---
kind: "range"
citation: "42 U.S.C. §§ 1320d–1320d–8"
title: "42"
from: "1320d"
to: "1320d–8"
count: 9
release: "119-102"
url: "https://uscodex.org/usc/42/1320d..1320d-8"
---

# §1320d. Definitions


For purposes of this part:

- (1) **Code set—** The term “code set” means any set of codes used for encoding data elements, such as tables of terms, medical concepts, medical diagnostic codes, or medical procedure codes.
- (2) **Health care clearinghouse—** The term “health care clearinghouse” means a public or [private entity](/usc/42/12181.md?p=6) that processes or facilitates the processing of nonstandard data elements of [health information](#4) into [standard](#7) data elements.
- (3) **Health care provider—** The term “[health care provider](/usc/42/300jj.md?p=3)” [includes](/usc/42/1301.md?p=b) a [provider of services](/usc/42/1395n.md?p=a-2) (as defined in [section 1395x(u) of this title](/usc/42/1395x.md?p=u)), a provider of medical or other health services (as defined in [section 1395x(s) of this title](/usc/42/1395x.md?p=s)), and any other [person](/usc/42/1301.md?p=a-3) furnishing health care services or supplies.
- (4) **Health information—** The term “health information” means any information, whether oral or recorded in any form or medium, that—
  - (A) is created or received by a [health care provider](/usc/42/300jj.md?p=3), [health plan](/usc/42/300jj.md?p=6), public health authority, employer, life insurer, [school](/usc/42/6372.md?p=1) or university, or [health care clearinghouse](#2); and
  - (B) relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.
- (5) **Health plan—** The term “[health plan](/usc/42/300jj.md?p=6)” means an individual or group plan that provides, or pays the cost of, [medical care](/usc/42/1301.md?p=a-7) (as such term is defined in [section 300gg–91 of this title](/usc/42/300gg–91.md)). Such term [includes](/usc/42/1301.md?p=b) the following, and any combination thereof:
  - (A) A [group health plan](/usc/42/1320d–9.md?p=b-2) (as defined in [section 300gg–91(a) of this title](/usc/42/300gg–91.md?p=a)), but only if the plan—
    - (i) has 50 or more participants (as defined in [section 1002(7) of title 29](/usc/29/1002.md?p=7)); or
    - (ii) is administered by an entity other than the employer who established and maintains the plan.
  - (B) A [health insurance issuer](/usc/42/18021.md?p=b-2) (as defined in [section 300gg–91(b) of this title](/usc/42/300gg–91.md?p=b)).
  - (C) A health maintenance organization (as defined in [section 300gg–91(b) of this title](/usc/42/300gg–91.md?p=b)).
  - (D) Parts[^1] A, B, C, or D of the Medicare [program](/usc/42/274l–1.md?p=4) under subchapter XVIII.
  - (E) The medicaid [program](/usc/42/274l–1.md?p=4) under subchapter XIX.
  - (F) A [Medicare supplemental policy](/usc/42/1320d–9.md?p=b-2) (as defined in [section 1395ss(g)(1) of this title](/usc/42/1395ss.md?p=g-1)).
  - (G) A [long-term care](/usc/42/1397j.md?p=14-A) policy, [including](/usc/42/1301.md?p=b) a [nursing home](/usc/42/1396g.md?p=e-1) fixed indemnity policy (unless the [Secretary](/usc/42/1301.md?p=a-6) determines that such a policy does not provide sufficiently comprehensive coverage of a benefit so that the policy should be treated as a [health plan](/usc/42/300jj.md?p=6)).
  - (H) An [employee](/usc/42/1320a–7h.md?p=e-7) welfare benefit plan or any other arrangement which is established or maintained for the purpose of offering or providing health benefits to the [employees](/usc/42/1320a–7h.md?p=e-7) of 2 or more employers.
  - (I) The health care [program](/usc/42/274l–1.md?p=4) for active military personnel under [title 10](/usc/10.md).
  - (J) The veterans health care [program](/usc/42/274l–1.md?p=4) under [chapter 17](/usc/38/chptII-ch17.md) of title 38.
  - (K) The Civilian Health and Medical [Program](/usc/42/274l–1.md?p=4) of the Uniformed Services (CHAMPUS), as defined in [section 1072(4) of title 10](/usc/10/1072.md?p=4).
  - (L) The [Indian](/usc/42/6862.md?p=6) health service [program](/usc/42/274l–1.md?p=4) under the [Indian](/usc/42/6862.md?p=6) Health Care Improvement Act ([25 U.S.C. 1601](/usc/25/1601.md) et seq.).
  - (M) The Federal [Employees](/usc/42/1320a–7h.md?p=e-7) Health Benefit Plan under [chapter 89](/usc/5/chptIII-sptG-ch89.md) of title 5.
- (6) **Individually identifiable health information—** The term “individually identifiable health information” means any information, [including](/usc/42/1301.md?p=b) demographic information collected from an individual, that—
  - (A) is created or received by a [health care provider](/usc/42/300jj.md?p=3), [health plan](/usc/42/300jj.md?p=6), employer, or [health care clearinghouse](#2); and
  - (B) relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual, and—
    - (i) identifies the individual; or
    - (ii) with respect to which there is a reasonable basis to believe that the information can be used to identify the individual.
- (7) **Standard—** The term “standard”, when used with reference to a data element of [health information](#4) or a transaction referred to in [section 1320d–2(a)(1) of this title](/usc/42/1320d–2.md?p=a-1), means any such data element or transaction that meets each of the standards and implementation specifications adopted or established by the [Secretary](/usc/42/1301.md?p=a-6) with respect to the data element or transaction under [sections 1320d–1 through 1320d–3](/usc/42/1320d–1..1320d–3.md) of this title.
- (8) **Standard setting organization—** The term “standard setting organization” means a standard setting organization [accredited](/usc/42/300w–9.md?p=c-2) by the American National [Standards](#7) Institute, [including](/usc/42/1301.md?p=b) the National [Council](/usc/42/300f.md?p=9) for Prescription [Drug](/usc/42/282.md?p=j-1-A-vii) [Programs](/usc/42/274l–1.md?p=4), that develops [standards](#7) for information transactions, data elements, or any other [standard](#7) that is necessary to, or will facilitate, the implementation of this part.
- (9) **Operating rules—** The term “operating rules” means the necessary business rules and guidelines for the electronic [exchange](/usc/42/300gg–91.md?p=d-21) of information that are not defined by a [standard](#7) or its implementation specifications as adopted for purposes of this part.

# §1320d–1. General requirements for adoption of standards

- (a) **Applicability—** Any [standard](/usc/42/1320d.md?p=7) adopted under this part shall apply, in whole or in part, to the following [persons](/usc/42/1301.md?p=a-3):
  - (1) A [health plan](/usc/42/300jj.md?p=6).
  - (2) A [health care clearinghouse](/usc/42/1320d.md?p=2).
  - (3) A [health care provider](/usc/42/300jj.md?p=3) who transmits any [health information](/usc/42/1320d.md?p=4) in electronic form in connection with a transaction referred to in [section 1320d–2(a)(1) of this title](/usc/42/1320d–2.md?p=a-1).
- (b) **Reduction of costs—** Any [standard](/usc/42/1320d.md?p=7) adopted under this part shall be consistent with the objective of reducing the administrative costs of providing and paying for health care.
- (c) **Role of standard setting organizations—**
  - (1) **In general—** Except as provided in [paragraph (2)](#c-2), any [standard](/usc/42/1320d.md?p=7) adopted under this part shall be a [standard](/usc/42/1320d.md?p=7) that has been developed, adopted, or [modified](/usc/42/7501.md?p=4) by a [standard setting organization](/usc/42/1320d.md?p=8).
  - (2) **Special rules—**
    - (A) **Different standards—** The [Secretary](/usc/42/1301.md?p=a-6) may adopt a [standard](/usc/42/1320d.md?p=7) that is different from any [standard](/usc/42/1320d.md?p=7) developed, adopted, or [modified](/usc/42/7501.md?p=4) by a [standard setting organization](/usc/42/1320d.md?p=8), if—
      - (i) the different [standard](/usc/42/1320d.md?p=7) will substantially reduce administrative costs to [health care providers](/usc/42/300jj.md?p=3) and [health plans](/usc/42/300jj.md?p=6) compared to the alternatives; and
      - (ii) the [standard](/usc/42/1320d.md?p=7) is promulgated in accordance with the rulemaking procedures of subchapter III of [chapter 5](/usc/5/chptI-ch5.md) of title 5.
    - (B) **No standard by standard setting organization—** If no [standard setting organization](/usc/42/1320d.md?p=8) has developed, adopted, or [modified](/usc/42/7501.md?p=4) any [standard](/usc/42/1320d.md?p=7) relating to a [standard](/usc/42/1320d.md?p=7) that the [Secretary](/usc/42/1301.md?p=a-6) is authorized or required to adopt under this part—
      - (i) [paragraph (1)](#c-1) shall not apply; and
      - (ii) [subsection (f)](#f) shall apply.
  - (3) **Consultation requirement—**
    - (A) **In general—** A [standard](/usc/42/1320d.md?p=7) may not be adopted under this part unless—
      - (i) in the case of a [standard](/usc/42/1320d.md?p=7) that has been developed, adopted, or [modified](/usc/42/7501.md?p=4) by a [standard setting organization](/usc/42/1320d.md?p=8), the organization consulted with each of the organizations described in [subparagraph (B)](#c-3-B) in the course of such development, adoption, or [modification](/usc/42/7501.md?p=4); and
      - (ii) in the case of any other [standard](/usc/42/1320d.md?p=7), the [Secretary](/usc/42/1301.md?p=a-6), in complying with the requirements of [subsection (f)](#f), consulted with each of the organizations described in [subparagraph (B)](#c-3-B) before adopting the [standard](/usc/42/1320d.md?p=7).
    - (B) **Organizations described—** The organizations referred to in [subparagraph (A)](#c-3-A) are the following:
      - (i) The National Uniform Billing Committee.
      - (ii) The National Uniform [Claim](/usc/42/1320a–7a.md?p=i-2) Committee.
      - (iii) The Workgroup for Electronic Data Interchange.
      - (iv) The American Dental Association.
- (d) **Implementation specifications—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish specifications for implementing each of the [standards](/usc/42/1320d.md?p=7) adopted under this part.
- (e) **Protection of trade secrets—** Except as otherwise required by law, a [standard](/usc/42/1320d.md?p=7) adopted under this part shall not require disclosure of trade secrets or confidential commercial information by a [person](/usc/42/1301.md?p=a-3) required to comply with this part.
- (f) **Assistance to Secretary—** In complying with the requirements of this part, the [Secretary](/usc/42/1301.md?p=a-6) shall rely on the recommendations of the National Committee on Vital and Health Statistics established under [section 242k(k) of this title](/usc/42/242k.md?p=k), and shall consult with appropriate Federal and [State agencies](/usc/42/1320a–7a.md?p=i-1) and private organizations. The [Secretary](/usc/42/1301.md?p=a-6) shall publish in the Federal Register any recommendation of the National Committee on Vital and Health Statistics regarding the adoption of a [standard](/usc/42/1320d.md?p=7) under this part.
- (g) **Application to modifications of standards—** This section shall apply to a [modification](/usc/42/7501.md?p=4) to a [standard](/usc/42/1320d.md?p=7) ([including](/usc/42/1301.md?p=b) an addition to a [standard](/usc/42/1320d.md?p=7)) adopted under [section 1320d–3(b) of this title](/usc/42/1320d–3.md?p=b) in the same manner as it applies to an initial [standard](/usc/42/1320d.md?p=7) adopted under [section 1320d–3(a) of this title](/usc/42/1320d–3.md?p=a).

# §1320d–2. Standards for information transactions and data elements

- (a) **Standards to enable electronic exchange—**
  - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt [standards](/usc/42/1320d.md?p=7) for transactions, and data elements for such transactions, to enable [health information](/usc/42/1320d.md?p=4) to be exchanged electronically, that are appropriate for—
    - (A) the financial and administrative transactions described in [paragraph (2)](#a-2); and
    - (B) other financial and administrative transactions determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6), consistent with the goals of improving the operation of the health care system and reducing administrative costs, and subject to the requirements under [paragraph (5)](#a-5).
  - (2) **Transactions—** The transactions referred to in [paragraph (1)(A)](#a-1-A) are transactions with respect to the following:
    - (A) Health [claims](/usc/42/1320a–7a.md?p=i-2) or equivalent encounter information.
    - (B) Health [claims](/usc/42/1320a–7a.md?p=i-2) attachments.
    - (C) Enrollment and disenrollment in a [health plan](/usc/42/300jj.md?p=6).
    - (D) Eligibility for a [health plan](/usc/42/300jj.md?p=6).
    - (E) Health care payment and remittance advice.
    - (F) [Health plan](/usc/42/300jj.md?p=6) premium payments.
    - (G) First report of injury.
    - (H) Health [claim](/usc/42/1320a–7a.md?p=i-2) status.
    - (I) Referral certification and [authorization](/usc/42/4370m.md?p=3).
    - (J) Electronic [funds](/usc/42/12854.md?p=3) transfers.
  - (3) **Accommodation of specific providers—** The [standards](/usc/42/1320d.md?p=7) adopted by the [Secretary](/usc/42/1301.md?p=a-6) under [paragraph (1)](#a-1) shall accommodate the needs of different types of [health care providers](/usc/42/300jj.md?p=3).
  - (4) **Requirements for financial and administrative transactions—**
    - (A) **In general—** The [standards](/usc/42/1320d.md?p=7) and associated [operating rules](/usc/42/1320d.md?p=9) adopted by the [Secretary](/usc/42/1301.md?p=a-6) shall—
      - (i) to the extent feasible and appropriate, enable determination of an individual’s eligibility and financial responsibility for specific services prior to or at the point of care;
      - (ii) be comprehensive, requiring minimal augmentation by paper or other communications;
      - (iii) provide for timely acknowledgment, response, and status reporting that supports a transparent [claims](/usc/42/1320a–7a.md?p=i-2) and denial management process ([including](/usc/42/1301.md?p=b) adjudication and appeals); and
      - (iv) describe all data elements ([including](/usc/42/1301.md?p=b) reason and remark codes) in unambiguous terms, require that such data elements be required or conditioned upon set values in other fields, and prohibit additional conditions (except where necessary to implement [State](/usc/42/1301.md?p=a-1) or Federal law, or to protect against fraud and [abuse](/usc/42/1397j.md?p=1)).
    - (B) **Reduction of clerical burden—** In adopting [standards](/usc/42/1320d.md?p=7) and [operating rules](/usc/42/1320d.md?p=9) for the transactions referred to under [paragraph (1)](#a-1), the [Secretary](/usc/42/1301.md?p=a-6) shall seek to reduce the number and complexity of forms ([including](/usc/42/1301.md?p=b) paper and electronic forms) and data entry required by patients and providers.
  - (5) **Consideration of standardization of activities and items—**
    - (A) **In general—** For purposes of carrying out [paragraph (1)(B)](#a-1-B), the [Secretary](/usc/42/1301.md?p=a-6) shall solicit, not later than January 1, 2012, and not less than every 3 years thereafter, input from entities described in [subparagraph (B)](#a-5-B) on—
      - (i) whether there could be greater uniformity in financial and administrative activities and items, as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6); and
      - (ii) whether such activities should be considered financial and administrative transactions (as described in [paragraph (1)(B)](#a-1-B)) for which the adoption of [standards](/usc/42/1320d.md?p=7) and [operating rules](/usc/42/1320d.md?p=9) would improve the operation of the health care system and reduce administrative costs.
    - (B) **Solicitation of input—** For purposes of [subparagraph (A)](#a-5-A), the [Secretary](/usc/42/1301.md?p=a-6) shall seek input from—
      - (i) the National Committee on Vital and Health Statistics, the [Health Information](/usc/42/1320d.md?p=4) Technology Policy Committee, and the [Health Information](/usc/42/1320d.md?p=4) Technology [Standards](/usc/42/1320d.md?p=7) Committee; and
      - (ii) [standard setting organizations](/usc/42/1320d.md?p=8) and stakeholders, as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6).
- (b) **Unique health identifiers—**
  - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt [standards](/usc/42/1320d.md?p=7) providing for a [standard](/usc/42/1320d.md?p=7) unique health identifier for each individual, employer, [health plan](/usc/42/300jj.md?p=6), and [health care provider](/usc/42/300jj.md?p=3) for use in the health care system. In carrying out the preceding sentence for each [health plan](/usc/42/300jj.md?p=6) and [health care provider](/usc/42/300jj.md?p=3), the [Secretary](/usc/42/1301.md?p=a-6) shall take into account multiple uses for identifiers and multiple locations and specialty classifications for [health care providers](/usc/42/300jj.md?p=3).
  - (2) **Use of identifiers—** The [standards](/usc/42/1320d.md?p=7) adopted under [paragraph (1)](#b-1) shall specify the purposes for which a unique health identifier may be used.
- (c) **Code sets—**
  - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt [standards](/usc/42/1320d.md?p=7) that—
    - (A) select [code sets](/usc/42/1320d.md?p=1) for appropriate data elements for the transactions referred to in [subsection (a)(1)](#a-1) from among the [code sets](/usc/42/1320d.md?p=1) that have been developed by private and public entities; or
    - (B) establish [code sets](/usc/42/1320d.md?p=1) for such data elements if no [code sets](/usc/42/1320d.md?p=1) for the data elements have been developed.
  - (2) **Distribution—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish efficient and low-cost procedures for distribution ([including](/usc/42/1301.md?p=b) electronic distribution) of [code sets](/usc/42/1320d.md?p=1) and [modifications](/usc/42/7501.md?p=4) made to such [code sets](/usc/42/1320d.md?p=1) under [section 1320d–3(b) of this title](/usc/42/1320d–3.md?p=b).
- (d) **Security standards for health information—**
  - (1) **Security standards—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt security [standards](/usc/42/1320d.md?p=7) that—
    - (A) take into account—
      - (i) the technical capabilities of record systems used to maintain [health information](/usc/42/1320d.md?p=4);
      - (ii) the costs of security measures;
      - (iii) the need for [training](/usc/42/285e–2.md?p=b-2) [persons](/usc/42/1301.md?p=a-3) who have access to [health information](/usc/42/1320d.md?p=4);
      - (iv) the value of audit trails in computerized record systems; and
      - (v) the needs and capabilities of small [health care providers](/usc/42/300jj.md?p=3) and rural [health care providers](/usc/42/300jj.md?p=3) (as such providers are defined by the [Secretary](/usc/42/1301.md?p=a-6)); and
    - (B) ensure that a [health care clearinghouse](/usc/42/1320d.md?p=2), if it is part of a larger organization, has policies and security procedures which isolate the activities of the [health care clearinghouse](/usc/42/1320d.md?p=2) with respect to processing information in a manner that prevents unauthorized access to such information by such larger organization.
  - (2) **Safeguards—** Each [person](/usc/42/1301.md?p=a-3) described in [section 1320d–1(a) of this title](/usc/42/1320d–1.md?p=a) who maintains or transmits [health information](/usc/42/1320d.md?p=4) shall maintain reasonable and appropriate administrative, technical, and physical safeguards—
    - (A) to ensure the integrity and confidentiality of the information;
    - (B) to protect against any reasonably anticipated—
      - (i) threats or [hazards](/usc/42/5165f.md?p=a-3) to the security or integrity of the information; and
      - (ii) unauthorized uses or disclosures of the information; and
    - (C) otherwise to ensure compliance with this part by the officers and [employees](/usc/42/1320a–7h.md?p=e-7) of such [person](/usc/42/1301.md?p=a-3).
- (e) **Electronic signature—**
  - (1) **Standards—** The [Secretary](/usc/42/1301.md?p=a-6), in coordination with the [Secretary](/usc/42/1301.md?p=a-6) of [Commerce](/usc/42/6311.md?p=7), shall adopt [standards](/usc/42/1320d.md?p=7) specifying procedures for the electronic transmission and authentication of signatures with respect to the transactions referred to in [subsection (a)(1)](#a-1).
  - (2) **Effect of compliance—** Compliance with the [standards](/usc/42/1320d.md?p=7) adopted under [paragraph (1)](#e-1) shall be deemed to satisfy Federal and [State](/usc/42/1301.md?p=a-1) statutory requirements for written signatures with respect to the transactions referred to in [subsection (a)(1)](#a-1).
- (f) **Transfer of information among health plans—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt [standards](/usc/42/1320d.md?p=7) for transferring among [health plans](/usc/42/300jj.md?p=6) appropriate [standard](/usc/42/1320d.md?p=7) data elements needed for the coordination of benefits, the sequential processing of [claims](/usc/42/1320a–7a.md?p=i-2), and other data elements for individuals who have more than one [health plan](/usc/42/300jj.md?p=6).
- (g) **Operating rules—**
  - (1) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt a [single](/usc/42/2304.md?p=m) set of [operating rules](/usc/42/1320d.md?p=9) for each transaction referred to under [subsection (a)(1)](#a-1) with the goal of creating as much uniformity in the implementation of the electronic [standards](/usc/42/1320d.md?p=7) as possible. Such [operating rules](/usc/42/1320d.md?p=9) shall be consensus-based and reflect the necessary business rules affecting [health plans](/usc/42/300jj.md?p=6) and [health care providers](/usc/42/300jj.md?p=3) and the manner in which they operate pursuant to [standards](/usc/42/1320d.md?p=7) issued under Health Insurance Portability and Accountability Act of 1996.
  - (2) **Operating rules development—** In adopting [operating rules](/usc/42/1320d.md?p=9) under this subsection, the [Secretary](/usc/42/1301.md?p=a-6) shall consider recommendations for [operating rules](/usc/42/1320d.md?p=9) developed by a qualified nonprofit entity that meets the following requirements:
    - (A) The entity focuses its mission on administrative simplification.
    - (B) The entity demonstrates a multi-stakeholder and consensus-based process for development of [operating rules](/usc/42/1320d.md?p=9), [including](/usc/42/1301.md?p=b) representation by or participation from [health plans](/usc/42/300jj.md?p=6), [health care providers](/usc/42/300jj.md?p=3), vendors, relevant Federal [agencies](/usc/42/1397n–12.md?p=1), and other [standard](/usc/42/1320d.md?p=7) development organizations.
    - (C) The entity has a public set of guiding principles that ensure the [operating rules](/usc/42/1320d.md?p=9) and process are open and transparent, and supports nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair, and nondiscriminatory [practices](/usc/42/17061.md?p=19).
    - (D) The entity builds on the transaction [standards](/usc/42/1320d.md?p=7) issued under Health Insurance Portability and Accountability Act of 1996.
    - (E) The entity allows for public review and updates of the [operating rules](/usc/42/1320d.md?p=9).
  - (3) **Review and recommendations—** The National Committee on Vital and Health Statistics shall—
    - (A) advise the [Secretary](/usc/42/1301.md?p=a-6) as to whether a nonprofit entity meets the requirements under [paragraph (2)](#g-2);
    - (B) review the [operating rules](/usc/42/1320d.md?p=9) developed and recommended by such nonprofit entity;
    - (C) determine whether such [operating rules](/usc/42/1320d.md?p=9) represent a consensus view of the health care stakeholders and are consistent with and do not conflict with other existing [standards](/usc/42/1320d.md?p=7);
    - (D) evaluate whether such [operating rules](/usc/42/1320d.md?p=9) are consistent with electronic [standards](/usc/42/1320d.md?p=7) adopted for [health information](/usc/42/1320d.md?p=4) technology; and
    - (E) submit to the [Secretary](/usc/42/1301.md?p=a-6) a recommendation as to whether the [Secretary](/usc/42/1301.md?p=a-6) should adopt such [operating rules](/usc/42/1320d.md?p=9).
  - (4) **Implementation—**
    - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt [operating rules](/usc/42/1320d.md?p=9) under this subsection, by regulation in accordance with [subparagraph (C)](#g-4-C), following consideration of the [operating rules](/usc/42/1320d.md?p=9) developed by the non-profit entity described in [paragraph (2)](#g-2) and the recommendation submitted by the National Committee on Vital and Health Statistics under [paragraph (3)(E)](#g-3-E) and having ensured consultation with providers.
    - (B) **Adoption requirements; effective dates—**
      - (i) **Eligibility for a health plan and health claim status—** The set of [operating rules](/usc/42/1320d.md?p=9) for eligibility for a [health plan](/usc/42/300jj.md?p=6) and health [claim](/usc/42/1320a–7a.md?p=i-2) status transactions shall be adopted not later than July 1, 2011, in a manner ensuring that such [operating rules](/usc/42/1320d.md?p=9) are effective not later than January 1, 2013, and may allow for the use of a machine readable identification card.
      - (ii) **Electronic funds transfers and health care payment and remittance advice—** The set of [operating rules](/usc/42/1320d.md?p=9) for electronic [funds](/usc/42/12854.md?p=3) transfers and health care payment and remittance advice transactions shall—
        - (I) allow for automated reconciliation of the electronic payment with the remittance advice; and
        - (II) be adopted not later than July 1, 2012, in a manner ensuring that such [operating rules](/usc/42/1320d.md?p=9) are effective not later than January 1, 2014.
      - (iii) **Health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, referral certification and authorization—** The set of [operating rules](/usc/42/1320d.md?p=9) for health [claims](/usc/42/1320a–7a.md?p=i-2) or equivalent encounter information, enrollment and disenrollment in a [health plan](/usc/42/300jj.md?p=6), [health plan](/usc/42/300jj.md?p=6) premium payments, and referral certification and [authorization](/usc/42/4370m.md?p=3) transactions shall be adopted not later than July 1, 2014, in a manner ensuring that such [operating rules](/usc/42/1320d.md?p=9) are effective not later than January 1, 2016.
    - (C) **Expedited rulemaking—** The [Secretary](/usc/42/1301.md?p=a-6) shall promulgate an interim final rule applying any [standard](/usc/42/1320d.md?p=7) or operating rule recommended by the National Committee on Vital and Health Statistics pursuant to [paragraph (3)](#g-3). The [Secretary](/usc/42/1301.md?p=a-6) shall accept and consider public comments on any interim final rule published under this subparagraph for 60 days after the date of such publication.
- (h) **Compliance—**
  - (1) **Health plan certification—**
    - (A) **Eligibility for a health plan, health claim status, electronic funds transfers, health care payment and remittance advice—** Not later than December 31, 2013, a [health plan](/usc/42/300jj.md?p=6) shall file a statement with the [Secretary](/usc/42/1301.md?p=a-6), in such form as the [Secretary](/usc/42/1301.md?p=a-6) may require, certifying that the data and information systems for such plan are in compliance with any applicable [standards](/usc/42/1320d.md?p=7) (as described under paragraph (7) of [section 1320d of this title](/usc/42/1320d.md)) and associated [operating rules](/usc/42/1320d.md?p=9) (as described under [paragraph (9)](/usc/42/1320d.md?p=9) of such section) for electronic [funds](/usc/42/12854.md?p=3) transfers, eligibility for a [health plan](/usc/42/300jj.md?p=6), health [claim](/usc/42/1320a–7a.md?p=i-2) status, and health care payment and remittance advice, respectively.
    - (B) **Health claims or equivalent encounter information, enrollment and disenrollment in a health plan, health plan premium payments, health claims attachments, referral certification and authorization—** Not later than December 31, 2015, a [health plan](/usc/42/300jj.md?p=6) shall file a statement with the [Secretary](/usc/42/1301.md?p=a-6), in such form as the [Secretary](/usc/42/1301.md?p=a-6) may require, certifying that the data and information systems for such plan are in compliance with any applicable [standards](/usc/42/1320d.md?p=7) and associated [operating rules](/usc/42/1320d.md?p=9) for health [claims](/usc/42/1320a–7a.md?p=i-2) or equivalent encounter information, enrollment and disenrollment in a [health plan](/usc/42/300jj.md?p=6), [health plan](/usc/42/300jj.md?p=6) premium payments, health [claims](/usc/42/1320a–7a.md?p=i-2) attachments, and referral certification and [authorization](/usc/42/4370m.md?p=3), respectively. A [health plan](/usc/42/300jj.md?p=6) shall provide the same level of documentation to certify compliance with such transactions as is required to certify compliance with the transactions specified in [subparagraph (A)](#h-1-A).
  - (2) **Documentation of compliance—** A [health plan](/usc/42/300jj.md?p=6) shall provide the [Secretary](/usc/42/1301.md?p=a-6), in such form as the [Secretary](/usc/42/1301.md?p=a-6) may require, with adequate documentation of compliance with the [standards](/usc/42/1320d.md?p=7) and [operating rules](/usc/42/1320d.md?p=9) described under [paragraph (1)](#h-1). A [health plan](/usc/42/300jj.md?p=6) shall not be considered to have provided adequate documentation and shall not be certified as being in compliance with such [standards](/usc/42/1320d.md?p=7), unless the [health plan](/usc/42/300jj.md?p=6)—
    - (A) demonstrates to the [Secretary](/usc/42/1301.md?p=a-6) that the plan conducts the electronic transactions specified in [paragraph (1)](#h-1) in a manner that fully complies with the regulations of the [Secretary](/usc/42/1301.md?p=a-6); and
    - (B) provides documentation showing that the plan has completed end-to-end testing for such transactions with their partners, such as [hospitals](/usc/42/1395dd.md?p=e-5) and [physicians](/usc/42/1395cc–4.md?p=a-2-E).
  - (3) **Service contracts—** A [health plan](/usc/42/300jj.md?p=6) shall be required to ensure that any entities that provide services pursuant to a contract with such [health plan](/usc/42/300jj.md?p=6) shall comply with any applicable certification and compliance requirements (and provide the [Secretary](/usc/42/1301.md?p=a-6) with adequate documentation of such compliance) under this subsection.
  - (4) **Certification by outside entity—** The [Secretary](/usc/42/1301.md?p=a-6) may designate independent, outside entities to certify that a [health plan](/usc/42/300jj.md?p=6) has complied with the requirements under this subsection, provided that the certification [standards](/usc/42/1320d.md?p=7) employed by such entities are in accordance with any [standards](/usc/42/1320d.md?p=7) or [operating rules](/usc/42/1320d.md?p=9) issued by the [Secretary](/usc/42/1301.md?p=a-6).
  - (5) **Compliance with revised standards and operating rules—**
    - (A) **In general—** A [health plan](/usc/42/300jj.md?p=6) ([including](/usc/42/1301.md?p=b) entities described under [paragraph (3)](#h-3)) shall file a statement with the [Secretary](/usc/42/1301.md?p=a-6), in such form as the [Secretary](/usc/42/1301.md?p=a-6) may require, certifying that the data and information systems for such plan are in compliance with any applicable revised [standards](/usc/42/1320d.md?p=7) and associated [operating rules](/usc/42/1320d.md?p=9) under this subsection for any interim final rule promulgated by the [Secretary](/usc/42/1301.md?p=a-6) under [subsection (i)](#i) that—
      - (i) amends any [standard](/usc/42/1320d.md?p=7) or operating rule described under paragraph (1) of this subsection; or
      - (ii) establishes a [standard](/usc/42/1320d.md?p=7) (as described under [subsection (a)(1)(B)](#a-1-B)) or associated [operating rules](/usc/42/1320d.md?p=9) (as described under [subsection (i)(5)](#i-5)) for any other financial and administrative transactions.
    - (B) **Date of compliance—** A [health plan](/usc/42/300jj.md?p=6) shall comply with such requirements not later than the effective date of the applicable [standard](/usc/42/1320d.md?p=7) or operating rule.
  - (6) **Audits of health plans—** The [Secretary](/usc/42/1301.md?p=a-6) shall conduct periodic audits to ensure that [health plans](/usc/42/300jj.md?p=6) ([including](/usc/42/1301.md?p=b) entities described under [paragraph (3)](#h-3)) are in compliance with any [standards](/usc/42/1320d.md?p=7) and [operating rules](/usc/42/1320d.md?p=9) that are described under [paragraph (1)](#h-1) or [subsection (i)(5)](#i-5).
- (i) **Review and amendment of standards and operating rules—**
  - (1) **Establishment—** Not later than January 1, 2014, the [Secretary](/usc/42/1301.md?p=a-6) shall establish a [review committee](#i-4-A) (as described under [paragraph (4)](#i-4)).
  - (2) **Evaluations and reports—**
    - (A) **Hearings—** Not later than April 1, 2014, and not less than biennially thereafter, the [Secretary](/usc/42/1301.md?p=a-6), acting through the [review committee](#i-4-A), shall conduct hearings to evaluate and review the adopted [standards](/usc/42/1320d.md?p=7) and [operating rules](/usc/42/1320d.md?p=9) established under this section.
    - (B) **Report—** Not later than July 1, 2014, and not less than biennially thereafter, the [review committee](#i-4-A) shall provide recommendations for updating and improving such [standards](/usc/42/1320d.md?p=7) and [operating rules](/usc/42/1320d.md?p=9). The [review committee](#i-4-A) shall recommend a [single](/usc/42/2304.md?p=m) set of [operating rules](/usc/42/1320d.md?p=9) per transaction [standard](/usc/42/1320d.md?p=7) and maintain the goal of creating as much uniformity as possible in the implementation of the electronic [standards](/usc/42/1320d.md?p=7).
  - (3) **Interim final rulemaking—**
    - (A) **In general—** Any recommendations to amend adopted [standards](/usc/42/1320d.md?p=7) and [operating rules](/usc/42/1320d.md?p=9) that have been approved by the [review committee](#i-4-A) and reported to the [Secretary](/usc/42/1301.md?p=a-6) under [paragraph (2)(B)](#i-2-B) shall be adopted by the [Secretary](/usc/42/1301.md?p=a-6) through promulgation of an interim final rule not later than 90 days after receipt of the committee’s report.
    - (B) **Public comment—**
      - (i) **Public comment period—** The [Secretary](/usc/42/1301.md?p=a-6) shall accept and consider public comments on any interim final rule published under this paragraph for 60 days after the date of such publication.
      - (ii) **Effective date—** The effective date of any amendment to existing [standards](/usc/42/1320d.md?p=7) or [operating rules](/usc/42/1320d.md?p=9) that is adopted through an interim final rule published under this paragraph shall be 25 months following the close of such public comment period.
  - (4) **Review committee—**
    - (A) **Definition—** For the purposes of this subsection, the term “review committee’ means a committee chartered by or within the Department of Health and Human services that has been designated by the [Secretary](/usc/42/1301.md?p=a-6) to carry out this subsection, [including](/usc/42/1301.md?p=b)—
      - (i) the National Committee on Vital and Health Statistics; or
      - (ii) any appropriate committee as determined by the [Secretary](/usc/42/1301.md?p=a-6).
    - (B) **Coordination of HIT standards—** In developing recommendations under this subsection, the [review committee](#i-4-A) shall ensure coordination, as appropriate, with the [standards](/usc/42/1320d.md?p=7) that support the certified electronic health record technology approved by the [Office](/usc/42/3058f.md?p=1) of the [National Coordinator](/usc/42/300jj.md?p=11) for [Health Information](/usc/42/1320d.md?p=4) Technology.
  - (5) **Operating rules for other standards adopted by the Secretary—** The [Secretary](/usc/42/1301.md?p=a-6) shall adopt a [single](/usc/42/2304.md?p=m) set of [operating rules](/usc/42/1320d.md?p=9) (pursuant to the process described under [subsection (g)](#g)) for any transaction for which a [standard](/usc/42/1320d.md?p=7) had been adopted pursuant to [subsection (a)(1)(B)](#a-1-B).
- (j) **Penalties—**
  - (1) **Penalty fee—**
    - (A) **In general—** Not later than April 1, 2014, and annually thereafter, the [Secretary](/usc/42/1301.md?p=a-6) shall assess a penalty fee (as determined under [subparagraph (B)](#j-1-B)) against a [health plan](/usc/42/300jj.md?p=6) that has failed to meet the requirements under [subsection (h)](#h) with respect to certification and documentation of compliance with—
      - (i) the [standards](/usc/42/1320d.md?p=7) and associated [operating rules](/usc/42/1320d.md?p=9) described under [paragraph (1)](#j-1) of such subsection; and
      - (ii) a [standard](/usc/42/1320d.md?p=7) (as described under [subsection (a)(1)(B)](#a-1-B)) and associated [operating rules](/usc/42/1320d.md?p=9) (as described under [subsection (i)(5)](#i-5)) for any other financial and administrative transactions.
    - (B) **Fee amount—** Subject to subparagraphs [(C)](#j-1-C), [(D)](#j-1-D), and [(E)](#j-1-E), the [Secretary](/usc/42/1301.md?p=a-6) shall assess a penalty fee against a [health plan](/usc/42/300jj.md?p=6) in the amount of $1 per covered life until certification is complete. The penalty shall be assessed per [person](/usc/42/1301.md?p=a-3) covered by the plan for which its data systems for major medical policies are not in compliance and shall be imposed against the [health plan](/usc/42/300jj.md?p=6) for each day that the plan is not in compliance with the requirements under [subsection (h)](#h).
    - (C) **Additional penalty for misrepresentation—** A [health plan](/usc/42/300jj.md?p=6) that knowingly provides inaccurate or incomplete information in a statement of certification or documentation of compliance under [subsection (h)](#h) shall be subject to a penalty fee that is double the amount that would otherwise be imposed under this subsection.
    - (D) **Annual fee increase—** The amount of the penalty fee imposed under this subsection shall be increased on an annual basis by the annual percentage increase in total national health care expenditures, as determined by the [Secretary](/usc/42/1301.md?p=a-6).
    - (E) **Penalty limit—** A penalty fee assessed against a [health plan](/usc/42/300jj.md?p=6) under this subsection shall not exceed, on an annual basis—
      - (i) an amount equal to $20 per covered life under such plan; or
      - (ii) an amount equal to $40 per covered life under the plan if such plan has knowingly provided inaccurate or incomplete information (as described under [subparagraph (C)](#j-1-C)).
    - (F) **Determination of covered individuals—** The [Secretary](/usc/42/1301.md?p=a-6) shall determine the number of covered lives under a [health plan](/usc/42/300jj.md?p=6) based upon the most recent statements and filings that have been submitted by such plan to the Securities and [Exchange](/usc/42/300gg–91.md?p=d-21) [Commission](/usc/42/2000ff.md?p=1).
  - (2) **Notice and dispute procedure—** The [Secretary](/usc/42/1301.md?p=a-6) shall establish a procedure for assessment of penalty fees under this subsection that provides a [health plan](/usc/42/300jj.md?p=6) with reasonable notice and a dispute resolution procedure prior to provision of a notice of assessment by the [Secretary](/usc/42/1301.md?p=a-6) of the Treasury (as described under [paragraph (4)(B)](#j-4-B)).
  - (3) **Penalty fee report—** Not later than May 1, 2014, and annually thereafter, the [Secretary](/usc/42/1301.md?p=a-6) shall provide the [Secretary](/usc/42/1301.md?p=a-6) of the Treasury with a report identifying those [health plans](/usc/42/300jj.md?p=6) that have been assessed a penalty fee under this subsection.
  - (4) **Collection of penalty fee—**
    - (A) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) of the Treasury, acting through the Financial Management Service, shall administer the collection of penalty fees from [health plans](/usc/42/300jj.md?p=6) that have been identified by the [Secretary](/usc/42/1301.md?p=a-6) in the penalty fee report provided under [paragraph (3)](#j-3).
    - (B) **Notice—** Not later than August 1, 2014, and annually thereafter, the [Secretary](/usc/42/1301.md?p=a-6) of the Treasury shall provide notice to each [health plan](/usc/42/300jj.md?p=6) that has been assessed a penalty fee by the [Secretary](/usc/42/1301.md?p=a-6) under this subsection. Such notice shall include the amount of the penalty fee assessed by the [Secretary](/usc/42/1301.md?p=a-6) and the due date for payment of such fee to the [Secretary](/usc/42/1301.md?p=a-6) of the Treasury (as described in [subparagraph (C)](#j-4-C)).
    - (C) **Payment due date—** Payment by a [health plan](/usc/42/300jj.md?p=6) for a penalty fee assessed under this subsection shall be made to the [Secretary](/usc/42/1301.md?p=a-6) of the Treasury not later than November 1, 2014, and annually thereafter.
    - (D) **Unpaid penalty fees—** Any amount of a penalty fee assessed against a [health plan](/usc/42/300jj.md?p=6) under this subsection for which payment has not been made by the due date provided under [subparagraph (C)](#j-4-C) shall be—
      - (i) increased by the interest accrued on such amount, as determined pursuant to the underpayment rate established under section 6621 of the Internal Revenue Code of 1986; and
      - (ii) treated as a past-due, legally enforceable debt owed to a Federal [agency](/usc/42/1397n–12.md?p=1) for purposes of section 6402(d) of the Internal Revenue Code of 1986.
    - (E) **Administrative fees—** Any fee charged or allocated for collection activities conducted by the Financial Management Service will be passed on to a [health plan](/usc/42/300jj.md?p=6) on a pro-rata basis and added to any penalty fee collected from the plan.

# §1320d–3. Timetables for adoption of standards

- (a) **Initial standards—** The [Secretary](/usc/42/1301.md?p=a-6) shall carry out [section 1320d–2 of this title](/usc/42/1320d–2.md) not later than 18 months after August 21, 1996, except that [standards](/usc/42/1320d.md?p=7) relating to [claims](/usc/42/1320a–7a.md?p=i-2) attachments shall be adopted not later than 30 months after August 21, 1996.
- (b) **Additions and modifications to standards—**
  - (1) **In general—** Except as provided in [paragraph (2)](#b-2), the [Secretary](/usc/42/1301.md?p=a-6) shall review the [standards](/usc/42/1320d.md?p=7) adopted under [section 1320d–2 of this title](/usc/42/1320d–2.md), and shall adopt [modifications](/usc/42/7501.md?p=4) to the [standards](/usc/42/1320d.md?p=7) ([including](/usc/42/1301.md?p=b) additions to the [standards](/usc/42/1320d.md?p=7)), as determined appropriate, but not more frequently than once every 12 months. Any addition or [modification](/usc/42/7501.md?p=4) to a [standard](/usc/42/1320d.md?p=7) shall be completed in a manner which minimizes the disruption and cost of compliance.
  - (2) **Special rules—**
    - (A) **First 12-month period—** Except with respect to additions and [modifications](/usc/42/7501.md?p=4) to [code sets](/usc/42/1320d.md?p=1) under [subparagraph (B)](#b-2-B), the [Secretary](/usc/42/1301.md?p=a-6) may not adopt any [modification](/usc/42/7501.md?p=4) to a [standard](/usc/42/1320d.md?p=7) adopted under this part during the 12-month period beginning on the date the [standard](/usc/42/1320d.md?p=7) is initially adopted, unless the [Secretary](/usc/42/1301.md?p=a-6) determines that the [modification](/usc/42/7501.md?p=4) is necessary in order to permit compliance with the [standard](/usc/42/1320d.md?p=7).
    - (B) **Additions and modifications to code sets—**
      - (i) **In general—** The [Secretary](/usc/42/1301.md?p=a-6) shall ensure that procedures exist for the routine maintenance, testing, enhancement, and expansion of [code sets](/usc/42/1320d.md?p=1).
      - (ii) **Additional rules—** If a [code set](/usc/42/1320d.md?p=1) is [modified](/usc/42/7501.md?p=4) under this subsection, the modified [code set](/usc/42/1320d.md?p=1) shall include instructions on how data elements of [health information](/usc/42/1320d.md?p=4) that were encoded prior to the [modification](/usc/42/7501.md?p=4) may be converted or translated so as to preserve the informational value of the data elements that existed before the [modification](/usc/42/7501.md?p=4). Any [modification](/usc/42/7501.md?p=4) to a [code set](/usc/42/1320d.md?p=1) under this subsection shall be implemented in a manner that minimizes the disruption and cost of complying with such [modification](/usc/42/7501.md?p=4).

# §1320d–4. Requirements

- (a) **Conduct of transactions by plans—**
  - (1) **In general—** If a [person](/usc/42/1301.md?p=a-3) desires to conduct a transaction referred to in [section 1320d–2(a)(1) of this title](/usc/42/1320d–2.md?p=a-1) with a [health plan](/usc/42/300jj.md?p=6) as a [standard](/usc/42/1320d.md?p=7) transaction—
    - (A) the [health plan](/usc/42/300jj.md?p=6) may not refuse to conduct such transaction as a [standard](/usc/42/1320d.md?p=7) transaction;
    - (B) the insurance plan may not delay such transaction, or otherwise adversely affect, or attempt to adversely affect, the [person](/usc/42/1301.md?p=a-3) or the transaction on the ground that the transaction is a [standard](/usc/42/1320d.md?p=7) transaction; and
    - (C) the information transmitted and received in connection with the transaction shall be in the form of [standard](/usc/42/1320d.md?p=7) data elements of [health information](/usc/42/1320d.md?p=4).
  - (2) **Satisfaction of requirements—** A [health plan](/usc/42/300jj.md?p=6) may satisfy the requirements under [paragraph (1)](#a-1) by—
    - (A) directly transmitting and receiving [standard](/usc/42/1320d.md?p=7) data elements of [health information](/usc/42/1320d.md?p=4); or
    - (B) submitting nonstandard data elements to a [health care clearinghouse](/usc/42/1320d.md?p=2) for processing into [standard](/usc/42/1320d.md?p=7) data elements and transmission by the [health care clearinghouse](/usc/42/1320d.md?p=2), and receiving [standard](/usc/42/1320d.md?p=7) data elements through the [health care clearinghouse](/usc/42/1320d.md?p=2).
  - (3) **Timetable for compliance—** [Paragraph (1)](#a-1) shall not be construed to require a [health plan](/usc/42/300jj.md?p=6) to comply with any [standard](/usc/42/1320d.md?p=7), implementation specification, or [modification](/usc/42/7501.md?p=4) to a [standard](/usc/42/1320d.md?p=7) or specification adopted or established by the [Secretary](/usc/42/1301.md?p=a-6) under [sections 1320d–1 through 1320d–3](/usc/42/1320d–1..1320d–3.md) of this title at any time prior to the date on which the plan is required to comply with the [standard](/usc/42/1320d.md?p=7) or specification under [subsection (b)](#b).
- (b) **Compliance with standards—**
  - (1) **Initial compliance—**
    - (A) **In general—** Not later than 24 months after the date on which an initial [standard](/usc/42/1320d.md?p=7) or implementation specification is adopted or established under sections [1320d–1](/usc/42/1320d–1.md) and [1320d–2](/usc/42/1320d–2.md) of this title, each [person](/usc/42/1301.md?p=a-3) to whom the [standard](/usc/42/1320d.md?p=7) or implementation specification applies shall comply with the [standard](/usc/42/1320d.md?p=7) or specification.
    - (B) **Special rule for small health plans—** In the case of a small [health plan](/usc/42/300jj.md?p=6), [paragraph (1)](#b-1) shall be applied by substituting “36 months” for “24 months”. For purposes of this subsection, the [Secretary](/usc/42/1301.md?p=a-6) shall determine the plans that qualify as small [health plans](/usc/42/300jj.md?p=6).
  - (2) **Compliance with modified standards—** If the [Secretary](/usc/42/1301.md?p=a-6) adopts a [modification](/usc/42/7501.md?p=4) to a [standard](/usc/42/1320d.md?p=7) or implementation specification under this part, each [person](/usc/42/1301.md?p=a-3) to whom the [standard](/usc/42/1320d.md?p=7) or implementation specification applies shall comply with the [modified](/usc/42/7501.md?p=4) [standard](/usc/42/1320d.md?p=7) or implementation specification at such time as the [Secretary](/usc/42/1301.md?p=a-6) determines appropriate, taking into account the time needed to comply due to the nature and extent of the [modification](/usc/42/7501.md?p=4). The time determined appropriate under the preceding sentence may not be earlier than the last day of the 180-day period beginning on the date such [modification](/usc/42/7501.md?p=4) is adopted. The [Secretary](/usc/42/1301.md?p=a-6) may extend the time for compliance for small [health plans](/usc/42/300jj.md?p=6), if the [Secretary](/usc/42/1301.md?p=a-6) determines that such extension is appropriate.
  - (3) **Construction—** Nothing in this subsection shall be construed to prohibit any [person](/usc/42/1301.md?p=a-3) from complying with a [standard](/usc/42/1320d.md?p=7) or specification by—
    - (A) submitting nonstandard data elements to a [health care clearinghouse](/usc/42/1320d.md?p=2) for processing into [standard](/usc/42/1320d.md?p=7) data elements and transmission by the [health care clearinghouse](/usc/42/1320d.md?p=2); or
    - (B) receiving [standard](/usc/42/1320d.md?p=7) data elements through a [health care clearinghouse](/usc/42/1320d.md?p=2).

# §1320d–5. General penalty for failure to comply with requirements and standards

- (a) **General penalty—**
  - (1) **In general—** Except as provided in [subsection (b)](#b), the [Secretary](/usc/42/1301.md?p=a-6) shall impose on any [person](/usc/42/1301.md?p=a-3) who violates a provision of this part—
    - (A) in the case of a [violation](/usc/42/2000e–16a.md?p=c) of such provision in which it is established that the [person](/usc/42/1301.md?p=a-3) did not know (and by exercising reasonable diligence would not have known) that such [person](/usc/42/1301.md?p=a-3) violated such provision, a penalty for each such [violation](/usc/42/2000e–16a.md?p=c) of an amount that is at least the amount described in [paragraph (3)(A)](#a-3-A) but not to exceed the amount described in [paragraph (3)(D)](#a-3-D);
    - (B) in the case of a [violation](/usc/42/2000e–16a.md?p=c) of such provision in which it is established that the [violation](/usc/42/2000e–16a.md?p=c) was due to reasonable [cause](/usc/42/9908.md?p=c-2) and not to willful [neglect](/usc/42/1397j.md?p=16), a penalty for each such [violation](/usc/42/2000e–16a.md?p=c) of an amount that is at least the amount described in [paragraph (3)(B)](#a-3-B) but not to exceed the amount described in [paragraph (3)(D)](#a-3-D); and
    - (C) in the case of a [violation](/usc/42/2000e–16a.md?p=c) of such provision in which it is established that the [violation](/usc/42/2000e–16a.md?p=c) was due to willful [neglect](/usc/42/1397j.md?p=16)—
      - (i) if the [violation](/usc/42/2000e–16a.md?p=c) is corrected as described in subsection (b)(3)(A),[^1] a penalty in an amount that is at least the amount described in [paragraph (3)(C)](#a-3-C) but not to exceed the amount described in [paragraph (3)(D)](#a-3-D); and
      - (ii) if the [violation](/usc/42/2000e–16a.md?p=c) is not corrected as described in such subsection, a penalty in an amount that is at least the amount described in [paragraph (3)(D)](#a-3-D).

      In determining the amount of a penalty under this section for a [violation](/usc/42/2000e–16a.md?p=c), the [Secretary](/usc/42/1301.md?p=a-6) shall base such determination on the nature and extent of the [violation](/usc/42/2000e–16a.md?p=c) and the nature and extent of the harm resulting from such [violation](/usc/42/2000e–16a.md?p=c).

  - (2) **Procedures—** The provisions of [section 1320a–7a of this title](/usc/42/1320a–7a.md) (other than subsections [(a)](#a) and [(b)](#b) and the second sentence of subsection (f)) shall apply to the imposition of a civil money penalty under this subsection in the same manner as such provisions apply to the imposition of a penalty under such [section 1320a–7a of this title](/usc/42/1320a–7a.md).
  - (3) **Tiers of penalties described—** For purposes of [paragraph (1)](#a-1), with respect to a [violation](/usc/42/2000e–16a.md?p=c) by a [person](/usc/42/1301.md?p=a-3) of a provision of this part—
    - (A) the amount described in this subparagraph is $100 for each such [violation](/usc/42/2000e–16a.md?p=c), except that the total amount imposed on the [person](/usc/42/1301.md?p=a-3) for all such [violations](/usc/42/2000e–16a.md?p=c) of an identical requirement or prohibition during a calendar year may not exceed $25,000;
    - (B) the amount described in this subparagraph is $1,000 for each such [violation](/usc/42/2000e–16a.md?p=c), except that the total amount imposed on the [person](/usc/42/1301.md?p=a-3) for all such [violations](/usc/42/2000e–16a.md?p=c) of an identical requirement or prohibition during a calendar year may not exceed $100,000;
    - (C) the amount described in this subparagraph is $10,000 for each such [violation](/usc/42/2000e–16a.md?p=c), except that the total amount imposed on the [person](/usc/42/1301.md?p=a-3) for all such [violations](/usc/42/2000e–16a.md?p=c) of an identical requirement or prohibition during a calendar year may not exceed $250,000; and
    - (D) the amount described in this subparagraph is $50,000 for each such [violation](/usc/42/2000e–16a.md?p=c), except that the total amount imposed on the [person](/usc/42/1301.md?p=a-3) for all such [violations](/usc/42/2000e–16a.md?p=c) of an identical requirement or prohibition during a calendar year may not exceed $1,500,000.
- (b) **Limitations—**
  - (1) **Offenses otherwise punishable—** No penalty may be imposed under [subsection (a)](#a) and no [damages](/usc/42/9601.md?p=6) obtained under [subsection (d)](#d) with respect to an act if a penalty has been imposed under [section 1320d–6 of this title](/usc/42/1320d–6.md) with respect to such act.
  - (2) **Failures due to reasonable cause—**
    - (A) **In general—** Except as provided in [subparagraph (B)](#b-2-B) or [subsection (a)(1)(C)](#a-1-C), no penalty may be imposed under [subsection (a)](#a) and no [damages](/usc/42/9601.md?p=6) obtained under [subsection (d)](#d) if the failure to comply is corrected during the 30-day period beginning on the first date the [person](/usc/42/1301.md?p=a-3) liable for the penalty or [damages](/usc/42/9601.md?p=6) knew, or by exercising reasonable diligence would have known, that the failure to comply occurred.
    - (B) **Extension of period—**
      - (i) **No penalty—** With respect to the imposition of a penalty by the [Secretary](/usc/42/1301.md?p=a-6) under [subsection (a)](#a), the period referred to in [subparagraph (A)](#b-2-A) may be extended as determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6) based on the nature and extent of the failure to comply.
      - (ii) **Assistance—** If the [Secretary](/usc/42/1301.md?p=a-6) determines that a [person](/usc/42/1301.md?p=a-3) failed to comply because the [person](/usc/42/1301.md?p=a-3) was unable to comply, the [Secretary](/usc/42/1301.md?p=a-6) may provide technical assistance to the [person](/usc/42/1301.md?p=a-3) during the period described in [subparagraph (A)](#b-2-A). Such assistance shall be provided in any manner determined appropriate by the [Secretary](/usc/42/1301.md?p=a-6).
  - (3) **Reduction—** In the case of a failure to comply which is due to reasonable [cause](/usc/42/9908.md?p=c-2) and not to willful [neglect](/usc/42/1397j.md?p=16), any penalty under [subsection (a)](#a) and any [damages](/usc/42/9601.md?p=6) under [subsection (d)](#d) that is[^2] not entirely waived under [paragraph (3)](#b-3)[^3] may be waived to the extent that the payment of such penalty[^4] would be excessive relative to the compliance failure involved.
- (c) **Noncompliance due to willful neglect—**
  - (1) **In general—** A [violation](/usc/42/2000e–16a.md?p=c) of a provision of this part due to willful [neglect](/usc/42/1397j.md?p=16) is a [violation](/usc/42/2000e–16a.md?p=c) for which the [Secretary](/usc/42/1301.md?p=a-6) is required to impose a penalty under [subsection (a)(1)](#a-1).
  - (2) **Required investigation—** For purposes of [paragraph (1)](#c-1), the [Secretary](/usc/42/1301.md?p=a-6) shall formally investigate any complaint of a [violation](/usc/42/2000e–16a.md?p=c) of a provision of this part if a preliminary investigation of the facts of the complaint indicate such a possible [violation](/usc/42/2000e–16a.md?p=c) due to willful [neglect](/usc/42/1397j.md?p=16).
- (d) **Enforcement by State attorneys general—**
  - (1) **Civil action—** Except as provided in [subsection (b)](#b), in any case in which the [attorney general](/usc/42/14902.md?p=6) of a [State](/usc/42/1301.md?p=a-1) has reason to believe that an interest of one or more of the residents of that [State](/usc/42/1301.md?p=a-1) has been or is threatened or adversely affected by any [person](/usc/42/1301.md?p=a-3) who violates a provision of this part, the [attorney general](/usc/42/14902.md?p=6) of the [State](/usc/42/1301.md?p=a-1), as parens patriae, may bring a civil action on behalf of such residents of the [State](/usc/42/1301.md?p=a-1) in a district court of the [United States](/usc/42/1301.md?p=a-2) of appropriate jurisdiction—
    - (A) to enjoin further such [violation](/usc/42/2000e–16a.md?p=c) by the defendant; or
    - (B) to obtain [damages](/usc/42/9601.md?p=6) on behalf of such residents of the [State](/usc/42/1301.md?p=a-1), in an amount equal to the amount determined under [paragraph (2)](#d-2).
  - (2) **Statutory damages—**
    - (A) **In general—** For purposes of [paragraph (1)(B)](#d-1-B), the amount determined under this paragraph is the amount calculated by multiplying the number of [violations](/usc/42/2000e–16a.md?p=c) by up to $100. For purposes of the preceding sentence, in the case of a continuing [violation](/usc/42/2000e–16a.md?p=c), the number of [violations](/usc/42/2000e–16a.md?p=c) shall be determined consistent with the [HIPAA privacy regulations](/usc/42/1320d–9.md?p=b-3) (as defined in [section 1320d–9(b)(3) of this title](/usc/42/1320d–9.md?p=b-3)) for [violations](/usc/42/2000e–16a.md?p=c) of [subsection (a)](#a).
    - (B) **Limitation—** The total amount of [damages](/usc/42/9601.md?p=6) imposed on the [person](/usc/42/1301.md?p=a-3) for all [violations](/usc/42/2000e–16a.md?p=c) of an identical requirement or prohibition during a calendar year may not exceed $25,000.
    - (C) **Reduction of damages—** In assessing [damages](/usc/42/9601.md?p=6) under [subparagraph (A)](#d-2-A), the court may consider the factors the [Secretary](/usc/42/1301.md?p=a-6) may consider in determining the amount of a civil money penalty under [subsection (a)](#a) under the [HIPAA privacy regulations](/usc/42/1320d–9.md?p=b-3).
  - (3) **Attorney fees—** In the case of any successful action under [paragraph (1)](#d-1), the court, in its discretion, may award the costs of the action and reasonable attorney fees to the [State](/usc/42/1301.md?p=a-1).
  - (4) **Notice to Secretary—** The [State](/usc/42/1301.md?p=a-1) shall serve prior written notice of any action under [paragraph (1)](#d-1) upon the [Secretary](/usc/42/1301.md?p=a-6) and provide the [Secretary](/usc/42/1301.md?p=a-6) with a copy of its complaint, except in any case in which such prior notice is not feasible, in which case the [State](/usc/42/1301.md?p=a-1) shall serve such notice immediately upon instituting such action. The [Secretary](/usc/42/1301.md?p=a-6) shall have the right—
    - (A) to intervene in the action;
    - (B) upon so intervening, to be heard on all matters arising therein; and
    - (C) to file petitions for appeal.
  - (5) **Construction—** For purposes of bringing any civil action under [paragraph (1)](#d-1), nothing in this section shall be construed to prevent an [attorney general](/usc/42/14902.md?p=6) of a [State](/usc/42/1301.md?p=a-1) from exercising the powers conferred on the [attorney general](/usc/42/14902.md?p=6) by the laws of that [State](/usc/42/1301.md?p=a-1).
  - (6) **Venue; service of process—**
    - (A) **Venue—** Any action brought under [paragraph (1)](#d-1) may be brought in the district court of the [United States](/usc/42/1301.md?p=a-2) that meets applicable requirements relating to venue under [section 1391 of title 28](/usc/28/1391.md).
    - (B) **Service of process—** In an action brought under [paragraph (1)](#d-1), process may be served in any district in which the defendant—
      - (i) is an inhabitant; or
      - (ii) maintains a physical place of business.
  - (7) **Limitation on State action while Federal action is pending—** If the [Secretary](/usc/42/1301.md?p=a-6) has instituted an action against a [person](/usc/42/1301.md?p=a-3) under [subsection (a)](#a) with respect to a specific [violation](/usc/42/2000e–16a.md?p=c) of this part, no [State](/usc/42/1301.md?p=a-1) [attorney general](/usc/42/14902.md?p=6) may bring an action under this subsection against the [person](/usc/42/1301.md?p=a-3) with respect to such [violation](/usc/42/2000e–16a.md?p=c) during the pendency of that action.
  - (8) **Application of CMP statute of limitation—** A civil action may not be instituted with respect to a [violation](/usc/42/2000e–16a.md?p=c) of this part unless an action to impose a civil money penalty may be instituted under [subsection (a)](#a) with respect to such [violation](/usc/42/2000e–16a.md?p=c) consistent with the second sentence of [section 1320a–7a(c)(1) of this title](/usc/42/1320a–7a.md?p=c-1).
- (e) **Allowing continued use of corrective action—** Nothing in this section shall be construed as preventing the [Office](/usc/42/3058f.md?p=1) for Civil Rights of the Department of Health and Human Services from continuing, in its discretion, to use corrective action without a penalty in cases where the [person](/usc/42/1301.md?p=a-3) did not know (and by exercising reasonable diligence would not have known) of the [violation](/usc/42/2000e–16a.md?p=c) involved.

# §1320d–6. Wrongful disclosure of individually identifiable health information

- (a) **Offense—** A [person](/usc/42/1301.md?p=a-3) who knowingly and in [violation](/usc/42/2000e–16a.md?p=c) of this part—
  - (1) uses or [causes](/usc/42/9908.md?p=c-2) to be used a unique health identifier;
  - (2) obtains [individually identifiable health information](/usc/42/1320d.md?p=6) relating to an individual; or
  - (3) discloses [individually identifiable health information](/usc/42/1320d.md?p=6) to another [person](/usc/42/1301.md?p=a-3),

  shall be punished as provided in [subsection (b)](#b). For purposes of the previous sentence, a [person](/usc/42/1301.md?p=a-3) ([including](/usc/42/1301.md?p=b) an [employee](/usc/42/1320a–7h.md?p=e-7) or other individual) shall be considered to have obtained or disclosed [individually identifiable health information](/usc/42/1320d.md?p=6) in [violation](/usc/42/2000e–16a.md?p=c) of this part if the information is maintained by a covered entity (as defined in the [HIPAA privacy regulation](/usc/42/1320d–9.md?p=b-3) described in [section 1320d–9(b)(3) of this title](/usc/42/1320d–9.md?p=b-3)) and the individual obtained or disclosed such information without [authorization](/usc/42/4370m.md?p=3).

- (b) **Penalties—** A [person](/usc/42/1301.md?p=a-3) described in [subsection (a)](#a) shall—
  - (1) be fined not more than $50,000, imprisoned not more than 1 year, or both;
  - (2) if the offense is committed under false pretenses, be fined not more than $100,000, imprisoned not more than 5 years, or both; and
  - (3) if the offense is committed with intent to sell, transfer, or use [individually identifiable health information](/usc/42/1320d.md?p=6) for commercial advantage, personal gain, or malicious harm, be fined not more than $250,000, imprisoned not more than 10 years, or both.

# §1320d–7. Effect on State law

- (a) **General effect—**
  - (1) **General rule—** Except as provided in [paragraph (2)](#a-2), a provision or requirement under this part, or a [standard](/usc/42/1320d.md?p=7) or implementation specification adopted or established under [sections 1320d–1 through 1320d–3](/usc/42/1320d–1..1320d–3.md) of this title, shall supersede any contrary provision of [State](/usc/42/1301.md?p=a-1) law, [including](/usc/42/1301.md?p=b) a provision of [State](/usc/42/1301.md?p=a-1) law that requires medical or [health plan](/usc/42/300jj.md?p=6) records ([including](/usc/42/1301.md?p=b) billing information) to be maintained or transmitted in written rather than electronic form.
  - (2) **Exceptions—** A provision or requirement under this part, or a [standard](/usc/42/1320d.md?p=7) or implementation specification adopted or established under [sections 1320d–1 through 1320d–3](/usc/42/1320d–1..1320d–3.md) of this title, shall not supersede a contrary provision of [State](/usc/42/1301.md?p=a-1) law, if the provision of [State](/usc/42/1301.md?p=a-1) law—
    - (A) is a provision the [Secretary](/usc/42/1301.md?p=a-6) determines—
      - (i) is necessary—
        - (I) to prevent fraud and [abuse](/usc/42/1397j.md?p=1);
        - (II) to ensure appropriate [State](/usc/42/1301.md?p=a-1) regulation of insurance and [health plans](/usc/42/300jj.md?p=6);
        - (III) for [State](/usc/42/1301.md?p=a-1) reporting on health care delivery or costs; or
        - (IV) for other purposes; or
      - (ii) addresses [controlled substances](/usc/42/11851.md?p=2); or
    - (B) subject to [section 264(c)(2)](/usc/42/264.md) of the Health Insurance Portability and Accountability Act of 1996, relates to the privacy of [individually identifiable health information](/usc/42/1320d.md?p=6).
- (b) **Public health—** Nothing in this part shall be construed to invalidate or limit the authority, power, or procedures established under any law providing for the reporting of disease or injury, [child](/usc/42/416.md?p=e) [abuse](/usc/42/1397j.md?p=1), birth, or death, public health surveillance, or public health investigation or [intervention](/usc/42/1397n–12.md?p=2).
- (c) **State regulatory reporting—** Nothing in this part shall limit the ability of a [State](/usc/42/1301.md?p=a-1) to require a [health plan](/usc/42/300jj.md?p=6) to report, or to provide access to, information for management audits, financial audits, [program](/usc/42/274l–1.md?p=4) monitoring and evaluation, [facility](/usc/42/11049.md?p=4) licensure or certification, or individual licensure or certification.

# §1320d–8. Processing payment transactions by financial institutions


To the extent that an entity is engaged in activities of a [financial institution](/usc/42/666.md?p=a-17-D-i) (as defined in [section 3401 of title 12](/usc/12/3401.md)), or is engaged in authorizing, processing, clearing, settling, billing, transferring, reconciling, or collecting payments, for a [financial institution](/usc/42/666.md?p=a-17-D-i), this part, and any [standard](/usc/42/1320d.md?p=7) adopted under this part, shall not apply to the entity with respect to such activities, [including](/usc/42/1301.md?p=b) the following:

- (1) The use or disclosure of information by the entity for authorizing, processing, clearing, settling, billing, transferring, reconciling or collecting, a payment for, or related to, [health plan](/usc/42/300jj.md?p=6) premiums or health care, where such payment is made by any means, [including](/usc/42/1301.md?p=b) a credit, debit, or other payment card, an account, check, or electronic [funds](/usc/42/12854.md?p=3) transfer.
- (2) The request for, or the use or disclosure of, information by the entity with respect to a payment described in [paragraph (1)](#1)—
  - (A) for transferring receivables;
  - (B) for auditing;
  - (C) in connection with—
    - (i) a [customer](/usc/42/7275.md?p=5) dispute; or
    - (ii) an inquiry from, or to, a [customer](/usc/42/7275.md?p=5);
  - (D) in a communication to a [customer](/usc/42/7275.md?p=5) of the entity regarding the [customer](/usc/42/7275.md?p=5)’s transactions, payment card, account, check, or electronic [funds](/usc/42/12854.md?p=3) transfer;
  - (E) for reporting to consumer reporting [agencies](/usc/42/1397n–12.md?p=1); or
  - (F) for complying with—
    - (i) a civil or criminal subpoena; or
    - (ii) a Federal or [State](/usc/42/1301.md?p=a-1) law regulating the entity.