 
Promoting immediate investment in and subsequent adoption of 
systems that are not interoperable or do not meet standards 
will only impede future progress by encouraging stove-piping, 
waste, and ``buy-in'' to old systems.
    The Centers for Medicare and Medicaid Services (CMS) and 
the HHS Office of the Inspector General (OIG) are predicted to 
issue a final rule by the end of this year that would create 
tightly-crafted safe harbors enabling these transactions. It is 
difficult to draft safe harbors that balance the need to 
maintain program integrity while permitting previously 
impermissible activities; involvement of CMS, OIG and the 
Department of Justice is critical, yet this does not appear to 
have happened in the drafting of HR 4157.
    Finally, the Congressional Budget Office has sent a letter, 
as seen in the Record, indicating that section 3 will increase 
Medicare spending because of the induced services and other 
increased waste, fraud, and abuse expected as a result of these 
provisions. A precise estimate is not available at this time.

                         DEMOCRATIC AMENDMENTS

    Mr. Emanuel and Mr. Doggett offered an amendment, which was 
defeated on a party-line vote, to strengthen current HIPAA 
protections. This amendment would have replaced section 4 with 
provisions to improve and preserve privacy, confidentiality and 
security protections for individually identifiable health 
information in the new electronic environment. The amendment 
included provisions that would have--
          (1) created a consent requirement;
          (2) required breach notification to affected 
        individual(s) and the Secretary;
          (3) extended the application of rules and protections 
        to all entities;
          (4) established safeguard requirements; and
          (5) provided access to damages and other relief for 
        individuals whose information is inappropriately 
        disclosed or used.
    In addition, Mr. Stark offered an amendment to protect from 
pre-emption state laws that provide greater protection of 
information relating to mental health, substance abuse, rape, 
incest and other domestic violence, family planning, HIV, 
sexually transmitted diseases, screening for and presence of 
genes or genetic markers, and other sensitive areas as 
designated by the Secretary, or permit individuals to pursue 
legal action against an entity that improperly uses or 
discloses identifiable health information. This amendment was 
also defeated on a party-line vote.
    Two additional amendments would have addressed timeline and 
funding concerns. The first, offered by Mr. Emanuel, would have 
established a process for the Secretary to develop and approve 
interoperability standards within 24 months of enactment if the 
process set forth in section 2 of the bill did not produce 
standards within 18 months of enactment. The amendment also 
directed the Secretary of HHS to establish a Medicare payment 
to finance the purchase of health information technology that 
meets specified standards. Finally, the amendment would have 
required Medicare providers--including Medicare Advantage and 
Part D plans--to use electronic health records with the core 
functionalities identified by the Institute of Medicine in 
their correspondence to HHS, ``Key Capabilities of an 
electronic Health Record System'' (July 31, 2003).
    An amendment offered by Mr. Thompson proposed to give 
Medicare providers the financial assistance necessary to 
purchase, support, and maintain health information technology 
systems. Recognizing that the cost of such systems is still 
unknown, the amendment gave broad authority for the Secretary 
of HHS to determine the appropriate amount and manner of 
distributing these funds. Funding would be available to all 
providers, including integrated delivery systems whose systems 
needed to be conformed to meet the new standards. However, 
given the current payment structure for Medicare Advantage 
plans, most plans would have been ineligible for additional 
funding under this provision.
    Although it is widely acknowledged that direct financing is 
an essential component for widespread adoption of health 
information technology, these two amendments were defeated on 
party-line votes.
    Finally, Mr. Stark offered an amendment to strike section 
3. It was also defeated on a party-line vote.

                               CONCLUSION

    Democrats want to see widespread adoption of inter-operable 
health information technology systems be a reality. That's why 
amendments were offered to ensure progress on this critical 
front.
    Lack of ready access to critical information in a patient's 
medical record has resulted in massive inefficiencies, sub-
optimal quality of care, and even death. The longer the 
Congress waits to provide the leadership necessary to progress 
toward a fully interoperable health information technology 
system, the more damage that is done. Unfortunately, HR 4157 as 
reported by the Committee misses the mark. Even worse, if 
passed in its current form, this bill may hinder the 
development of interoperable medical records for years to come.
    The promotion of health information technology should not 
be a partisan undertaking. However, the Committee leadership 
has made it so every step of the way: rejecting our suggestions 
and potential compromise positions to early drafts of the bill, 
not seeking input from the minority in constructing a manager's 
amendment, and defeating each of our amendments on party-line 
votes.
    In contrast, the Senate unanimously passed a bill (S 1418) 
to establish standards and certification processes for 
interoperability within a year of enactment, and to provide 
funding to help health care providers acquire and support the 
expanded use of information technology in their practices. 
Although S 1418 does not go as far as we would like, it is 
significantly better than the bill the Committee recommended.
    We look forward to correcting the deficiencies in HR 4157 
prior to final passage by the House in order to send into 
conference with the Senate a strong bill with timelines for 
action, clear guidance for advancement, financial support, and 
improved patient privacy protections.

                                   C. B. Rangel.
                                   Lloyd Doggett.
                                   Rahm Emanuel.
                                   John B. Larson.
                                   Jim McDermott.
                                   Stephanie Tubbs Jones.
                                   Pete Stark.
                                   Xavier Becerra.
                                   Michael R. McNulty.
                                   John Tanner.
                                   John Lewis.
                                   Earl Pomeroy.
                                   Mike Thompson.
                                   Ben Cardin.
                                   Richard E. Neal.
                                   Sander Levin.