TITLE V_QUALITY AND CONSUMER PROTECTION

  Subtitle A_Quality Management and Improvement

  SEC. 5001. NATIONAL QUALITY COUNCIL.


  (a) Establishment._Not later than 1 year after the date of enactment of this Act, the Secretary of Health and Human Services shall establish a council to be known as the National Quality Council to oversee a national program of quality management and improvement designed to enhance the quality, appropriateness, and effectiveness of health care services and access to such services in the United States. 


  (b) Appointment._The National Quality Council shall consist of 15 members appointed by the President, with the advice and consent of the Senate, who are broadly representative of the population of the United States and shall include the following:


  (1) Individuals and health care providers distinguished in the fields of medicine, public health, health care quality, and related fields of health services research. Such members shall constitute at least one-third of the Council's membership.


  (2) Individuals representing consumers of health care services. Such members shall constitute at least one-third of the Council's membership.


  (3) Other individuals representing purchasers of health care, health plans, States, and nationally recognized health care accreditation organizations.


  (c) Duties._The National Quality Council shall_


  (1) develop national goals and performance measures of quality for plans and providers;

  (2) oversee the development of survey methodology, sampling and audit methods;


  (3) oversee the design and production of Consumer Report Cards;


  (4) oversee the quality improvement foundation demonstration project under section 5006; 

  (5) oversee the evaluation of the impact of the implementation of this Act on the quality of health care services in the United States and the access of consumers to such services; and

  (6) report on quality with respect to the medicare program as described in subsection (d).


  (d) Report on Quality in Medicare._

  (1) In general._Not later than January 1, 1999, the National Quality Council shall prepare and submit to Congress a report containing the recommendations of the Council on methods to coordinate and integrate quality oversight with respect to the medicare populations remaining in the programs under parts A and B of title XVIII of the Social Security Act.

  (2) Contents._The report under paragraph (1) shall contain_

  (A) a status report, prepared by the Prospective Payment Assessment Commission and the Physician Payment Review Commission, concerning the Peer Review Organizations and any other related medicare quality-related activities; and

  (B) an evaluation of the quality improvement foundation demonstration project established under section 5006 and the feasibility of expanding the demonstration project and merging the Peer Review Organization program to serve as a national quality improvement program.

  (e) Consultation._In carrying out the duties under this section, the National Quality Council shall establish a process of consultation with appropriate interested parties.


  (f) Terms._

  (1) In general._Except as provided in paragraph (2), members of the Council shall serve for a term of 4 years.

  (2) Staggered rotation._Of the members first appointed to the Council under subsection (b), the President shall appoint members to serve for a term of between 1 and 4 years so that no more than one third of the Council seats are vacated each year.

  (3) Service beyond term._A member of the Council may continue to serve after the expiration of the term of the member until a successor is appointed.

  (g) Vacancies._If a member of the Council does not serve the full term applicable under subsection (f), the individual appointed to fill the resulting vacancy shall be appointed for the remainder of the term of the predecessor of the individual.

  (h) Chair._The President shall designate an individual to serve as the chair of the Council.

  (i) Meetings._The Council shall meet not less than once during each 4-month period and shall otherwise meet at the call of the President or the chair.

  (j) Compensation and Reimbursement of Expenses._Members of the Council shall receive compensation for each day (including travel time) engaged in carrying out the duties of the Council. Such compensation may not be in an amount in excess of the maximum rate of basic pay payable for level IV of the Executive Schedule under section 5315 of title 5, United States Code.

  (k) Conflicts of Interest._Members of the Council shall disclose upon appointment to the Council or at any subsequent time that it may occur, conflicts of interest.

  (l) Executive Director; Staff._

  (1) Executive director._

  (A) In general._The Council shall, without regard to section 5311(b) of title 5, United States Code, appoint an Executive Director.

  (B) Pay._The Executive Director shall be paid at a rate equivalent to a rate for the Senior Executive Service.

  (2) Staff._

  (A) In general._Subject to subparagraphs (B) and (C), the Executive  Director, with the approval of the Council, may appoint and fix the pay of additional personnel.

  (B) Pay._The Executive Director may make such appointments without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and any personnel so appointed may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title, relating to classification and General Schedule pay rates, except that an individual so appointed may not receive pay in excess of 120 percent of the annual rate of basic pay payable for GSÿ0915 of the General Schedule.

  (C) Detailed personnel._Upon request of the Executive Director, the head of any Federal department or agency may detail any of the personnel of that department or agency to the Council to assist the Council in carrying out its duties under this Act.

  (m) Contract Authority._To the extent provided in advance in appropriations Acts, the Council may contract with any person (including an agency of the Federal Government) for studies and analysis as required to execute its functions. Any employee of the Executive Branch may be detailed to the Council to assist the Council in carrying out its duties.

  (n) Consultations with Experts._The Council may consult with any outside expert individuals or groups that the Council determines appropriate in performing its duties under this section. The Council may establish advisory committees.

  (o) Access to Information._The Council may secure directly from any department or agency of the United States information necessary to enable it to carry out its functions, to the extent such information is otherwise available to a department or agency of the United States. Upon request of the chair,  the head of that department or agency shall furnish that information to the Council.

  (p) Delegation of Authority._Except as otherwise provided, the Council may delegate any function to such officers and employees as the Council may designate and may authorize such successive redelegations of such functions with the Council as the Council deems to be necessary or appropriate. No delegation of functions by the Council shall relieve the Council of responsibility for the administration of such functions.

  (q) Rulemaking._The Council is authorized to establish such rules as may be necessary to carry out this section.

  (r) Health Care Provider._For purposes of this subtitle, the term ``health care provider'' means an individual who, or entity that, provides an item or service to an individual that is covered under the health plan (as defined in section 3) in which the individual is enrolled.

  SEC. 5002. NATIONAL QUALITY GOALS.

  The National Quality Council shall develop a set of national quality goals that will address the needs of the general population as well as population subgroups. The goals shall incorporate, among others, goals identified by the Secretary of Health and Human Services for meeting public health objectives delineated in Healthy People 2000, and goals related to improving or maintaining the quality of health care; population health status; health promotion; prevention of diseases, disorders, disabilities, and injuries; and consumer satisfaction.

  SEC. 5003. STANDARDS AND PERFORMANCE MEASURES OF QUALITY FOR HEALTH PLANS.

  (a) Development._

  (1) In general._The National Quality Council shall establish national standards and performance measures for health plans and providers that will enable the Secretary to assess progress made towards achieving the national quality goals.

  (2) Measures and standards._

  (A) Measures._Quality measures under this section shall assess, at a minimum, the provision of health care services; access to health care services and providers; outcomes of care for specified medical conditions; population health status; health promotion; prevention of diseases, disorders, disabilities, injuries, and other health conditions; appropriateness of care; and consumer satisfaction, both for the general population and population subgroups, defined by demographic characteristics and health status.

  (B) Standards._Quality standards under this section at a minimum shall relate to:

  (i) Health plan compliance with members' rights under this Act.

  (ii) Quality improvement and accountability.

  (iii) Documentation and review of provider credentialing and competency.

  (iv) Management of clinical, and administrative and financial information.

  (b) Certification of Plans._The National Quality Council shall provide information and technical assistance to the Secretary and the States concerning the use of national standards and performance measures developed under this section for State certification of health plans. The standards and measures shall ensure that health plans are accountable for the overall health and satisfaction of enrolled populations and for the health outcomes attained by patients treated for specified medical conditions.

  (c) Accuracy of Measures._A State shall periodically audit the national measures of quality performance to assure accuracy.

  SEC. 5004. PLAN DATA ANALYSIS AND CONSUMER SURVEYS. 

  (a) In General._The National Quality Council shall be responsible for surveys, methodology, sampling and audit methods to collect the information necessary to carry out its functions under this subtitle.

  (b) Survey and Data Analysis._The National Quality Council shall approve a standard design for the consumer surveys and sampling of relevant plan data described in subsection (a).

  (c) Survey Integration._To the extent feasible, surveys developed under this section shall be integrated with existing Federal surveys.

  SEC. 5005. EVALUATION AND REPORTING OF QUALITY PERFORMANCE.

  (a) Health Plan Reports._Each State annually shall publish and make available to the public a performance report, in a standard format designated by the National Quality Council, outlining the performance of each health plan offered in the State with respect to the set of national measures of quality performance developed under section and 5003. The report shall include_

  (1) the results of a smaller number of such measures for health care providers if the available information is statistically meaningful; and

  (2) the results of consumer surveys and an analysis of the plan data collected in section 5004.

  (b) Consumer Report Cards._The health plan reports under subsection (a) shall be summarized in a consumer report card as specified by the National Quality Council and made available by the State to all individuals in the State. 

  (c) Quality Reports._The National Quality Council annually shall provide recommendations to the Congress, the National Health Benefits and Coverage Commission, and the Secretary in the form of a summary report that_

  (1) outlines in a standard format the performance of each State;

  (2) discusses State-level and national trends relating to health care quality; and

  (3) presents data for each State from health plan reports and consumer surveys that were conducted during the year. 

  SEC. 5006. QUALITY IMPROVEMENT FOUNDATIONS. 

  (a) Establishment._The National Quality Council shall oversee the operation of quality improvement foundations in performing the duties specified in subsection (c). 

  (b) Structure and Membership._

  (1) Grant process._The Secretary, in consultation with the Council, shall, through a competitive grant making process, award demonstration grants for the establishment and operation of quality improvement foundations. In awarding such grants, the Secretary shall consider geographic diversity, regional economies of scale, population density, regional needs and other regional differences.

  (2) Eligible applicants._To be eligible to receive a grant for the establishment of a quality improvement foundation under paragraph (1), an applicant entity shall_

  (A) be a not-for-profit entity; and

  (B) have a board that includes health care providers, representatives from relevant institutions of higher education in the region, consumers, purchasers of health care, and other interested parties.

  (c) Duties._

  (1) In general._Each quality improvement foundation shall carry out the duties described in paragraph (2). The foundation shall establish a program of activities incorporating such duties and shall be able to demonstrate the involvement of a broad cross-section of the providers and health care institutions throughout the State or region.

  (2) Duties described._The duties described in this paragraph include the following:

  (A) Collaboration with and technical assistance to providers and health plans in ongoing efforts to improve the quality of health care provided to individuals in the State.

  (B) Population-based monitoring of practice patterns and patient outcomes,on an other than a case-by-case basis.   

  (C) Developing programs in lifetime learning for health professionals to improve the quality of health care by ensuring that health professionals remain informed about new knowledge, acquire new skills, and adopt new roles as technology and societal demands change.   

  (D) Disseminating information about successful quality improvement programs, practice guidelines, and research findings, including information on innovative staffing of health professionals.   

  (E) Assist in developing innovative patient education systems that enhance patient involvement in decisions relating to their health care, including an emphasis on shared decisionmaking between patients and health care providers.   

  (F) Issuing a report to the public regarding the foundation's activities for the previous year including areas of success during the previous year and areas for opportunities in improving health outcomes for the community, and the adoption of guidelines.   

  (d) Restrictions on Disclosure._The restrictions on disclosure of information under section 1160 of the Social Security Act shall apply to quality improvement foundations under this section, except that_

  (1) such foundations shall make data available to qualified organizations and individuals for research for public benefit under the terms set forth in section 5218;

  (2) individuals and qualified organizations shall meet standards consistent with the Public Health Service Act and policies regarding the conduct of scientific research, including provisions related to confidentiality, privacy, protection of humans and shall pay reasonable costs for data; and 

  (3) such foundations may exchange information with other quality improvement foundations.

  SEC. 5007. AUTHORIZATION OF APPROPRIATIONS.

  (a) National Quality Council._For the purpose of carrying out this subtitle with respect to the establishment and activities of the National Quality Council, there are authorized to be appropriated $4,000,000 for each of the fiscal years 1995 through 2000.

  (b) Quality Improvement Foundations._For the purpose of carrying out section 5006, the are authorized to be appropriated $50,000,000 for each of the fiscal years 1996 through 2000.

  SEC. 5008. ROLE OF HEALTH PLANS IN QUALITY MANAGEMENT.         

  Each health plan shall_

  (1) measure and disclose performance on quality measures as designated by this Act;

  (2) furnish information required under subtitles B and of this title and provide such other reports and information on the quality of care delivered by health care providers who are members of a provider network of the plan as may be required under this Act; and         

  (3) maintain quality management systems that_

  (A) use the national measures of quality performance developed by the National Quality Council under section 5003; and

  (B) measure the quality of health care furnished to enrollees under the plan by all health care providers of the plan where practical.

  SEC. 5009. CONFORMING AMENDMENTS TO PUBLIC HEALTH SERVICE ACT.

  Title IX of the Public Health Service Act is amended_

  (1) in section 903(a)(4) (42 U.S.C. 299aÿ091(a)(4)), by inserting ``and Quality Improvement Foundations'' after ``health agencies'';

  (2) in section 904(c)(1) (42 U.S.C. 299aÿ092(c)(1)), by inserting ``the National Quality Council and'' after ``in consultation with'';

  (3) in section 912(b)(4) (42 U.S.C. 299bÿ091(b)(4))_

  (A) by inserting ``outcomes,'' before ``risks''; and

  (B) by inserting before the semicolon ``to the extent feasible given the availability of unbiased, reliable, and valid data'';

  (4) in section 914 (42 U.S.C. 299bÿ093)_

  (A) in subsection (a)(2)(B)_

  (i) by inserting ``the National Quality Council,'' after ``shall consult with''; and 

  (ii) by inserting before the period ``and relevant sections of the    Health Reform Act'';

  (B) in subsection (c), by inserting ``Quality Improvement Foundations and other'' after ``carried out through''; and

  (C) in subsection (f)_

  (i) by striking ``to Administrator'' in the subsection heading;

  (ii) by striking ``Administrator'' and inserting ``National Quality Council and the''; and

  (5) in section 927 (42 U.S.C. 299cÿ096), by adding at the end thereof the following new paragraphs:

  ``(5) The term `National Quality Council' means the Council established under section 5001 of the Health Reform Act.

  ``(6) The term ``Quality Improvement Foundations'' means the Foundations established under section 5006 of the Health Reform Act.''.

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  Subtitle B_Administrative Simplification

  PART 1_PURPOSE AND DEFINITIONS

  SEC. 5101. PURPOSE.

  It is the purpose of this subtitle to improve the efficiency and effectiveness of the health care system, including the medicare program under title XVIII of the Social Security Act and the medicaid program under title XIX of such Act,  by encouraging the development of a health information network through the establishment of standards and requirements for the electronic transmission of certain health information. 

  SEC. 5102. DEFINITIONS.

  For purposes of this subtitle:

  (1) Certified._The term ``certified'' means, with respect to a health information network service, that such service is certified under section 5141.

  (2) Code set._The term ``code set'' means any set of codes used for encoding data elements, such as tables of terms, medical concepts, medical diagnostic codes, or medical procedure codes.

  (3) Coordination of benefits._The term ``coordination of benefits'' means determining and coordinating the financial obligations of health plans when health care benefits are payable under two or more health plans.

  (4) Health care provider._The term ``health care provider'' includes a provider of services (as defined in section 1861(u) of the Social Security Act), a provider of medical or other health services (as defined in section 1861(s) of the Social Security Act), and any other person furnishing health care services or supplies.

  (5) 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, health oversight agency (as defined in section 5202), health researcher, public health authority (as defined in section 5202), employer, life insurer, school or university, or certified health information network service; 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.

  (6) Health information network._The term ``health information network'' means the health information system that is formed through the application of the requirements and standards established under this subtitle.

  (7) Health information protection organization._The term ``health information protection organization'' means a private entity or an entity operated by a State that accesses standard data elements of health information through the health information network and_

  (A) processes such information into non-identifiable health information and discloses such information;

  (B) if such information is protected health information (as defined in section 5202), discloses such information only in accordance with subtitle C; and

  (C) may store such information

  (8) Health information network service._The term ``health information network service''_

  (A) means a private entity or an entity operated by a State that enters into contracts to_

  (i) process or facilitate the processing of nonstandard data elements of health information into standard data elements;

  (ii) provide the means by which persons are connected to the health information network for purposes of meeting the requirements of this subtitle, including the holding of standard data elements of health information; 

  (iii) provide authorized access to health information through the health information network; or

  (iv) provide specific information processing services, such as automated coordination of benefits and claims transaction routing; and

  (B) includes a health information protection organization.

  (9) Health plan._The term ``health plan'' has the meaning given such term in section 3(a)(1)(A) except that such term shall include clauses (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xii), (xiii), and (xiv) of such section.

  (10) Non-identifiable health information._The term ``non-identifiable health information'' means health information that is not protected health information as defined in section 5202.

  (11) Patient medical record information._The term ``patient medical record information'' means health information derived from a clinical encounter that relates to the physical or mental condition of an individual.

  (12) Standard._The term ``standard'' when referring to an information  transaction or to data elements of health information means the transaction or data elements meet any standard adopted by the Secretary under part 2 that applies to such information transaction or data elements.

  PART 2_STANDARDS FOR DATA ELEMENTS AND INFORMATION TRANSACTIONS
 

  SEC. 5111. GENERAL REQUIREMENTS ON SECRETARY.

  (a) In General._The Secretary shall adopt standards and modifications to standards under this subtitle that are_

  (1) consistent with the objective of reducing the costs of providing and paying for health care; 

  (2) in use and generally accepted or developed or modified by the standards setting organizations accredited by the American National Standard Institute (ANSI); and

  (3) consistent with the objective of protecting the privacy of protected health information (as defined in section 5202).

  (b) Initial Standards._The Secretary may develop an expedited process for the adoption of initial standards under this subtitle.

  (c) Failsafe._If the Secretary is unable to adopt standards or modified standards in accordance with subsection (a) that meet the requirements of this subtitle_

  (1) the Secretary may develop or modify such standards and, after providing public notice and an adequate period for public comment, adopt such standards; and

  (2) if the Secretary adopts standards under paragraph (1), the Secretary shall submit a report to the appropriate committees of Congress on the actions taken by the Secretary under this subsection. 

  (d) Assistance to the Secretary._In complying with the requirements of this subtitle, the Secretary shall rely on recommendations of the Health Information Advisory Committee established under section 5163 and shall consult with appropriate Federal agencies.

  SEC. 5112. STANDARDS FOR TRANSACTIONS AND DATA ELEMENTS.

  (a) In General._The Secretary shall adopt standards for transactions and data elements to make uniform and able to be exchanged electronically health information that is_

  (1) appropriate for the following financial and administrative transactions: claims (including coordination of benefits) or equivalent encounter information, claims attachments, enrollment and disenrollment, eligibility, payment and remittance advice, premium payments, first report of injury, claims status, and referral certification and authorization; 

  (2) related to other transactions determined appropriate by the Secretary consistent with the goals of improving the health care system and reducing administrative costs; and

  (3) related to research inquiries by a health researcher with respect to information standardized under paragraph (1) or (2).

  (b) Unique Health Identifiers._The Secretary shall adopt standards providing for a standard unique health identifier for each individual, employer, health plan, and health care provider for use in the health care system.

  (c) Code Sets._

  (1) In general._The Secretary, in consultation with experts from the private sector and Federal agencies, shall_

  (A) select code sets for appropriate data elements from among the code sets that have been developed by private and public entities; or

  (B) establish code sets for such data elements if no code sets for the data elements have been developed.

  (2) Distribution._The Secretary shall establish efficient and low-cost procedures for distribution of code sets and modifications made to such code sets under section 5113(b).

  (d) Electronic Signature._The Secretary, in coordination with the Secretary of Commerce, shall promulgate regulations specifying procedures for the electronic transmission and authentication of signatures, compliance with which will be deemed to satisfy Federal and State statutory requirements for written signatures with respect to information transactions required by this subtitle and written signatures on medical records and prescriptions.

  (e) Special Rules_

  (1) Coordination of benefits._Any standards adopted under subsection (a) that relate to coordination of benefits shall provide that a claim for reimbursement for medical services furnished is tested by an algorithm specified by the Secretary against all records that are electronically available through the health information network relating to enrollment and eligibility for the individual who received such services to determine any primary and secondary obligors for payment.

  (2) Clinical laboratory tests._

  (A) In general._Except as provided in subparagraph (B), any standards adopted under subsection (a) shall provide that claims for clinical laboratory tests for which benefits are payable by a plan sponsor shall be submitted directly by the person or entity that performed (or supervised the performance of) the tests to the sponsor in a manner consistent with (and subject to such exceptions as are provided under) the requirement for direct submission of such claims under the medicare program.

  (B) Exception._Payment for a clinical laboratory test may be made_

  (i) to a physician with whom the physician who performed or supervised the test shares a practice; or

  (ii) on a pre-paid, at-risk basis to the person or entity who performs or supervises the test.

  SEC. 5113. TIMETABLES FOR ADOPTION OF STANDARDS.

  (a) Initial Standards._The Secretary shall adopt standards relating to the data elements and transactions for the information described in section 5112(a) not later than 9 months after the date of the enactment of this subtitle (except in the case of standards for claims attachments which shall be adopted not later than 24 months after the date of the enactment of this subtitle).

  (b) Additions and Modifications to Standards._

  (1) In general._Except as provided in paragraph (2), the Secretary shall review the standards adopted under this subtitle and shall adopt additional or modified standards as determined appropriate, but no more frequently than once every 6 months.  Any addition or modification to standards shall be completed in a manner which minimizes the disruption and cost of compliance.

  (2) Special rules._

  (A) First 12-month period._Except with respect to additions and modifications to code sets under subparagraph (B), the Secretary shall not adopt any modifications to standards adopted under this subtitle during the 12-month period beginning on the date such standards are adopted unless the Secretary determines that a modification is necessary in order to permit compliance with requirements relating to the standards.

  (B) Additions and modifications to code sets._

  (i) In general._The Secretary shall ensure that procedures exist for the routine maintenance, testing, enhancement, and expansion of code sets.

  (ii) Additional rules._If a code set is modified under this subsection, the modified code set shall include instructions on how data elements that were encoded prior to the modification are to be converted or translated so as to preserve the value of the data elements.  Any modification to a code set under this subsection shall be implemented in a manner that minimizes the disruption and cost of complying with such modification.
 

  (c) Evaluation of Standards._The Secretary may establish a process to measure or verify the consistency of standards adopted or modified under this subtitle.  Such process may include demonstration projects and analysis of the cost of implementing such standards and modifications.

  PART 3_REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND INFORMATION

  SEC. 5121. REQUIREMENTS ON HEALTH PLANS.

  (a) In General._If a person desires to conduct any of the transactions described in section 5112(a) with a health plan as a standard transaction, the health plan shall conduct such standard transaction in a timely manner and the information transmitted or received in connection with such transaction shall be in the form of standard data elements.

  (b) Satisfaction of Requirements._A health plan may satisfy the requirement imposed on such plan under subsection (a) by directly transmitting standard data elements or submitting nonstandard data elements to a certified health information network service for processing into standard data elements and transmission.

  SEC. 5122. TIMETABLES FOR COMPLIANCE WITH REQUIREMENTS.

  (a) Initial Compliance._Not later than 12 months after the date on which standards are adopted under part 2 with respect to any type of transaction or data elements, a health plan shall comply with the requirements of this subtitle with respect to such transaction or data elements.

  (b) Compliance with Modified Standards._

  (1) In general._If the Secretary adopts a modified standard under part 2, a health plan shall be required to comply with the modified standard at such time as the Secretary determines appropriate taking into account the time needed to comply due to the nature and extent of the modification.

  (2) Special rule._In the case of modifications to standards that do not occur within the 12-month period beginning on the date such standards are adopted, the time determined appropriate by the Secretary under paragraph (1) shall be no sooner than the last day of the 90-day period beginning on the date such modified standard is adopted and no later than the last day of the 12 month period beginning on the date such modified standard is adopted.

  PART 4_ACCESSING HEALTH INFORMATION

  SEC. 5131. ACCESS FOR AUTHORIZED PURPOSES.

  (a) In General._The Secretary shall adopt technical standards for appropriate persons, including health plans, health care providers, certified health information network services, health researchers, and Federal and State agencies, to locate and access the health information that is available through the health information network due to the requirements of this subtitle. Such technical standards shall ensure that any request to locate or access information shall be authorized under subtitle C.

  (b) Government Agencies._

  (1) In general._Certified Health information protection organizations shall make available to a Federal or State agency pursuant to a Federal Acquisition Regulation (or an equivalent State system), any non-identifiable health information that is requested by such agency.

  (2) Certain information available at low cost._If a health information protection organization described in paragraph (1) needs information from a health plan in order to comply with a request of a Federal or State agency that is necessary to comply with a requirement under this Act, such plan shall make such information available to such organization for a charge that does not exceed the reasonable cost of transmitting the information. An organization that receives information under the preceding sentence shall, upon request from any certified health information protection organization, make such information available to such an organization for a charge that does not exceed the reasonable cost of transmitting the information.
 

  (c) Functional Separation._The standards adopted by the Secretary under subsection (a) shall ensure that any health information disclosed under such subsection shall not, after such disclosure, be used or released for an administrative, regulatory, or law enforcement purpose unless such disclosure was made for such purpose. 

  SEC. 5132. RESPONDING TO ACCESS REQUESTS.

  (a) In General._The Secretary shall adopt, and modify as appropriate, standards under which a health plan shall respond to requests for access to health information consistent with this subtitle and subtitle C.

  (b) Standards Described._The standards under subsection (a) shall provide_

  (1) for a standard format under which a plan will respond to each request either by satisfying the request or by responding with a negative response, which may include an explanation of the failure to satisfy the request; and

  (2) that a plan shall respond to a request in a timely manner taking into account the age and amount of the information being requested.

  (c) Length of Time Information Should be Accessible._The Secretary shall adopt standards with respect to the length of time any standard data elements for a type of health information should be accessible through the health information network.

  SEC. 5133. TIMETABLES FOR ADOPTION OF STANDARDS AND COMPLIANCE.

  (a) Initial Standards._The Secretary shall adopt standards under this part not later than 9 months after the date of the enactment of this subtitle and such standards shall be effective upon adoption.

  (b) Modifications to Standards._The provisions of paragraphs (1) and (2)(A) of section 5114(b) shall apply to modifications to standards under this part.

  PART 5_STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION NETWORK

  SEC. 5141. STANDARDS AND CERTIFICATION FOR HEALTH INFORMATION NETWORK SERVICES.

  (a) Standards for Operation._The Secretary shall establish standards with respect to the operation of health information network services ensuring that_

  (1) such services have policies and security procedures that are consistent with the privacy requirements under subtitle C, including secure methods of access to and transmission of data; and

  (2) such services, if they are part of a larger organization, have policies and procedures in place which isolate their activities with respect to processing information in a manner that prevents unauthorized access to such information by such larger organization.

  (b) Certification by the Secretary._

  (1) Establishment._Not later than 12 months after the date of the enactment of this subtitle, the Secretary shall establish a certification procedure for health information network services which ensures that certified services are qualified to meet the requirements of this subtitle.

  (2) Audits and reports._The procedure established under paragraph (1) shall provide for audits and reports as the Secretary determines appropriate in order to monitor such entity's compliance with the requirements of this subtitle.

  (c) Loss of Certification._

  (1) Mandatory termination._If a health information network service violates a requirement imposed under subtitle C, its certification under this section shall be terminated unless the Secretary determines that appropriate corrective action has been taken.

  (2) Discretionary termination._If a health information network service violates a requirement or standard imposed under this subtitle and a penalty has been imposed under section 5151, the Secretary shall review the certification of such service and may terminate such certification.

  (d) Certification by Private Entities._The Secretary may designate private entities to conduct the certification procedures established by the Secretary under this section.  A health information network service certified by such an entity in accordance with such designation shall be considered to be certified by the Secretary.

  SEC. 5142. ENSURING AVAILABILITY OF INFORMATION.

  The Secretary shall establish a procedure under which a health plan which does not have the ability to transmit standard data elements directly or does not have access to a certified health information network service shall be able to make health information available for disclosure as authorized by this subtitle.

  PART 6_PENALTIES

  SEC. 5151. GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIREMENTS AND STANDARDS.

  (a) In General._Except as provided in subsection (b), the Secretary shall impose on any person that violates a requirement or standard imposed under this subtitle a penalty of not more than $1,000 for each violation. The provisions of section 1128A of the Social Security Act (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to the imposition of a civil money penalty under this subsection in the same manner as such provisions apply to the imposition of a penalty under section 1128A of the Social Security Act.

  (b) Limitations._

  (1) Noncompliance not discovered._A penalty may not be imposed under subsection (a) if it is established to the satisfaction of the Secretary that the person liable for the penalty did not know, and by exercising reasonable diligence would not have known, that such person failed to comply with the requirement or standard described in subsection (a).

  (2) Failures due to reasonable cause._

  (A) In general._Except as provided in subparagraph (B), a penalty may not be imposed under subsection (a) if_

  (i) the failure to comply was due to reasonable cause and not to willful neglect; and

  (ii) the failure to comply is corrected during the 30-day period beginning on the 1st date the person liable for the penalty knew, or by exercising reasonable diligence would have known, that the failure to comply occurred.

  (B) Extension of period._

  (i) No penalty._The period referred to in subparagraph (A)(ii) may be extended as determined appropriate by the Secretary based on the nature and extent of the failure to comply.

  (ii) Assistance._If the Secretary determines that a health plan failed to comply because such plan was unable to comply, the Secretary may provide technical assistance to such plan during the period described in clause (i).  Such assistance shall be provided in any manner determined appropriate by the Secretary.

  (3) Reduction._In the case of a failure to comply which is due to reasonable cause and not to willful neglect, any penalty under subsection (a) that is not entirely waived under paragraph (2) may be waived to the extent that the payment of such penalty would be excessive relative to the compliance failure involved.

  PART 7_MISCELLANEOUS PROVISIONS

  SEC. 5161. EFFECT ON STATE LAW.

  (a) In General._Except as provided in subsection (b), a provision, requirement, or standard under this subtitle shall supersede any contrary provision of State law, including_

  (1) a provision of State law that requires medical or health plan records (including billing information) to be maintained or transmitted in written rather than electronic form, and

  (2) a provision of State law which provides for requirements or standards that are more stringent than the requirements or standards under this subtitle;

  except where the Secretary determines that the provision is necessary to prevent fraud and abuse, with respect to controlled substances, or for other purposes.

  (b) Public Health Reporting._Nothing in this subtitle shall be construed to invalidate or limit the authority, power, or procedures established under any law providing for the reporting of disease or injury, child abuse, birth, or death, public health surveillance, or public health investigation or intervention.

  SEC. 5162. HEALTH INFORMATION CONTINUITY.

  (a) Health Plans._If a health plan takes any action that would threaten the continued availability of standard data elements of health information held by such plan, such data elements shall be transferred to a health plan in accordance with procedures established by the Secretary.

  (b) Health Information Network Services._If a certified health information network service loses its certified status or takes any action that would threaten the continued availability of the standard data elements of health information held by such service, such data elements shall be transferred to another such service, as designated by the Secretary.

  SEC. 5163. HEALTH INFORMATION ADVISORY COMMITTEE.

  (a) Establishment._There is established a committee to be known as the Health Information Advisory Committee.

  (b) Duties._The committee shall_

  (1) provide assistance to the Secretary in complying with the requirements imposed on the Secretary under this subtitle and subtitle C; and

  (2) be generally responsible for advising the Secretary and the Congress on the status and the future of the health information network.

  (c) Membership._

  (1) In general._The committee shall consist of 15 members to be appointed by the President not later than 60 days after the date of the enactment of this subtitle. The President shall designate 1 member as the Chair. 

  (2) Expertise._The membership of the committee shall consist of individuals who are of recognized standing and distinction in the areas of information systems, consumer health, or privacy, and who possess the demonstrated capacity to discharge the duties imposed on the committee.

  (3) Terms._Each member of the committee shall be appointed for a term of 5 years, except that the members first appointed shall serve staggered terms such that the terms of no more than 3 members expire at one time.

  SEC. 5164. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated such sums as may be necessary to carry out the purposes of this subtitle.

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  Subtitle C_Privacy of Health Information

  PART 1_DEFINITIONS

  SEC. 5201. DEFINITIONS.

  For purposes of this subtitle:

  (1) Protected health information._The term ``protected health information'' means any information, including demographic information collected from an individual, whether oral or recorded in any form or medium, that_

  (A) is created or received by a health care provider, health plan, health oversight agency, health researcher, public health authority, employer, life insurer, school or university, or certified health information network service; 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, and_

  (i) identifies an individual; or

  (ii) with respect to which there is a reasonable basis to believe that the information can be used to identify an individual.

  (2) Disclose._The term ``disclose'', when used with respect to protected health information, means to provide access to the information, but only if such access is provided to a person other than the individual who is the subject of the information.

  (3) Health information trustee._The term ``health information trustee'' means_

  (A) a health care provider, health plan, health oversight agency, certified health information network service, employer, life insurer, or school or university insofar as it creates, receives, maintains, uses, or transmits protected health information; 

  (B) any person who obtains protected health information under section 5213, 5217, 5218, 5221, 5222, 5226, or 5231; and

  (C) any employee or agent of a person covered under subparagraphs (A) or (B).

  (4) Health oversight agency._The term ``health oversight agency'' means a person who_

  (A) performs or oversees the performance of an assessment, evaluation, determination, or investigation relating to the licensing, accreditation, or certification of health care Ðproviders; or 

  (B)(i) performs or oversees the performance of an assessment, evaluation, determination, investigation, or prosecution relating to the effectiveness of, compliance with, or applicability of legal, fiscal, medical, or scientific standards or aspects of performance related to the delivery of, or payment for health care, health services, equipment, or research or relating to  health care fraud or fraudulent claims regarding health care, health services or equipment, or related activities and items; and

  (ii) is a public agency, acting on behalf of a public agency, acting pursuant to a requirement of a public agency, or carrying out activities under a Federal or State law governing the assessment, evaluation, determination, investigation, or prosecution described in clause (i).

  (5) Public health authority._The term ``public health authority'' means an authority or instrumentality of the United States, a State, or a political subdivision of a State that is (A) responsible for public health matters; and (B) engaged in such activities as injury reporting, public health surveillance, and public health investigation or intervention.

  (6) Individual representative._The term ``individual representative'' means any individual legally empowered to make decisions concerning the provision of health care to an individual (where the individual lacks the legal capacity under State law to make such decisions) or the administrator or executor of the estate of a deceased individual.

  (7) Person._The term ``person'' includes an authority of the United States, a State, or a political subdivision of a State.

  PART 2_AUTHORIZED DISCLOSURES

  Subpart A_General Provisions

  SEC. 5206. GENERAL RULES REGARDING DISCLOSURE.

  (a) General Rule._A health information trustee may disclose protected health information only for a purpose that is authorized under this subtitle.

  (b) Disclosure Within a Trustee._A health information trustee may disclose protected health information to an officer, employee, or agent of the trustee for a purpose that is compatible with and related to the purpose for which the information was collected or received by that trustee.

  (c) Scope of Disclosure._Every disclosure of protected health information by a health information trustee shall be limited to the minimum amount of information necessary to accomplish the purpose for which the information is disclosed.

  (d) No General Requirement to Disclose._Nothing in this subtitle that permits a disclosure of health information shall be construed to require such disclosure.

  (e) Use and Redisclosure of Information._Protected health information about an individual that is disclosed under this subtitle may not be used in, or disclosed to any person for use in, any administrative, civil, or criminal action or investigation directed against the individual unless the action or investigation arises out of or is directly related to the law enforcement inquiry for which the information was obtained.

  (f) Identification of Disclosed Information as Protected Information._Except as provided in this subtitle, a health information trustee may not disclose protected health information unless such information is clearly identified as protected health information that is subject to this subtitle.

  (g) Information in Which Providers are Identified._The Secretary may issue regulations protecting information identifying providers in order to promote the availability of health care services.

  SEC. 5207. AUTHORIZATIONS FOR DISCLOSURE OF PROTECTED HEALTH INFORMATION.

  A health information trustee may disclose protected health information pursuant to an authorization executed by the individual who is the subject of the information pursuant to regulations issued by the Secretary with regard to the form of such authorization, the information that must be provided to the individual for authorization, and the scope of the authorization.

  SEC. 5208. CERTIFIED HEALTH INFORMATION NETWORK SERVICES.

  A health information trustee may disclose protected health information to a certified health information protection organization for the purpose of creating non-identifiable health information.

  Subpart B_Specific Disclosures Relating to Patient

  SEC. 5211. DISCLOSURES FOR TREATMENT AND FINANCIAL AND ADMINISTRATIVE TRANSACTIONS.

  (a) Health Care Treatment._A health care provider, health plan, employer, or person who receives protected health information under section 5213, may disclose protected health information to a health care provider for the purpose of providing health care to an individual if the individual who is the subject of the information has been notified of the individual's right to object and has not previously objected in writing to the disclosure. 

  (b) Disclosure for Financial and Administrative Purposes._A health care provider or employer may disclose protected health information to a health care provider or health plan for the purpose of providing for the payment for, or reviewing the payment of, health care furnished to an individual.

  SEC. 5212. NEXT OF KIN AND DIRECTORY INFORMATION.

  (a) Next of Kin._A health care provider or person who receives protected health information under section 5213 may disclose protected health information to the next of kin, an individual representative of the individual who is the subject of the information, or an individual with whom that individual has a close personal relationship if_

  (1) the individual who is the subject of the information_

  (A) has been notified of the individual's right to object and has not objected to the disclosure; 

  (B) is not competent to be notified about the right to object; or

  (C) exigent circumstances exist such that it would not be practicable to notify the individual of the right to object; and

  (2) the information disclosed relates to health care currently being provided to that individual.

  (b) Directory Information._A health care provider and a person receiving protected health information under section 5213 may disclose protected health information to any person if_

  (1) the information does not reveal specific information about the physical or mental condition of the individual who is the subject of the information or health care provided to that person;

  (2) the individual who is the subject of the information_

  (A) has been notified of the individual's right to object and has not objected to the disclosure;

  (B) is not competent to be notified about the right to object; or

  (C) exigent circumstances exist such that it would not be practicable to notify the individual of the right to object; and

  (3) the information consists only of 1 or more of the following items:

  (A) The name of the individual who is the subject of the information.

  (B) If the individual who is the subject of the information is receiving health care from a health care provider on a premises controlled by the provider_

  (i) the location of the individual on the premises; and

  (ii) the general health status of the individual, described as critical, poor, fair, stable, or satisfactory or in terms denoting similar conditions.

  (c) Identification of Deceased Individual._A health care provider, health plan, employer, or life insurer, may disclose protected health information if necessary to assist in the identification of a deceased individual.

  SEC. 5213. EMERGENCY CIRCUMSTANCES.

  A health care provider, health plan, employer, or person who receives protected health information under this section may disclose protected health information in emergency circumstances where there is a reasonable belief that such information is needed to protect the health or safety of an individual from imminent harm.

  Subpart C_Disclosure for Oversight, Public Health, and Research Purposes

  SEC. 5216. OVERSIGHT.

  (a) In General._A health information trustee may disclose protected health information to a health oversight agency for an oversight function authorized by law.

  (b) Use in Action Against Individuals._Notwithstanding section 5206(e), protected health information about an individual that is disclosed under this section may be used in, or disclosed in, an administrative, civil, or criminal action or investigation directed against the individual who is the subject of the information if the action or investigation arises out of or is directly related to_

  (1) receipt of health care or payment for health care; 

  (2) an action involving a fraudulent claim related to health; or 

  (3) an action involving a misrepresentation of the health of the individual who is the subject of the information.

  SEC. 5217. PUBLIC HEALTH.

  A health care provider, health plan, public health authority, employer, or person who receives protected health information under section 5213 may disclose protected health information to a public health authority or other person authorized by law for use in a legally authorized_

  (1) disease or injury reporting;

  (2) public health surveillance; or

  (3) public health investigation or intervention.

  SEC. 5218. HEALTH RESEARCH.

  (a) In General._A health information trustee may disclose protected health information to a health researcher if an institutional review board determines that the research project engaged in by the health researcher_

  (1) requires use of the protected health information for the effectiveness of the project; and

  (2) is of sufficient importance to outweigh the intrusion into the privacy of the individual who is the subject of the information that would result from the disclosure.

  (b) Research Requiring Direct Contact._A health care provider or health plan may disclose protected health information to a health researcher for a research project that includes direct contact with an individual who is the subject of protected health information if an institutional review board determines that direct contact is necessary and will be made in a manner that minimizes the risk of harm, embarrassment, or other adverse consequences to the individual.

  (c) Special Rule for Trustees other than Academic Centers or Health Care Facilities._If a health researcher described in subsection (a) or (b) is not an academic center or a health care facility, the determinations required by an institutional review board shall be made by such a board that is certified by the Secretary.

  (d) Use of Health Information Network._A health information trustee may disclose protected health information to a health researcher using the health information network only if the research project satisfies requirements established by the Secretary for protecting the confidentiality of information in the health information network.

  Subpart D_Disclosure For Judicial, Administrative, and Law Enforcement Purposes

  SEC. 5221. JUDICIAL AND ADMINISTRATIVE PURPOSES.

  A health care provider, health plan, health oversight agency, employer, or life insurer may disclose protected health information in connection with litigation or proceedings to which the individual who is the subject of the information_

  (1) is a party and in which the individual has placed the individual's physical or mental condition in issue; or

  (2) is deceased and in which the individual's physical or mental condition is in issue.

  SEC. 5222. LAW ENFORCEMENT.

  A health care provider, health plan, health oversight agency, employer, life insurer, or person who receives protected health information under section 5213 may disclose protected health information to a law enforcement agency (other than a health oversight agency governed by section 5216) if the information is requested for use_

  (1) in an investigation or prosecution of a health information trustee;

  (2) in the identification of a victim or witness in a law enforcement inquiry; 

  (3) in connection with the investigation of criminal activity committed against the trustee  or on premises controlled by the trustee; or

  (4) in the investigation or prosecution of criminal activity relating to or arising from the provision of health care or payment for health care.

  Subpart E_Disclosure Pursuant to Government Subpoena or Warrant

  SEC. 5226. GOVERNMENT SUBPOENAS AND WARRANTS.

  A health care provider, health plan, health oversight agency, employer, life insurer, or person who receives protected health information under section 5213 shall disclose protected health information under this section if the disclosure is pursuant to_

  (1) a subpoena issued under the authority of a grand jury;

  (2) an administrative subpoena or summons or a judicial subpoena or warrant; or

  (3) an administrative subpoena or summons, a judicial subpoena or warrant, or a grand jury subpoena, and the disclosure otherwise meets the conditions of section 5216, 5217, 5218, 5221, or 5222.

  SEC. 5227. ACCESS PROCEDURES FOR LAW ENFORCEMENT SUBPOENAS AND WARRANTS.

  (a) Probable Cause Requirement._A government authority may not obtain protected health information about an individual under paragraph (1) or (2) of section 5226 for use in a law enforcement inquiry unless there is probable cause to believe that the information is relevant to a legitimate law enforcement inquiry being conducted by the government authority.

  (b) Warrants._A government authority that obtains protected health information about an individual under circumstances described in subsection (a) and pursuant to a warrant shall, not later than 30 days after the date the warrant was executed, serve the individual with, or mail to the last known address of the individual, a notice that protected health information about the individual was so obtained, together with a notice of the individual's right to challenge the warrant.

  (c) Subpoena or Summons._Except as provided in subsection (d), a government authority may not obtain protected health information about an individual under circumstances described in subsection (a) and pursuant to a subpoena or summons unless a copy of the subpoena or summons has been served on the individual, if the identity of the individual is known, on or before the date of return of the subpoena or summons, together with notice of the individual's right to challenge the subpoena or summons.  If the identity of the individual is not known at the time the subpoena or summons is served, the individual shall be served not later than 30 days thereafter, with notice that protected health information about the individual was so obtained together with notice of the individual's right to challenge the subpoena or summons.

  (d) Application for Delay._

  (1) In general._A government authority may apply ex parte and under seal to an appropriate court to delay serving a notice or copy of a warrant, subpoena, or summons required under subsection (b) or (c).

  (2) Ex parte order._The court shall enter an ex parte order delaying or extending the delay of notice, an order prohibiting the disclosure of the request for, or disclosure of, the protected health information, and an order requiring the disclosure of the protected health information if the court finds that_

  (A) the inquiry being conducted is within the lawful jurisdiction of the government authority seeking the protected health information;

  (B) there is probable cause to believe that the protected health information being sought is relevant to a legitimate law enforcement inquiry; 

  (C) the government authority's need for the information outweighs the privacy interest of the individual who is the subject of the information; and

  (D) there is reasonable ground to believe that receipt of notice by the individual will result in_

  (i) endangering the life or physical safety of any individual;

  (ii) flight from prosecution;

  (iii) destruction of or tampering with evidence or the information being sought; 

  (iv) intimidation of potential witnesses; or

  (v) disclosure of the existence or nature of a confidential law enforcement investigation or grand jury investigation is likely to seriously jeopardize such investigation.

  SEC. 5228. CHALLENGE PROCEDURES FOR LAW ENFORCEMENT WARRANTS, SUBPOENAS, AND SUMMONS.

  (a) Motion To Quash._Within 15 days after the date of service of a notice of execution or a copy of a warrant, subpoena, or summons of a government authority seeking protected health information about an individual under paragraph (1) or (2) of section 5226, the individual may file a motion to quash.

  (b) Standard for Decision._The court shall grant a motion under subsection (a) unless the government demonstrates that there is probable cause to believe the protected health information is relevant to a legitimate law enforcement inquiry being conducted by the government authority and the government authority's need for the information outweighs the privacy interest of the individual.

  (c) Attorney's Fees._In the case of a motion brought under subsection (a) in which the individual has substantially prevailed, the court may assess against the government authority a reasonable attorney's fee and other litigation costs (including expert's fees) reasonably incurred.

  (d) No Interlocutory Appeal._A ruling denying a motion to quash under this section shall not be deemed to be a final order, and no interlocutory appeal may be taken therefrom by the individual.

  Subpart F_Disclosure Pursuant to Party Subpoena 

  SEC. 5231. PARTY SUBPOENAS.

  A health care provider, health plan, employer, life insurer, or person who receives protected health information under section 5213 may disclose protected health information under this section if the disclosure is pursuant to a subpoena issued on behalf of a party who has complied with the access provisions of section 5232.

  SEC. 5232. ACCESS PROCEDURES FOR PARTY SUBPOENAS.

  A party may not obtain protected health information about an individual pursuant to a subpoena unless a copy of the subpoena together with a notice of the individual's right to challenge the subpoena in accordance with section 5233 has been served upon the individual on or before the date of return of the subpoena.

  SEC. 5233. CHALLENGE PROCEDURES FOR PARTY SUBPOENAS.

  (a) Motion To Quash Subpoena._After service of a copy of the subpoena seeking protected health information under section 5231, the individual who is the subject of the protected health information may file in any court of competent jurisdiction a motion to quash the subpoena.

  (b) Standard for Decision._The court shall grant a motion under subsection (a) unless the respondent demonstrates that_

  (1) there is reasonable ground to believe the information is relevant to a lawsuit or other judicial or administrative proceeding; and

  (2) the need of the respondent for the information outweighs the privacy interest of the individual.

  (c) Attorney's Fees._In the case of a motion brought under subsection (a) in which the individual has substantially prevailed, the court may assess against the respondent a reasonable attorney's fee and other litigation costs and expenses (including expert's fees) reasonably incurred.

  PART 3_PROCEDURES FOR ENSURING SECURITY OF PROTECTED HEALTH INFORMATION

  Subpart A_Establishment of Safeguards

  SEC. 5236. ESTABLISHMENT OF SAFEGUARDS.

  A health information trustee shall establish and maintain appropriate administrative, technical, and physical safeguards to ensure the integrity and confidentiality of protected health information created or received by the trustee.

  SEC. 5237. ACCOUNTING FOR DISCLOSURES.

  A health information trustee shall create and maintain, with respect to any protected health information disclosed in exceptional circumstances, a record of the disclosure in accordance with regulations issued by the Secretary.

  Subpart B_Review of Protected Health Information By Subjects of the Information

  SEC. 5241. INSPECTION OF PROTECTED HEALTH INFORMATION.

  (a) In General._Except as provided in subsection (b), a health care provider or health plan shall permit an individual who is the subject of protected health information or the individual's designee to inspect any such information that the provider or plan maintains.  A health care provider or health plan may require an individual to reimburse the provider or plan for the cost of such inspection.

  (b) Exceptions._A health care provider or health plan is not required by this section to permit inspection or copying of protected health information if any of the following conditions apply:

  (1) Mental health treatment notes._The information consists of psychiatric, psychological, or mental health treatment notes, and the provider or plan determines, based on reasonable medical judgment, that inspection or copying of the notes would cause sufficient harm.

  (2) Endangerment to life or safety._The provider or plan determines that disclosure of the information could reasonably be expected to endanger the life or physical safety of any individual.

  (3) Confidential source._The information identifies or could reasonably lead to the identification of a person (other than a health care provider) who provided information under a promise of confidentiality to a health care provider concerning the individual who is the subject of the information.

  (4) Administrative purposes._The information is used by the provider or plan solely for administrative purposes and not in the provision of health care to the individual who is the subject of the information.

  (c) Deadline._A health care provider or health plan shall comply with or deny (with a statement of the reasons for such denial) a request for inspection or copying of protected health information under this section within the 30-day period beginning on the date on which the provider or plan receives the request.

  SEC. 5242. AMENDMENT OF PROTECTED HEALTH INFORMATION.

  A health care provider or health plan shall, within 45 days after receiving a written request to correct or amend protected health information from the individual who is the subject of the information_

  (1) correct or amend such information; or 

  (2) provide the individual with a statement of the reasons for refusing to correct or amend such information and include a copy of such statement in the provider's or plan's records.

  SEC. 5243. NOTICE OF INFORMATION PRACTICES.

  A health care provider or health plan shall provide written notice of the provider's or plan's information practices, including notice of individual rights with respect to protected health information.

  Subpart C_Standards for Electronic Disclosures

  SEC. 5246. STANDARDS FOR ELECTRONIC DISCLOSURES.

  The Secretary shall promulgate standards for disclosing protected health information in accordance with this subtitle in electronic form.

  PART 4_SANCTIONS

  Subpart A_No Sanctions for Permissible Actions

  SEC. 5251. NO LIABILITY FOR PERMISSIBLE DISCLOSURES.

  A health information trustee who makes a disclosure of protected health information about an individual that is permitted by this subtitle  shall not be liable to the individual for the disclosure under common law and shall not be subject to criminal prosecution under this subtitle.
 

  Subpart B_Civil Sanctions

  SEC. 5256. CIVIL PENALTY.

  (a) Violation._Any health information trustee who the Secretary determines has substantially and materially failed to comply with this subtitle shall be subject, in addition to any other penalties that may be prescribed by law, to a civil penalty of not more than $10,000 for each such violation.

  (b) Procedures for Imposition of Penalties._Section 1128A of the Social Security Act, other than subsections (a) and (b) and the second sentence of subsection (f) of that section,  shall apply to the imposition of a civil monetary penalty under this section in the same manner as such provisions apply with respect to the imposition of a penalty under section 1128A of such Act.

  SEC. 5257. CIVIL ACTION.

  (a) In General._An individual who is aggrieved by negligent conduct in violation of this subtitle may bring a civil action to recover_

  (1) the greater of actual damages or liquidated damages of $5,000, not to exceed $50,000;

  (2) punitive damages;

  (3) a reasonable attorney's fee and expenses of litigation;

  (4) costs of litigation; and

  (5) such preliminary and equitable relief as the court determines to be appropriate.

  (b) Limitation._No action may be commenced under this section more than 3 years after the date on which the violation was or should reasonably have been discovered.

  Subpart C_Criminal Sanctions

  SEC. 5261. WRONGFUL DISCLOSURE OF PROTECTED HEALTH INFORMATION.

  (a) Offense._A person who knowingly_

  (1) obtains protected health information relating to an individual in violation of this subtitle; or 

  (2) discloses protected  health information to another person in violation of this subtitle,

  shall be punished as provided in subsection (b).

  (b) Penalties._A person described in subsection (a) shall_

  (1) be fined not more than $50,000, imprisoned not more than 1 year, or both; 

  (2) if the offense is committed under false pretenses, be fined not more than $100,000, imprisoned not more than 5 years, or both; and

  (3) if the offense is committed with intent to sell, transfer, or use protected health information for commercial advantage, personal gain, or malicious harm, fined not more than $250,000, imprisoned  not more than 10 years, or both.

  PART 5_ADMINISTRATIVE PROVISIONS

  SEC. 5266. RELATIONSHIP TO OTHER LAWS.

  (a) State Law._Except as provided in subsections (b), (c), and (d), this subtitle preempts State law.

  (b) Laws Relating to Public or Mental Health._Nothing in this subtitle shall be construed to preempt or operate to the exclusion of any State law relating to public health or mental health that prevents or regulates disclosure of protected health information otherwise allowed under this subtitle.

  (c) Privileges._Nothing in this subtitle is intended to  preempt or modify State common or statutory law to the extent such law concerns a privilege of a witness or person in a court of the State. This subtitle does not supersede or modify Federal common or statutory law to the extent such law concerns a privilege of a witness or person in a court of the United States.  Authorizations pursuant to section 5207 shall not be construed as a waiver of any such privilege.

  (d) Certain Duties Under State or Federal Law._This subtitle shall not be construed to preempt, supersede, or modify the operation of_

  (1) any law that provides for the reporting of vital statistics such as birth or death information;

  (2) any law requiring the reporting of abuse or neglect information about any individual; 

  (3) subpart II of part E of title XXVI of the Public Health Service Act (relating to notifications of emergency response employees of possible exposure to infectious diseases); or

  (4) any Federal law or regulation governing confidentiality of alcohol and drug patient records.

  SEC. 5267. RIGHTS OF INCOMPETENTS.

  (a) Effect of Declaration of Incompetence._Except as provided in section 5268, if an individual has been declared to be incompetent by a court of competent jurisdiction, the rights of the individual under this subtitle shall be exercised and discharged in the best interests of the individual through the individual's representative.

  (b) No Court Declaration._Except as provided in section 5268, if a health care provider determines that an individual, who has not been declared to be incompetent by a court of competent jurisdiction, suffers from a medical condition that prevents the individual from acting knowingly or effectively on the individual's own behalf, the right of the individual to authorize disclosure may be exercised and discharged in the best interest of the individual by the individual's representative.

  SEC. 5268. EXERCISE OF RIGHTS.

  (a) Individuals Who Are 18 or Legally Capable._In the case of an individual_

  (1) who is 18 years of age or older, all rights of the individual shall be exercised by the individual; or

  (2) who, acting alone, has the legal right, as determined by State law, to apply for and obtain a type of medical examination, care, or treatment and who has sought such examination, care, or treatment, the individual shall exercise all rights of an individual under this subtitle with respect to protected health information relating to such examination, care, or treatment.

  (b) Individuals Under 18._Except as provided in subsection (a)(2), in the case of an individual who is_

  (1) under 14 years of age, all the individual's rights under this subtitle shall be exercised through the parent or legal guardian of the individual; or

  (2) 14, 15, 16, or 17 years of age, the rights of inspection and amendment, and the right to authorize disclosure of protected health information of the individual may be exercised either by the individual or by the parent or legal guardian of the individual.

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  Subtitle D_Review of Benefit Determinations for Enrolled Individuals

  SEC. 5301. DEFINITIONS.

  For purposes of this subtitle_

  (1) Claim._The term ``claim'' means_

  (A) a request for payment for or provision of a health care intervention under a health plan;

  (B) a request for preauthorization of a health care intervention which is submitted to a health plan prior to receipt of such intervention;

  (C) a request for a utilization review of a health care intervention which is submitted to a health plan prior to or concurrent with receipt of such intervention;

  (D) a request for a determination on enrollment or disenrollment of an individual in a health plan; or

  (E) a request for a determination on whether an individual is eligible for coverage under a health plan.

  (2) Claimant._The term ``claimant'' with respect to a claim means_

  (A) any individual who submits the claim, or on whose behalf a claim is submitted, to a health plan in connection with the individual's enrollment under the plan; or

  (B) a provider with a valid assignment who submits a claim to the plan.

  (3) Health care intervention._The term ``health care intervention'' has the meaning given such term by section 1101(4).

  SEC. 5302. CLAIMS PROCEDURES FOR HEALTH PLANS.

  (a) General Rules Governing Treatment of Claims._

  (1) Adequate notice of disposition of claim._

  (A) Claim in complete form._In any case in which a claim is submitted in complete form to a health plan, the plan shall provide to the claimant with respect to the claim a written notice of_

  (i) the plan's approval of the claim within 25 days after the date of the submission of the claim; or

  (ii) the plan's denial of the claim within the earlier of_

  (I) 25 days after such date of submission, or

  (II) 5 days after the date of the determination to deny the claim.

  The notice of denial shall set forth the reasons for the denial, clearly explain the right to request an explanation under paragraph (2) of the specific reasons and facts underlying the decision to reduce or fail to provide the health care intervention or to pay the claim, the right to appeal the denial pursuant to this subtitle, and a description of the process for appealing such decision sufficient to allow the claimant to initiate appeals and submit evidence to the decision maker in support of the position of the claimant.

  (B) Claim in incomplete form._In any case in which a claim that is submitted is not complete, the health plan shall within 15 days after the date on which the claim is submitted notify the claimant of any required matter remaining to be filed in order to complete the claim and to respond to questions the claimant may have about completing the claim.

  (C) Failure to comply with time limits treated as approval._The failure by any health plan to comply with any time limits of this paragraph with respect to any claim submitted to the plan shall be treated as approval by the plan of the claim.

  (D) Form of notice._Any notice to the claimant under this paragraph shall be written in language easily calculated to be understood by an average individual enrolled in the plan.

  (2) Additional notice and disclosure requirements for health plans._In the case of a denial of a claim, upon written request of the claimant, the plan shall provide, within 10 working days of the request, a response which includes, together with the reasons provided to the claimant under paragraph (1)(A)_

  (A) if the denial is based in whole or in part on a determination that the claim is for a health care intervention which is not covered by the applicable benefits package, the factual basis for the determination;

  (B) if the denial is based in whole or in part on exclusion of coverage with respect to a health care intervention because the intervention is not a qualified investigational treatment (as defined in section 1101(7)), the basis for the determination and a description of the process used in making the determination; and

  (C) if the denial is based in whole or in part on a determination that the health care intervention is not medically necessary or appropriate, the basis for the determination, and a description of the process used in making the determination.

  (3) Plan's duty to review denials upon timely request._The health plan shall review its denial of a claim if the claimant submits to the plan a written request for reconsideration of the claim after receipt of written notice from the plan of the denial. The plan shall allow any such claimant not less than 60 days after receipt of written notice from the plan of the denial or, if no such notice was received, from the date claimant discovers, or reasonably should have discovered, the denial, to submit the claimant's request for reconsideration of the claim.

  (4) Time limit for review._The health plan shall complete any review required under paragraph (3), and shall provide the claimant written notice of the plan's decision on the claim after reconsideration pursuant to the review, within 30 days after the date of the receipt of the request for reconsideration.

  (5) De novo reviews._

  (A) In general._Any review required under paragraph (3)_

  (i) shall be de novo;

  (ii) shall be conducted by an individual who did not make the initial decision denying the claim and who is authorized to approve the claim; and

  (iii) shall include review by_

  (I) a qualified physician with similar expertise to the treating physician if the resolution of any issues involved requires medical expertise, or

  (II) a certified medical reviewer.

  (B) Certified medical reviewers._The Secretary of Labor, in consultation with the Secretary, shall by regulation_

  (i) establish qualifications and standards for certified medical reviewers; and

  (ii) establish procedures for the certification or decertification of such reviewers.

  Certified medical reviewers shall be recognized experts in their medical fields and shall not be employees of health plans.

  (c) Treatment of Urgent Requests to Plans for Preauthorization and Utilization Review._

  (1) In general._This subsection applies in the case of any claim submitted by the claimant consisting of a request for preauthorization of or a utilization review determination with respect to a health care intervention   (other than an emergency health care intervention which may not be subject to preauthorization or utilization review) which is accompanied by an attestation by the treating physician that_

  (A) failure to immediately or within 10 days provide the health care intervention could reasonably be expected to result in_

  (i) placing the health of the claimant (or, with respect to a claimant who is a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, or

  (ii) serious impairment to bodily functions which may lead to death; or

  (B) immediate provision of the health care intervention is necessary because the claimant has made or is at serious risk of making an attempt to harm such claimant or another individual.

  A request for preauthorization or a utilization review determination with respect to a health care intervention may be filed under this subsection at any time prior to completion by the plan of any review conducted pursuant to subsection (b)(3).

  (2) Shortened time limit for consideration of urgent requests._Notwithstanding subsection (a)(1), a health plan shall approve or deny any claim in complete form described in paragraph (1) within 3 days after submission of the claim to the plan, except that a hearing officer may, pursuant to section 5304(e), order a plan to render a decision in less than 3 days. Failure by the plan to comply with the time limits of this paragraph with respect to the claim shall be treated as approval by the plan of the claim.

  (3) Expedited exhaustion of plan remedies._Any claim described in paragraph (1) or any claim for an emergency health care intervention which is denied by the health plan shall be treated as a claim with respect to which all remedies under the plan provided pursuant to this section are exhausted, irrespective of any review provided under subsection (b)(3).

  (4) Denial of previously authorized claims not permitted._In any case in which a health plan approves a claim described in paragraph (1)_

  (A) the plan may not subsequently deny payment or provision of benefits pursuant to the claim, unless the claimant, or another individual, misrepresented or failed to disclose a material fact;

  (B) in the case of a violation of subparagraph (A) in connection with the claim, all remedies under the plan provided pursuant to this section with respect to the claim shall be treated as exhausted; and

  (C) notwithstanding subparagraph (A), subsequent to the preauthorization of or utilization review determination with respect to the health care intervention which is the subject of the claim, the plan may deny payment in the case of a change in the claimant's eligibility under the plan.

  (d) Determination of Incompleteness of Claim._A claim shall be considered submitted in complete form when the health plan is in receipt of all information reasonably required by the plan to make a decision on the claim.

  (e) Waiver of Rights Prohibited._A health plan may not require any party to waive any right under the plan or this Act as a condition for approval of any claim under the plan, except to the extent otherwise specified in a formal settlement agreement.

  SEC. 5303. REVIEW IN AREA CLAIMS DISPUTE OFFICES OF GRIEVANCES BASED ON ACTS OR PRACTICES BY HEALTH PLANS.

  (a) Claims Dispute Offices._The Secretary of Labor shall establish and maintain claims dispute offices which shall have exclusive jurisdiction over complaints described in subsection (c).

  (b) Appointment and Qualifications of Hearing Officers._The Secretary of Labor may retain or employ hearing officers for the claims dispute offices. No individual may serve as a hearing officer unless the individual meets standards which shall be prescribed by the Secretary of Labor. Such standards shall include, but not be limited to, experience in the health benefits area, training, ability to communicate with the claimant, affiliations, diligence, absence of actual or potential, conflicts of interest, and other qualifications deemed relevant by the Secretary of Labor.

  (c) Filings of Complaints._

  (1) In general._A claimant may file a complaint regarding a claim with the appropriate claims dispute office if such claimant is aggrieved by an act or practice engaged in by a health plan which consists of, or results in, a denial or delay of payment or provision of benefits under the plan, if such denial or delay consists of a failure to comply with the terms of the plan (including the provision of benefits in full when due in accordance with the terms of the plan) or consists of a failure to comply with the applicable requirements of this Act.

  (2) Exception._Paragraph (1) shall not apply in the case of a claim for payment for a health care intervention which has already been rendered to the claimant if such claim is for less than $500.

  (d) Exhaustion of Plan Remedies._No complaint may be filed until the claimant has exhausted all remedies (as defined by this subtitle) provided under the plan with respect to the claim in accordance with section 5302.

  (e) Procedures._The Secretary of Labor shall promulgate rules governing the filing, service, and disposition of complaints filed pursuant to this section, including procedures for the amendment of complaints, answers or responses to complaints, and for the submission and disposition of any related motions.

  (f) Time Limitation._Complaints shall be filed not later than 60 days after receipt by the claimant of the written notice of the plan's decision upon review.

  (g) Exclusive Procedure._Except as provided in section 5305 and the amendments made by section 5308, and notwithstanding any other provision of this Act or any other law, the filing of a complaint with the claims dispute office shall be the sole and exclusive means of seeking redress with respect to any act or practice described in subsection (c).

  SEC. 5304. PROCEEDINGS BEFORE HEARING OFFICERS IN CLAIMS DISPUTE OFFICES.

  (a) Assignment of Complaints to Hearing Officers._Upon filing, a complaint shall be assigned to a hearing officer. At no time shall a hearing officer have any official, financial, or personal conflict of interest with respect to issues in controversy before the hearing officer.

  (b) Mediation._

  (1) In General._Within 30 days of the filing of the complaint, and prior to rendering a final decision, the hearing officer shall attempt to mediate the dispute and shall convene at least one mediation conference. Such conference may be conducted in person or through electronic communication.

  (2) Inapplicability of formal rules._Formal rules of evidence shall not apply to mediation conferences.

  (3) Confidentiality._

  (A) In general._Under regulations of the Secretary of Labor, rules similar to the rules under section 574 of title 5, United States Code (relating to confidentiality in dispute resolution proceedings), shall apply to the mediation conference.

  (B) Civil remedies._The Secretary of Labor may assess a civil penalty against any individual who discloses information in violation of the regulations prescribed pursuant to subparagraph (A) in the amount of 3 times the amount of the claim involved. The Secretary of Labor may bring a civil action to enforce such civil penalty in the United States district court for the district in which is located the claims dispute office within which the complaint was filed under section 5303.

  (4) Process non-binding._Any findings and conclusions made in the mediation conference shall be treated as advisory in nature and non-binding. Statements made in the course of the conference shall not be admissible in any other proceedings.

  (5) Enforcement._Any party to a settlement agreement entered into pursuant to a mediation conference under this subtitle may, in the case of an alleged violation of such agreement, petition the United States district court for the district in which is located the claims dispute office within which the complaint was filed under section 5303 for the enforcement of the agreement. In any such action, a prevailing claimant shall be entitled to reasonable costs and expenses (including a reasonable attorney's fee and reasonable expert witness fees) on the charges on which the claimant prevails.

  (c) Adjudications._

  (1) In general._If the matters in the complaint are not resolved through mediation, the hearing officer shall determine whether the claimant is entitled to relief but only on the basis of submissions in writing.

  (2) Standard of review._

  (A) Payment disputes._In the case of a complaint based upon claim for payment for a health care intervention which has already been rendered to the claimant, the hearing officer shall review the decision of the health plan to determine_

  (i) whether the plan's decision is justified by substantial evidence based on the record considered as a whole;

  (ii) whether the plan's decision is in excess of statutory jurisdiction, authority, or limitations, in violation of a statutory right, or otherwise not in accordance with the law; or

  (iii) whether the determination is without observance of procedure required by law, taking due account of the rule of prejudicial error.

  (B) Other disputes._With respect to a complaint other than one described in subparagraph (A), the hearing officer shall determine all issues de novo. The claimant shall have the burden of proving each element of the complaint by a preponderance of the evidence. A determination by a certified medical reviewer that a health care intervention is not medically necessary or appropriate shall be rebuttably presumed to be correct if such determination meets the requirements of section 1106(c)(1).

  (3) Testimony._The testimony taken by the hearing officer shall be in the form of affidavits or declarations submitted under oath.

  (4) Authority of hearing officers._The hearing officer may compel by subpoena the production of evidence in written form. In case of contumacy or refusal to obey a subpoena lawfully issued under this paragraph and upon application of the hearing officer, the United States district court for the district in which the claims dispute office is located may issue an order requiring compliance with the subpoena.

  (d) Decision of Hearing Officer._

  (1) In general._Not later than 120 days after the date on which a complaint is filed, the hearing officer shall issue a written decision. Each such written decision_

  (A) shall include the hearing officer's findings of fact; and

  (B) shall constitute the hearing officer's final disposition of the proceedings.

  (2) Decisions finding in favor of claimant._If the hearing officer's decision includes a determination that any party named in the complaint has engaged in or is engaged in an act or practice described in section 5303(c), the hearing officer shall issue and cause to be served on such party an order which requires such party_

  (A) to provide the benefits due under the terms of the plan and to otherwise comply with the terms of the plan and the applicable requirements of this Act;

  (B) to pay to the claimant prejudgment interest on the actual costs incurred in obtaining the health care intervention at issue in the complaint; and

  (C) to pay to the prevailing claimant costs, including a reasonable attorney's fee, reasonable expert witness fees, and other reasonable costs relating to the hearing on the charges on which the claimant prevails.

  (3) Decisions not in favor of claimant._If the hearing officer's decision includes a determination that the party named in the complaint has not engaged in or is not engaged in an act or practice referred to in section 5303(c) with respect to any charge in the complaint on which the claimant does not prevail, the hearing officer_

  (A) shall include in the decision a dismissal with prejudice of the charge; and

  (B) upon a finding that such charge is frivolous, shall issue and cause to be served on the claimant an order which requires the claimant to pay to such party a reasonable attorney's fee, reasonable expert witness fees, and other reasonable costs relating to the proceedings on such charge.

  In determining whether a charge is frivolous, the court shall consider whether the claimant was appearing pro se or with the assistance of counsel.

  (e) Treatment of Urgent Requests for Preauthorization and Utilization Review._

  (1) In general._In the case of an urgent request for preauthorization of or a utilization review determination made to a plan under section 5302(c), a complaint may be filed with a complaint dispute office at any time after a request has been submitted to the plan under section 5302(c), regardless of whether the plan has rendered a decision on such a request. Any complaint filed pursuant to this paragraph shall be accompanied by a request for expedited consideration.

  (2) Request for expedited consideration._A claimant may, at any time prior to issuance of a final decision by a hearing officer, request expedited consideration with respect to any complaint filed by the claimant. Any request for expedited consideration shall be accompanied by the attestation by the treating physician described in section 5302(c)(1).

  (3) Request for immediate plan decision._Upon receipt of a request for expedited consideration, if the plan has not already rendered a decision with respect to the request, the hearing officer may order the plan to render such decision within such time as the officer believes is necessary to prevent harm to the claimant or another individual.

  (4) Hearing and decision._Upon receipt of a request for expedited consideration, the hearing officer shall set a time and date for a hearing on both the complaint and request for expedited consideration. Such hearing shall occur within 3 days of the time set by the hearing officer for a decision by the plan. Such hearing may be conducted electronically or in person, and the hearing officer shall issue a written decision immediately.

  (5) Temporary emergency order._Subject to the requirements of Rule 65 of the Federal Rules of Civil Procedure (as applied to temporary restraining orders), a hearing officer may grant a temporary emergency order if the claimant demonstrates_

  (A) a substantial likelihood of success on the merits;

  (B) that irreparable injury will result in the absence of the requested relief; 

  (C) that no other parties will be harmed if temporary relief is granted; and

  (D) that the public interest favors entry of a temporary emergency order.

  In any instance in which a temporary emergency order is issued, the hearing officer shall as soon as possible thereafter conduct a hearing pursuant to paragraph (4).

  (f) Review._

  (1) In general._Unless an appeal is taken as provided in this subsection, the decision of the hearing officer shall be final and binding upon all parties. Any party may, within 60 days after service of the decision by the claims dispute office, file an appeal of the decision with the United States court of appeals for the circuit in which the claims dispute office is located.

  (2) Scope of review._The court of appeals shall review the decision of the hearing officer from which the appeal is made, except that the review shall be only for the purposes of determining_

  (A) whether the determination is supported by substantial evidence on the record considered as a whole;

  (B) whether the determination is in excess of statutory jurisdiction, authority, or limitations, in violation of a statutory right, or otherwise not in accordance with the law; or

  (C) whether the determination is without observance of procedure required by law, taking due account of the rule of prejudicial error.

  (3) Further review._Upon the filing of the record with the court, the jurisdiction of the court shall be exclusive and its judgment shall be final, subject only to review as provided in section 1254 of title 28 of the United States Code.

  (4) Awarding of attorneys' fees and other costs and expenses._

  (A) In general._In any judicial proceeding under this subsection, the court may, in its discretion, award to a prevailing claimant reasonable costs and expenses (including a reasonable attorney's fee) on the causes on which the claimant prevails.

  (B) Denial of complaint._Upon a finding that a complaint is frivolous, the court may, in its discretion, award to the party named in the complaint reasonable costs and expenses (including a reasonable attorney's fee).

  (g) Court Enforcement of Orders._

  (1) In general._If a final decision of a hearing officer is not appealed under subsection (f), any party may petition the United States district court for the district in which the claims dispute office is located for enforcement of the order. In any such proceeding, the order of the hearing officer shall not be subject to review.

  (2) Awarding of costs._In any action by a claimant for court enforcement under this subsection, a prevailing claimant shall be entitled to costs, including a reasonable attorney's fee, reasonable expert witness fees, and other reasonable costs relating to such action.

  (h) Representation._Parties may participate pro se or be represented by attorneys in all proceedings with respect to a complaint filed pursuant to this section.

  SEC. 5305. SMALL CLAIMS DISPUTES.

  (a) Civil Action._Any claimant aggrieved, with respect to a health care intervention already rendered to the claimant, by a failure to pay for such intervention under the plan, may, if the amount of such payment is less than $500, commence a civil action to recover the amount of the claim in any court of competent jurisdiction.

  (b) Exhaustion of Plan Remedies._No complaint may be filed until the claimant has exhausted all remedies (as defined by this subtitle) provided under the plan with respect to the claim in accordance with section 5302.

  (c) Standard of Review and Burden of Proof._In any action filed pursuant to subsection (a), the court shall review the decision of the health plan in accordance with the standards set forth in section 5304(c)(2)(A).

  (d) Remedies._The sole remedy available to the prevailing claimant shall be the amount of the payment for benefits under the plan and costs, including a reasonable attorney's fee.

  (e) Federal court jurisdiction._The district courts of the United States shall not have jurisdiction based on section 1331 or 1337 of title 28, United States Code, over any civil action brought pursuant to this section. An action brought in a State court pursuant to this section shall not be subject to removal to Federal court without regard to the citizenship or residence of the parties.

  SEC. 5306. ALTERNATIVE BINDING ARBITRATION.

  (a) In General._A health plan may establish an alternative claims dispute arbitration procedure, and may require claimants to use such procedure in lieu of review by a claims dispute office pursuant to sections 5303 and 5304, but only as provided in this section.

  (b) Consumer Protection Standards._The Secretary of Labor shall by regulation develop and promulgate consumer protection standards for any alternative claims dispute arbitration procedure adopted by a plan pursuant to this section. Such consumer protections should include provisions governing_

  (1) the time frame for decisions, including urgent decisions, by the alternative claims dispute resolution process;

  (2) the selection and compensation of a neutral third party arbitrator;

  (3) publication of decisions of any third party arbitrator, and filing of such decisions with the Department of Labor;

  (4) expertise and qualifications of any third party arbitrators;

  (5) compliance with the provisions of this Act;

  (6) enforceability of an arbitrator's award, including provisions to have a judgment of a United States district court entered upon the award, pursuant to section 8 of title 9, United States Code;

  (7) the provision of adequate and prominent notice to claimants that such alternative claims dispute arbitration is the sole and exclusive means of claims dispute resolution under the plan;

  (8) procedures for consideration of urgent review requests that provide protection to claimants functionally equivalent to the protections provided under section 5304(e).

  (c) Standards of Review and Proof._

  (1) In general._In any arbitration conducted pursuant to this section, the arbitrator shall hear complaints and motions under the standard of review prescribed in section 5304(c)(2).

  (2) Burden of proof._The claimant shall have to meet the burden of proof on the contents of the claimant's complaint by a preponderance of the evidence.

  (d) Remedies._The remedies available to the arbitrator shall be the same as those provided in paragraphs (2) and (3) of section 5304(d).

  (e) Certification of Arbitration Processes._Before claimants can be required to agree to arbitration as a condition of receiving benefits under the plan, the plan must be certified by the Secretary of Labor as complying with the consumer protection standards issued by the Secretary pursuant to subsection (b).

  (f) Withdrawal of Certification._With respect to any plan that has received certification from the Secretary of Labor pursuant to subsection (e), the Secretary may, either upon petition or upon the Secretary's own motion, withdraw such certification after notice to the plan and opportunity for a hearing, if the Secretary concludes that the plan is not in compliance with the consumer protection standards issued pursuant to subsection (b). The Secretary may provisionally withdraw such certification without notice and a hearing if the Secretary determines that the plan's violations of consumer protection standards pose a significant and imminent danger to the health of claimants. In the event of such a provisional withdrawal, the Secretary shall, within 5 working days, afford the plan the opportunity for a hearing to determine whether such withdrawal shall become permanent.

  (g) Applicability of Arbitration Act._The provisions of title 9, United States Code, shall apply to all arbitrations conducted pursuant to this section.

  SEC. 5307. CIVIL MONEY PENALTIES.

  (a) Bad Faith Plans._The Secretary of Labor may assess a civil penalty against any health plan in an amount not to exceed $750,000, upon a finding by clear and convincing evidence of a pattern or practice of denial or delay in the payment or provision of benefits thereunder without any reasonable basis and carried out in bad faith.

  (b) Definitions._For purposes of this section_

  (1) a health plan shall be treated as engaging in a pattern or practice if, with respect to violations, the health plan or those who act on its behalf have knowingly engaged in such violations with such frequency and regularity as to indicate a general practice to engage in that type of conduct; and

  (2) the term ``bad faith'' means the willful or reckless_

  (A) failure to pay a claim within 20 business days after the plan has determined that the claimant has established eligibility for receipt of the benefit and there is no reasonable basis for questioning the claimant's eligibility for receipt of the benefit,

  (B) requirement of a claimant to file a complaint to recover a claim when there is no reasonable basis for questioning the claimant's eligibility for receipt of the benefit, or

  (C) refusal to pay a claim following a failure to conduct an investigation of the claim requested by a claimant.

  (c) Misrepresentation._Upon petition by a plan, the Secretary of Labor may assess a civil monetary penalty in an amount not to exceed the greater of $2,000 or 2 times the amount of the claim_

  (1) against a claimant, upon a finding that claimant, or another individual whose misrepresentation or failure to disclose is known to the claimant, knowingly and willfully misrepresented or failed to disclose a material fact with respect to a claim submitted for urgent review pursuant to section 5302(c); or

  (2) against an individual other than the claimant, upon a finding that such individual knowingly and willfully misrepresented or failed to disclose a material fact with respect to a claim submitted for urgent review pursuant to section 5302(c).

  (d) Civil Action To Enforce Civil Penalty._The Secretary of Labor may commence a civil action in the United States district court for the district in which the defendant resides to enforce a civil penalty assessed under subsections (a) or (c).

  SEC. 5308. TECHNICAL AMENDMENTS.

  (a) Section 502(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132(a)) is amended_

  (1) in paragraph (1)(A), by inserting ``except for an action relating to a health plan (as defined in section 3(a) of the Health Reform Act),'' before ``to recover''; and

  (2) in paragraph (3), by inserting ``except for an action relating to a health plan (as so defined),'' before ``by a participant''.

  (b) Section 503 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1133) is amended by inserting ``, other than a health plan (as defined in section 3(a) of the Health Reform Act),'' after ``every employee benefit plan''.

  SEC. 5309. REASONABLE CARE IN CONDUCTING PREAUTHORIZATION AND UTILIZATION REVIEW.

  (a) In General._Any person who both_

  (1) conducts a preauthorization or utilization review with respect to a health care intervention requested under a health plan, prior to receipt by the claimant of such intervention; and

  (2) in the course of conducting such preauthorization or utilization review determines whether a health care intervention is medically necessary or appropriate,

  shall exercise reasonable care with respect to all medical judgments made in the course of such review.

  (b) Standard of Care._The standard of care of a person described in subsection (a) shall be that of a similarly situated, reasonably prudent person conducting a preauthorization or utilization review who is determining whether a health care intervention is medically necessary or appropriate.

  (c) Private Right of Action._

  (1) In general._Except as provided in paragraph (2), any claimant (other than a provider), or the estate or successor of such claimant, aggrieved by a violation of subsection (a), may bring an action against the person who conducted such review in a court of competent jurisdiction where the claimant resides, where the health care intervention was rendered or was to be rendered, or where the preauthorization or utilization review is conducted.

  (2) No action against certified medical reviewer._No action may be brought under this section against a certified medical reviewer.

  (d) Elements of an Action._In any action brought pursuant to subsection (c), such a claimant shall demonstrate, by a preponderance of the evidence, that_

  (1) the defendant failed to use reasonable care in exercising medical judgment with respect to determining whether a health care intervention requested by the claimant, or on behalf of such claimant, was medically necessary or appropriate with respect to a preauthorization or utilization review under the claimant's plan;

  (2) such failure to exercise reasonable care was the actual and proximate cause of a material delay in the provision, or denial, of the health care intervention actually covered by the plan;

  (3) such delay or denial of the health care intervention covered by the plan actually and proximately resulted in actual and demonstrable physical injury to the claimant; and

  (4) the claimant, or the agent of such claimant, exhausted all remedies available pursuant to sections 5303 through 5306, including, where appropriate, remedies for urgent review.

  (e) Defenses._

  (1) In general._It shall be a complete defense to any action brought pursuant to subsection (c) that a hearing officer, acting pursuant to sections 5303 and 5304, or, where appropriate, an arbitrator conducting an alternative claims dispute arbitration pursuant to section 5306, affirmed or concurred in the preauthorization or utilization review determination.

  (2) Mitigation._Any claimant who brings an action pursuant to this section shall have a duty to take all reasonable actions to mitigate harm or otherwise, where affordable, to obtain the health care intervention. In the event the court determines that the claimant failed to take all reasonable actions to mitigate harm, the court shall determine the proportion of claimant's injury attributable to such failure to take reasonable actions to mitigate harm, and shall diminish proportionately any amount awarded as damages.

  (f) Presumptions._A person that conducts a preauthorization or utilization review with respect to a health care intervention and that, in the course of such review, relies in good faith on_

  (1) a coverage recommendation issued by the National Health Benefits and Coverage Commission pursuant to section 1104(b);

  (2) a practice guideline described in section 1104(a); or

  (3) a decision by a certified medical reviewer that the requested health care intervention was not medically necessary or appropriate,

  shall be rebuttably presumed to have used reasonable care with respect to medical judgments incorporated in such recommendation, guideline, or decision. 

  (g) Remedies._In any action brought pursuant to subsection (c), a court may award with respect to a violation of subsection (a)_

  (1) compensatory economic damages; and

  (2) compensatory non-economic damages, the total amount of which shall not exceed the greater of $100,000 (indexed annually based on the Consumer Price Index), or 2 times the amount of the benefits claim, the decision with respect to which forms the basis of the action, regardless of the number of actions brought with respect to such violation.

  A court may not award punitive damages.

  (h) Several Liability._With respect to any action brought pursuant to this section, the liability of each defendant joined in such action for non-economic damages shall be several only, and shall not be joint. Each defendant shall be liable only for the amount of non-economic damages allocated to such defendant in direct proportion to such defendant's percentage of responsibility. The court shall determine the proportion of responsibility of each party for claimant's harm.

  (i) Limitation on Attorney's Contingency Fees._With respect to an attorney or attorneys who represent, on a contingency fee basis, a claimant or claimants in an action brought pursuant to this section, the total amount of such fees that may be charged, received, or collected for services rendered in connection with such action shall not exceed_

  (1) 33 1/3 percent of the first $150,000 of the total amount recovered by judgment or settlement in such action (based on after tax recovery); plus

  (2) 25 percent of any amount recovered in excess of the amount described in paragraph (1).

  (j) Alternative Dispute Resolution Preserved._Nothing in this section shall be construed as prohibiting parties from agreeing to resolve disputes under this section pursuant to private contractual arrangements.

  (k) Definitions._For the purposes of this section_

  (1) the term ``compensatory economic damages'' means damages awarded for pecuniary loss actually and proximately resulting from a violation of subsection (a) for medical expense loss, work loss, replacement services loss, loss due to death, burial costs, and loss of business or employment opportunities, but excluding amounts paid or to be paid by the health plan;

  (2) the term ``compensatory non-economic damages'' means any damages (other than punitive damages) awarded for subjective, non-monetary loss resulting from a violation of subsection (a), including, but not limited to, pain, suffering, emotional distress, loss of society and companionship, loss of consortium, but excluding pecuniary loss or loss for mere inconvenience or frustration resulting from delay; and

  (3) the term ``contingency fee'' means all compensation for professional legal services which is payable only if a recovery is effected on behalf of one or more claimants.

  SEC. 5310. EXCLUSIVE REMEDIES.

  Notwithstanding any other provision of State law and any other provision of this Act, the provisions of this subtitle shall constitute the exclusive remedies with respect to a claim, or the manner of conducting a preauthorization or utilization review with respect to health care interventions requested under a health plan.

  VEÿ09

  VEÿ09

  VEÿ09

  Subtitle E_Enhanced Penalties for Health Care Fraud

  PART 1_ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM

  SEC. 5401. ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM.

  (a) Establishment of Program._

  (1) In general._Not later than January 1, 1995, the Secretary of Health and Human Services (in this subtitle referred to as the ``Secretary''), acting through the Office of the Inspector General of the Department of Health and Human Services, and the Attorney General shall establish a program_

  (A) to coordinate Federal, State, and local law enforcement programs to control fraud and abuse with respect to the delivery of and payment for health care in the United States,

  (B) to conduct investigations, audits, evaluations, and inspections relating to the delivery of and payment for health care in the United States,

  (C) to facilitate the enforcement of the provisions of sections 1128, 1128A, and 1128B of the Social Security Act and other statutes applicable to health care fraud and abuse, and

  (D) to provide for the modification and establishment of safe harbors and to issue interpretative rulings and special fraud alerts pursuant to section 5403.

  (2) Coordination with health plans._In carrying out the program established under paragraph (1), the Secretary and the Attorney General shall consult with, and arrange for the sharing of data with representatives of health plans.

  (3) Regulations._

  (A) In general._The Secretary and the Attorney General shall by regulation establish standards to carry out the program under paragraph (1).

  (B) Information standards._

  (i) In general._Such standards shall include standards relating to the furnishing of information by health plans, providers, and others to enable the Secretary and the Attorney General to carry out the program (including coordination with health plans under paragraph (2)).

  (ii) Confidentiality._Such standards shall include procedures to assure that such information is provided and utilized in a manner that appropriately protects the confidentiality of the information and the privacy of individuals receiving health care services and items.

  (iii) Qualified immunity for providing information._The provisions of section 1157(a) of the Social Security Act (relating to limitation on liability) shall apply to a person providing information to the Secretary or the Attorney General in conjunction with their performance of duties under this section, in the same manner as such section applies to information provided to organizations with a contract under subtitle B of title V of this Act, with respect to the performance of such a contract.

  (C) Disclosure of ownership information._

  (i) In general._Such standards shall include standards relating to the disclosure of ownership information described in clause (ii) by any entity providing health care services and items.

  (ii) Ownership information described._The ownership information described in this clause includes_

  (I) a description of such items and services provided by such entity;

  (II) the names and unique physician identification numbers of all physicians with a financial relationship (as defined in section 1877(a)(2) of the Social Security Act) with such entity;

  (III) the names of all other individuals with such an ownership or investment interest in such entity; and

  (IV) any other ownership and related information required to be disclosed by such entity under section 1124 or section 1124A of the Social Security Act, except that the Secretary shall establish procedures under which the information required to be submitted under this subclause will be reduced with respect to health care provider entities that the Secretary determines will be unduly burdened if such entities are required to comply fully with this subclause.

  (4) Authorization of appropriations for investigators and other personnel._In addition to any other amounts authorized to be appropriated to the Secretary and the Attorney General for health care anti-fraud and abuse activities for a fiscal year, there are authorized to be appropriated additional amounts as may be necessary to enable the Secretary and the Attorney General to conduct investigations and audits of allegations of health care fraud and abuse and otherwise carry out the program established under paragraph (1) in a fiscal year.

  (5) Ensuring access to documentation._The Inspector General of the Department of Health and Human Services is authorized to exercise the authority described in paragraphs (4) and (5) of section 6 of the Inspector General Act of 1978 (relating to subpoenas and administration of oaths) with respect to the activities under the all-payer fraud and abuse control program established under this subsection to the same extent as such Inspector General may exercise such authorities to perform the functions assigned by such Act.

  (6) Authority of inspector general._Nothing in this Act shall be construed to diminish the authority of any Inspector General, including such authority as provided in the Inspector General Act of 1978.  

  (7) health plan defined._For the purposes of this subsection, the term ``health plan'' shall have the meaning given such term in section 3(a)(1) of this Act.

  (b) Health Care Fraud and Abuse Control Account._

  (1) Establishment._

  (A) In general._There is hereby established an account to be known as the ``Health Care Fraud and Abuse Control Account'' (in this section referred to as the ``Anti-Fraud Account''). The Anti-Fraud Account shall consist of_

  (i) such gifts and bequests as may be made as provided in subparagraph (B);

  (ii) such amounts as may be deposited in the Anti-Fraud Account as provided in subsection (a)(4), sections 5441(b) and 5442(b), and title XI of the Social Security Act; and

  (iii) such amounts as are transferred to the Anti-Fraud Account under subparagraph (C).

  (B) Authorization to accept gifts._The Anti-Fraud Account is authorized to accept on behalf of the United States money gifts and bequests made unconditionally to the Anti-Fraud Account, for the benefit of the Anti-Fraud Account or any activity financed through the Anti-Fraud Account.

  (C) Transfer of amounts._

  (i) In general._The Secretary of the Treasury shall transfer to the Anti-Fraud Account an amount equal to the sum of the following:

  (I) Criminal fines imposed in cases involving a Federal health care offense (as defined in section 982(a)(6)(B) of title 18, United States Code).

  (ii) Administrative penalties and assessments imposed under titles XI, XVIII, and XIX of the Social Security Act (except as otherwise provided by law).

  (iii) Amounts resulting from the forfeiture of property by reason of a Federal health care offense.

  (iv) Penalties and damages imposed under the False Claims Act (31 U.S.C. 3729 et seq.), in cases involving claims related to the provision of health care items and services (other than funds awarded to a relator or for restitution).

  (2) Use of funds._

  (A) In general._Amounts in the Anti-Fraud Account shall be available without appropriation and until expended as determined jointly by the Secretary and the Attorney General of the United States in carrying out the health care fraud and abuse control program established under subsection (a) (including the administration of the program), and may be used to cover costs incurred in operating the program, including costs (including equipment, salaries and benefits, and travel and training) of_

  (i) prosecuting health care matters (through criminal, civil, and administrative proceedings);

  (ii) investigations;

  (iii) financial and performance audits of health care programs and operations;

  (iv) inspections and other evaluations; and

  (v) provider and consumer education regarding compliance with the provisions of this subtitle.

  (B) Funds used to supplement agency appropriations._It is intended that disbursements made from the Anti-Fraud Account to any Federal agency be used to increase and not supplant the recipient agency's appropriated operating budget.

  (3) Annual report._The Secretary and the Attorney General shall submit jointly an annual report to Congress on the amount of revenue which is generated and disbursed by the Anti-Fraud Account in each fiscal year.

  (4) Use of funds by inspector general._

  (A) Reimbursements for Investigations._The Inspector General is authorized to receive and retain for current use reimbursement for the costs of conducting investigations, when such restitution is ordered by a court, voluntarily agreed to by the payer, or otherwise.

  (B) Crediting._Funds received by the Inspector General as reimbursement for costs of conducting investigations shall be deposited to the credit of the appropriation from which initially paid, or to appropriations for similar purposes currently available at the time of deposit, and shall remain available for obligation for 1 year from the date of their deposit.

  SEC. 5402. APPLICATION OF FEDERAL HEALTH ANTI-FRAUD AND ABUSE SANCTIONS TO ALL FRAUD AND ABUSE AGAINST ANY HEALTH PLAN.

  (a) Crimes._

  (1) Social security act._Section 1128B of the Social Security Act (42 U.S.C. 1320aÿ097b) is amended as follows:

  (A) In the heading, by adding at the end the following: ``or health plans''.

  (B) In subsection (a)(1)_

  (i) by striking ``title XVIII or'' and inserting ``title XVIII,'', and

  (ii) by adding at the end the following: ``or a health plan (as defined in section 1128(i)),''.

  (C) In subsection (a)(5), by striking ``title XVIII or a State health care program'' and inserting ``title XVIII, a State health care program, or a health plan''.

  (D) In the second sentence of subsection (a)_

  (i) by inserting after ``title XIX'' the following: ``or a health plan'', and

  (ii) by inserting after ``the State'' the following: ``or the plan''.

  (E) In subsection (b)(1), by striking ``title XVIII or a State health care program'' each place it appears and inserting ``title XVIII, a State health care program, or a health plan''.

  (F) In subsection (b)(2), by striking ``title XVIII or a State health care program'' each place it appears and inserting ``title XVIII, a State health care program, or a health plan''.

  (G) In subsection (b)(3), by striking ``title XVIII or a State health care program'' each place it appears in subparagraphs (A) and (C) and inserting ``title XVIII, a State health care program, or a health plan''.

  (H) In subsection (d)(2)_

  (i) by striking ``title XIX,'' and inserting ``title XIX or under a health plan,'', and

  (ii) by striking ``State plan,'' and inserting ``State plan or the health plan,''.

  (2) Identification of community service opportunities._Section 1128B of such Act (42 U.S.C. 1320aÿ097b) is further amended by adding at the end the following new subsection:

  ``(f) The Secretary may_

  ``(1) in consultation with State and local health care officials, identify opportunities for the satisfaction of community service obligations that a court may impose upon the conviction of an offense under this section, and

  ``(2) make information concerning such opportunities available to Federal and State law enforcement officers and State and local health care officials.''.

  (b) Health Plan Defined._Section 1128 of the Social Security Act (42 U.S.C. 1320aÿ097) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection:

  ``(i) Health Plan Defined._For purposes of sections 1128A and 1128B, the term `health plan' has the same meaning given such term in section 3(a)(1) of the Health Reform Act.''.

  (c) Effective Date._The amendments made by this section shall take effect on January 1, 1995.

  SEC. 5403. HEALTH CARE FRAUD AND ABUSE GUIDANCE.

  (a) Solicitation and Publication of Modifications to Existing Safe Harbors and New Safe Harbors._

  (1) In general._

  (A) Solicitation of proposals for safe harbors._Not later than January 1, 1995, and not less than annually thereafter, the Secretary shall publish a notice in the Federal Register soliciting proposals, which will be accepted during a 60-day period, for_

  (i) modifications to existing safe harbors issued pursuant to section 14(a) of the Medicare and Medicaid Patient and Program Protection Act of 1987 (42 U.S.C. 1320aÿ097b note);

  (ii) additional safe harbors specifying payment practices that shall not be treated as a criminal offense under section 1128B(b) of the Social Security Act the (42 U.S.C. 1320aÿ097b(b))  and shall not serve as the basis for an exclusion under section 1128(b)(7) of such Act (42 U.S.C. 1320aÿ097(b)(7));

  (iii) interpretive rulings to be issued pursuant to subsection (b); and

  (iv) special fraud alerts to be issued pursuant to subsection (c).

  (B) Publication of proposed modifications and proposed additional state harbors._After considering the proposals described in clauses (i) and (ii) of subparagraph (A), the Secretary, in consultation with the Attorney General, shall publish in the Federal Register proposed modifications to existing safe harbors and proposed additional safe harbors, if appropriate, with a 60-day comment period.  After considering any public comments received during this period, the Secretary shall issue final rules modifying the existing safe harbors and establishing new safe harbors, as appropriate.

  (C) Report._The Inspector General of the Department of Health and Human Services (hereafter in this section referred to as the ``Inspector General'') shall, in an annual report to Congress or as part of the year-end semiannual report required by section 5 of the Inspector General Act of 1978 (5 U.S.C. App.), describe the proposals received under clauses (i) and (ii) of subparagraph (A) and explain which proposals were included in the publication described in subparagraph (B), which proposals were not included in that publication, and the reasons for the rejection of the proposals that were not included.

  (2) Criteria for modifying and establishing safe harbors._In modifying  and establishing safe harbors under paragraph (1)(B), the Secretary  may consider the extent to which providing a safe harbor for the specified payment practice may result in any of the following:

  (A) An increase or decrease in access to health care services.

  (B) An increase or decrease in the quality of health care services.

  (C) An increase or decrease in patient freedom of choice among health care providers.

  (D) ~An increase or decrease in competition among health care providers.

  (E) An increase or decrease in the ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.

  (F) An increase or decrease in the cost to Government health care programs.

  (G) An increase or decrease in the potential overutilization of health care services.

  (H) The existence or nonexistence of any potential financial benefit to a health care professional or provider which may vary based on their decisions of_

  (i) whether to order a health care item or service; or

  (ii)  whether to arrange for a referral of health care items or services to a particular practitioner or provider.

  (I) Any other factors the Secretary deems appropriate in the interest of preventing fraud and abuse in Government health care programs.

  (b)  Int~erpretive Rulings._

  (1) In general._

  (A) Request for interpretive ruling._Any person may present, at any time, a request to the Inspector General for a statement of the Inspector General's current interpretation of the meaning of a specific aspect of the application of sections 1128A and 1128B of the Social Security Act (hereafter in this section referred to as an ``interpretive ruling'').

  (B) Issuance and effect of interpretive ruling._

  (i) In general._If appropriate, the Inspector General shall in consultation with the Attorney General, issue an interpretive ruling in response to a request described in subparagraph (A). Interpretive rulings shall not have the force of law and shall be treated as an interpretive rule within the meaning of section 553(b) of title 5, United States Code.  All interpretive rulings issued pursuant to this provision shall be published in the Federal Register or otherwise made available for public inspection.

  (ii) Reasons for denial._If the Inspector General does not issue an interpretive ruling in response to a request described in subparagraph (A), the Inspector General shall notify the requesting party of such decision and shall identify the reasons for such decision.

  (2) Criteria for  interpretive rulings._

  (A) In general._In determining whether to  issue an interpretive ruling under paragraph (1)(B), the Inspector General  may consider_

  (i) whether and to what extent the request identifies an  ambiguity within the language of the statute, the existing safe harbors, or previous interpretive rulings; and

  (ii) whether the subject of the requested interpretive ruling  can be adequately addressed by interpretation of the language of the statute, the existing  safe harbor rules, or previous interpretive rulings, or whether the request would require a  substantive ruling not authorized under this subsection.

  (B) No rulings on factual issues._The Inspector General shall not give an interpretive ruling on any factual issue, including the intent of the parties or the fair market value of particular leased space or equipment.

  (c) Special Fraud Alerts._

  (1) In general._

  (A) Request for special fraud alerts._Any person may present, at any time, a request to the Inspector General  for a  notice which informs the public of  practices which the Inspector General considers to be suspect or  of particular concern under section 1128B(b) of the Social Security Act (42 U.S.C. 1320aÿ097b(b)) (hereafter in this subsection referred to as a ``special fraud alert'').

  (B) Issuance and publication of special fraud alerts._Upon receipt of a request described in subparagraph (A),  the Inspector General shall investigate the subject matter of the  request to determine whether a special fraud alert should be  issued.  If appropriate, the Inspector General shall in  consultation with the Attorney General, issue a special fraud  alert in response to the request.  All  special fraud alerts issued pursuant to this subparagraph shall be  published in the Federal Register.
  

  (2) Criteria for special fraud alerts._~~In determining whether  to issue a special fraud alert upon a request described in paragraph (1), the Inspector  General may consider_

  (A) whether and to what extent the practices that would be   identified in the special fraud alert may result in any of the   consequences described in subsection (a)(2); and

  (B) the volume and frequency of the conduct that would be   identified in the special fraud alert.

  SEC. 5404. REPORTING OF FRAUDULENT ACTIONS UNDER MEDICARE.

  Not later than 1 year after the date of the enactment of this Act, the Secretary shall establish a program through which individuals entitled to benefits under the medicare program may report to the Secretary on a confidential basis (at the individual's request) instances of suspected fraudulent actions arising under the program by providers of items and services under the program.

  PART 2_REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE

  SEC. 5411. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE AND STATE HEALTH CARE PROGRAMS.

  (a) Individual Convicted of Felony Relating to Fraud._

  (1) In general._Section 1128(a) of the Social Security Act (42 U.S.C. 1320aÿ097(a)) is amended by adding at the end the following new paragraph:

  ``(3) Felony conviction relating to fraud._Any individual or entity that has been convicted after the date of the enactment of the Health Reform Act, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a program (other than those specifically described in paragraph (1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct.''.

  (2) Conforming amendment._Section 1128(b)(1) of such Act (42 U.S.C. 1320aÿ097(b)(1)) is amended_

  (A) in the heading, by striking ``Conviction'' and inserting ``Misdemeanor conviction''; and

  (B) by striking ``criminal offense'' and inserting ``criminal offense consisting of a misdemeanor''.

  (b) Individual Convicted of Felony Relating to Controlled Substance._

  (1) In general._Section 1128(a) of the Social Security Act (42 U.S.C. 1320aÿ097(a)), as amended by subsection (a), is amended by adding at the end the following new paragraph:

  ``(4) Felony conviction relating to controlled substance._Any individual or entity that has been convicted after the date of the enactment of the Health Reform Act, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance.''.

  (2) Conforming amendment._Section 1128(b)(3) of such Act (42 U.S.C. 1320aÿ097(b)(3)) is amended_

  (A) in the heading, by striking ``Conviction'' and inserting ``Misdemeanor conviction''; and

  (B) by striking ``criminal offense'' and inserting ``criminal offense consisting of a misdemeanor''.

  SEC. 5412. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR CERTAIN INDIVIDUALS AND ENTITIES SUBJECT TO PERMISSIVE EXCLUSION FROM MEDICARE AND STATE HEALTH CARE PROGRAMS.

  Section 1128(c)(3) of the Social Security Act (42 U.S.C. 1320aÿ097(c)(3)) is amended by adding at the end the following new subparagraphs:

  ``(D) In the case of an exclusion of an individual or entity under paragraph (1), (2), or (3) of subsection (b), the period of the exclusion shall be 3 years, unless the Secretary determines in accordance with published regulations that a shorter period is appropriate because of mitigating circumstances or that a longer period is appropriate because of aggravating circumstances.

  ``(E) In the case of an exclusion of an individual or entity under subsection (b)(4) or (b)(5), the period of the exclusion shall not be less than the period during which the individual's or entity's license to provide health care is revoked, suspended, or surrendered, or the individual or the entity is excluded or suspended from a Federal or State health care program.

  ``(F) In the case of an exclusion of an individual or entity under subsection (b)(6)(B), the period of the exclusion shall be not less than 1 year.''.

  SEC. 5413. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP OR CONTROL INTEREST IN SANCTIONED ENTITIES.

  Section 1128(b) of the Social Security Act (42 U.S.C. 1320aÿ097(b)) is amended by adding at the end the following new paragraph:

  ``(15) Individuals controlling a sanctioned entity._Any individual who has a direct or indirect ownership or control interest of 5 percent or more, or an ownership or control interest (as defined in section 1124(a)(3)) in, or who is an officer, director, agent, or managing employee (as defined in section 1126(b)) of, an entity_

  ``(A) that has been convicted of any offense described in subsection (a) or in paragraph (1), (2), or (3) of this subsection;

  ``(B) against which a civil monetary penalty has been assessed under section 1128A; or

  ``(C) that has been excluded from participation under a program under title XVIII or under a State health care program.''.

  SEC. 5414. ACTIONS SUBJECT TO CRIMINAL PENALTIES.

  (a) Restriction on Application of Exception for Amounts Paid to Employees._Section 1128B(b)(3)(B) of the Social Security Act (42 U.S.C. 1320aÿ097b(b)(3)(B)) is amended by striking ``services;'' and inserting the following: ``services,  but only if the amount of remuneration under the arrangement is (i) consistent with fair market value; (ii) not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals of patients directly contacted by the employee to the employer for the furnishing (or arranging for the furnishing) of such items or services; and (iii) provided pursuant to an arrangement that would be commercially reasonable even if no such referrals were made;''.

  (b) New Exception for Capitated Payments._Section 1128B(b)(3) of the Social Security Act (42 U.S.C. 1320aÿ097b(b)(3)) is amended_

  (A) by striking ``and'' at the end of subparagraph (D);

  (B) by striking the period at the end of subparagraph (E) and inserting a semicolon; and

  (C) by adding at the end the following new subparagraphs:

  ``(F) any reduction in cost sharing or increased benefits given to an individual, any amounts paid to a provider for an item or service furnished to an individual, or any discount or reduction in price given by the provider for such an item or service, if the individual is enrolled with and such item or service is covered under any of the following:

  ``(i) A health plan which is furnishing items or services under a risk-sharing contract under section 1876 or section 1903(m).

  ``(ii) A health plan receiving payments on a prepaid basis, under a demonstration project under section 402(a) of the Social Security Amendments of 1967 or under section 222(a) of the Social Security Amendments of 1972;

  ``(G) any amounts paid to a provider for an item or service furnished to an individual or any discount or reduction in price given by the provider for such an item or service, if the individual is enrolled with and such item or service is covered under a health plan under which the provider furnishing the item or service is paid by the health plan for furnishing the item or service only on a capitated basis pursuant to a written arrangement between the plan and the provider in which the provider assumes financial risk for furnishing the item or service;

  ``(H) differentials in coinsurance and deductible amounts as part of a benefit plan design as long as the differentials have been disclosed in writing to all third party payors to whom claims are presented and as long as the differentials meet the standards as defined in regulations promulgated by the Secretary; and

  ``(I) remuneration given to individuals to promote the delivery of preventive care in compliance with regulations promulgated by the Secretary.''.

  SEC. 5415. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO COMPLY WITH STATUTORY OBLIGATIONS.

  (a) Minimum Period of Exclusion for Practitioners and Persons Failing To Meet Statutory Obligations._

  (1) In general._The second sentence of section 1156(b)(1) of the Social Security Act (42 U.S.C. 1320cÿ095(b)(1)) is amended by striking ``may prescribe)'' and inserting ``may prescribe, except that such period may not be less than 1 year)''.

  (2) Conforming amendment._Section 1156(b)(2) of such Act (42 U.S.C. 1320cÿ095(b)(2)) is amended by striking ``shall remain'' and inserting ``shall (subject to the minimum period specified in the second sentence of paragraph (1)) remain''.

  (b) Repeal of ``Unwilling or Unable'' Condition for Imposition of Sanction._Section 1156(b)(1) of the Social Security Act (42 U.S.C. 1320cÿ095(b)(1)) is amended_

  (1) in the second sentence, by striking ``and determines'' and all that follows through ``such obligations,''; and

  (2) by striking the third sentence.

  SEC. 5416. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE ORGANIZATIONS. 

  (a) Application of Intermediate Sanctions for Any Program Violations._

  (1) In general._Section 1876(i)(1) of the Social Security Act (42 U.S.C. 1395mm(i)(1)) is amended by striking ``the Secretary may terminate'' and all that follows and inserting the following: ``in accordance with procedures established under paragraph (9), the Secretary may at any time terminate any such contract or may impose the intermediate sanctions described in paragraph (6)(B) or (6)(C) (whichever is applicable) on the eligible organization if the Secretary determines that the organization_

  ``(A) has failed substantially to carry out the contract; 

  ``(B) is carrying out the contract in a manner inconsistent with the efficient and effective administration of this section; or

  ``(C) no longer substantially meets the applicable conditions of subsections (b), (c), (e), and (f).''.

  (2) Other intermediate sanctions for miscellaneous program violations._Section 1876(i)(6) of such Act (42 U.S.C. 1395mm(i)(6)) is amended by adding at the end the following new subparagraph: 

  ``(C) In the case of an eligible organization for which the Secretary makes a determination under paragraph (1) the basis of which is not described in subparagraph (A), the Secretary may apply the following intermediate sanctions: 

  ``(i) Civil money penalties of not more than $25,000 for each determination under paragraph (1) if the deficiency that is the basis of the determination has directly adversely affected (or has the substantial likelihood of adversely affecting) an individual covered under the organization's contract.

  ``(ii) Civil money penalties of not more than $10,000 for each week beginning after the initiation of procedures by the Secretary under paragraph (9) during which the deficiency that is the basis of a determination under paragraph (1) exists.

  ``(iii) Suspension of enrollment of individuals under this section after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the deficiency that is the basis for the determination has been corrected and is not likely to recur.''.

  (3) Procedures for imposing sanctions._Section 1876(i) of such Act (42 U.S.C. 1395mm(i)) is amended by adding at the end the following new paragraph: 

  ``(9) The Secretary may terminate a contract with an eligible organization under this section or may impose the intermediate sanctions described in paragraph (6) on the organization in accordance with formal investigation and compliance procedures established by the Secretary under which_

  ``(A) the Secretary provides the organization with the opportunity to develop and implement a corrective action plan to correct the deficiencies that were the basis of the Secretary's determination under paragraph (1); 

  ``(B) in deciding whether to impose sanctions, the Secretary considers aggravating factors such as whether an entity has a history of deficiencies or has not taken action to correct deficiencies the Secretary has brought to their attention;

  ``(C) there are no unreasonable or unnecessary delays between the finding of a deficiency and the imposition of sanctions; and

  ``(D) the Secretary provides the organization with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before imposing any sanction or terminating the contract.''.

  (4) Conforming amendments._Section 1876(i)(6)(B) of such Act (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the second sentence.

  (b) Agreements With Peer Review Organizations._

  (1) Requirement for written agreement._Section 1876(i)(7)(A) of the Social Security Act (42 U.S.C. 1395mm(i)(7)(A)) is amended by striking ``an agreement'' and inserting ``a written agreement''.

  (2) Development of model agreement._Not later than July 1, 1995, the Secretary shall develop a model of the agreement that an eligible organization with a risk-sharing contract under section 1876 of the Social Security Act must enter into with an entity providing peer review services with respect to services provided by the organization under section 1876(i)(7)(A) of such Act.

  (3) Report by gao._

  (A) Study._The Comptroller General of the United States shall conduct a study of the costs incurred by eligible organizations with risk-sharing contracts under section 1876(b) of such Act of complying with the requirement of entering into a written agreement with an entity providing peer review services with respect to services provided by the organization, together with an analysis of how information generated by such entities is used by the Secretary to assess the quality of services provided by such eligible organizations.

  (B) Report to congress._Not later than July 1, 1997, the Comptroller General shall submit a report to the Committee on Ways and Means and the Committee on Energy and Commerce of the House of Representatives and the Committee on Finance and the Special Committee on Aging of the Senate on the study conducted under subparagraph (A).

  (c) Effective Date._The amendments made by this section shall apply with respect to contract years beginning on or after January 1, 1995.

  SEC. 5417. EFFECTIVE DATE.

  The amendments made by this part shall take effect January 1, 1995.

  PART 3_ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

  SEC. 5421. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE DATA COLLECTION PROGRAM.

  (a) General Purpose._Not later than January 1, 1995, the Secretary shall establish a national health care fraud and abuse data collection program for the reporting of final adverse actions (not including settlements in which no findings of liability have been made) against health care providers, suppliers, or practitioners as required by subsection (b), with access as set forth in subsection (c).

  (b) Reporting of Information._

  (1) In general._Each government agency and health plan shall report any final adverse action (not including settlements in which no findings of liability have been made) taken against a health care provider, supplier, or practitioner.

  (2) Information to be reported._The information to be reported under paragraph (1) includes:

  (A) The name of any health care provider, supplier, or practitioner who is the subject of a final adverse action.

  (B) The name (if known) of any health care entity with which a health care provider, supplier, or practitioner is affiliated or associated.

  (C) The nature of the final adverse action.

  (D) A description of the acts or omissions and injuries upon which the final adverse action was based, and such other information as the Secretary determines by regulation is required for appropriate interpretation of information reported under this section.

  (3) Confidentiality._In determining what information is required, the Secretary shall include procedures to assure that the privacy of individuals receiving health care services is appropriately protected.

  (4) Timing and form of reporting._The information required to be reported under this subsection shall be reported regularly (but not less often than monthly) and in such form and manner as the Secretary prescribes. Such information shall first be required to be reported on a date specified by the Secretary.

  (5) To whom reported._The information required to be reported under this subsection shall be reported to the Secretary.

  (c) Disclosure and Correction of Information._

  (1) Disclosure._With respect to the information about final adverse actions (not including settlements in which no findings of liability have been made) reported to the Secretary under this section respecting a health care provider, supplier, or practitioner, the Secretary shall, by regulation, provide for_

  (A) disclosure of the information, upon request, to the health care provider, supplier, or licensed practitioner, and

  (B) procedures in the case of disputed accuracy of the information.

  (2) Corrections._Each Government agency and health plan shall report corrections of information already reported about any final adverse action taken against a health care provider, supplier, or practitioner, in such form and manner that the Secretary prescribes by regulation.

  (d) Access to Reported Information._

  (1) Availability._The information in this database shall be available to Federal and State government agencies and health plans pursuant to procedures that the Secretary shall provide by regulation.

  (2) Fees for disclosure._The Secretary may establish or approve reasonable fees for the disclosure of information in this database. The amount of such a fee may not exceed the costs of processing the requests for disclosure and of providing such information. Such fees shall be available to the Secretary or, in the Secretary's discretion to the agency designated under this section to cover such costs.

  (e) Protection From Liability for Reporting._No person or entity, including the agency designated by the Secretary in subsection (b)(5) shall be held liable in any civil action with respect to any report made as required by this section, without knowledge of the falsity of the information contained in the report.

  (f) Definitions and Special Rules._For purposes of this section:

  (1) The term ``final adverse action'' includes:

  (A) Civil judgments against a health care provider in Federal or State court related to the delivery of a health care item or service.

  (B) Federal or State criminal convictions related to the delivery of a health care item or service.

  (C) Actions by Federal or State agencies responsible for the licensing and certification of health care providers, suppliers, and licensed health care practitioners, including_

  (i) formal or official actions, such as revocation or suspension of a license (and the length of any such suspension), reprimand, censure or probation,

  (ii) any other loss of license of the provider, supplier, or practitioner, by operation of law, or

  (iii) any other negative action or finding by such Federal or State  agency that is publicly available information.

  (D) Exclusion from participation in Federal or State health care programs.

  (E) Any other adjudicated actions or decisions that the Secretary shall establish by regulation.

  (2) The terms ``licensed health care practitioner'', ``licensed practitioner'', and ``practitioner'' mean, with respect to a State, an individual who is licensed or otherwise authorized by the State to provide health care services (or any individual who, without authority holds himself or herself out to be so licensed or authorized).

  (3) The term ``health care provider'' means a provider of services as defined in section 1861(u) of the Social Security Act, and any entity, including a health maintenance organization, group medical practice, or any other entity listed by the Secretary in regulation, that provides health care services.

  (4) The term ``supplier'' means a supplier of health care items and services described in section 1819(a) and (b), and section 1861 of the Social Security Act.

  (5) The term ``Government agency'' shall include:

  (A) The Department of Justice.

  (B) The Department of Health and Human Services.

  (C) Any other Federal agency that either administers or provides payment for the delivery of health care services, including, but not limited to the Department of Defense and the Veterans' Administration.

  (D) State law enforcement agencies.

  (E) State medicaid fraud and abuse units.

  (F) Federal or State agencies responsible for the licensing and certification of health care providers and licensed health care practitioners.

  (6) The term ``health plan'' has the meaning given to such term by section 1128(i) of the Social Security Act.

  (7) For purposes of paragraph (2), the existence of a conviction shall be determined under paragraph (4) of section 1128(j) of the Social Security Act.

  (g) Conforming Amendment._Section 1921(d) of the Social Security Act is amended by inserting ``and section 5421 of the Health Reform Act'' after ``section 422 of the Health Care Quality Improvement Act of 1986''. 

  PART 4_CIVIL MONETARY PENALTIES

  SEC. 5431. CIVIL MONETARY PENALTIES.

  (a) General Civil Monetary Penalties._Section 1128A of the Social Security Act (42 U.S.C. 1320aÿ097a) is amended as follows:

  (1) In subsection (a)(1), by inserting ``or of any health plan (as defined in section 1128(i)),'' after ``subsection (i)(1)),''.

  (2) In subsection (b)(1)(A), by inserting ``or under a health plan'' after ``title XIX''.

  (3) In subsection (f)_

  (A) by redesignating paragraph (3) as paragraph (4); and 

  (B) by inserting after paragraph (2) the following new paragraphs:

  ``(3) With respect to amounts recovered arising out of a claim under a health plan, the portion of such amounts as is determined to have been paid by the plan shall be repaid to the plan, and the portion of such amounts attributable to the amounts recovered under this section by reason of the amendments made by subtitle E of title V of the Health Reform Act (as estimated by the Secretary) shall be deposited into the Health Care Fraud and Abuse Control Account established under section 5401(b) of such Act.''.

  (4) In subsection (i)_

  (A) in paragraph (2), by inserting ``or under a health plan'' before the period at the end, and

  (B) in paragraph (5), by inserting ``or under a health plan'' after ``or XX''.

  (b) Prohibition Against Offering Inducements to Individuals Enrolled Under Programs or Plans._

  (1) Offer of remuneration._Section 1128A(a) of the Social Security Act (42 U.S.C. 1320aÿ097a(a)) is amended_

  (A) by striking ``or'' at the end of paragraph (1)(D);

  (B) by striking ``, or'' at the end of paragraph (2) and inserting a semicolon;

  (C) by striking the semicolon at the end of paragraph (3) and inserting ``; or''; and

  (D) by inserting after paragraph (3) the following new paragraph:

  ``(4) offers to or transfers remuneration to any individual eligible for benefits under title XVIII of this Act, or under a State health care program (as defined in section 1128(h)) that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under title XVIII, or a State health care program;''.

  (2) Remuneration defined._Section 1128A(i) of such Act (42 U.S.C. 1320aÿ097a(i)) is amended by adding the following new paragraph:

  ``(6) The term `remuneration' includes the waiver of coinsurance and deductible amounts (or any part thereof), and transfers of items or services for free or for other than fair market value. The term `remuneration' does not include_

  ``(A) the waiver of coinsurance and deductible amounts by a person, if_

  ``(i) the waiver is not offered as part of any advertisement or solicitation; 

  ``(ii) the person does not routinely waive coinsurance or deductible amounts; and

  ``(iii) the person_

  ``(I) waives the coinsurance and deductible amounts after determining in good faith that the individual is in financial need;

  ``(II) fails to collect coinsurance or deductible amounts after making reasonable collection efforts; or   

  ``(III) provides for any permissible waiver as specified in section 1128B(b)(3) or in regulations issued by the Secretary;

  ``(B) differentials in coinsurance and deductible amounts as part of a benefit plan design as long as the differentials have been disclosed in writing to all third party payors to whom claims are presented and as long as the differentials meet the standards as defined in regulations promulgated by the Secretary; or

  ``(C) incentives given to individuals to promote the delivery of preventive care as determined by the Secretary in regulations.''.

  (c) Excluded Individual Retaining Ownership or Control Interest in Participating Entity._Section 1128A(a) of the Social Security Act (42 U.S.C. 1320aÿ097a(a)), as amended by subsection (b), is further amended_

  (1) by striking ``or'' at the end of paragraph (3);

  (2) by striking the semicolon at the end of paragraph (4) and inserting ``; or''; and

  (3) by inserting after paragraph (4) the following new paragraph:

  ``(5) in the case of a person who is not an organization, agency, or other entity, is excluded from participating in a program under title XVIII or a State health care program in accordance with this subsection or under section 1128 and who, at the time of a violation of this subsection, retains a direct or indirect ownership or control interest of 5 percent or more, or an ownership or control interest (as defined in section 1124(a)(3)) in, or who is an officer, director, agent, or managing employee (as defined in section 1126(b)) of, an entity that is participating in a program under title XVIII or a State health care program;''.

  (d) Modifications of Amounts of Penalties and Assessments._Section 1128A(a) of the Social Security Act (42 U.S.C. 1320aÿ097a(a)), as amended by subsections (b) and (c), is amended in the matter following paragraph (6)_

  (1) by striking ``$2,000'' and inserting ``$10,000''; 

  (2) by inserting ``; in cases under paragraph (4), $10,000 for each such offer or transfer; in cases under paragraph (5), $10,000 for each day the prohibited relationship occurs; in cases under paragraph (6) or (7), $10,000 per violation'' after ``false or misleading information was given''; 

  (3) by striking ``twice the amount'' and inserting ``3 times the amount''; and 

  (4) by inserting ``(or, in cases under paragraph (4), 3 times the amount of the illegal remuneration)'' after ``for each such item or service''.

  (e) Claim for Item or Service Based on Incorrect Coding or Medically Unnecessary Services._Section 1128A(a)(1) of the Social Security Act (42 U.S.C. 1320aÿ097a(a)(1)) is amended_

  (1) in subparagraph (A) by striking ``claimed,'' and inserting the following:  ``claimed, including any person who repeatedly presents or causes to be presented a claim for an item or service that is based on a code that the person knows or should know will result in a greater payment to the person than the code the person knows or should know is applicable to the item or service actually provided,'';

  (2) in subparagraph (C), by striking ``or'' at the end;

  (3) in subparagraph (D), by striking ``; or'' and inserting ``, or''; and 

  (4) by inserting after subparagraph (D) the following new subparagraph:

  ``(E) is for a medical or other item or service that a person repeatedly knows or should know is not medically necessary; or''.

  (f) Permitting Secretary To Impose Civil Monetary Penalty._Section 1128A(b) of the Social Security Act (42 U.S.C. 1320aÿ097a(a)) is amended by adding the following new paragraph:

  ``(3) Any person (including any organization, agency, or other entity, but excluding a beneficiary as defined in subsection (i)(5)) who the Secretary determines has violated section 1128B(b) of this title shall be subject to a civil monetary penalty of not more than $10,000 for each such violation.  In addition, such person shall be subject to an assessment of not more than twice the total amount of the remuneration offered, paid, solicited, or received in violation of section 1128B(b).  The total amount of remuneration subject to an assessment shall be calculated without regard to whether some portion thereof also may have been intended to serve a purpose other than one proscribed by section 1128B(b).''.

  (g) Sanctions Against Practitioners and Persons for Failure to Comply with Statutory Obligations._Section 1156(b)(3) of the Social Security Act (42 U.S.C. 1320cÿ095(b)(3)) is amended by striking ``the actual or estimated cost'' and inserting the following: ``up to $10,000 for each instance''.

  (h) Procedural Provisions._Section 1876(i)(6) of such Act (42 U.S.C. 1395mm(i)(6)) is further amended by adding at the end the following new subparagraph:

  ``(D) The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under subparagraph (A) or (B) in the same manner as they apply to a civil money penalty or proceeding under section 1128A(a).''.

  (i) Effective Date._The amendments made by this section shall take effect January 1, 1995.

  PART 5_AMENDMENTS TO CRIMINAL LAW

  SEC. 5441. HEALTH CARE FRAUD.

  (a) In General._

  (1)  Fines and imprisonment for health care fraud violations._Chapter 63 of title 18, United States Code, is amended by adding at the end the following new section:

  ``ÿ1A1347. Health care fraud

  ``(a) Whoever knowingly executes, or attempts to execute, a scheme or artifice_

  ``(1) to defraud any health plan or other person, in connection with the delivery of or payment for health care benefits, items, or services; or

  ``(2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health plan, or person in connection with the delivery of or payment for health care benefits, items, or services;

  shall be fined under this title or imprisoned not more than 10 years, or both.  If the violation results in serious bodily injury (as defined in section 1365(g)(3) of this title), such person shall be imprisoned for any term of years.

  ``(b) For purposes of this section, the term `health plan' has the same meaning given such term in section 1128(i) of the Social Security Act.''.

  (2) Clerical amendment._The table of sections at the beginning of chapter 63 of title 18, United States Code, is amended by adding at the end the following:

  ``1347. Health care fraud.''.

  (b) Criminal Fines Deposited in the Health Care Fraud and Abuse Control Account._The Secretary of the Treasury shall deposit into the Health Care Fraud and Abuse Control Account established under section 5401(b) an amount equal to the criminal fines imposed under section 1347 of title 18, United States Code (relating to health care fraud).

  SEC. 5442. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.

  (a) In General._Section 982(a) of title 18, United States Code, is amended by adding after paragraph (5) the following new paragraph:

  ``(6)(A) The court, in imposing sentence on a person convicted of a Federal health care offense, shall order the person to forfeit property, real or personal, that_

  ``(i) is used in the commission of the offense if the offense results in a financial loss or gain of $50,000 or more; or

  ``(ii) constitutes or is derived from proceeds traceable to the commission of the offense.

  ``(B) For purposes of this paragraph, the term `Federal health care offense' means a violation of, or a criminal conspiracy to violate_

  ``(i) section 1347 of this title;

  ``(ii) section 1128B of the Social Security Act;

  ``(iii) sections 287, 371, 664, 666, 1001, 1027, 1341, 1343, or 1954 of this title if the violation or conspiracy relates to health care fraud; and

  ``(iv) section 501 or 511 of the Employee Retirement Income Security Act of 1974, if the violation or conspiracy relates to health care fraud.''.

  (b) Property Forfeited Deposited in Health Care Fraud and Abuse Control Account._The Secretary of the Treasury shall deposit into the Health Care Fraud and Abuse Control Account established under section 5401(b) an amount equal to amounts resulting from forfeiture of property by reason of a Federal health care offense pursuant to section 982(a)(6) of title 18, United States Code.

  SEC. 5443. INJUNCTIVE RELIEF RELATING TO FEDERAL HEALTH CARE OFFENSES.

  Section 1345(a)(1) of title 18, United States Code, is amended_

  (1) by striking ``or'' at the end of subparagraph (A);

  (2) by inserting ``or'' at the end of subparagraph (B); and

  (3) by adding at the end the following:

  ``(C) committing or about to commit a Federal health care offense (as defined in section 982(a)(6)(B) of this title);''.

  PART 6_PAYMENTS FOR STATE HEALTH CARE FRAUD CONTROL UNITS

  SEC. 5451. ESTABLISHMENT OF STATE FRAUD UNITS.

  (a) Establishment of Health Care Fraud and Abuse Control Unit._The Governor of each State shall, consistent with State law, establish and maintain in accordance with subsection (b) a State agency to act as a Health Care Fraud and Abuse Control Unit for purposes of this part.

  (b) Definition._In this section, a ``State Fraud Unit'' means a Health Care Fraud and Abuse Control Unit designated under subsection (a) that the Secretary certifies meets the requirements of this part.

  SEC. 5452. REQUIREMENTS FOR STATE FRAUD UNITS.

  (a) In General._The State Fraud Unit must_

  (1) be a single identifiable entity of the State government;

  (2) be separate and distinct from any State agency with principal responsibility for the administration of any Federally-funded or mandated health care program;

  (3) meet the other requirements of this section.

  (b) Specific Requirements Described._The State Fraud Unit shall_

  (1) be a Unit of the office of the State Attorney General or of another department of State government which possesses statewide authority to prosecute individuals for criminal violations;

  (2) if it is in a State the constitution of which does not provide for the criminal prosecution of individuals by a statewide authority and has formal procedures, (A) assure its referral of suspected criminal violations to the appropriate authority or authorities in the State for prosecution, and (B) assure its assistance of, and coordination with, such authority or authorities in such prosecutions; or

  (3) have a formal working relationship with the office of the State Attorney General or the appropriate authority or authorities for prosecution and have formal procedures (including procedures for its referral of suspected criminal violations to such office) which provide effective coordination of activities between the Fraud Unit and such office with respect to the detection, investigation, and prosecution of suspected criminal violations relating to any Federally-funded or mandated health care programs.

  (c) Staffing Requirements._The State Fraud Unit shall_

  (1) employ attorneys, auditors, investigators and other necessary personnel; and

  (2) be organized in such a manner and provide sufficient resources as is necessary to promote the effective and efficient conduct of State Fraud Unit activities.

  (d) Cooperative Agreements; Memoranda of Understanding._The State Fraud Unit shall have cooperative agreements with_

  (1) Federally-funded or mandated health care programs;

  (2) similar Fraud Units in other States, as exemplified through membership and participation in the National Association of Medicaid Fraud Control Units or its successor; and

  (3) the Secretary.

  (e) Reports._The State Fraud Unit shall submit to the Secretary an application and an annual report containing such information as the Secretary determines to be necessary to determine whether the State Fraud Unit meets the requirements of this section.

  (f) Funding Source; Participation in All-Payer Program._In addition to those sums expended by a State under section 5454(a) for purposes of determining the amount of the Secretary's payments, a State Fraud Unit may receive funding for its activities from other sources, the identity of which shall be reported to the Secretary in its application or annual report. The State Fraud Unit shall participate in the all-payer fraud and abuse control program established under section 5401.

  SEC. 5453. SCOPE AND PURPOSE.

  The State Fraud Unit shall carry out the following activities:

  (1) The State Fraud Unit shall conduct a statewide program for the investigation and prosecution (or referring for prosecution) of violations of all applicable state laws regarding any and all aspects of fraud in connection with any aspect of the administration and provision of health care services and activities of providers of such services under any Federally-funded or mandated health care programs;

  (2) The State Fraud Unit shall have procedures for reviewing complaints of the abuse or neglect of patients of facilities (including patients in residential facilities and home health care programs) that receive payments under any Federally-funded or mandated health care programs, and, where appropriate, to investigate and prosecute such complaints under the criminal laws of the State or for referring the complaints to other State agencies for action.

  (3) The State Fraud Unit shall provide for the collection, or referral for collection to the appropriate agency, of overpayments that are made under any Federally-funded or mandated health care program and that are discovered by the State Fraud Unit in carrying out its activities. 

  SEC. 5454. PAYMENTS TO STATES.

  (a) Matching Payments to States._Subject to subsection (c), for each year for which a State has a State Fraud Unit approved under section 5452(b) in operation the Secretary shall provide for a payment to the State for each quarter in a fiscal year in an amount equal to the applicable percentage of the sums expended during the quarter by the State Fraud Unit.

  (2) Time of payment._The Secretary shall provide for a payment under paragraph (1) for a quarter by not later than 30 days after the end of the quarter.

  (b) Applicable Percentage Defined._

  (1) In general._In subsection (a), the ``applicable percentage'' with respect to a State for a fiscal year is_

  (A) 90 percent, for quarters occurring during the first 3 years for which the State Fraud Unit is in operation; or

  (B) 75 percent, for any other quarters.

  (2) Treatment of states with medicaid fraud control units._In the case of a State with a State medicaid fraud control in operation prior to or as of the date of the enactment of this Act, in determining the number of years for which the State Fraud Unit under this part has been in operation, there shall be included the number of years for which such State medicaid fraud control unit was in operation.

  (c) Limit on Payment._Notwithstanding subsection (a), the total amount of payments made to a State under this section for a fiscal year may not exceed_

  (1) for fiscal year 1996, 4 times the amount paid to the State under section 1903(a)(6) of the Social Security Act during the first quarter of 1995; and

  (2) for each succeeding fiscal year, the amount determined under this subsection in the previous fiscal year, increased by the percentage increase in the consumer price index for all urban consumers (U.S. city average) for the year.

  VFÿ09

  VFÿ09

  VFÿ09

  Subtitle F_Health Care Malpractice Reform

  SEC. 5501. FINDINGS AND PURPOSE.

  (a) Findings._Congress finds the following:

  (1) Effect on health care access and costs._The civil justice system of the United States is a costly and inefficient mechanism that has an adverse impact on the availability of, and access to, health care services and the cost of health care in the United States.

  (2) Effect on interstate commerce._The health care and insurance industries and the litigation system used to resolve health care liability disputes affect interstate commerce by contributing to the high cost of health care and premiums for health care liability insurance purchased by participants in the health care system.

  (3) Effect on federal spending._The problems in the health care liability litigation systems existing throughout the United States have a significant effect on the amount, distribution, and use of Federal funds.

  (4) Compelling interest._There is a compelling governmental interest in reforming the health care liability litigation system.

  (b) Purpose._It is the purpose of this subtitle to implement reasonable, comprehensive, and effective health care liability reform that is designed to_

  (1) ensure that individuals with meritorious health care injury claims receive fair, adequate, and expeditious compensation, including reasonable non-economic damages;

  (2) improve the availability of health care services; and

  (3) reduce the incidence of defensive medicine and lower the cost of health care liability insurance.

  SEC. 5502. APPLICABILITY.

  Except as provided in sections 5511 and 5521, this subtitle shall apply to any health care liability claim and any health care liability action brought in a Federal or State court, that is initiated on or after January 1, 1995.

  SEC. 5503. DEFINITIONS.

  As used in this subtitle:

  (1) Alternative dispute resolution system._The term ``alternative dispute resolution system'' means a system that provides for the resolution of health care liability claims in a manner other than through health care liability actions brought in Federal or State courts.

  (2) Claimant._The term ``claimant'' means any person who asserts a health care liability claim or health care liability action, including a person who asserts or claims a right to legal or equitable contribution, indemnity or subrogation, arising out of a health care liability claim or action, and any individual on whose behalf such a claim is asserted or such an action is brought, whether deceased, incompetent, or a minor.

  (3) Economic losses._The term ``economic losses'' means losses for hospital and medical expenses, lost wages, lost employment, and other pecuniary losses incurred by an individual with respect to which a health care liability claim or action is pursued. 

  (4) Health care professional._The term ``health care professional'' means any individual who provides health professional services as defined in section 1101(6). 

  (5) Health care provider._The term ``health care provider'' means any organization or institution that is engaged in the delivery of health care interventions (as defined in section 1101(4)) in a State and that is required by Federal or State law or regulation to be licensed, registered or certified by the Federal or State government to engage in the delivery of such services, or who is certified to provide health care services pursuant to a program of education and training and examination by an accredited institution, professional board, or professional organization. 

  (6) Health care negligence._The term ``health care negligence'' means an act or omission by a health care provider or a health care professional which deviates from the applicable State standard of care and causes an injury. 

  (7) Health care liability action._The term ``health care liability action'' means a civil action brought in a State or Federal court against a health care provider, health care professional, or other defendant joined in the action (regardless of the theory of liability on which the claim is based) in which the claimant alleges a health care liability claim.

  (8) Health care liability claim._The term ``health care liability claim'' means a claim brought against a health care provider, health care professional, or other defendant joined in a claim alleging that an injury was suffered by the claimant as the result of health care negligence or gross negligence, breach of express or implied warranty or contract, or failure to discharge a duty to warn or instruction to obtain consent arising from the provision of (or failure to provide) health care services. 

  (9) Injury._The term ``injury'' means an injury, illness, disease, or other harm suffered by an individual as a result of the provision of health care interventions (as defined in section 1101(4)) by a health care provider or health care professional. 

  (10) Noneconomic losses._The term ``noneconomic losses'' means losses for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of consortium, and other nonpecuniary losses incurred by an individual with respect to which a health care liability claim or action is pursued. 

  PART 1_ALTERNATIVE DISPUTE RESOLUTION

  SEC. 5511. ALTERNATIVE DISPUTE RESOLUTION.

  (a) Application to Health Care Liability Claims Under Plans._In the case of any health care liability claim, no health care liability action may be brought with respect to such claim until the final resolution of the claim under the alternative dispute resolution method adopted by the State under subsection (b).

  (b) Adoption of Mechanism by States._Each State shall_

  (1) adopt at least one of the alternative dispute resolution methods specified under this section for the resolution of health care liability claims arising from the provision of health care services; and

  (2) require that health plans disclose to enrollees (and potential enrollees), in accordance with standards established by the Secretary, the availability and procedures for consumer grievances under the plan, including the alternative dispute resolution method or methods adopted under this section.

  (c) Specification of Permissible Alternative Dispute Resolution Methods._

  (1) In general._The Secretary shall, by regulation, develop or certify existing alternative dispute resolution methods for the use by States in resolving health care malpractice claims under subsection (a). Such methods shall include at least the following:

  (A) Binding arbitration._The use of binding arbitration.

  (B) Fault-based systems._The use of fault-based administrative systems, expedited review and dismissal of claims when not adequately supported.

  (C) Mediation._The use of mediation, a settlement process coordinated by a neutral third party without the ultimate rendering of a formal obligation as to factual or legal findings.

  (D) Early neutral evaluation._The use of early neutral evaluation, in which the parties make a presentation to a neutral attorney or other neutral evaluator for an assessment of the merits, to encourage settlement.

  (E) Early offers of settlement._A process by which health care providers are encouraged to make, and claimants are encouraged to accept, early offers of settlement.

  (F) Catastrophic systems._The use of catastrophic injury compensation systems. 

  (2) Standards for establishing methods._In developing alternative dispute resolution methods under paragraph (1), the Secretary shall assure that the methods promote the resolution of health care liability claims in a manner that_

  (A) is affordable for the parties involved;

  (B) provides for timely resolution of claims;

  (C) provides for the consistent and fair resolution of claims; and

  (D) provides for reasonably convenient access to dispute resolution for individuals enrolled in qualified health plans.

  (d) State Initiated Alternative._A State will be permitted to operate an alternative dispute resolution method (other than a method described in subsection (c)) that otherwise complies with this part if such method_

  (1) is determined by the Secretary to accomplish the purposes and otherwise meet the requirements of this section; and

  (2) is certified by the Secretary as an appropriate alternative dispute resolution method.

  (e) Failure To Establish System._If a State fails to establish an alternative resolution system that meets the requirements of this section, the Secretary shall provide for the operation of an approved alternative dispute resolution method in such State until such time as a system under this section is adopted.

  (f) Effective Date._This section shall apply to any health care liability claim or any health care liability action initiated on or after January 1, 1997.

  SEC. 5512. COURT ACTIONS.

  (a) Further Redress._

  (1) In general._The extent to which any party seeks further redress (subsequent to a decision of an alternative dispute resolution method) concerning a health care liability claim or action in a Federal or State court shall be dependent upon the methods of alternative dispute resolution adopted by the State. 

  (2) Claimant._With respect to further redress described in paragraph (1), if the party initiating such court action is the claimant and the claimant receives a worse result, with respect to liability or a level of damages that equals 331/3 percent less under the decision of the court than under the State alternative dispute resolution method, such party shall bear the costs, including legal fees, incurred in the court action by the other party or parties to such action. 

  (3) Provider or other defendant._If the party initiating such court action is the health care professional, health care provider, or other defendant joined in the claim and the health care professional, health care provider or other defendant receives a worse result, with respect to liability or a level of damages that equals 331/3 percent more under the decision of the court than under the State alternative dispute resolution method, such party shall bear the costs, including legal fees, incurred in the court action by the other party or parties to such action.

  (b) Federal Court Jurisdiction Not Established on Federal Question Grounds._Nothing in this subtitle shall be construed to establish any jurisdiction in the district courts of the United States over health care liability actions on the basis of section 1331 or 1337 of title 28, United States Code.

  PART 2_LIABILITY REFORM

  SEC. 5521. PREEMPTION OF STATE LAW.

  (a) In General._Subject to subsection (b), the provisions of this subtitle shall preempt any State law to the extent that such State law is inconsistent with the limitations contained in such provisions. With respect to any issue in a health care liability action to which this subtitle does not apply, such issue shall be governed by any otherwise applicable Federal or State law.

  (b) Limitations._

  (1) Damages and attorney's fees._The provisions of this subtitle shall preempt any State law, with respect to both procedural and substantive matters, to the extent that such State law_

  (A) permits the recovery of damages by a claimant in an amount that is greater than that which is permitted under this subtitle; and

  (B) permits the awarding of attorneys' fees in an amount that is greater than that which is permitted under this subtitle.

  (2) Greater restrictions._The provisions of this subtitle shall not preempt any State law that imposes restrictions on liability or damages that are more stringent than those provided under this subtitle.

  (3) Alternative dispute resolution._The provisions of this subtitle shall not be construed as preempting or displacing any State sponsored or private alternative dispute resolution system that differs from the methods described in section 5511.

  (4) Rights of action._Nothing in this subtitle shall be construed_

  (A) to create any new rights of action not otherwise permitted under State law; 

  (B) to prohibit a State from establishing overall limits on damages with respect to health care liability claims or actions or any other claims or actions; 

  (C) to establish remedies that are not otherwise provided under applicable Federal or State law; and

  (D) to prohibit parties from agreeing to resolve health care liability claims pursuant to private contractual arrangements.

  (c) Effect on Sovereign Immunity and Choice of Law or Venue._Nothing in this section shall be construed to_

  (1) waive or affect any defense of sovereign immunity asserted by any State under any provision of law; 

  (2) waive or affect any defense of sovereign immunity asserted by the United States; 

  (3) affect the applicability of any provision of the Foreign Sovereign Immunities Act of 1976;

  (4) preempt State choice-of-law rules with respect to claims brought by a foreign nation or a citizen of a foreign nation; or 

  (5) affect the right of any court to transfer venue or to apply the law of a foreign nation or to dismiss a claim of a foreign nation or of a citizen of a foreign nation on the ground of inconvenient forum.

  SEC. 5522. LIMITATION ON AMOUNT OF ATTORNEY'S CONTINGENCY FEES.

  (a) In General._With respect to an attorney or attorneys who represent, on a contingency fee basis, a plaintiff or plaintiffs in a health care liability claim or action, the total amount of such fees that may be charged, received, or collected for services rendered in connection with such action (including the resolution of the claim that is the subject of the action under any alternative dispute resolution system) shall not exceed_

  (1) 331/3 percent of the first $150,000 of the total amount recovered by judgment or settlement in such action (based on after tax recovery); plus

  (2) 25 percent of any amount recovered in excess of the amount described in paragraph (1).

  (b) Applicability._The limitations described in subsection (a) shall apply to any amount recovered, with respect to a health care liability claim or action, whether by judgment, settlement, mediation, arbitration, or any other form of alternative dispute resolution. With respect to a health care liability claim or action involving a minor or incompetent individual, a court may authorize or approve an attorneys' fee that is less than that permitted under the limits described in subsection (a).

  (c) Contingency Fee._For purposes of this section, the term ``contingency fee'' means all compensation for professional legal services which is payable only if a recovery is effected on behalf of one or more claimants.

  SEC. 5523. REFORM OF DAMAGES.

  (a) Limitation on Noneconomic Damages._With respect to a health care liability claim or action brought in any forum, the total amount of damages that may be awarded to an individual and the family members of such individual for noneconomic losses resulting from an injury alleged under such claim or action may not exceed $250,000 (indexed annually based on the Consumer Price Index), regardless of the number of health care professionals, health care providers and other defendants against whom the action is brought or the number of actions brought with respect to the injury. With respect to actions heard by a jury, the jury may not be informed of the limitation contained in this subsection, and if necessary, a reduction in the jury's damage award shall be made by the court. 

  (b) Development of Alternative Limits on Noneconomic Damages._

  (1) In general._

  (A) Committee._Not later than 60 days after the date of enactment of this Act, the Secretary shall appoint the committee described in paragraph (4). The committee shall develop recommendations for alternative limits on the amount of noneconomic damages that may be awarded with respect to health liability claims and the legislative specifications necessary to replace the limit imposed under subsection (a) on the amount of such damages with such alternative limits. 

  (B) Transmittal._Not later than 1 year after the date described in section 5502, the Secretary shall transmit to Congress the recommendations of the committee established under subparagraph (A) concerning alternative limits.

  (C) Purpose._The purpose of the development of the limits under this paragraph is to provide certainty and fairness in health care liability awards and to avoid unwarranted disparities among health care providers and health care professionals who have engaged in similar conduct.

  (2) Establishment of separate limits for categories of injuries._In developing limits under paragraph (1), the committee shall establish separate limits for noneconomic damages resulting from each of the following categories of injuries:

  (A) Non-physical injuries.

  (B) Insignificant physical injuries.

  (C) Temporary minor physical injuries.

  (D) Temporary major physical injuries.

  (E) Permanent minor physical injuries.

  (F) Permanent substantial physical injuries.

  (G) Permanent major physical injuries.

  (H) Permanent grave physical injuries.

  (I) Death.

  (3) Factors considered._In developing limits under paragraph (1) for each of the categories described in paragraph (2), the committee shall_

  (A) examine the most recent available data on the amount of damages awarded with respect to such claims; and

  (B) set specific limits that reasonably compensate most injured parties, utilizing for guidance the level of compensation currently provided, excluding those levels of compensation that the Board finds unreasonably large.

  (4) Composition of committee._In developing limits under this subsection, the Secretary shall appoint a committee to be made up of an equal number of representatives of each of the following:

  (A) Attorneys who represent plaintiffs in health care liability actions.

  (B) Attorneys who represent health care professionals and health care providers in health care liability actions.

  (C) Physicians and other health care professionals and providers.

  (D) Individuals who have suffered injury as a result of medical malpractice.

  (E) Representatives of health plans.

  (F) Additional representatives of each of the following:

  (i) Judges who preside over health care liability actions.

  (ii) Medical ethicists.

  (iii) Health care economists.

  (iv) Liability insurers.

  (5) Consultation._In developing recommendation under this subsection, the committee shall consult with other experts in the fields of their expertise.

  (6) Guidance to entities resolving claims._If Congress enacts legislation that imposes separate limits, for categories of injury, on the amount of noneconomic damages that may be awarded with respect to health care liability claims, the Secretary shall prepare and disseminate guidelines to assist courts and other entities resolving such claims in the determination of the particular category of injury specified in paragraph (2) to which a claimant's injury shall be assigned for purposes of applying the appropriate limit on such damages.

  (c) Allocation of Punitive Damage Awards for Provider Licensing and Disciplinary Activities._

  (1) In general._With respect to the total amount of any punitive damages awarded in a health care liability action, 75 percent of such amount shall be paid to the State in which the action is brought (or, in a case brought in Federal court, in the State in which the health care services that caused the injury that is the subject of the action were provided) for the purposes of carrying out the activities described in paragraph (2).

  (2) Activities described._A State shall use amounts paid pursuant to paragraph (1) to carry out activities to ensure the safety and quality of health care services provided in the State, including_

  (A) licensing or certifying health care professionals and health care providers in the State;

  (B) implementing health care quality assurance programs; 

  (C) carrying out programs to reduce malpractice-related costs for providers volunteering to provide services in medically underserved areas; and

  (D) providing resources for additional investigation and disciplinary activities by the State licensing board.

  (3) Maintenance of effort._A State shall use any amounts paid pursuant to paragraph (1) to supplement and not to replace amounts spent by the State for the activities described in paragraph (2).

  (d) Several Liability._

  (1) In general._With respect to a health care liability claim or action, the liability of each defendant for noneconomic and punitive damages shall be several only, and shall not be joint. Each defendant shall be liable only for the amount of noneconomic and punitive damages allocated to such defendant in direct proportion to such defendant's percentage of responsibility as determined under paragraph (2).

  (2) Proportion of responsibility._For purposes of this subsection, the trier of fact shall determine the proportion of responsibility of each party for the claimant's harm. 

  VGÿ09

  VGÿ09

  VGÿ09

  Subtitle G_Patient's Right to Self-Determination Regarding Health Care

  SEC. 5601. TREATMENT OF ADVANCE DIRECTIVES.

  (a) In General._An advance directive validly executed outside the State in which such directive is presented must be given effect to the same extent as an advance directive validly executed under the law of the State in which presented.

  (b) No inference._Nothing in this section may be construed to authorize the administration, withholding, or withdrawal of health care otherwise prohibited by the laws of the State.

  (c) Effective Date._This section shall take effect on the date that is 6 months after the date of enactment of this Act.


  (a) In General._An advance directive that fails to meet the formalities of execution, form, or language required by State law shall be given effect to the extent that the treating health care provider in good faith believes that such directive constitutes a reliable expression of the wishes of the individual executing such directive concerning such individual's health care.

  (b) Construction._Nothing in subsection (a) may be construed to authorize the administration, withholding, or withdrawal of health care otherwise prohibited by the laws of the State. 

  SEC. 5602. AMENDMENTS TO RULES UNDER MEDICARE AND MEDICAID.


  Written policies and written information adopted by health care providers pursuant to sections 4206 and 4751 of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101ÿ09508), shall be modified within 6 months of enactment of this title to conform to the provisions of this title.

  (a) Medicare._Section 1866(f)(1) of the Social Security Act (42 U.S.C. 1395cc(f)(1)) is amended_

  (1) in subparagraph (A), by striking ``and'' at the end of clause (i), by redesignating clause (ii) as clause (iii), and by inserting after clause (i) the following new clause:

  ``(ii) the result under such State law if the individual is incapacitated in the absence of an advance directive, and'';

  (2) in subparagraph (B), by inserting ``and to include the content of such directive if the individual so desires'' before the semicolon;

  (3) in subparagraph (D), by striking ``and'' at the end;

  (4) in subparagraph (E), by striking the period at the end and inserting ``; and''; and

  (5) by inserting after subparagraph (E) the following new subparagraph:

  ``(F) to provide for effective communication between the individual (or surrogate decision maker when appropriate) and the appropriate provider regarding all aspects of health care decisions affecting the individual, including obtaining informed consent, individual prognosis and treatment decisions, and the formulation of advance directives.''.

  (b) Medicaid._Section 1902(w)(1) of the Social Security Act (42 U.S.C. 1396a(w)(1)) is amended_

  (1) in subparagraph (A), by striking ``and'' at the end of clause (i), by redesignating clause (ii) as clause (iii), and by inserting after clause (i) the following new clause:

  ``(ii) the result under such State law if the individual is incapacitated in the absence of an advance directive, and'';

  (2) in subparagraph (B), by inserting ``and to include the content of such directive if the individual so desires'' before the semicolon;

  (3) in subparagraph (D), by striking ``and'' at the end;

  (4) in subparagraph (E), by striking the period at the end and inserting ``; and''; and

  (5) by inserting after subparagraph (E) the following new subparagraph:

  ``(F) to provide for effective communication between the individual (or surrogate decision maker when appropriate) and the appropriate provider regarding all aspects of health care decisions affecting the individual, including obtaining informed consent, individual prognosis and treatment decisions, and the formulation of advance directives.''.

  (c) Application to kidney dialysis centers of provisions relating to advance directives._

  (1) Medicare._Section 1866(a)(1)(Q) of the Social Security Act (42 U.S.C.1395cc(a)(1)(Q)) is amended by striking ``and hospice programs'' and inserting ``hospice programs, and kidney dialysis centers''.

  (2) Medicaid._Section 1902(a)(57) of such Act (42 U.S.C. 1396(a)(57)) is amended by striking ``hospice program'' and inserting ``hospice program, kidney dialysis center''.

  (d) Effective Date._The amendments made by this section shall take effect on and after the date which is 1 year after the date of the enactment of this Act.

  SEC. 5603. STUDY OF ISSUES RELATED TO END OF LIFE CARE.

  (a) Study._

  (1) In general._Within 6 months after the date of the enactment of this Act, the Secretary shall enter into an agreement with the Institute of Medicine of the National Academy of Sciences (or with another nonprofit, nongovernmental organization or consortium of institutions if the Institute declines to perform the study) to investigate and report on issues relating to care at the end of life, including how to determine the application of medically necessary or appropriate care for gravely or terminally ill or injured persons of all ages.

  (2) Specific issues._The study described in paragraph (1) shall specifically include an examination of the following issues:

  (A) The epidemiology of dying.

  (B) Conditions that promote or impede appropriate care (such as professional training and beliefs, financing and organization of services, patient and public knowledge and attitudes).

  (C) Concerns of health care practitioners and providers, medical educators, the religious and medical ethics communities, the general public, and others responsible for public and private decisions about the organization, financing, and quality of health care in the United States.

  (D) Methods of communication and health care decisionmaking among providers, patients, and surrogates.

  (E) Priorities for research on the issues described in the preceding subparagraphs.

  (b) Report._The Institute of Medicine (or the organization conducting the study under this section) shall submit to the Secretary and the Congress a report on the study described in subsection (a) within 27 months after the date of the enactment of this Act.

  (c) Authorization of Appropriations._There are authorized to be appropriated such sums as are necessary to carry out the purposes of this section.