I 

111TH CONGRESS 

1ST SESSION H. R. 3664 

To direct the Secretary of Health and Human Services to establish a 

Healthcare Innovation Zone pilot program. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 29, 2009 

Ms. SCHWARTZ introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on 

Ways and Means, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To direct the Secretary of Health and Human Services to 

establish a Healthcare Innovation Zone pilot program. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Healthcare Innovation 

5 Zone Pilot Act of 2009’’. 

6 SEC. 2. HEALTHCARE INNOVATION ZONE PILOT PROGRAM. 

7 (a) ESTABLISHMENT.—The Secretary of Health and 

8 Human Services shall establish a Healthcare Innovation 

9 Zone pilot program to increase health care provider inteVerDate Nov 24 2008 05:21 Sep 30, 2009 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3664.IH H3664

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1 gration and align health care provider incentives to reduce 

2 the rate of growth of health care costs while improving 

3 quality of care for Medicare, Medicaid, and privately in4 sured patients. The HIZ program, by including teaching 

5 hospitals, shall provide for the incorporation of new and 

6 innovative clinical initiatives for the training of the next 

7 generation of physicians, nurses, and other health profes8 sionals in a new model of cost-effective, high-quality health 

9 care. 

10 (b) FEATURES OF PROGRAM.—The HIZ pilot pro11 gram established under subsection (a) shall consist of— 

12 (1) an HIZ planning grant program, as de13 scribed in section 3; and 

14 (2) an HIZ pilot project, as described in section 

15 4. 

16 SEC. 3. HIZ PLANNING GRANT PROGRAM. 

17 (a) ESTABLISHMENT.—Within 6 months after the 

18 date of the enactment of this Act, the Secretary shall 

19 begin accepting applications for HIZ planning grants. The 

20 Secretary will make grants to successful applicants for the 

21 purposes of researching and preparing an HIZ design 

22 plan, in accordance with subsection (d). 

23 (b) ELIGIBILITY REQUIREMENTS.—An applicant for 

24 a grant under this section shall be a group of clinical or 

25 other entities that provides a full spectrum of health care, 


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1 including inpatient, outpatient, post-acute, and preventive 

2 care, to Medicare beneficiaries, Medicaid enrollees, and 

3 other individuals enrolled in private insurance plans. Such 

4 applicants must include a teaching hospital, and may in5 clude— 

6 (1) other clinical entities, including community 

7 hospitals and health centers or physician group prac8 tices; 

9 (2) schools of medicine or other health profes10 sions; and 

11 (3) other nonclinical entities, including commu12 nity organizations. 

13 (c) APPLICATION.—An application for a grant under 

14 this section shall include— 

15 (1) a description of the geographic region to be 

16 included in the HIZ established under section 4, in17 cluding population and health care provider demo18 graphics, as well as an estimate of the number of 

19 people that could be cared for in the HIZ; 

20 (2) a demonstration that the grant applicant 

21 has the expertise to engage community and clinical 

22 care leaders in developing a design plan for the HIZ 

23 that will meet the requirements listed in subsection 

24 (e); and 


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1 (3) a proposed budget setting forth the costs to 

2 be incurred in creating the HIZ design plan. 

3 (d) CRITERIA FOR AWARDING GRANTS.—The Sec4 retary shall give preference to grant applications in which 

5 the potential HIZ would care for large and diverse popu6 lations and that also demonstrate the commitment of clin7 ical and community partners to participate in the planning 

8 process for creating and submitting the HIZ design plan 

9 as set forth in subsection (e). 

10 (e) HIZ DESIGN PLAN REQUIREMENTS.—A recipient 

11 of a grant under this section must submit to the Secretary, 

12 within 1 year after receiving such grant funds, an HIZ 

13 design plan describing the HIZ to be created in the pilot 

14 program under section 4. Such HIZ design plan must con15 tain— 

16 (1) an estimate of the number of people to 

17 whom health care will be delivered by the providers 

18 in the HIZ using the models of care described in 

19 such plan; 

20 (2) a description of the legal and management 

21 structure of the HIZ Coordinating Entity under 

22 which the full spectrum of care would be provided 

23 through the HIZ, and that will receive and admin24 ister payments received under the pilot program; 


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1 (3) a description of how the full spectrum of 

2 care will be provided and by whom; 

3 (4) a description, including supporting financial 

4 documentation, of how the HIZ will reduce the rate 

5 of increase in Medicare and other health care spend6 ing including the level of the reduction and over 

7 what time frame such reduction will be achieved; 

8 (5) a description of how physician, hospital, and 

9 other providers will be integrated and aligned, and 

10 how health care delivery processes will be changed to 

11 reduce the rate of growth of health care costs while 

12 improving quality of care for Medicare, Medicaid, 

13 and privately insured patients; 

14 (6) a description of the target population to be 

15 served by the HIZ; 

16 (7) a list and description of quality metrics that 

17 will be used to measure quality improvement, includ18 ing both quality of care and community health sta19 tus; and cost indicators that best would track cost 

20 containment over time; 

21 (8) a description of how the HIZ will incor22 porate the training of the next generation of physi23 cians, nurses, and other health professionals in a 

24 new model of cost-effective, high-quality health care; 


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1 (9) a proposal to address non-financial barriers 

2 to the provision of the full spectrum of care, includ3 ing physician self-referral laws, anti-trust consider4 ations, State laws, and accreditation or certification 

5 requirements; 

6 (10) a description of the infrastructure and 

7 mechanisms to be used to collect, analyze, and ap8 propriately share data among clinical partners; 

9 (11) a description of the methods to be used to 

10 monitor and track health costs and utilization; 

11 (12) a description of a strategy to improve pre12 vention and public health and the health status of 

13 the community; 

14 (13) a description of mechanisms to achieve in15 volvement by the community and external experts as 

16 ongoing partners in and monitors of the HIZ; 

17 (14) a description of payment methodology op18 tions that address both funding level and mecha19 nisms to distribute funds to HIZ providers; and 

20 (15) a description of the start-up and other ad21 ditional costs that would be required to establish and 

22 operate the HIZ. 

23 (f) NUMBER AND AMOUNT OF PLANNING GRANTS.— 

24 The Secretary shall award no more than 25 grants under 


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1 this section in an amount of at least $250,000 and not 

2 more than $1,000,000 per grant. 

3 (g) AUTHORIZATION OF APPROPRIATIONS.—There 

4 are authorized to be appropriated to carry out this section 

5 $25,000,000 for the first fiscal year beginning after the 

6 date of enactment of this section and such sums as may 

7 be necessary for subsequent fiscal years. 

8 SEC. 4. HEALTHCARE INNOVATION ZONE PILOT PROJECT. 

9 (a) ESTABLISHMENT.—The Secretary shall establish 

10 an HIZ pilot project to test the effectiveness of HIZs in 

11 reducing the rate of growth of health care costs while im12 proving quality of care for Medicare, Medicaid, and pri13 vately insured patients. 

14 (b) DURATION.—The pilot project shall operate for 

15 a period of at least 3 years and shall be subject to renewal 

16 at the Secretary’s discretion. 

17 (c) APPLICATION.—A person who is eligible under 

18 section 3(b) may submit an application for participation 

19 in the HIZ pilot project to the Secretary at such time and 

20 manner, and containing the information described in sec21 tions 3(e) and section 4(d) and any such additional infor22 mation, as the Secretary may require. 

23 (d) REQUIREMENTS.—In addition to the require24 ments established by the Secretary under subsection (c), 


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1 to be eligible to participate in the HIZ pilot project under 

2 this section, the HIZ providers shall— 

3 (1) provide comprehensive health care services, 

4 as defined by the Secretary, to at least 50 percent 

5 of the population within the HIZ; 

6 (2) maintain or improve the quality of health 

7 care services provided under the HIZ, according to 

8 metrics approved by the Secretary, and submit the 

9 information necessary to the Secretary so that the 

10 Secretary may determine whether such maintenance 

11 or improvement has occurred; and 

12 (3) collect and submit information on changes 

13 that are being made to clinical education processes 

14 to reflect changes made in the delivery of health 

15 care. 

16 (e) PAYMENT.—The Secretary shall distribute pay17 ments to the HIZ Coordinating Entity so that the aggre18 gate level of payment for all Medicare beneficiaries partici19 pating in the HIZ pilot project will be equal to a base 

20 level of Medicare payments, as defined by the Secretary, 

21 increased by a rate of growth that is 1.5 percentage points 

22 less than the projected rate of growth for the HIZ. The 

23 Secretary may modify the 1.5 percentage point reduction 

24 if the estimated growth rate is lower than the national 

25 average. The types of payments subject of this arrangeVerDate Nov 24 2008 05:21 Sep 30, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3664.IH H3664

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1 ment and additional payment mechanisms shall be at the 

2 discretion of the Secretary and each HIZ based on the 

3 methodology options submitted by the grant recipient, as 

4 set forth under section 3(e)(14). 

5 (f) WAIVER OF RIGHTS TO PAYMENT UNDER PUBLIC

6 PROGRAMS.—A health care provider receiving payments 

7 for patients under this section shall waive any right to ad8 ditional reimbursement under title XVIII of the Social Se9 curity Act (42 U.S.C. 1395 et seq.) beyond those estab10 lished under subsection (e) for those services provided to 

11 Medicare beneficiaries participating in the HIZ pilot. 

12 (g) WAIVERS.—The Secretary may waive any re13 quirements under titles XI, XVIII, and XIX of the Social 

14 Security Act (42 U.S.C. 1301 et seq.; 42 U.S.C. 1395 et 

15 seq.; and 42 U.S.C. 1396 et seq.), including the 

16 antikickback and civil monetary penalty statutes, and with 

17 regard to title XIX, statewideness, comparability, and 

18 managed care requirements, as necessary to carry out the 

19 pilot program established under this section. In the inter20 est of facilitating the development of HIZ pilot projects, 

21 the Secretary shall release a streamlined Medicare or Med22 icaid waiver application form. Use of such form is vol23 untary. Nothing contained in the antitrust laws shall be 

24 construed to prohibit persons providing health care serv25 ices as part of a pilot project authorized under this section 


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1 from lawfully carrying out the legitimate object thereof, 

2 nor shall such persons be held or construed to be illegal 

3 combinations or conspiracies in restraint of trade under 

4 the antitrust laws, if acting in accordance with the busi5 ness model approved by the Secretary under this section. 

6 (h) REPORTS.— 

7 (1) HIZ REPORT.—A person that establishes an 

8 HIZ pilot project under this section shall submit, 2 

9 years after the beginning of such project to the Sec10 retary a report that describes and evaluates the ac11 tivities of the HIZ. 

12 (2) SECRETARY REPORT.—The Secretary shall 

13 submit to Congress an evaluation of the current sta14 tus of the pilot within 6 months after the end of the 

15 first year of the pilot and every year thereafter until 

16 the end of pilot. 

17 SEC. 5. DEFINITIONS. 

18 In this Act: 

19 (1) PLANNING GRANT PROGRAM.—The term 

20 ‘‘planning grant program’’ means the HIZ planning 

21 grant program as described in section 3. 

22 (2) HIZ.—Each of the terms ‘‘HIZ’’ and 

23 ‘‘Healthcare Innovation Zone’’ mean a geographic 

24 region that contains— 


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1 (A) clinical and other entities that provide 

2 a full spectrum of health care, including inpa3 tient, outpatient, post-acute, and preventive 

4 care, to Medicare beneficiaries, Medicaid enroll5 ees, and other individuals enrolled in private in6 surance plans; and 

7 (B) a teaching hospital that has the capac8 ity to conduct health services research and pro9 vides clinical training for health professionals. 

10 (3) HIZ COORDINATING ENTITY.—The term 

11 ‘‘HIZ Coordinating Entity’’ means a legal and man12 agement structure that is responsible for overseeing 

13 the delivery of the full spectrum of care in the HIZ, 

14 and that will receive and administer payments re15 ceived under the pilot program. 

16 (4) SECRETARY.—The term ‘‘Secretary’’ means 

17 the Secretary of Health and Human Services. 

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