SEC. 163. ADMINISTRATIVE SIMPLIFICATION.
(a) STANDARDIZING ELECTRONIC ADMINISTRATIVE TRANSACTIONS.--
(1) IN GENERAL.--Part C of title XI of the Social Security Act (42 U.S.C. 1320d et seq.) is amended by inserting after section 1173 the following new section:
''SEC. 1173A. STANDARDIZE ELECTRONIC ADMINISTRATIVE TRANSACTIONS.
''(a) STANDARDS FOR FINANCIAL AND ADMINISTRATIVE TRANSACTIONS.--
''(1) IN GENERAL.--The Secretary shall adopt and regularly update standards consistent with the goals described in paragraph (2).
''(2) GOALS FOR FINANCIAL AND ADMINISTRATIVE TRANSACTIONS.--The goals for standards under paragraph (1) are that such standards shall--
''(A) be unique with no conflicting or redundant standards;
''(B) be authoritative, permitting no additions or constraints for electronic transactions, including companion guides;
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''(C) be comprehensive, efficient and robust, requiring minimal augmentation by paper transactions or clarification by further communications;
''(D) enable the real-time (or near real time) determination of an individual's financial responsibility at the point of service and, to the extent possible, prior to service, including whether the individual is eligible for a specific service with a specific physician at a specific facility, which may include utilization of a machine-readable health plan beneficiary identification card;
''(E) enable, where feasible, near real-time adjudication of claims;
''(F) provide for timely acknowledgment, response, and status reporting applicable to any electronic transaction deemed appropriate by the Secretary;
''(G) describe all data elements (such as reason and remark codes) inunambiguous terms, notpermit optional fields, require that data elements be either required or conditioned upon set values in other fields, and prohibit ad-
ditional conditions; and
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''(H) harmonize all common data elements across administrative and clinical transaction standards.
''(3) TIME FOR ADOPTION.--Not later than 2 years after the date of implementation of the X12 Version 5010 transaction standards implemented under this part, the Secretary shall adopt standards under this section.
''(4) REQUIREMENTS FOR SPECIFIC STAND-ARDS.--The standards under this section shall be developed, adopted and enforced so as to--
''(A) clarify, refine, complete, and expand, as needed, the standards required under section 1173;
''(B) require paper versions of standard-ized transactions to comply with the same
standards as to data content such that a fully compliant, equivalent electronic transaction can be populated from the data from a paper
version;
''(C) enable electronic funds transfers, in order to allow automated reconciliation with the related health care payment and remittance ad-
vice;
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''(D) require timely and transparent claim and denial management processes, including tracking, adjudication, and appeal processing ;
''(E) require the use of a standard elec-tronic transaction with which health care pro-viders may quickly and efficiently enroll with a health plan to conduct the other electronic transactions provided for in this part; and
''(F) provide for other requirements relat-ing to administrative simplification as identified by the Secretary, in consultation with stake-
holders.
''(5) BUILDING ON EXISTING STANDARDS.--In developing the standards under this section, the Secretary shall build upon existing and planned stand-
ards.
''(6) IMPLEMENTATION AND ENFORCEMENT.-- Not later than 6 months after the date of the enactment of this section, the Secretary shall submit to the appropriate committees of Congress a plan for the implementation and enforcement, by not later than 5 years after such date of enactment, of the standards under this section. Such plan shall include--
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''(A) a process and timeframe with mile-stones for developing the complete set of stand-ards;
''(B) an expedited upgrade program for continually developing and approving additions and modifications to the standards as often as annually to improve their quality and extend their functionality to meet evolving require-ments in health care;
''(C) programs to provide incentives for, and ease the burden of, implementation for cer-tain health care providers, with special consid-eration given to such providers serving rural or underserved areas and ensure coordination with standards, implementation specifications, and certification criteria being adopted under the HITECH Act;
''(D) programs to provide incentives for, and ease the burden of, health care providers who volunteer to participate in the process of setting standards for electronic transactions;
''(E) an estimate of total funds needed to ensure timely completion of the implementation plan; and
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''(F) an enforcement process that includes timely investigation of complaints, random au-dits to ensure compliance, civil monetary and programmatic penalties for non-compliance con-sistent with existing laws and regulations, and a fair and reasonable appeals process building off of enforcement provisions under this part.
''(b) LIMITATIONS ON USE OF DATA.--Nothing in this section shall be construed to permit the use of infor-mation collected under this section in a manner that would adversely affect any individual.
''(c) PROTECTION OF DATA.--The Secretary shall en-sure (through the promulgation of regulations or other-wise) that all data collected pursuant to subsection (a) are--
''(1) used and disclosed in a manner that meets the HIPAA privacy and security law (as defined in section 3009(a)(2) of the Public Health Service Act), including any privacy or security standard adopted under section 3004 of such Act; and
''(2) protected from all inappropriate internal use by any entity that collects, stores, or receives the data, including use of such data in determinations of eligibility (or continued eligibility) in health plans,
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and from other inappropriate uses, as defined by the Secretary.''.
(2) DEFINITIONS.--Section 1171 of such Act (42 U.S.C. 1320d) is amended--
(A) in paragraph (7), by striking ''with reference to'' and all that follows and inserting ''with reference to a transaction or data element of health information in section 1173 means implementation specifications, certifi-cation criteria, operating rules, messaging formats, codes, and code sets adopted or estab-lished by the Secretary for the electronic exchange and use of information''; and
(B) by adding at the end the following new paragraph:
''(9) OPERATING RULES.--The term 'operating rules' means business rules for using and processing transactions. Operating rules should address the fol-
lowing:
''(A) Requirements for data content using available and established national standards.
''(B) Infrastructure requirements that es-tablish best practices for streamlining data flow to yield timely execution of transactions.
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''(C) Policies defining the transaction re- lated rights and responsibilities for entities that are transmitting or receiving data.''.
(3) CONFORMING AMENDMENT.--Section 1179(a) of such Act (42 U.S.C. 1320d-8(a)) is amended, in the matter before paragraph (1)--
(A) by inserting ''on behalf of an indi-vidual'' after ''1978)''; and
(B) by inserting ''on behalf of an indi-vidual'' after ''for a financial institution'' and
(b) STANDARDS FOR CLAIMS ATTACHMENTS AND COORDINATION OF BENEFITS.--
(1) STANDARD FOR HEALTH CLAIMS ATTACH-MENTS.--Not later than 1 year after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate a final rule to es-tablish a standard for health claims attachment transaction described in section 1173(a)(2)(B) of the Social Security Act (42 U.S.C. 1320d-2(a)(2)(B)) and coordination of benefits.
(2) REVISION IN PROCESSING PAYMENT TRANS-ACTIONS BY FINANCIAL INSTITUTIONS.--
(A) IN GENERAL.--Section 1179 of the Social Security Act (42 U.S.C. 1320d-8) is
amended, in the matter before paragraph (1)--
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(i) by striking ''or is engaged'' and inserting ''and is engaged''; and
(ii) by inserting ''(other than as a business associate for a covered entity)'' after ''for a financial institution''.
(B) EFFECTIVE DATE.--The amendments made by paragraph (1) shall apply to trans-actions occurring on or after such date (not later than 6 months after the date of the enact-ment of this Act) as the Secretary of Health and Human Services shall specify.