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<PRE>[DOCID: f:s705is.txt]






107th CONGRESS
  1st Session
                                 S. 705

    To establish a health information technology grant program for 
hospitals and for skilled nursing facilities and home health agencies, 
and to require the Secretary of Health and Human Services to establish 
 and implement a methodology under the medicare program for providing 
hospitals with reimbursement for costs incurred by such hospitals with 
               respect to information technology systems.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 5, 2001

  Mr. Schumer introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To establish a health information technology grant program for 
hospitals and for skilled nursing facilities and home health agencies, 
and to require the Secretary of Health and Human Services to establish 
 and implement a methodology under the medicare program for providing 
hospitals with reimbursement for costs incurred by such hospitals with 
               respect to information technology systems.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Information 
Technology and Quality Improvement Act of 2001''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purpose.
Sec. 3. Health Information Technology Grant Program for hospitals.
Sec. 4. Continuing reimbursement for hospitals under part A of the 
                            Medicare Program for Capital Costs of 
                            Information Technology.
Sec. 5. Health Information Technology Grant Program for skilled nursing 
                            facilities and home health agencies.
Sec. 6. Health Care Improvement Advisory Board.
Sec. 7. AHRQ studies of grant programs.

SEC. 2. PURPOSE.

    It is the purpose of this Act to encourage the development and use 
by hospitals, skilled nursing facilities, and home health agencies of 
information technology that can--
            (1) reduce the incidence of medical errors;
            (2) enhance the efficiency and quality of care of our 
        Nation's health care system;
            (3) strengthen medical privacy protections;
            (4) disseminate best practices; and
            (5) prepare America's health care system for the challenges 
        presented by an aging population and other challenges of the 
        21st century.

SEC. 3. HEALTH INFORMATION TECHNOLOGY GRANT PROGRAM FOR HOSPITALS.

    (a) Grants.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary''), acting 
        through the Administrator of the Health Care Financing 
        Administration, shall establish a program to make grants to 
        hospitals that have submitted applications in accordance with 
        subsection (b) for the purpose of assisting such hospitals in 
        offsetting costs related to--
                    (A) purchasing, developing, and implementing health 
                care information systems designed to improve medical 
                care and reduce adverse events and health care 
                complications resulting from medical errors, including 
                medication errors; and
                    (B) establishing data systems to comply with--
                            (i) the administrative simplification 
                        requirements of part C of title XI of the 
                        Social Security Act (42 U.S.C. 1320d et seq.); 
                        and
                            (ii) privacy requirements pursuant to 
                        section 264 of the Health Insurance Portability 
                        and Accountability Act of 1996 (42 U.S.C. 
                        1320d-2 note).
            (2) Duration.--The Secretary shall conduct the grant 
        program during the 5-year period beginning on the date that is 
        20 months after the date of enactment of this Act.
            (3) Hospital defined.--For purposes of this section, the 
        term ``hospital'' has the meaning given such term in section 
        1861(e) of the Social Security Act (42 U.S.C. 1395x(e)).
            (4) Costs.--For purposes of this section, the term 
        ``costs'' shall include total expenditures incurred for--
                    (A) purchasing and installing computer software and 
                hardware and purchasing or leasing associated data 
                communications facilities;
                    (B) making improvements to existing computer 
                software and hardware; and
                    (C) providing education and training of hospital 
                staff on computer information systems.
    (b) Application.--
            (1) In general.--A hospital seeking a grant under this 
        section shall submit an application to the Secretary at such 
        time and in such form and manner as the Secretary specifies.
            (2) Specific information.--An application submitted under 
        paragraph (1) shall--
                    (A) specify the amount of funding requested under 
                the grant;
                    (B) specify the manner in which the hospital will 
                use such funding to achieve the purpose of the grant 
                (as described in subsection (a)(1)); and
                    (C) provide assurances that any system which is 
                funded under the grant will meet the standards 
                established by the Health Care Improvement Advisory 
                Board under section 6(c)(2).
    (c) Approval.--
            (1) Timeframe.--The Secretary shall either approve or 
        disapprove an application submitted under subsection (b) within 
        90 days of receipt of such application.
            (2) Consideration of applications.--In awarding grants 
        under this section, the Secretary shall do the following:
                    (A) Consult with ahrq.--The Secretary shall consult 
                with the Agency for Healthcare Research and Quality on 
                the types of health care information and data systems 
                that are likely to best achieve the purpose of the 
                grants (as described in subsection (a)(1)).
                    (B) Consult with board.--The Secretary shall 
                consult with the Health Care Improvement Advisory Board 
                established under section 6 on--
                            (i) the types of health care information 
                        and data systems that are likely to best 
                        achieve the purpose of the grants (as described 
                        in subsection (a)(1));
                            (ii) how such systems can best be used in 
                        order to achieve such purpose; and
                            (iii) which types of systems meet the 
                        standards established by the Board under 
                        section 6(c)(2) of such section.
                    (C) Equitable distribution of grants.--The 
                Secretary shall ensure that grants are equitably 
                distributed among different types of hospitals, using 
                measures of equity that the Secretary determines will 
                lead to the maximum improvement in health care delivery 
                for the maximum number of individuals.
                    (D) Reserve 20 percent of grant funds for rural 
                hospitals.--
                            (i) In general.--Subject to clause (ii), 
                        the Secretary shall ensure that at least 20 

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                        percent of the funds available for making 
                        grants under this section are used for making 
                        grants to rural hospitals.
                            (ii) Rural hospital defined.--For purposes 
                        of clause (i), the term ``rural hospital'' 
                        means a hospital that--
                                    (I) is located in a rural area (as 
                                such term is defined for purposes of 
                                section 1886(d) of the Social Security 
                                Act (42 U.S.C. 1395ww(d)));
                                    (II) is located in an area 
                                designated by any law or regulation of 
                                the State as a rural area; or
                                    (III) is designated by the State as 
                                a rural hospital.
                            (ii) Availability of reserve funds if 
                        limited number of rural hospitals apply for 
                        grants.--If the Secretary estimates that the 
                        amount of funds reserved under clause (i) for 
                        hospitals described in such clause will be 
                        greater than the amount of funds provided to 
                        such hospitals under this section, the 
                        Secretary may reduce the amount reserved for 
                        such hospitals by an amount equal to such 
                        excess and use such funds for awarding grants 
                        to hospitals located in nonrural areas.
                    (E) Special consideration to certain hospitals.--
                The Secretary shall give special consideration to--
                            (i) hospitals that are in financial need 
                        (as demonstrated by low or negative operating 
                        surpluses, based on the hospital's most 
                        recently audited financial statements);
                            (ii) hospitals located in an area that is 
                        designated as a health professional shortage 
                        area under section 332(a)(1)(A) of the Public 
                        Health Service Act (42 U.S.C. 254e(a)(1)(A)) or 
                        a medically underserved area under section 
                        330(b)(3) of such Act (42 U.S.C. 254b(b)(3));
                            (iii) not-for-profit hospitals;
                            (iv) publicly sponsored hospitals; and
                            (v) hospitals that will use funds provided 
                        under the grant to establish systems that will 
                        provide access to information across different 
                        provider settings, such as skilled nursing 
                        facilities and home health agencies.
    (d) Multiyear Funding.--Subject to subsections (a)(2) and (i), the 
Secretary may provide a grant under this section that provides funding 
to a hospital in multiple years as long as the Secretary finds that 
such funding is necessary in order for the hospital to achieve the 
purposes for which the funding is provided.
    (e) Limitation on Amount of Grant.--A grant awarded under this 
section may not exceed an amount equal to 80 percent of the costs of 
the health care information or data systems for which the hospital is 
seeking funding.
    (f) Information and Assistance.--
            (1) Furnishing information on the program to hospitals.--
        The Secretary shall ensure that information on the grant 
        program under this section, including information on the 
        standards for systems established by the Health Care 
        Improvement Advisory Board under section 6(c)(2), is made 
        available to hospitals through--
                    (A) publication of information on the grant program 
                in the Federal Register; and
                    (B) fiscal intermediaries under the medicare 
                program.
            (2) Assistance for certain hospitals.--
                    (A) In general.--The Secretary shall provide 
                hospitals described in clauses (i), (ii), (iii), and 
                (iv) of subsection (c)(2)(E) with such technical 
                assistance as the Secretary determines appropriate to 
                ensure that such hospitals are able to successfully 
                apply for grants under this section.
                    (B) Contracts.--
                            (i) In general.--The Secretary may contract 
                        with private entities in order to provide the 
                        assistance under subparagraph (A).
                            (ii) Funding.--There are authorized to be 
                        appropriated for the purpose of entering into 
                        contracts under this subparagraph $10,000,000.
    (g) Hospital Required To Furnish Secretary With Information.--A 
hospital receiving a grant under this section shall furnish the 
Secretary with such information as the Secretary may require to--
            (1) evaluate the project for which the grant is made; and
            (2) ensure that funding provided under the grant is 
        expended for the purposes specified, in accordance with 
        subsection (b)(2), in the application submitted under 
        subsection (b)(1).
    (h) Reports.--
            (1) In general.--The Secretary shall submit, at least 
        annually, a report to the Committee on Ways and Means of the 
        House of Representatives and the Committee on Finance of the 
        Senate on the grant program established under this section.
            (2) Contents.--A report submitted pursuant to paragraph (1) 
        shall include information on--
                    (A) the number of grants made;
                    (B) the nature of the projects for which funding is 
                provided under the grant program;
                    (C) the distribution of grant recipients among 
                different types of hospitals; and
                    (D) such other matters as the Secretary determines 
                appropriate.
    (i) Funding.--
            (1) In general.--Subject to paragraph (2), for purposes of 
        carrying out this section, the Secretary shall provide for the 
        transfer from the Federal Hospital Insurance Trust Fund under 
        section 1817 of the Social Security Act (42 U.S.C. 1395i) of an 
        amount not to exceed $355,000,000.
            (2) Limitation on administrative expenses.--The Secretary 
        may not expend more than $5,000,000 of the amount transferred 
        under paragraph (1) to pay the costs of administering the grant 
        program under this section.

SEC. 4. CONTINUING REIMBURSEMENT FOR HOSPITALS UNDER PART A OF THE 
              MEDICARE PROGRAM FOR CAPITAL COSTS OF INFORMATION 
              TECHNOLOGY.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by adding at the end the following new section:

    ``reimbursement for hospitals under part a for capital costs of 
                         information technology

    ``Sec. 1897. (a) Establishment of Methodology.--
            ``(1) In general.--Based on the results of the health 
        information technology grant program under section 3 of the 
        Health Information Technology and Quality Improvement Act of 
        2001, the Secretary, acting through the Administrator of the 
        Health Care Financing Administration, shall establish a 
        methodology for providing all hospitals with reimbursement for 
        costs, including the costs described in section 3(a)(4) of the 
        Health Information Technology and Quality Improvement Act of 
        2001, incurred by such hospitals with respect to information 
        technology systems.
            ``(2) Consultation.--The Secretary shall consult with the 
        Health Care I
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mprovement Advisory Board (established under 
        section 6 of such Act) and the Agency for Healthcare Research 
        and Quality in establishing the methodology under paragraph 
        (1).
    ``(b) Implementation.--By not later than 60 days after the 
completion of the grant program described in subsection (a)(1), the 
Secretary shall implement the methodology established under such 
subsection.
    ``(c) Payments.--Payments to hospitals by reason of the 
implementation of the methodology established under subsection (a)(1) 
shall be made from the Federal Hospital Insurance Trust Fund under 
section 1817.
    ``(d) Report to Congress.--Not later than 60 days after the 
Secretary implements the payment methodology under this section, the 
Secretary shall submit a report to the Committee on Ways and Means of 
the House of Representatives and the Committee on Finance of the Senate 
that contains a detailed description of the establishment and 
implementation of such methodology, including the basis used by the 
Secretary in establishing such methodology.''.

SEC. 5. HEALTH INFORMATION TECHNOLOGY GRANT PROGRAM FOR SKILLED NURSING 
              FACILITIES AND HOME HEALTH AGENCIES.

    (a) Grants.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary''), acting 
        through the Administrator of the Health Care Financing 
        Administration, shall establish a program to make grants to 
        qualified entities that have submitted applications in 
        accordance with subsection (b) for the purpose of assisting 
        such qualified entities in offsetting costs related to--
                    (A) purchasing, developing, and implementing health 
                care information systems designed to improve medical 
                care and reduce adverse events and health care 
                complications resulting from medical errors, including 
                medication errors; and
                    (B) establishing data systems to comply with--
                            (i) the administrative simplification 
                        requirements of part C of title XI of the 
                        Social Security Act (42 U.S.C. 1320d et seq.); 
                        and
                            (ii) privacy requirements pursuant to 
                        section 264 of the Health Insurance Portability 
                        and Accountability Act of 1996 (42 U.S.C. 
                        1320d-2 note).
            (2) Duration.--The Secretary shall conduct the grant 
        program during the 3-year period beginning on the date that is 
        60 days after the date of enactment of this Act.
            (3) Qualified entity defined.--For purposes of this 
        section, the term ``qualified entity'' means--
                    (A) a skilled nursing facility (as defined in 
                section 1819(a) of the Social Security Act (42 U.S.C. 
                1395i-3(e)); and
                    (B) a home health agency (as defined in section 
                1861(o) of such Act (42 U.S.C. 1395x(o)).
            (4) Costs.--For purposes of this section, the term 
        ``costs'' shall include total expenditures incurred for--
                    (A) purchasing and installing computer software and 
                hardware and purchasing or leasing associated data 
                communications facilities;
                    (B) making improvements to existing computer 
                software and hardware; and
                    (C) providing education and training of staff on 
                computer information systems.
    (b) Application.--
            (1) In general.--A qualified entity seeking a grant under 
        this section shall submit an application to the Secretary at 
        such time and in such form and manner as the Secretary 
        specifies.
            (2) Specific information.--An application submitted under 
        paragraph (1) shall--
                    (A) specify the amount of funding requested under 
                the grant; and
                    (B) specify the manner in which the qualified 
                entity will use such funding to achieve the purpose of 
                the grant (as described in subsection (a)(1)).
    (c) Approval.--
            (1) Timeframe.--The Secretary shall either approve or 
        disapprove an application submitted under subsection (b) within 
        90 days of receipt of such application.
            (2) Consideration of applications.--In awarding grants 
        under this section, the Secretary shall do the following:
                    (A) Consult with ahrq.--The Secretary shall consult 
                with the Agency for Healthcare Research and Quality on 
                the types of health care information and data systems 
                that are likely to best achieve the purpose of the 
                grants (as described in subsection (a)(1)).
                    (B) Equitable regional distribution of grants.--The 
                Secretary shall ensure that grants are equitably 
                distributed among qualified entities located in 
                different regions.
                    (C) Special consideration to certain qualified 
                entities.--The Secretary shall give special 
                consideration to--
                            (i) qualified entities that are in 
                        financial need (as demonstrated by low or 
                        negative operating surpluses, based on the 
                        entity's most recently audited financial 
                        statements);
                            (ii) skilled nursing facilities located in 
                        an area that is designated as a health 
                        professional shortage area under section 
                        332(a)(1)(A) of the Public Health Service Act 
                        (42 U.S.C. 254e(a)(1)(A)) or a medically 
                        underserved area under section 330(b)(3) of 
                        such Act (42 U.S.C. 254b(b)(3));
                            (iii) home health agencies that have a 
                        majority of patients that reside in an area 
                        that is designated as a health professional 
                        shortage area or a medically underserved area;
                            (iv) not-for-profit qualified entities; and
                            (v) publicly sponsored qualified entities.
    (d) Multiyear Funding.--Subject to subsections (a)(2) and (i), the 
Secretary may provide a grant under this section that provides funding 
to a qualified entity in multiple years as long as the Secretary finds 
that such funding is necessary in order for the qualified entity to 
achieve the purposes for which the funding is provided.
    (e) Limitation on Amount of Grant.--A grant awarded under this 
section may not exceed an amount equal to 80 percent of the costs of 
the health care information and data systems for which the qualified 
entity is seeking funding.
    (f) Furnishing Information on the Program to Qualified Entities.--
The Secretary shall ensure that information on the grant program under 
this section is made available to qualified entities through--
            (1) publication of information on the grant program in the 
        Federal Register; and
            (2) fiscal intermediaries under the medicare program.
    (g) Qualified Entity Required To Furnish Secretary With 
Information.--A qualified entity receiving a grant under this section 
shall furnish the Secretary with such information as the Secretary may 
require to--
            (1) evaluate the project for which the grant is made; and
            (2) ensure that funding provided under the grant is 
        expended for the purposes specified, in accordance with 
        subsection (b)(2), in the application submitted under 
        subsection (b)(1).
    (h) Reports.--
            (1) Interim reports.--
                    (A) In general.--N
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ot later than 12 months and 24 
                months after the Secretary implements the grant program 
                under this section, the Secretary shall submit a report 
                to the Committee on Ways and Means of the House of 
                Representatives and the Committee on Finance of the 
                Senate on the grant program established under this 
                section.
                    (B) Contents.--A report submitted pursuant to 
                subparagraph (A) shall include information on--
                            (i) the number of grants made;
                            (ii) the nature of the projects for which 
                        funding is provided under the grant program;
                            (iii) the regional distribution of grant 
                        recipients; and
                            (iv) such other matters as the Secretary 
                        deems appropriate.
            (2) Final report.--Not later than 180 days after the 
        completion of all of the projects for which a grant is made 
        under this section, the Secretary shall submit a final report 
        to the committees referred to in paragraph (1)(A) on the grant 
        program, together with recommendations for such legislation and 
        administrative actions as the Secretary considers appropriate.
    (i) Funding.--
            (1) In general.--Subject to paragraph (2), for purposes of 
        carrying out this section, the Secretary shall provide for the 
        transfer from the Federal Hospital Insurance Trust Fund under 
        section 1817 of the Social Security Act (42 U.S.C. 1395i) of an 
        amount not to exceed $33,000,000.
            (2) Limitation on administrative expenses.--The Secretary 
        may not expend more than $3,000,000 of the amount transferred 
        under paragraph (1) to pay the costs of administering the grant 
        program under this section.

SEC. 6. HEALTH CARE IMPROVEMENT ADVISORY BOARD.

    (a) Establishment.--Not later than 60 days after the date of 
enactment of this Act, the Secretary of Health and Human Services shall 
establish a board to be known as the Health Care Improvement Advisory 
Board (in this section referred to as the ``Board'').
    (b) Membership.--The Secretary of Health and Human Services shall 
ensure that the Board is composed of the following individuals:
            (1) Experts in health information technology.
            (2) Experts in health care quality improvement.
            (3) Experts in medical records privacy and security.
            (4) Experts from hospitals (as defined in section 1861(e) 
        of the Social Security Act (42 U.S.C. 1395x(e)) with experience 
        in the successful development and implementation of health 
        information technologies.
            (5) A representative from the Health Care Financing 
        Administration.
            (6) A representative from the Agency for Healthcare 
        Research and Quality.
            (7) A representative from the National Library of Medicine.
            (8) A representative from the National Council for Vital 
        Health Statistics.
    (c) Duties.--
            (1) Advise.--The Board shall advise the Secretary of Health 
        and Human Services on--
                    (A) the types of health care information and data 
                systems that are likely to best achieve the purpose of 
                the grants to hospitals made under section 3;
                    (B) how such systems can best be used in order to 
                achieve such purpose; and
                    (C) the establishment of a methodology for 
                providing hospitals with reimbursement for costs 
                incurred by such hospitals with respect to information 
                technology systems pursuant to section 1897 of the 
                Social Security Act (as added by section 4).
            (2) Establishment of standards.--By not later than 20 
        months after the date of enactment of this Act, the Board shall 
        establish standards for health care information and data 
        systems with regards to health care information technology 
        interoperability, including--
                    (A) common medical terminology;
                    (B) records security; and
                    (C) storage and transmission of data.
    (d) Termination.--The Board shall terminate 60 days after the date 
that the Secretary of Health and Human Services implements the 
methodology described in subsection (c)(1)(C).
    (e) Funding.--For purposes of carrying out this section, the 
Secretary shall provide for the transfer from the Federal Hospital 
Insurance Trust Fund under section 1817 of the Social Security Act (42 
U.S.C. 1395i) of an amount not to exceed $17,000,000.

SEC. 7. AHRQ STUDIES OF GRANT PROGRAMS.

    (a) Study and Report on Hospital Grant Program.--
            (1) Study.--
                    (A) In general.--The Agency for Healthcare Research 
                and Quality shall conduct a study of the grant program 
                conducted under section 3.
                    (B) Evaluation.--The study conducted under 
                subparagraph (A) shall include an evaluation of--
                            (i) the technology employed by recipients 
                        of grants under section 3;
                            (ii) the impact such grants have had on 
                        medical errors, patient safety, privacy, and 
                        quality of care; and
                            (iii) the characteristics that are common 
                        to--
                                    (I) effective and efficient systems 
                                and applications; and
                                    (II) systems and applications that 
                                are easily implemented and readily 
                                accepted by health care providers and 
                                patients.
            (2) Report.--Not later than the end of the third year of 
        the 5-year period referred to in section 3(a)(2), the Agency 
        for Healthcare Research and Quality shall submit a report to 
        the Secretary of Health and Human Services, the Committee on 
        Ways and Means of the House of Representatives, and the 
        Committee on Finance of the Senate on the study conducted under 
        subsection (a), together with recommendations on the 
        establishment of a methodology for providing hospitals with 
        reimbursement for costs incurred by such hospitals with respect 
        to information technology systems pursuant to section 1897 of 
        the Social Security Act (as added by section 4).
            (3) Funding.--There is authorized to be appropriated 
        $5,000,000 for the purposes of conducting the study under 
        paragraph (1) and submitting the report described in paragraph 
        (2).
    (b) Study and Report on Skilled Nursing Facility and Home Health 
Agency Grant Program.--
            (1) Study.--
                    (A) In general.--The Agency for Healthcare Research 
                and Quality shall conduct a study of the grant program 
                conducted under section 5.
                    (B) Evaluation.--The study conducted under 
                subparagraph (A) shall include an evaluation of--
                            (i) the technology employed by recipients 
                        of grants under section 5;
                            (ii) the impact such grants have had on 
                        medical errors, patient safety, privacy, and 
                        quality of care; and
                            (iii) the characteristics that are common 
                        to--
                                    (I) effective and efficient systems 
                                and applications; and
                                    (II) systems and applications that 
                                are easily implemented and r
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eadily 
                                accepted by health care providers and 
                                patients.
            (2) Report.--Not later than 60 days after completion of all 
        of the projects for which a grant is made under section 5, the 
        Agency for Healthcare Research and Quality shall submit to the 
        Secretary and the committees referred to in subsection (a)(2) a 
        report on the study conducted under paragraph (1) together with 
        such recommendations for legislation and administrative action 
        as the Board determines appropriate regarding the establishment 
        of reimbursement methodologies to encourage the establishment 
        and implementation of health care information technologies by 
        entities, such as skilled nursing facilities and home health 
        agencies.
            (3) Funding.--There is authorized to be appropriated 
        $5,000,000 for the purposes of conducting the study under 
        paragraph (1) and submitting the report described in paragraph 
        (2).
                                 &lt;all&gt;

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