Section 1178(a)(1) provides the following “general rule” for the preemption of State law:
Except as provided in paragraph (2), a provision or requirement under this part [part C of title XI], or a standard or implementation specification adopted or established under sections 1172 through 1174, shall supersede any contrary provision of State law, including a provision of State law that requires medical or health plan records (including billing information) to be maintained or transmitted in written rather than electronic form.
As we read this provision, the provisions and requirements of part C of title XI, along with the standards and implementation specifications adopted thereunder, do not supplant State law, except to the extent such State law is “contrary” to the federal statutory or regulatory scheme. Moreover, the provisions and requirements of part C of title XI, along with the standards and implementation specifications adopted thereunder, do not preempt contrary State law where one of the exceptions provided for by section 1178(a)(2) applies or the law in question lies within the scope of the carve-outs made by sections 1178(b) and (c). Thus, States may continue to regulate in the area covered by part C of title XI and the regulations and implementation specifications adopted or established thereunder, except to the extent States adopt laws that are contrary to the federal statutory and regulatory scheme, and even those contrary State laws may continue to be enforceable, if they come within the statutory exceptions or carve-outs.
We note, however, that many of the Administrative Simplifications regulations will have preemptive effect. The structure of many of the regulations, particularly those addressing the various administrative transactions, is to prescribe the use of a particular form or format for the transaction in question. Where the prescribed form or format is used, covered entities are required to accept the transaction. A State may well not be able to require additional requirements for such transactions consistent with the federally prescribed form or format.