The Library of Congress  >  THOMAS Home  >  Committee Reports  >  Search Results

28-890

109TH CONGRESS

Rept. 109-601

HOUSE OF REPRESENTATIVES

2d Session

Part II

--HEALTH INFORMATION TECHNOLOGY PROMOTION ACT OF 2006

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

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

R E P O R T

together with

DISSENTING VIEWS

[To accompany H.R. 4157]

[Including cost estimate of the Congressional Budget Office]

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

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

`PART D--HEALTH INFORMATION TECHNOLOGY

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

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

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

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

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

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

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

SEC. 9. PROMOTION OF TELEHEALTH SERVICES.

I. INTRODUCTION

A. PURPOSE AND SUMMARY

Broad use of information technology throughout the health care delivery system is essential to improve the quality and efficiency of health care delivery. The adoption of health information technology is increasingly necessary to deliver state of the art care to individuals with chronic illness to promote interoperability between private and public providers and payers. Efficiencies gained by the coordinated development of health information technology will accelerate and advance private and public efforts to improve quality of care and reduce health costs.

The purpose of the Health Information Technology Promotion Act of 2006 (H.R. 4157) is to create the Office of the National Coordinator for Health Information Technology to accelerate and oversee the development of interoperability efforts in the public and private health care sectors and to coordinate Federal government activities relating to health information technology (IT). The bill would enable private sources of funding to finance physician adoption of health IT by providing exceptions and safe harbors in the fraud and abuse laws, and would provide for a study of state and federal security and confidentiality laws and regulations to ensure the protection of patient health information as the health system moves to electronic systems. In addition, the bill would direct the Secretary to modernize the procedure and diagnosis coding system, develop procedures to ensure timely updating of standards that enable electronic exchanges, study the use of telemedicine and telemonitoring services, and provide a report on the work conducted by the American Health Information Community and its role in the future. Finally, the bill would direct the Secretary to develop a strategic plan for coordinating implementation of health IT.

Office of the National Coordinator for Health Information Technology.--This bill would codify the Office of the National Coordinator for Health IT (ONCHIT) in statute and clearly delineate its ongoing roles and responsibilities. The duties of the office would include: maintaining and updating the strategic plan to guide the nationwide implementation of interoperable health IT to improve health care quality, reduce medical errors, increase the efficiency of care, and advance the delivery of appropriate evidence-based health care services; and serving as the principal advisor to the Secretary of Health and Human Services (HHS) on the use of health IT.

Duties of this office would also include serving as the coordinator of Federal government activities related to the development and maintenance of standards used in health information exchange and the certification and inspection of health IT products to ensure that such products conform to the standards noted above. Also, duties would include coordinating health IT policies and programs across Federal agencies and providing input and advice to the Office of Management and Budget regarding Federal health IT programs.

Stark/Anti-Kickback Safe Harbors.--This bill would include statutory exceptions and safe harbors in physician self-referral (`Stark' laws) and anti-kickback laws that would allow hospitals, groups practices, and other entities to provide physicians with hardware, software, or IT training and support services that are used for the electronic exchange of health information.

Further, donors of such technology may not impose conditions limiting its use by physicians to individuals who are also patients of the donor entity; nor can donors limit physicians' use of the technology in conjunction with other IT systems that physicians might utilize or condition donations based on the volume or value of referrals or business generated by the physician. This bill would also require written agreements regarding any remuneration, and would allow this exception to preempt state laws governing self-referral and anti-kickback provisions to ensure that the federal exception can be implemented. Any gift must be for the purpose of better coordination of care, to improve quality or improve efficiency.

Privacy/Security Standards.--This bill would require the Secretary of HHS to conduct a study on the impact of variation between state security and confidentiality laws and federal security and confidentiality standards. The Secretary would report back to Congress within 18 months with recommendations on the extent to which federal standards should be modified to provide greater commonality in order to better protect or strengthen the security and confidentiality when exchanging health information.

If Congress does not enact legislation 18 months after receipt of the study, the Secretary has the authority, but is not required, to modify federal security and confidentiality standards. Any modification in federal standards would supersede State law.

Adoption of Modern Coding System.--This bill would require the Secretary to adopt the updated Health Insurance Portability and Accountability Act (HIPAA) transaction standard ASC X12 5010 (to replace ASC X12 4010) for transactions occurring on or after April 1, 2009. The standard applies to claims transactions.

This bill would also require the Secretary to update the National Council for Prescription Drug Programs (NCPDP) telecommunication standards to the latest version approved by the National Committee on Vital Health Statistics (NCVHS) as of April 1, 2009.

The Secretary is also required to adopt, per the past recommendation of the National Committee on Vital Health Statistics (NCVHS), the ICD-10 coding system for transactions occurring on or after October 1, 2009. The standard applies to coding for diagnosis and procedures, but procedures only in inpatient hospital settings.

Procedures to Ensure Timely Updating of Standards.--This bill would adopt an accelerated process for updating standards in order to keep pace with the development of technology. The Secretary is required to publish a notice in the Federal Register and to receive and to consider comments on proposed additions or modifications developed by a HIPAA standard setting organization and made to the NCVHS and the Designated Standard Maintenance Organization (DSMO). The NCVHS would then submit its recommendation to the Secretary within 120 days. The Secretary would either adopt or reject proposed modifications or additions to existing standards within 90 days if the NCVHS recommends the change.

Report on the American Health Information Community.--This bill would require the Secretary of HHS to report back in one year on the activities of the American Health Information Community (AHIC), with recommendations for the ongoing structure and responsibilities of the entity.

AHIC was formed to provide input and recommendations to HHS on how to make health records digital and interoperable, and assure that the privacy and security of those records are protected.

Strategic Plan for Coordinating Implementation of Health Information Technology.--This bill would require the Secretary to develop a strategic plan to coordinate implementation efforts for health IT standards, HIPAA transaction standards, and new coding systems. This plan will address how activities would be coordinated between the Office of the National Coordinator for Health IT, the American Health Information Community, the Office of Electronic Standards and Security, and the National Committee for Vital Health Statistics.

Promotion of Telehealth Services.--This bill would require the Secretary to encourage and facilitate the adoption of State licensure agreements in order to provide telehealth services across state lines. The Secretary would also be required to study the use of store and forward technology in the provision of telehealth services under the Medicare program and the expansion of telehealth services provided in home health agencies and county mental health clinics or other publicly funded mental health facilities.

B. BACKGROUND

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

C. LEGISLATIVE HISTORY

During the 108th and 109th Congresses, the Subcommittee held a series of four hearings on health care information technology: June 17, 2004; July 22, 2004; July 27, 2005; and April 6, 2006. Subcommittee Chairman Nancy Johnson and Energy and Commerce Health Subcommittee Chairman Deal introduced the `Health Information Technology Promotion Act of 2005' (H.R. 4157) on October 27, 2005. The bill has been referred to the Committee on Ways and Means, and to the Committee on Energy and Commerce, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

On June 17, 2004, the Ways and Means Subcommittee on Health held its first hearing on health care information technology and heard testimony from the National Health Information Technology Coordinator Dr. David Brailer and Dr. Robert Kolodner, Acting Chief Health Informatics Officer, Department of Veterans Affairs. A second panel consisted of Dr. Charles Safran, American Medical Informatics Association; Janet Marchibroda, eHealth Initiative; Dr. Marc Overhage, Indiana University; and Dr. Andrew Wiesenthal, Kaiser Permanente.

The Subcommittee on Health held its second hearing on July 22, 2004, on electronic prescribing and heard testimony from Dave McLean, RxHub; Craig Fuller, National Association of Chain Drug Stores; Dr. Thomas Sullivan, Women's Health Center Cardiology; and Dr. Jonathan Teich, Harvard University.

The Subcommittee on Health held its third hearing on July 27, 2005, on health care information technology and heard testimony from the National Health Information Technology Coordinator, Dr. David Brailer. A second panel consisted of Dr. Don Detmer, American Medical Informatics Association; Linda Kloss, American Health Information Management Association; Dr. Allen Weiss, Naples Community Hospital Healthcare System; Joy Pritts, Health Policy Institute; and Mary Grealy, Healthcare Leadership Council.

The Subcommittee on Health held its final hearing in a series of four hearings on April 6, 2006, and heard testimony from the National Health Information Technology Coordinator, Dr. David Brailer; Lewis Morris, Inspector General, Department of HHS; and Dr. Simon Cohn, National Committee on Vital and Health Statistics. The second panel consisted of Brent Henry, Partners HealthCare System; Dr. Kenneth Kizer, Medsphere Systems Corporation; Joseph Smith, Arkansas Blue Cross Blue Shield; and Gloryanne Bryant, Catholic Healthcare West.

II. EXPLANATION OF PROVISIONS

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS

Current Law

No provision.

Explanation of Provision

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

Effective Date

No provision.

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

Current Law

There are no existing statutory provisions regarding the current Office of the National Coordinator for Health Information Technology (ONCHIT) within the Department of Health and Human Services (HHS). ONCHIT was created by Executive Order 13335, signed by the President on April 27, 2004. The National Coordinator was instructed to develop, maintain, and direct a strategic plan to guide the nationwide implementation of interoperable health IT in the public and private health care sectors. The National Coordinator was also required, within 90 days, to report to the Secretary on progress towards the strategic plan. On July 21, 2004, the National Coordinator delivered that report, titled Strategic Framework: The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich Health Care.

On October 6, 2005, ONCHIT awarded: (1) a $3.3 million contract to the American National Standards Institute to convene a panel of standards development organizations to develop a harmonization process for achieving a widely accepted and useful set of interoperable health IT standards; and (2) a $2.7 million contract to the Certification Commission for Health Information Technology, a nonprofit organization created by three health IT industry associations, to develop a process for certifying electronic health records and the network components through which they interoperate.

Explanation of Provision

The bill would establish within HHS an Office of the National Coordinator for Health Information Technology. The National Coordinator would be appointed by the President and report directly to the Secretary. The National Coordinator would be required to perform duties consistent with the development of a nationwide interoperable health IT infrastructure that, among other things, improves health care quality, promotes wellness, reduces health care costs, improves health information exchange, and ensures health information privacy and security. Those duties would include: (1) directing and overseeing the continuous improvement of a strategic plan to guide implementation of a nationwide interoperable health IT infrastructure; (2) acting as the principal advisor to the Secretary on health IT and coordinating all health IT programs within the department; (3) coordinating health IT activities across the federal government and, using private entities to the maximum extent possible, providing for the development of health IT standards and the certification of health IT products; and (4) advising the Director of the Office of Management and Budget on federal health IT programs.

The bill would authorize, for each of FY 2006 through FY 2010, such sums as may be necessary to carry out the activities of ONCHIT. Further, the bill would nullify Executive Order 13335. Finally, the bill would provide for the transfer of all functions, personnel, assets, liabilities, administrative actions, and statutory reporting requirements applicable to the existing ONCHIT to the new ONCHIT created under the Act.

Reasons for Change

No statutory position currently exists to coordinate health information technology initiatives for the federal government. The current Office of the National Coordinator for Health Information Technology was created by executive order. Congress should create a statutory position to ensure ongoing attention to health IT issues. This provision would codify the existing Office of the National Coordinator and specify its role in coordinating public/private partnerships to develop technology standards without creating a new government infrastructure to address the issue.

There is also the ongoing effort towards rebuilding the health care system in Louisiana's Gulf Coast region. The Committee believes that the Gulf Coast area providers and payers should increase the use of electronic health records so that patients can receive quality care anywhere, particularly in emergency situations. After the hurricanes in 2005 and as a direct result of the significant loss of paper medical records, the State of Louisiana initiated a series of activities to connect patients to lost information. The State received a $3.7 million grant from the ONCHIT to assist in the development of the Louisiana Health Information Exchange, which has successfully engaged stakeholders in Louisiana to prepare for the next hurricane season by creating a repository for patients' health information. The Committee believes the ONCHIT should continue to work with Louisiana stakeholders to develop a health information technology infrastructure that will allow all participating health care providers to contribute to an electronic patient record that can be accessed by any healthcare provider treating that patient.

Effective Date

Upon enactment.

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

Current Law

The federal anti-kickback statute (42 U.S.C. 1320a-7b(b)) prohibits an individual or entity from knowingly or willfully offering or accepting remuneration of any kind to induce a

patient referral for, or purchase of, an item or service covered by any federal health care program. Violations of the law are punishable by up to five years in prison, criminal fines up to $25,000, administrative civil money penalties up to $50,000, and exclusion from participation in federal health care programs. HHS issues regulations designating specific safe harbors for various payment and business practices that would otherwise be implicated by the anti-kickback statute and subject to its criminal and civil prosecution.

The Medicare physician self-referral (Stark) law (42 USC 1395nn(e)) prohibits physicians from referring patients to any entity for certain health services if the physician has a financial relationship with the entity, and prohibits entities from billing for any services resulting from such referrals, unless an exception applies. On March 25, 2004, CMS issued an interim final rule creating several new Stark exceptions, including one for health IT items and services furnished by an entity to physicians to enable them to participate in `community-wide health information systems.'

The Medicare Modernization Act (MMA; P.L. 108-173, Section 101) instructed the Secretary to establish a safe harbor from penalties under the anti-kickback statute and an exception to the Stark law for the provision of health IT and training services used in electronic prescribing. That would allow, for example, a hospital to provide such technologies and services to its medical staff, and Medicare Advantage plans to provide such technologies and services to pharmacies and prescribing health care providers. Proposed regulations were issued on October 5, 2005. While the proposed safe harbor covers health IT used solely for e-prescribing, as instructed by MMA, the proposed Stark exception would apply more broadly to health IT for electronic health records, provided they include electronic prescribing as one component.

Explanation of Provision

The bill would create a safe harbor from civil monetary penalties under the anti-kickback statute for health IT and related services provided by a hospital or critical access hospital (CAH) to a physician, subject to the following requirements. The provision of health IT and related services must be made pursuant to a written agreement specifying that the primary purpose of the remuneration is for better coordination of care or improvement of health care quality or efficiency, and without a condition that: (1) limits or restricts their use to services provided by the physician to individuals receiving services at the location of the hospital or CAH; (2) limits or restricts their use in conjunction with other health IT; or (3) takes into account the volume or value of referrals (or other business generated) by the physician to the hospital or CAH.

The bill also would create a safe harbor from criminal penalties under the anti-kickback statute for health IT and related services solicited or received by a physician, subject to the same set of requirements. The provision of health IT and related services must be made pursuant to a written agreement between the physician and the entity providing the technology specifying that the primary purpose of the remuneration is for better coordination of care or improvement of health care quality or efficiency, and without a condition that: (1) limits or restricts their use to services provided by the physician to individuals receiving services at the location of the entity providing such technology; (2) limits or restricts their use in conjunction with other health IT; or (3) takes into account the volume or value of referrals (or other business generated) by the physician to the entity providing such technology.

Finally, the bill would create an exception to the Stark law for health IT and related services provided by an entity to a physician, again subject to the same requirements. The provision of health IT and related services must be made pursuant to a written agreement between the physician and the entity providing the technology specifying that the primary purpose of the remuneration is for better coordination of care or improvement of health care quality or efficiency, and without a condition that: (1) limits or restricts their use to services provided by the physician to individuals receiving services at the location of the entity providing such technology; (2) limits or restricts their use in conjunction with other health IT; or (3) takes into account the volume or value of referrals (or other business generated) by the physician to the entity providing such technology.

For the purposes of this section, health IT includes hardware, software, license, intellectual property, equipment, or other IT or related services used primarily for the electronic creation, maintenance, and exchange of clinical health information.

The bill would require the Secretary, within 180 days of enactment, to promulgate implementing regulations. It also would preempt state laws that would otherwise penalize the provision of health IT and related services as described in this section. In addition, the bill would instruct the Secretary, within three years of enactment, to report to Congress on the impact of each of the safe harbors and the Stark exception on increasing health IT adoption and on the business relationships between providers. The Secretary would be required to include in the report recommendations for changes in the safe harbors and Stark exception, as may be appropriate.

Reasons for Change

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

Effective Date

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

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

Current Law

Under the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act (HIPAA, P.L. 104-191, 42 USC 1320d), Congress set a three-year deadline to enact health information privacy legislation. If, as turned out to be the case, the Congress was unable to enact such legislation before the deadline, the Secretary was instructed to promulgate regulations containing standards to protect the privacy of individually identifiable health information. Under the HIPAA privacy rule (45 CFR Parts 160, 164), which became effective for health care providers and most health plans in April 2003, all applicable state and federal laws must be complied with unless it is impossible to comply with both and if the state law is less protective of medical privacy.

HIPAA also instructed the Secretary to develop security standards to safeguard electronic patient information against unauthorized access, use, and disclosure. The security standards (45 CFR Parts 160, 162, 164), which became effective for health care providers and most health plans in April 2005, preempt contrary state laws, except for exception determinations made by the Secretary. On October 6, 2005, ONCHIT awarded an $11.5 million contract to RTI International in association with the National Governors Association to assess variations in business policies and state laws that affect privacy and security practices that may pose challenges to the secure electronic exchange of health information, and to identify practical solutions for addressing such variation. State solutions and implementation plans are expected to be finalized in early 2007.

Explanation of Provision

The bill would require the Secretary to study the degree of variation and commonality among state and federal (HIPAA) health information privacy and security requirements and examine how such variation may adversely impact the secure, confidential, and timely exchange of health information. The Secretary would have to report to Congress, within 18 months, on whether there is need for greater commonality among state and federal requirements and, if so, how federal standards should be changed to provide the commonality needed to better protect or strengthen the privacy and security of health information that is exchanged.

The bill would give Congress 18 months following receipt of the Secretary's report to enact legislation to implement the report's recommendations, including modifying the HIPAA privacy and security standards. If Congress failed to act within that period, the Secretary could act, by regulation, to modify the HIPAA privacy and security standards based upon the report's recommendations. Such modified HIPAA standards would preempt any related, but contrary state law.

Reasons for Change

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

Effective Date

Upon enactment.

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

Current Law

To support the growth of electronic record keeping and claims processing in the nation's health care system, HIPAA's Administrative Simplification provisions instructed the Secretary to adopt electronic format and data standards for several routine administrative transactions between health plans and health care providers (e.g., claims for payment). The Secretary was to rely on the recommendations of the National Committee on Vital and Health Statistics (NCVHS), consult with appropriate federal and state agencies and private organizations, and publish in the Federal Register any NCVHS recommendation regarding the adoption of a standard. Final standards for eight electronic transactions and for code sets to be used in those transactions (45 CFR Parts 160, 162) were issued in August 2000. The transactions standards include several Accredited Standards Committee X12 (ASC X12) version 4010 standards, and the National Council for Prescription Drug Programs (NCPDP) Telecommunications Standards version 5.1. The code sets adopted by the Secretary include the International Statistical Classification of Diseases and Related Health Problems, 9th revision, Clinical Modification (ICD-9-CM).

HIPAA also instructed the Secretary to review and, not more frequently than once a year, modify the Administrative Simplification standards. Again, the Secretary was to rely on the recommendations of the NCVHS and publish in the Federal Register any NCVHS recommendation regarding the modification of a standard. Any such modification must be completed in a manner that minimizes disruption and the cost of compliance. Regarding code sets (e.g., ICD codes), any modification must also include instructions for the conversion or translation of prior encoded data elements so as to preserve the informational value of the data.

Explanation of Provision

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

The bill also would require the Secretary to publish in the Federal Register a notice for the following modification of the HIPAA code sets: (1) replacement of ICD-9-CM with both the ICD-10-CM and ICD-10-PCS (Procedure Coding System). The replacement would apply to services furnished on or after October 1, 2009, including under Medicare Part A.

Reasons for Change

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

Effective Date

Upon enactment.

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

Current Law

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

Explanation of Provision

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

Reason for Change

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

Enactment Date

Upon enactment.

SECTION 7. REPORT ON THE AMERICAN HEALTH INFORMATION COMMUNITY

Current Law

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

Explanation of Provision

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

Reason for Change

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

Effective Date

Upon enactment.

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

Current Law

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

Explanation of Provision

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

Reasons for Change

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

Effective Date

Upon enactment.

SECTION 9. PROMOTION OF TELEHEALTH SERVICES

Current Law

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

Explanation of Provision

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

Reasons for Change

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

Effective Date

Upon enactment.

III. VOTES OF THE COMMITTEE

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

MOTION TO REPORT THE BILL

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



-----------------------------------------------------------------


Representatives Yea Nay Present   Representative Yea Nay Present 


-----------------------------------------------------------------


Mr. Thomas      X                     Mr. Rangel       X         


Mr. Shaw        X                      Mr. Stark       X         


Mrs. Johnson    X                      Mr. Levin       X         


Mr. Herger      X                     Mr. Cardin       X         


Mr. McCrery     X                  Mr. McDermott       X         


Mr. Camp        X                 Mr. Lewis (GA)       X         


Mr. Ramstad     X                       Mr. Neal       X         


Mr. Nussle                           Mr. McNulty       X         


Mr. Johnson     X                  Mr. Jefferson       X         


Mr. English     X                     Mr. Tanner       X         


Mr. Hayworth    X                    Mr. Becerra       X         


Mr. Weller      X                    Mr. Doggett       X         


Mr. Hulshof     X                    Mr. Pomeroy       X         


Mr. Lewis (KY)  X               Ms. Tubbs Jonesa       X         


Mr. Foley       X                   Mr. Thompson       X         


Mr. Brady       X                    Mr. Larson.       X         


Mr. Reynolds    X                    Mr. Emanuel       X         


Mr. Ryan        X                                                


Mr. Cantor      X                                                


Mr. Linder      X                                                


Mr. Beauprez    X                                                


Ms. Hart        X                                                


Mr. Chocola     X                                                


Mr. Nunes       X                                                


-----------------------------------------------------------------


VOTES ON AMENDMENTS


A rollcall vote was conducted on the following amendments to the Chairman's Amendment in the Nature of a Substitute.

An amendment by Mr. Stark, which would which would strike section 3 of the Chairman's amendment was defeated by a rollcall vote of 17 yeas to 23 nays. The vote was as follows:





----------------------------------------------------------------


Representatives Yea Nay Present  Representative Yea Nay Present 


----------------------------------------------------------------


Mr. Thomas            X              Mr. Rangel   X             


Mr. Shaw              X               Mr. Stark   X             


Mrs. Johnson          X               Mr. Levin   X             


Mr. Herger            X              Mr. Cardin   X             


Mr. McCrery           X           Mr. McDermott   X             


Mr. Camp              X          Mr. Lewis (GA)   X             


Mr. Ramstad           X                Mr. Neal   X             


Mr. Nussle                          Mr. McNulty   X             


Mr. Johnson           X           Mr. Jefferson   X             


Mr. English           X              Mr. Tanner   X             


Mr. Hayworth          X             Mr. Becerra   X             


Mr. Weller            X             Mr. Doggett   X             


Mr. Hulshof           X             Mr. Pomeroy   X             


Mr. Lewis (KY)        X         Ms. Tubbs Jones   X             


Mr. Foley             X            Mr. Thompson   X             


Mr. Brady             X              Mr. Larson   X             


Mr. Reynolds          X             Mr. Emanuel   X             


Mr. Ryan              X                                         


Mr. Cantor            X                                         


Mr. Linder            X                                         


Mr. Beauprez          X                                         


Ms. Hart              X                                         


Mr. Chocola           X                                         


Mr. Nunes             X                                         


----------------------------------------------------------------


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





----------------------------------------------------------------


Representatives Yea Nay Present  Representative Yea Nay Present 


----------------------------------------------------------------


Mr. Thomas            X              Mr. Rangel   X             


Mr. Shaw              X               Mr. Stark   X             


Mrs. Johnson          X               Mr. Levin   X             


Mr. Herger            X              Mr. Cardin   X             


Mr. McCrery           X           Mr. McDermott   X             


Mr. Camp              X          Mr. Lewis (GA)   X             


Mr. Ramstad           X                Mr. Neal   X             


Mr. Nussle                          Mr. McNulty   X             


Mr. Johnson           X           Mr. Jefferson   X             


Mr. English           X              Mr. Tanner   X             


Mr. Hayworth          X             Mr. Becerra   X             


Mr. Weller            X             Mr. Doggett   X             


Mr. Hulshof           X             Mr. Pomeroy   X             


Mr. Lewis (KY)        X         Ms. Tubbs Jones   X             


Mr. Foley             X            Mr. Thompson   X             


Mr. Brady             X              Mr. Larson   X             


Mr. Reynolds          X             Mr. Emanuel   X             


Mr. Ryan              X                                         


Mr. Cantor            X                                         


Mr. Linder            X                                         


Mr. Beauprez          X                                         


Ms. Hart              X                                         


Mr. Chocola           X                                         


Mr. Nunes             X                                         


----------------------------------------------------------------


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





----------------------------------------------------------------


Representatives Yea Nay Present  Representative Yea Nay Present 


----------------------------------------------------------------


Mr. Thomas            X              Mr. Rangel   X             


Mr. Shaw              X               Mr. Stark   X             


Mrs. Johnson          X               Mr. Levin   X             


Mr. Herger            X              Mr. Cardin   X             


Mr. McCrery           X           Mr. McDermott   X             


Mr. Camp              X          Mr. Lewis (GA)   X             


Mr. Ramstad           X                Mr. Neal   X             


Mr. Nussle                          Mr. McNulty   X             


Mr. Johnson           X           Mr. Jefferson   X             


Mr. English           X              Mr. Tanner   X             


Mr. Hayworth          X             Mr. Becerra   X             


Mr. Weller            X             Mr. Doggett   X             


Mr. Hulshof           X             Mr. Pomeroy   X             


Mr. Lewis (KY)        X         Ms. Tubbs Jones   X             


Mr. Foley             X            Mr. Thompson   X             


Mr. Brady             X              Mr. Larson   X             


Mr. Reynolds          X             Mr. Emanuel   X             


Mr. Ryan              X                                         


Mr. Cantor            X                                         


Mr. Linder            X                                         


Mr. Beauprez          X                                         


Ms. Hart              X                                         


Mr. Chocola           X                                         


Mr. Nunes             X                                         


----------------------------------------------------------------


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





----------------------------------------------------------------


Representatives Yea Nay Present  Representative Yea Nay Present 


----------------------------------------------------------------


Mr. Thomas            X              Mr. Rangel   X             


Mr. Shaw              X               Mr. Stark   X             


Mrs. Johnson          X               Mr. Levin   X             


Mr. Herger            X              Mr. Cardin   X             


Mr. McCrery           X           Mr. McDermott   X             


Mr. Camp              X          Mr. Lewis (GA)   X             


Mr. Ramstad           X                Mr. Neal   X             


Mr. Nussle            X             Mr. McNulty   X             


Mr. Johnson           X           Mr. Jefferson   X             


Mr. English           X              Mr. Tanner   X             


Mr. Hayworth          X             Mr. Becerra   X             


Mr. Weller            X             Mr. Doggett   X             


Mr. Hulshof           X             Mr. Pomeroy   X             


Mr. Lewis (KY)        X         Ms. Tubbs Jones   X             


Mr. Foley             X            Mr. Thompson   X             


Mr. Brady             X              Mr. Larson   X             


Mr. Reynolds          X             Mr. Emanuel   X             


Mr. Ryan              X                                         


Mr. Cantor            X                                         


Mr. Linder            X                                         


Mr. Beauprez          X                                         


Ms. Hart              X                                         


Mr. Chocola           X                                         


Mr. Nunes             X                                         


----------------------------------------------------------------


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





----------------------------------------------------------------


Representatives Yea Nay Present  Representative Yea Nay Present 


----------------------------------------------------------------


Mr. Thomas            X              Mr. Rangel   X             


Mr. Shaw              X               Mr. Stark   X             


Mrs. Johnson          X               Mr. Levin   X             


Mr. Herger            X              Mr. Cardin   X             


Mr. McCrery           X           Mr. McDermott   X             


Mr. Camp              X          Mr. Lewis (GA)   X             


Mr. Ramstad           X                Mr. Neal   X             


Mr. Nussle                          Mr. McNulty   X             


Mr. Johnson           X           Mr. Jefferson   X             


Mr. English           X              Mr. Tanner   X             


Mr. Hayworth          X             Mr. Becerra   X             


Mr. Weller            X             Mr. Doggett   X             


Mr. Hulshof           X             Mr. Pomeroy   X             


Mr. Lewis (KY)        X         Ms. Tubbs Jones   X             


Mr. Foley             X            Mr. Thompson   X             


Mr. Brady             X              Mr. Larson   X             


Mr. Reynolds          X             Mr. Emanuel   X             


Mr. Ryan              X                                         


Mr. Cantor            X                                         


Mr. Linder            X                                         


Mr. Beauprez          X                                         


Ms. Hart              X                                         


Mr. Chocola           X                                         


Mr. Nunes             X                                         


----------------------------------------------------------------


IV. BUDGET EFFECTS OF THE BILL


A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS


In compliance with clause 3(d)(2) of rule XIII of the Rules of the House of Representatives, the following statement is made concerning the effects on the budget of this bill, H.R. 4157, as reported: The Committee fundamentally disagrees with the assessment of the Congressional Budget Office (CBO).

The Committee believes H.R. 4157 will result in significantly reduced expenditures in both private and public sector health programs that are not reflected in the CBO estimate. The Committee believes CBO's assumption regarding baseline spending does not reflect the slow rate of adoption of health information technology, nor does it recognize how the legislation will speed the adoption and use of such technology.

Even after the Committee highlighted numerous articles and academic studies on the benefits of health information technology on utilization of services, particularly lab services, CBO continues to believe the bill will result in increased utilization. Despite the bill's clear requirement that entities must enter into written agreements to improve the quality of care, to reduce medical errors and duplicative services, to promote quality or to enhance efficiency, CBO continues to believe volume of services would increase. In addition, the bill makes it illegal to condition gifts of donated technology on the value or volume of services. Legal experts and the Inspector General of the Department of Health and Human Services look at inappropriate indirect referral arrangements. CBO, however, believes such indirect arrangements will occur despite the legal prohibition in the legislation, and irrespective of the significant penalties under the Stark and anti-kickback statutes. CBO thus believes the provision will increase costs. The Committee fundamentally disagrees with this assessment and believes CBO has not provided any credible or material evidence to justify its claims.

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX EXPENDITURES


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

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE


In compliance with clause 3(c)(3) of rule XIII of the Rules of the House of Representatives, requiring a cost estimate prepared by the CBO, the following report prepared by the CBO is provided.

U.S. Congress,


Congressional Budget Office,


Washington, DC, July 25, 2006.


Hon. WILLIAM `BILL' M. THOMAS,

Chairman, Committee on Ways and Means,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4157, the Better Health Information System Act of 2006.

If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Tom Bradley.

Sincerely,

DONALD B. MARRON,

Acting Director.

Enclosure.

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

Summary: H.R. 4157 would amend the Public Health Service Act (PHSA) to codify the establishment and responsibilities of the Office of the National Coordinator for Health Information Technology (ONCHIT). In addition, the bill would modify the Social Security Act to:





The amendments to the PHSA and the deadline for updated standards for coding medical services would affect spending subject to appropriation. Assuming appropriation of the necessary amounts, CBO estimates that implementing the bill would increase discretionary spending by $658 million over the 2007-2011 period and reduce such spending by $150 million over the succeeding five years.

Enacting the deadline for updated standards for coding medical services and the safe-harbor provisions would affect direct spending. CBO estimates those provisions would increase direct spending by $180 million over the 2007-2011 period and by $80 million during the following five years.

CBO estimates that enacting the deadline for updated standards for coding medical services would reduce federal revenues by $26 million over the 2007-2011 period, and would increase federal revenues by $84 million over the succeeding five years. Social Security payroll taxes, which are off-budget, account for about one-third of those amounts.

H.R. 4157 would preempt, in some circumstances, certain state laws that govern the security and confidentiality of health information as well as laws that establish civil or criminal penalties for exchanging health information technology. Because those preemptions would limit the application of state laws, they would be intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA). CBO estimates that the costs of the mandates to states would be minimal and would not exceed the threshold established in UMRA ($64 million in 2006, adjusted annually for inflation).

Other provisions of the bill, notably new coding requirements and the safe-harbor provisions--for gifts of information technology, would affect states' spending, adding about $200 million to their costs over the 2007-2011 period. However, those provisions would not be intergovernmental mandates as defined in UMRA.

The bill would impose private-sector mandates on health plans, providers, and clearing-houses by requiring them to adopt updated coding and transaction standards by specified future dates. CBO estimates that the direct cost of these provisions would exceed the threshold specified in UMRA for private-sector mandates ($128 million in 2006, adjusted annually for inflation) in the first three years following enactment of the bill.

Estimated cost to the Federal Government: The estimated cost of H.R. 4157 is shown in the following table. The costs of this legislation fall within budget functions 550 (health) and 570 (Medicare).



ESTIMATED BUDGETARY EFFECTS OF H.R. 4157


---------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                 By fiscal year, in millions of dollars--                                                                  


                                                                                                     2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007-2011 2007-2016 


---------------------------------------------------------------------------------------------------------------------------------------------------------------------------


CHANGES IN SPENDING SUBJECT TO APPROPRIATION                                                                                                                               


ONCHIT:                                                                                                                                                                    


Estimated Authorization Level                                                                         116  119  122  125    0    0    0    0    0    0       482       482 


Estimated Outlays                                                                                      58   94  114  121   61   24    5    1    0    0       448       478 


Medicare:                                                                                                                                                                  


Estimated Authorization Level                                                                           0  200   25   25 -200  -20    0    0    0    0        50        30 


Estimated Outlays                                                                                       0   50   75   75   10  -70  -70  -40    0    0       210        30 


Total, Changes in Discretionary Spending:                                                                                                                                  


Estimated Authorization Level                                                                         116  319  147  150 -200  -20    0    0    0    0       532       512 


Estimated Outlays                                                                                      58  144  189  196   71  -46  -65  -39    0    0       658       508 


CHANGES IN DIRECT SPENDING                                                                                                                                                 


Medicaid, Safe Harbors                                                                                 10   15   15   15   20   20   20   25   25   25        75       190 


Medicare, Safe Harbors                                                                                 15   15   15   15   15   15   20   20   20   20        75       170 


Subtotal, Safe Harbors                                                                                 25   30   30   30   35   35   40   45   45   45       150       360 


Medicaid, ICD-10                                                                                        5   20   25    5  -25  -40  -30  -25  -20  -15        30      -100 


Total, Changes in Direct Spending (Budget Authority and Outlays)                                       30   50   55   35   10   -5   10   20   25   30       180       260 


CHANGES IN REVENUE                                                                                                                                                         


Income and HI Payroll Taxes (on budget)                                                                -2  -10  -14   -2   12   19   13   10    7    6       -16        39 


Social Security Payroll Taxes (off-budget)                                                             -1   -6   -8   -1    6   10    7    5    4    3       -10        19 


Total, Changes in Revenue                                                                              -3  -16  -22   -3   18   29   20   15   11    9       -26        58 


---------------------------------------------------------------------------------------------------------------------------------------------------------------------------


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

HEALTH INFORMATION TECHNOLOGY AND QUALITY


On April 27, 2004, the President issued Executive Order 13335, which established within the Office of the Secretary of Health and Human Services the position of National Coordinator of Health Information Technology, The Secretary subsequently established the Office of the National Coordinator of Health Information Technology to support the adoption of interoperable health information technology. Funding for ONCHIT totaled $62 million for 2006: $43 million was appropriated to the office, and $19 million was reprogrammed from other activities. The President requested $116 million for ONCHIT for 2007.

The National Coordinator for Health Information Technology serves as the senior advisor to the President and the Secretary of Health and Human Services on all health information technology programs and initiatives, and is responsible for:







H.R. 4157 would codify the establishment and responsibilities of ONCHIT. The bill would require the Secretary to prepare reports on certain activities initiated pursuant to the executive order to promote the development of a nationwide health information network and on issues related to the development, operation, and implementation of state, regional, and community organizations that share and coordinate the deployment and use of health information technology (so-called health information exchanges).

The bill would authorize the appropriation for 2006 through 2010 of such sums as are necessary to conduct ONCHIT's activities. Based on information provided by the Department of Health and Human Services (HHS), CBO estimates that funding the authorized activities would require the appropriation of about $116 million in 2007 and that funding requirements would grow with inflation in subsequent years. Assuming appropriation of those amounts, CBO estimates that ONCHIT's activities would cost $58 million in 2007, $448 million over the 2007-2011 period, and $478 million over the 2007-2016 period.

SAFE HARBORS FOR GIFTS OF HEALTH INFORMATION TECHNOLOGY


H.R. 4157 would establish `safe harbors' for donations of health information technology that might otherwise be subject to civil monetary penalties, criminal penalties, or sanctions for violating the prohibitions on certain physician referrals. The bill would permit any entity to provide health information technology (hardware, software, or related services) to physicians. CBO estimates that provision would increase direct spending by $25 million in 2007, $150 million over the 2007-2011 period, and $360 million over the 2007-2016 period; federal spending for Medicaid and Medicare would each account for about half of those increases.

The Administration has identified the current application of those penalties and sanctions as an impediment to the success of efforts to promote the widespread adoption of interoperable health information technology. Accordingly, the HHS Office of the Inspector General and the Centers for Medicare & Medicaid Services (CMS), under authority existing in current law, are engaged in a rule-making process to establish safe harbors for gifts of health information technology that would balance enforcement of program-integrity rules with promotion of the adoption of interoperable health information technology. In the preliminary stage of the rule-making process, those offices described a framework that would limit:





It is likely that the final rules will specify a somewhat broader set of eligible entities and donations than the preliminary guidelines. In particular, we anticipate that hospitals and group practices will be allowed to donate to a broader set of physicians and that the eligible gifts will include some equipment.

However, CBO expects that, based on concerns about program integrity, the final rules will establish a set of eligible entities that is narrower than those specified in the bill. Thus, clinical laboratories, imaging centers, suppliers of durable medical equipment, pharmaceutical manufacturers, and other entities that probably will not be eligible for the safe harbor under current law would qualify under the bill. Although the legislation would prohibit the contract between the donor and the physician from including a condition that links the gift of technology to the volume or value of referrals to the donor, CBO expects that, in some cases, that condition would be implicit (or would be perceived by the physician as being implicit). To the extent that a gift might lead to a shift of business from one provider to another, such a development would not affect the cost of the government's health care programs. But CBO

estimates that, in aggregate, such donations by entities other than hospitals, group practices, Medicare Advantage plans, and prescription drug plans would lead to an increase in the volume of services that Medicare and state Medicaid programs pay for, thus increasing costs.

Information furnished by CMS, the HHS Inspector General, and the Department of Justice indicates that some physicians who receive gifts of value from suppliers substantially increase the volume of services they order. CBO's estimate assumes that the number of physicians inclined to do so is quite small--less than 1 percent of practicing physicians. Moreover, CBO expects that many of those physicians would not receive donations of technology from donors who would be covered by the safe harbors under H.R. 4157 but not covered under current law. Accordingly, CBO's estimate ofthe additional direct spending for Medicare and Medicaid represents an increase in spending for services furnished by the newly-protected categories of donors of less than one-tenth of a percent. (Total federal spending for such services in those two programs is estimated to total about $55 billion in 2006.)

BUDGETARY EFFECTS OF HEALTH INFORMATION TECHNOLOGY


CBO expects that the use of information technology in the health care sector will continue to grow under current law, and that expanded use of such technology will likely produce improvements in the quality of the health care provided to U.S. residents. In some cases, that improvement in the quality of health care might mean less use of medical services; in other cases, it might mean an increase in utilization.

Under current law, CBO also expects that the expanded use of health information technology will likely result in increased efficiency in the health care system. That is, the use of information technology will result in more health benefits per dollar of spending than would otherwise be realized.

Experts caution, however, that the evidence is mixed concerning whether those improvements in quality and efficiency will also result in lower spending for health care, either in the private sector or for government programs. 1

 [Footnote]  In her recent testimony to the Senate Subcommittee on Technology, Innovation, and Competitiveness, Dr. Carolyn Clancy (Director of the Agency for Health Research and Quality) noted that, if poorly designed or implemented, health information technology will not bring those benefits, and in some cases may even lead to new medical errors and potential costs. She also noted that achieving improvements in health care and realizing potential cost savings will require real process change and will not result from simply acquiring and deploying hardware and software.

[Footnote 1: See, for example:]

Testimony of Carolyn Clancy, MD to the Subcommittee on Technology, Innovation and Competitiveness of the Senate Committee on Commerce, Science, and Transportation, June 21, 2006. (http://commerce.senate.gov/public/XX--files/Clancy062106. pdf)

Clifford Goodman, `Savings In Electronic Medical Record Systems? Do It For The Quality', Health Affairs, Sept/Oct. 2005. (http://content.healthaffairs.org/cgi/content/full/24/5/1124)

Paul B. Ginsburg, Ph.D., `Controlling Health Care Costs', New England Journal of Medicine, Oct 14, 2004. (http://content.nejm.org/cgi/content/full/351/16/1591)

Jaan Sidorov, `It Ain't Necessarily So: The Electronic Health Record And The Unlikely Prospect Of Reducing Health Care Costs', Health Affairs, July/August 2006. (http://content.healthaffairs.org/cgi/reprint/25/4/1079)

James Walker, `Electronic Medical Records And Health Care Transformation', Health Affairs, Sept./Oct 2005. (http://content.healthaffairs.org/cgi/content/full/24/5/1118)

To the extent that health information technology will result in lower spending for health care, much of those savings would not be passed through as a reduction in direct spending for federal programs--particularly Medicare--under current law. For example, two areas account for much of the potential savings reported in the literature: reductions in the cost of care during a hospital stay, and administrative savings for providers and claims processors. Under current law, Medicare's payment rates for hospital inpatient services are updated each year to reflect changes in general inflation rates, and do not reflect changes in the costs that hospitals incur (either for administrative activities or for providing health care services). Medicare might realize savings in the cost of processing claims. However, funding for Medicare's claims-processing activities is subject to appropriation, so such savings could only be realized through the appropriations process.

In preparing an estimate of the budgetary effect of legislation involving health information technology, CBO focuses on the extent to which the bill would change the rate at which the use of health technology will grow or how well that technology will be designed and implemented under current law. CBO then evaluates the extent to which those changes, in conjunction with other provisions in current law and in the proposed legislation, would affect direct spending.

CBO estimates that enacting H.R. 4157 would not significantly affect either the rate at which the use of health technology will grow or how well that technology will be designed and implemented. Therefore, with the exception of the effects on spending described above, CBO estimates enacting the bill would have no effect on spending by the federal government.

STANDARDS FOR THE ELECTRONIC EXCHANGE OF HEALTH DATA


H.R. 4157 would require the Secretary of HHS to establish expedited procedures for adopting updates to standards that enable the electronic exchange of health data.

The bill would require that two sets of standards apply to certain health information transactions by April 1, 2009: the `X12' standards developed by the Accredited Standards Committee for electronic data interchange, and the updated telecommunication standards adopted by the National Council for Prescription Drug Programs. CBO estimates that implementing those provisions would not have a significant effect on federal spending.

In addition, the bill would require health plans, providers, and clearinghouses to adopt the 10th revision of the International Classification of Diseases (ICD-10) by October 1, 2009, for all services currently submitted for payment using codes specified in the 9th revision (ICD-9). Under current law, CBO expects that the ICD-10 standard will be adopted by t