To enhance the adoption of health information technology and to improve the quality and reduce the costs of healthcare in the United States.

June 30, 2005

Mr. ENZI (for himself, Mr. KENNEDY, Mr. GRASSLEY, Mr. BAUCUS, Mr. DODD, Mr. ALEXANDER, Mr. HARKIN, Mr. ISAKSON, Ms. MIKULSKI, Mr. DEWINE, Mr. JEFFORDS, Mr. HATCH, Mrs. MURRAY, Mr. REED, Mr. ALLEN, Mr. BURNS, Mr. CRAPO, Mr. DEMINT, Mr. SANTORUM, Mr. THOMAS, and Ms. CANTWELL) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions

To enhance the adoption of health information technology and to improve the quality and reduce the costs of healthcare in the United States.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Better Healthcare Through Information Technology Act'.

SEC. 2. IMPROVING HEALTHCARE, QUALITY, SAFETY, AND EFFICIENCY.

The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by adding at the end the following:

`TITLE XXIX--HEALTH INFORMATION TECHNOLOGY

`SEC. 2901. PURPOSES.

`It is the purpose of this title to improve the quality, safety, and efficiency of healthcare by--

`(1) protecting the privacy and security of health information;

`(2) fostering the widespread adoption of health information technology;

`(3) establishing the public-private American Health Information Collaborative to identify uniform national data standards (including content, communication, and security) and implementation policies for the widespread adoption of health information technology;

`(4) establishing health information network demonstration programs;

`(5) awarding competitive grants to facilitate the purchase and enhance the utilization of qualified health information technology; and

`(6) awarding competitive grants to States for the development of State loan programs to facilitate the widespread adoption of health information technology.

`SEC. 2902. DEFINITIONS.

`In this title:

`(1) COLLABORATIVE- The term `Collaborative' means the public-private American Health Information Collaborative established under section 2904.

`(2) HEALTHCARE PROVIDER- The term `healthcare provider' means a hospital, skilled nursing facility, home health entity, healthcare clinic, community health center, group practice (as defined in section 1877(h)(4) of the Social Security Act), a pharmacist, a pharmacy, a laboratory, a physician (as defined in section 1861(r) of the Social Security Act), a health facility operated by or pursuant to a contract with the Indian Health Service, a rural health clinic, and any other category of facility or clinician determined appropriate by the Secretary.

`(3) HEALTH INFORMATION- The term `health information' means any information, whether oral or recorded in any form or medium, that--

`(A) is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; and

`(B) relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.

`(4) HEALTH INFORMATION NETWORK- The term `health information network' means an organization of health care providers and other entities established for the purpose of linking health information systems to enable the electronic sharing of health information.

`(5) HEALTH INSURANCE ISSUER- The term `health insurance issuer' has the meaning given that term in section 2791.

`(6) LABORATORY- The term `laboratory' has the meaning given that term in section 353.

`(7) PHARMACIST- The term `pharmacist' has the meaning given that term in section 804 of the Federal Food, Drug, and Cosmetic Act.

`(8) QUALIFIED HEALTH INFORMATION TECHNOLOGY- The term `qualified health information technology' means a computerized system (including hardware, software, and training) that--

`(A) protects the privacy and security of health information and properly encrypts such health information;

`(B) maintains and provides permitted access to patients' health records in an electronic format;

`(C) incorporates decision support software to reduce medical errors and enhance healthcare quality;

`(D) is consistent with the standards recommended by the collaborative; and

`(E) allows for the reporting of quality measures.

`(9) STATE- The term `State' means each of the several States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.

`SEC. 2903. OFFICE OF THE NATIONAL COORDINATOR OF HEALTH INFORMATION TECHNOLOGY.

`(a) Office of National Health Information Technology- There is established within the Office of the Secretary an Office of the National Coordinator of Health Information Technology (referred to in this section as the `Office'). The Office shall be headed by a National Coordinator who shall be appointed by the Secretary and shall report directly to the Secretary.

`(b) Purpose- It shall be the purpose of the Office to carry out programs and activities to develop a nationwide interoperable health information technology infrastructure that--

`(1) ensures that patients' health information is secure and protected;

`(2) improves healthcare quality, reduces medical errors, and advances the delivery of patient-centered medical care;

`(3) reduces healthcare costs resulting from inefficiency, medical errors, inappropriate care, and incomplete information;

`(4) ensures that appropriate information to help guide medical decisions is available at the time and place of care;

`(5) promotes a more effective marketplace, greater competition, and increased choice through the wider availability of accurate information on healthcare costs, quality, and outcomes;

`(6) improves the coordination of care and information among hospitals, laboratories, physician offices, and other entities through an effective infrastructure for the secure and authorized exchange of healthcare information;

`(7) improves public health reporting and facilitates the early identification and rapid response to public health threats and emergencies, including bioterror events and infectious disease outbreaks;

`(8) facilitates health research; and

`(9) promotes prevention of chronic diseases.

`(c) Duties of the National Coordinator- The National Coordinator shall--

`(1) serve as a member of the public-private American Health Information Collaboration established under section 2904;

`(2) serve as the principal advisor to the Secretary concerning the development, application, and use of health information technology;

`(3) facilitate the adoption of a national system for the electronic exchange of health information;

`(4) facilitate the adoption and implementation of standards for the electronic exchange of health information to reduce cost and improve healthcare quality; and

`(5) submit the reports described under section 2904(h).

`(d) Detail of Federal Employees-

`(1) IN GENERAL- Upon the request of the National Coordinator, the head of any Federal agency is authorized to detail, with or without reimbursement from the Office, any of the personnel of such agency to the Office to assist it in carrying out its duties under this section.

`(2) EFFECT OF DETAIL- Any detail of personnel under paragraph (1) shall--

`(A) not interrupt or otherwise affect the civil service status or privileges of the Federal employee; and

`(B) be in addition to any other staff of the Department employed by the National Coordinator.

`(3) ACCEPTANCE OF DETAILEES- Notwithstanding any other provision of law, the Office may accept detailed personnel from other Federal agencies without regard to whether the agency described under paragraph (1) is reimbursed.

`(e) Authorization of Appropriations- There are authorized to be appropriated such sums as may be necessary to carry out the activities of the Office under this section for each of fiscal years 2006 through 2010.

`SEC. 2904. AMERICAN HEALTH INFORMATION COLLABORATIVE.

`(a) Establishment- Not later than 60 days after the date of enactment of this title, and subject to the provisions of this title, the Secretary shall establish the public-private American Health Information Collaborative (referred to in this section as the `Collaborative').

`(b) Composition- The Collaborative shall be composed of--

`(1) the Secretary, who shall serve as the chairperson of the Collaborative;

`(2) the Secretary of Defense, or his or her designee;

`(3) the Secretary of Veterans Affairs, or his or her designee;

`(4) the National Coordinator for Health Information Technology;

`(5) the Director of the National Institute of Standards and Technology; and

`(6) one voting member from each of the following categories to be appointed by the Secretary from nominations submitted by the public:

`(A) Patient advocates.

`(B) Physicians.

`(C) Hospitals.

`(D) Pharmacists.

`(E) Health insurance plans.

`(F) Standards development organizations.

`(G) Technology vendors.

`(H) Public health entities.

`(I) Clinical research and academic entities.

`(J) Employers.

`(K) An Indian tribe or tribal organization.

`(L) State and local government agencies.

`(c) Recommendations and Policies- The Collaborative shall make recommendations to identify uniform national policies to the Federal Government and private entities to support the widespread adoption of health information technology, including--

`(1) protecting the privacy and security of personal health information;

`(2) measures to prevent unauthorized access to health information;

`(3) measures to ensure accurate patient identification;

`(4) methods to facilitate secure patient access to health information;

`(5) recommendations for a nationwide architecture that achieves interoperability of health information technology systems; and

`(6) other policies determined to be necessary by the Collaborative.

`(d) Standards-

`(1) IN GENERAL- The Collaborative shall, on an ongoing basis--

`(A) review existing standards (including content, communication, and security standards) for the electronic exchange of health information, including such standards adopted by the Secretary under paragraph (2)(A);

`(B) identify deficiencies and omissions in such existing standards; and

`(C) identify duplications and omissions in such existing standards;

and recommend modifications to such standards as necessary.

`(2) RECOMMENDATIONS- The Collaborative shall recommend to the President the adoption by the Federal Government of--

`(A) the standards adopted by the Consolidated Health Informatics Initiative as of the date of enactment of this title; and

`(B) on an ongoing basis as appropriate, any additional standards or modifications recommended pursuant to the review described in paragraph (1).

`(3) LIMITATION- The standards described in this section shall not include any standards developed pursuant to the Health Insurance Portability and Accountability Act of 1996.

`(e) Action by the President- Upon receipt of a recommendation from the Collaborative under subsection (d)(2), the President shall review and if appropriate, provide for the adoption by the Federal Government of such recommended standards.

`(f) Coordination of Federal Spending- Not later than 1 year after the adoption by the Federal Government of a recommendation as provided for in subsection (e), and in compliance with chapter 113 of title 40, United States Code, no Federal agency shall expend Federal funds for the purchase of hardware, software, or support services for the electronic exchange of health information that is not consistent with applicable standards adopted by the Federal Government under subsection (e).

`(g) Coordination of Federal Data Collection- Not later than 2 years after the adoption by the Federal Government of a recommendation as provided for in subsection (e), all Federal agencies collecting health data for the purposes of surveillance, epidemiology, adverse event reporting, or research shall comply with standards adopted under subsection (e).

`(h) Voluntary Adoption- Any standards adopted by the Federal Government under subsection (e) shall be voluntary with respect to private entities.

`(i) Reports- The Secretary shall submit to the Committee on Health, Education, Labor, and Pensions and the Committee on Finance of the Senate and the Committee on Energy and Commerce and the Committee on Ways and Means of the House of Representatives, on an annual basis, a report that--

`(1) describes the specific actions that have been taken to facilitate the adoption of a nationwide system for the electronic exchange of health information;

`(2) describes barriers to the adoption of such a nationwide system; and

`(3) contains recommendations to achieve full implementation of such a nationwide system.

`(j) Application of FACA- The Federal Advisory Committee Act (5 U.S.C. App.) shall apply to the Collaborative, except that the term provided for under section 14(a)(2) shall be 5 years.

`(k) 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.

`SEC. 2905. IMPLEMENTATION AND CERTIFICATION OF HEALTH INFORMATION STANDARDS.

`(a) Implementation-

`(1) IN GENERAL- The Secretary, based upon the recommendations of the Collaborative, shall develop criteria to ensure uniform and consistent implementation of any standards for the electronic exchange of health information voluntarily adopted by private entities in technical conformance with such standards adopted under this title.

`(2) IMPLEMENTATION ASSISTANCE- The Secretary may recognize a private entity or entities to assist private entities in the implementation of the standards adopted under this title.

`(b) Certification-

`(1) IN GENERAL- The Secretary, based upon the recommendations of the Collaborative, shall develop criteria to ensure and certify that hardware, software, and support services that claim to be in compliance with any standard for the electronic exchange of health information adopted under this title have established and maintained such compliance in technical conformance with such standards.

`(2) CERTIFICATION ASSISTANCE- The Secretary may recognize a private entity or entities to assist in the certification described under paragraph (1).

`SEC. 2906. COMPETITIVE GRANTS TO FACILITATE THE WIDESPREAD ADOPTION OF HEALTH INFORMATION TECHNOLOGY.

`(a) In General- The Secretary may award competitive grants to eligible entities to facilitate the purchase and enhance the utilization of qualified health information technology systems to improve the quality and efficiency of healthcare.

`(b) Eligibility- To be eligible to receive a grant under subsection (a) an entity shall--

`(1) submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require;

`(2) submit to the Secretary a strategic plan for the implementation of data sharing and interoperability measures;

`(3) be a--

`(A) not for profit hospital;

`(B) group practice (including a single physician); or

`(C) another healthcare provider not described in subparagraph (A) or (B);

`(4) adopt the standards adopted by the Federal Government under section 2904;

`(5) submit to the Secretary a report on the degree to which such entity has achieved the measures adopted under section 2909;

`(6) demonstrate significant financial need; and

`(7) provide matching funds in accordance with subsection (d).

`(c) Use of Funds- Amounts received under a grant under this section shall be used to facilitate the purchase and enhance the utilization of qualified health information technology systems.

`(d) Matching Requirement- To be eligible for a grant under this section an entity shall contribute non-Federal contributions to the costs of carrying out the activities for which the grant is awarded in an amount equal to $1 for each $3 of Federal funds provided under the grant.

`(e) Preference in Awarding Grants- In awarding grants under this section the Secretary shall give preference to--

`(1) eligible entities that are located in rural, frontier, and other underserved areas as determined by the Secretary;

`(2) eligible entities that will use grant funds to enhance secure data sharing across various health care settings or enhance interoperability with regional or national health information networks; and

`(3) with respect to an entity described in subsection (b)(3)(C), a not for profit healthcare provider.

`(f) Authorization of Appropriations- There are authorized to be appropriated to carry out this section, $25,000,000 for fiscal year 2006, $75,000,000 for fiscal year 2007, and such sums as may be necessary for each of fiscal years 2008 through 2010.

`SEC. 2907. COMPETITIVE GRANTS TO STATES FOR THE DEVELOPMENT OF STATE LOAN PROGRAMS TO FACILITATE THE WIDESPREAD ADOPTION OF HEALTH INFORMATION TECHNOLOGY.

`(a) In General- The Secretary may award competitive grants to States for the establishment of State programs for loans to healthcare providers to facilitate the purchase and enhance the utilization of qualified health information technology.

`(b) Establishment of Fund- To be eligible to receive a competitive grant under this section, a State shall establish a qualified health information technology loan fund (referred to in this section as a `State loan fund') and comply with the other requirements contained in this section. A grant to a State under this section shall be deposited in the State loan fund established by the State. No funds authorized by other provisions of this title to be used for other purposes specified in this title shall be deposited in any State loan fund.

`(c) Eligibility- To be eligible to receive a grant under subsection (a) a State shall--

`(1) submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require;

`(2) submit to the Secretary a strategic plan in accordance with subsection (d);

`(3) establish a qualified health information technology loan fund in accordance with subsection (b);

`(4) require that healthcare providers receiving such loans consult with the Center for Best Practices established in section 914(d) to access the knowledge and experience of existing initiatives regarding the successful implementation and effective use of health information technology;

`(5) require that healthcare providers receiving such loans adopt the standards adopted by the Federal Government under section 2904(d);

`(6) submit to the Secretary a report on the degree to which the State has achieved the measures under section 2909; and

`(7) provide matching funds in accordance with subsection (h).

`(d) Strategic Plan-

`(1) IN GENERAL- A State that receives a grant under this section shall annually prepare a strategic plan that identifies the intended uses of amounts available to the State loan fund of the State.

`(2) CONTENTS- A strategic plan under paragraph (1) shall include--

`(A) a list of the projects to be assisted through the State loan fund in the first fiscal year that begins after the date on which the plan is submitted;

`(B) a description of the criteria and methods established for the distribution of funds from the State loan fund; and

`(C) a description of the financial status of the State loan fund and the short-term and long-term goals of the State loan fund.

`(e) Use of Funds-

`(1) IN GENERAL- Amounts deposited in a State loan fund, including loan repayments and interest earned on such amounts, shall be used only for awarding loans or loan guarantees, or as a source of reserve and security for leveraged loans, the proceeds of which are deposited in the State loan fund established under subsection (a). Loans under this section may be used by a healthcare provider to facilitate the purchase and enhance the utilization of qualified health information technology.

`(2) LIMITATION- Amounts received by a State under this section may not be used--

`(A) for the purchase or other acquisition of any health information technology system that is not a qualified health information technology system;

`(B) to conduct activities for which Federal funds are expended under this title, or the amendments made by the Better Healthcare Through Information Technology Act; or

`(C) for any purpose other than making loans to eligible entities under this section.

`(f) Types of Assistance- Except as otherwise limited by applicable State law, amounts deposited into a State loan fund under this section may only be used for the following:

`(1) To award loans that comply with the following:

`(A) The interest rate for each loan shall be less than or equal to the market interest rate.

`(B) The principal and interest payments on each loan shall commence not later than 1 year after the loan was awarded, and each loan shall be fully amortized not later than 10 years after the date of the loan.

`(C) The State loan fund shall be credited with all payments of principal and interest on each loan awarded from the fund.

`(2) To guarantee, or purchase insurance for, a local obligation (all of the proceeds of which finance a project eligible for assistance under this section) if the guarantee or purchase would improve credit market access or reduce the interest rate applicable to the obligation involved.

`(3) As a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the State if the proceeds of the sale of the bonds will be deposited into the State loan fund.

`(4) To earn interest on the amounts deposited into the State loan fund.

`(g) Administration of State Loan Funds-

`(1) COMBINED FINANCIAL ADMINISTRATION- A State may (as a convenience and to avoid unnecessary administrative costs) combine, in accordance with State law, the financial administration of a State loan fund established under this section with the financial administration of any other revolving fund established by the State if otherwise not prohibited by the law under which the State loan fund was established.

`(2) COST OF ADMINISTERING FUND- Each State may annually use not to exceed 4 percent of the funds provided to the State under a grant under this section to pay the reasonable costs of the administration of the programs under this section, including the recovery of reasonable costs expended to establish a State loan fund which are incurred after the date of enactment of this title.

`(3) GUIDANCE AND REGULATIONS- The Secretary shall publish guidance and promulgate regulations as may be necessary to carry out the provisions of this section, including--

`(A) provisions to ensure that each State commits and expends funds allotted to the State under this section as efficiently as possible in accordance with this title and applicable State laws; and

`(B) guidance to prevent waste, fraud, and abuse.

`(4) PRIVATE SECTOR CONTRIBUTIONS-

`(A) IN GENERAL- A State loan fund established under this section may accept contributions from private sector entities, except that such entities may not specify the recipient or recipients of any loan issued under this section.

`(B) AVAILABILITY OF INFORMATION- A State shall make publically available the identity of, and amount contributed by, any private sector entity under subparagraph (A) and may issue letters of commendation or make other awards (that have no financial value) to any such entity.

`(5) RESERVATION OF AMOUNTS- A State may reserve not to exceed 40 percent of amounts in the State loan fund to issue loans to recipients who serve medically underserved areas.

`(h) Matching Requirements-

`(1) IN GENERAL- The Secretary may not make a grant under subsection (a) to a State unless the State agrees to make available (directly or through donations from public or private entities) non-Federal contributions in cash toward the costs of the State program to be implemented under the grant in an amount equal to not less than $1 for each $1 of Federal funds provided under the grant.

`(2) DETERMINATION OF AMOUNT OF NON-FEDERAL CONTRIBUTION- In determining the amount of non-Federal contributions that a State has provided pursuant to paragraph (1), the Secretary may not include any amounts provided to the State by the Federal Government.

`(i) Preference in Awarding Grants- The Secretary may give a preference in awarding grants under this section to States that adopt value-based purchasing programs to improve healthcare quality.

`(j) Reports- The Secretary shall annually submit to the Committee on Health, Education, Labor, and Pensions and the Committee on Finance of the Senate, and the Committee on Energy and Commerce and the Committee on Ways and Means of the House of Representatives, a report summarizing the reports received by the Secretary from each State that receives a grant under this section.

`(k) Authorization of Appropriations-

`(1) IN GENERAL- For the purpose of making grants under subsection (a), there is authorized to be appropriated $50,000,000 for fiscal year 2006, $100,000,000 for fiscal year 2007, and such sums as may be necessary for each of fiscal years 2008 through 2010.

`(l) Availability- Amounts appropriated under paragraph (1) shall remain available through fiscal year 2010.

`SEC. 2908. DEMONSTRATION PROGRAM TO INTEGRATE INFORMATION TECHNOLOGY INTO CLINICAL EDUCATION.

`(a) In General- The Secretary may award grants under this section to carry out demonstration projects to develop academic programs integrating qualified health information technology systems in the clinical education of health professionals. Such awards shall be made on a competitive basis and pursuant to peer review.

`(b) Eligibility- To be eligible to receive a grant under subsection (a), an entity shall--

`(1) submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require;

`(2) submit to the Secretary a strategic plan for integrating qualified health information technology in the clinical education of health professionals and for ensuring the consistent utilization of decision support software to reduce medical errors and enhance healthcare quality;

`(3) be--

`(A) a health professions school; or

`(B) an academic health center;

`(4) provide for the collection of data regarding the effectiveness of the demonstration project to be funded under the grant in improving the safety of patients, the efficiency of health care delivery, and in increasing the likelihood that graduates of the grantee will adopt and incorporate health information technology in the delivery of health care services; and

`(5) provide matching funds in accordance with subsection (c).

`(c) Matching Funds-

`(1) IN GENERAL- The Secretary may award a grant to an entity under this section only if the entity agrees to make available non-Federal contributions toward the costs of the program to be funded under the grant in an amount that is not less than $1 for each $2 of Federal funds provided under the grant.

`(2) DETERMINATION OF AMOUNT CONTRIBUTED- Non-Federal contributions under paragraph (1) may be in cash or in kind, fairly evaluated, including equipment or services. Amounts provided by the Federal Government, or services assisted or subsidized to any significant extent by the Federal Government, may not be included in determining the amount of such contributions.

`(d) Preference in Awarding Grants- In awarding grants under subsection (a), the Secretary shall give preference to applicants that--

`(1) will use grant funds in collaboration with 2 or more disciplines; and

`(2) will use grant funds to integrate qualified health information technology into community-based clinical education experiences.

`(e) Evaluation- The Secretary shall take such action as may be necessary to evaluate the projects funded under this section and publish, make available, and disseminate the results of such evaluations on as wide a basis as is practicable.

`(f) Reports- Not later than 1 year after the date of enactment of this title, and annually thereafter, the Secretary shall submit to the Committee on Health, Education, Labor, and Pensions and the Committee on Finance of the Senate, and the Committee on Energy and Commerce and the Committee on Ways and Means of the House of Representatives a report that--

`(1) describes the specific projects established under this section; and

`(2) contains recommendations for Congress based on the evaluation conducted under subsection (e).

`(g) Limitation- Not more than 10 percent of amounts received under a grant awarded under this section may be used for administrative expenses.

`(h) Authorization of Appropriations- There is authorized to be appropriated to carry out this section, such sums as may be necessary for fiscal year 2006, $5,000,000 for fiscal year 2007, and such sums as may be necessary for each of fiscal years 2008 through 2010.

`(i) Sunset- This section shall not apply after September 30, 2008.

`SEC. 2909. QUALITY MEASUREMENT SYSTEMS.

`(a) In General- The Secretary shall develop quality measurement systems for the purposes of measuring the quality of care patients receive.

`(b) Requirements- The Secretary shall ensure that the quality measurement systems developed under subsection (a) comply with the following:

`(1) MEASURES-

`(A) IN GENERAL- Subject to subparagraph (B), the Secretary shall select measures of quality to be used by the Secretary under the systems.

`(B) REQUIREMENTS- In selecting the measures to be used under each system pursuant to subparagraph (A), the Secretary shall, to the extent feasible, ensure that--

`(i) such measures are evidence based, reliable and valid, and feasible to collect and report;

`(ii) such measures include measures of process, structure, beneficiary experience, efficiency, and equity;

`(iii) such measures include measures of overuse, underuse, and misuse of healthcare items and services; and

`(iv) such measures include--

`(I) with respect to the initial year in which such measures are used, one or more elements of a qualified health information technology system as defined in section 2901; and

`(II) with respect to subsequent years, additional elements of qualified health information technology systems as defined in section 2901.

`(2) WEIGHTS OF MEASURES- The Secretary shall assign weights to the measures used by the Secretary under each system established under subsection (a).

`(3) MAINTENANCE- The Secretary shall, as determined appropriate, but in no case more often than once during each 12-month period, update the quality measurement systems developed under subsection (a), including through--

`(A) the addition of more accurate and precise measures under the systems and the retirement of existing outdated measures under the systems; and

`(B) the refinement of the weights assigned to measures under the systems.

`(c) Required Considerations in Developing and Updating the Systems- In developing and updating the quality measurement systems under this section, the Secretary shall--

`(1) consult with, and take into account the recommendations of, the entity that the Secretary has an arrangement with under subsection (e);

`(2) consult with provider-based groups and clinical specialty societies; and

`(3) take into account--

`(A) the demonstrations required under this Act;

`(B) the demonstration program under section 1866A of the Social Security Act;

`(C) the demonstration program under section 1866C of such Act;

`(D) any other demonstration or pilot program conducted by the Secretary relating to measuring and rewarding quality and efficiency of care; and

`(E) the report by the Institute of Medicine of the National Academy of Sciences under section 238(b) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

`(d) Required Considerations in Implementing the Systems- In implementing the quality measurement systems under this section, the Secretary shall take into account the recommendations of public-private entities--

`(1) that are established to examine issues of data collection and reporting, including the feasibility of collecting and reporting data on measures; and

`(2) that involve representatives of health care providers, consumers, employers, and other individuals and groups that are interested in quality of care.

`(e) Arrangement With an Entity to Provide Advice and Recommendations-

`(1) ARRANGEMENT- On and after July 1, 2006, the Secretary shall have in place an arrangement with an entity that meets the requirements described in paragraph (2) under which such entity provides the Secretary with advice on, and recommendations with respect to, the development and updating of the quality measurement systems under this section, including the assigning of weights to the measures under subsection (b)(2).

`(2) REQUIREMENTS DESCRIBED- The requirements described in this paragraph are the following:

`(A) The entity is a private nonprofit entity governed by an executive director and a board.

`(B) The members of the entity include representatives of--

`(i)(I) health plans and providers receiving reimbursement under this title for the provision of items and services, including health plans and providers with experience in the care of frail elderly and individuals with multiple complex chronic conditions; or

`(II) groups representing such health plans and providers;

`(ii) groups representing individuals entitled to benefits under part A of title XVIII of the Social Security Act or enrolled under part B of such title;

`(iii) purchasers and employers or groups representing purchasers or employers;

`(iv) organizations that focus on quality improvement as well as the measurement and reporting of quality measures;

`(v) State government health programs;

`(vi) individuals skilled in the conduct and interpretation of biomedical, health services, and health economics research and with expertise in outcomes and effectiveness research and technology assessment; and

`(vii) individuals or entities involved in the development and establishment of standards and certification for health information technology systems and clinical data.

`(C) The membership of the entity is representative of individuals with experience with urban health care issues and individuals with experience with rural and frontier health care issues.

`(D) The entity does not charge a fee for membership for participation in the work of the entity related to the arrangement with the Secretary under paragraph (1). If the entity does require a fee for membership for participation in other functions of the entity, there shall be no linkage between such fee and participation in the work of the entity related to such arrangement with the Secretary.

`(E) The entity--

`(i) permits any member described in subparagraph (B) to vote on matters of the entity related to the arrangement with the Secretary under paragraph (1); and

`(ii) ensures that such members have an equal vote on such matters.

`(F) With respect to matters related to the arrangement with the Secretary under paragraph (1), the entity conducts its business in an open and transparent manner and provides the opportunity for public comment.

`(G) The entity operates as a voluntary consensus standards setting organization as defined for purposes of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (Public Law 104-113) and Office of Management and Budget Revised Circular A-119 (published in the Federal Register on February 10, 1998).

`SEC. 2910. APPLICABILITY OF PRIVACY AND SECURITY REGULATIONS.

`The regulations promulgated by the Secretary under part C of title XI of the Social Security Act and sections 261, 262, 263, and 264 of the Health Insurance Portability and Accountability Act of 1996 with respect to the privacy, confidentiality, and security of health information shall--

`(1) apply to any health information stored or transmitted in an electronic format on or after the date of enactment of this title; and

`(2) apply to the implementation of standards, programs, and activities under this title.

`SEC. 2911. STUDY OF REIMBURSEMENT INCENTIVES.

`The Secretary shall carry out, or contract with a private entity to carry out, a study that examines methods to create efficient reimbursement incentives for improving healthcare quality in community health centers and other federally qualified health centers, rural health clinics, free clinics, and other programs reimbursed primarily on a cost basis deemed appropriate by the Secretary.'.

SEC. 3. CENTER FOR BEST PRACTICES.

Section 914 of the Public Health Service Act (42 U.S.C. 299b-3) is amended by adding at the end the following:

`(d) Center for Best Practices-

`(1) IN GENERAL- The Secretary, acting through the Director, shall develop a Center for Best Practices to provide technical assistance and develop best practices to support and accelerate the efforts of States and healthcare providers to adopt, implement, and effectively use health information technology.

`(2) CENTER FOR BEST PRACTICES-

`(A) IN GENERAL- In carrying out paragraph (1), the Director shall establish a voluntary Center for Best Practices (referred to in this subsection as the `Center') for States and healthcare stakeholders seeking to facilitate mutual learning and accelerate the pace of innovation in, and implementation of, health information technology. The Center shall support activities to meet goals, including--

`(i) providing for the widespread adoption of interoperable health information technology;

`(ii) providing for the establishment of regional and local health information networks to facilitate the development of interoperability across healthcare settings;

`(iii) the development of solutions to barriers to the exchange of electronic health information; or

`(iv) other activities identified by the States or health care stakeholders as a focus for developing and sharing best practices.

`(B) PURPOSES- The purpose of the Center is to--

`(i) provide a forum for the exchange of knowledge and experience;

`(ii) accelerate the transfer of lessons learned from existing public and private sector initiatives, including those currently receiving Federal financial support;

`(iii) assemble, analyze, and widely disseminate evidence and experience related to the adoption, implementation, and effective use of health information technology;

`(iv) assure the timely provision of technical and expert assistance from the Agency and its contractors;

`(v) accelerate the pace of health information technology innovation; and

`(vi) provide technical assistance to entities developing applications for demonstration grants under subsection (b).

`(C) SUPPORT FOR ACTIVITIES- To provide support for the activities of the Center, the Director shall--

`(i) modify the requirements, if necessary, that apply to the National Resource Center for Health Information Technology to provide the necessary infrastructure to support the duties and activities of the Network and facilitate information exchange across the public and private sectors;

`(ii) expand the Agency's focus on the adoption, implementation, and effective use of health information technology through the development of practical implementation guidance based upon existing knowledge and support for rapid-cycle implementation research to address questions for which existing knowledge is insufficient; and

`(iii) develop the capacity to identify and widely share in a timely manner innovative approaches to advancing health information technology and its ultimate goal, the improvement of the quality, safety, and efficiency of health care.

`(3) TECHNICAL ASSISTANCE TELEPHONE NUMBER OR WEBSITE- The Secretary shall establish a toll-free telephone number or Internet website to provide healthcare providers with a single point of contact to--

`(A) learn about Federal grants and technical assistance services related to health information technology;

`(B) learn about qualified health information software that has been certified to be in compliance with the standards adopted by the Federal Government under section 2904 and is available for commercial use;

`(C) receive referrals to regional and local health information networks for assistance with health information technology;

`(D) provide information regarding--

`(i) the electronic submission of health data collected by Federal agencies; and

`(ii) the uniform and consistent implementation of standards; and

`(E) disseminate additional information determined by the Secretary to be helpful to such providers.

`(4) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this subsection, such sums as may be necessary for each of fiscal years 2006 through 2010.'.

SEC. 4. HEALTH INFORMATION NETWORK DEMONSTRATION PROGRAM.

Section 914 of the Public Health Service Act (42 U.S.C. 299b-3), as amended by subsection (b), is further amended by adding at the end the following:

`(e) Health Information Network Demonstration Program-

`(1) IN GENERAL- The Director may establish a demonstration program under which grants or contracts shall be awarded to support health information network planning, implementation, and evaluation activities.

`(2) ELIGIBILITY- To be eligible to receive a grant or contract under the demonstration program under paragraph (1), an entity shall--

`(A) submit to the Director an application at such time, in such manner, and containing such information as the Director may require;

`(B) submit to the Director a strategic plan for the implementation of data sharing and interoperability measures across the various health care settings within the proposed network;

`(C) be a public or nonprofit private entity that is or represents a network or potential network that includes healthcare providers and group health plans in a defined area of geographic proximity or organizational affinity, and that may include for profit entities so long as such an entity is not the grantee;

`(D) demonstrate, where appropriate, the involvement and commitment of the appropriate State or States;

`(E) specify a defined area of geographic proximity or organizational affinity that the health information network will encompass;

`(F) demonstrate active participation in the best practice network described in subsection (d);

`(G) demonstrate compliance with the data standards and technical policies adopted by the Federal Government under section 2904(e);

`(H) submit to the Secretary a report on the degree to which such entity has achieved the measures under section 2909;

`(I) demonstrate financial need; and

`(J) agree to provide matching funds in accordance with paragraph (4).

`(3) USE OF FUNDS-

`(A) IN GENERAL- Amounts received under a grant under this subsection shall be used to establish and implement a regional or local health information network.

`(B) LIMITATION- Amounts received under a grant under this subsection may not be used to purchase a health information technology system that is not a qualified health information technology system.

`(4) MATCHING REQUIREMENT- To be eligible to receive a grant or contract under this subsection an entity shall contribute non-Federal funds to the costs of carrying out the activities for which the grant or contract is awarded in an amount equal to $1 for each of $2 of Federal funds, provided under the grant.

`(5) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be appropriated to carry out this subsection, $50,000,000 for fiscal year 2006, $70,000,000 for fiscal year 2007, and such sums as may be necessary for each of fiscal years 2008 through 2010.'.

SEC. 5. EXCEPTION TO FEDERAL ANTI-KICKBACK AND STARK LAWS FOR THE PROVISION OF PERMITTED SUPPORT.

(a) Anti-Kickback- Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b)(3)) is amended--

(1) in paragraph (3)--

(A) in subparagraph (G), by striking `and' at the end;

(B) in 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)--

(i) by moving such subparagraph 2 ems to the left; and

(ii) by striking the period at the end and inserting a semicolon;

(C) by redesignating subparagraph (H), as added by section 431(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2287), as subparagraph (I);

(D) in subparagraph (I), as so redesignated--

(i) by moving such subparagraph 2 ems to the left; and

(ii) by striking the period at the end and inserting `; and'; and

(E) by adding at the end the following new:

`(J) during the 5-year period beginning on the date the Secretary issues the interim final rule under section 5(c)(1) of the Better Healthcare Through Information Technology Act, the provision, with or without charge, of any permitted support (as defined in paragraph (4)).'; and

(2) by adding at the end the following new paragraph:

`(4) PERMITTED SUPPORT-

`(A) DEFINITION OF PERMITTED SUPPORT- Subject to subparagraph (B), in this section, the term `permitted support' means the provision of any equipment, item, information, right, license, intellectual property, software, training, or service used for developing, implementing, operating, or facilitating the use of systems designed to improve the quality of health care and to promote the electronic exchange of health information.

`(B) EXCEPTION- The term `permitted support' shall not include the provision of--

`(i) any support that is determined in a manner that is related to the volume or value of any referrals or other business generated between the parties for which payment may be made in whole or in part under a Federal health care program;

`(ii) any support that has more than incidental utility or value to the recipient beyond the exchange of health care information; or

`(iii) any health information technology system, product, or service that is not in compliance with data standards adopted by the Federal Government under section 2904 of the Public Health Service Act.'.

(b) Stark- Section 1877(e) of the Social Security Act (42 U.S.C. 1395nn(e)) is amended by adding at the end the following new paragraph:

`(9) PERMITTED SUPPORT- During the 5-year period beginning on the date the Secretary issues the interim final rule under section 5(c)(1) of the Better Healthcare Through Information Technology Act, the provision, with or without charge, of any permitted support (as defined in section 1128B(b)(4)).'.

(c) Regulations- In order to carry out the amendments made by this section--

(1) the Secretary of Health and Human Services shall issue an interim final rule with comment period by not later than the date that is 180 days after the date of enactment of this Act; and

(2) the Secretary shall issue a final rule by not later than the date that is 180 days after the date that the interim final rule under paragraph (1) is issued.

END