I 

113TH CONGRESS 

2D SESSION H. R. 5823 

To amend title XVIII of the Social Security Act to create incentives for 

healthcare providers to promote quality healthcare outcomes, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 9, 2014 

Mr. MATHESON 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 amend title XVIII of the Social Security Act to create 

incentives for healthcare providers to promote quality 

healthcare outcomes, and for other purposes. 

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; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Incentivizing Healthcare Quality Outcomes Act of 

6 2014’’. 

7 (b) FINDINGS.—Congress makes the following find8 ings: 


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1 (1) Healthcare delivery organizations are faced 

2 with an unmanageable array of quality measures 

3 and methods of risk adjustment that are overly proc4 ess oriented, may not relate to health outcomes, and 

5 create a significant administrative burden. 

6 (2) Existing quality measures and methods of 

7 risk adjustment used to adjust Medicare payments 

8 should be replaced with a comprehensive and clini9 cally credible quality measurement system based on 

10 the rate of occurrence of potentially preventable out11 comes. 

12 (3) Payment adjustment for quality outcomes 

13 should be applied to all types of healthcare delivery 

14 organizations including hospitals, health systems, 

15 Medicare Advantage plans, health homes, and ac16 countable care organizations as well as healthcare 

17 professionals. 

18 SEC. 2. INCENTIVIZING HEALTHCARE QUALITY OUTCOMES. 

19 (a) IN GENERAL.—Title XVIII of the Social Security 

20 Act (42 U.S.C. 1395 et seq.) is amended by adding at 

21 the end the following new section: 

22 ‘‘INCENTIVIZING HEALTHCARE QUALITY OUTCOMES

23 ‘‘SEC. 1899B. (a) ADJUSTMENT OF PAYMENTS TO

24 HEALTH-CARE DELIVERY ORGANIZATION FOR POTEN25 TIALLY PREVENTABLE OUTCOMES.— 


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1 ‘‘(1) IN GENERAL.—In order to provide an in2 centive for each applicable healthcare delivery orga3 nization (as defined in subsection (k)) to reduce po4 tentially preventable outcomes, the amount of pay5 ments to the organization under this title for an ap6 plicable prospective period (as defined in such sub7 section) shall be the amount otherwise determined 

8 multiplied by the healthcare delivery organization9 specific adjustment factor determined under para10 graph (2) for such period. 

11 ‘‘(2) HEALTHCARE DELIVERY ORGANIZATION

12 SPECIFIC PAYMENT ADJUSTMENT FACTOR.— 

13 ‘‘(A) IN GENERAL.—For purposes of para14 graph (1), subject to subparagraph (B), the 

15 healthcare delivery organization-specific pay16 ment adjustment factor described in this para17 graph for an applicable healthcare delivery or18 ganization for an applicable prospective period 

19 is equal to 1 minus the ratio (expressed as a 

20 percentage), as determined by the Secretary, 

21 of— 

22 ‘‘(i) the composite aggregate pay23 ments for excess potentially preventable 

24 outcomes (described in subsection (c)(1)) 

25 for the organization and period; to 


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1 ‘‘(ii) the aggregate payments under 

2 this title to the organization for such pe3 riod. 

4 ‘‘(B) PHASE-IN OF HEALTHCARE DELIV5 ERY ORGANIZATION-SPECIFIC ADJUSTMENT

6 FACTOR.—In no case shall the healthcare deliv7 ery organization-specific payment adjustment 

8 factor under subparagraph (A) be— 

9 ‘‘(i) less than 97 percent or more than 

10 103 percent for fiscal year 2016; 

11 ‘‘(ii) be less than 94 percent or more 

12 than 106 percent for fiscal year 2017; or 

13 ‘‘(iii) be less than 90 percent or more 

14 than 110 percent for fiscal year 2018 and 

15 each subsequent fiscal year. 

16 ‘‘(b) ADJUSTMENT TO THE ANNUAL UPDATE FAC17 TOR FOR PAYMENTS TO HEALTHCARE PROFESSIONALS IN

18 A GEOGRAPHIC REGION FOR POTENTIALLY PREVENT19 ABLE OUTCOMES.— 

20 ‘‘(1) IN GENERAL.—In order to provide an in21 centive for healthcare professionals (that are not 

22 part of an applicable healthcare delivery organiza23 tion) in a geographic region to coordinate care and 

24 reduce potentially preventable outcomes, the annual 

25 update factor for traditional Medicare fee-for-service 


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1 payments to all such professionals in a geographic 

2 region established under paragraph (3) for an appli3 cable prospective period (beginning on or after Octo4 ber 1, 2015) shall be equal to the annual update fac5 tor that would otherwise apply multiplied by the geo6 graphic-specific potentially preventable outcomes ad7 justment factor (as described in paragraph (2)) for 

8 the geographic region and period. 

9 ‘‘(2) GEOGRAPHIC-SPECIFIC POTENTIALLY PRE10 VENTABLE OUTCOMES ADJUSTMENT FACTOR.— 

11 ‘‘(A) IN GENERAL.—For purposes of para12 graph (1), subject to subparagraph (B), the ge13 ographic-specific potentially preventable out14 comes adjustment factor described in this para15 graph for a geographic region for an applicable 

16 prospective period is equal to 1 minus the ratio 

17 (expressed as a percentage), as determined by 

18 the Secretary, of— 

19 ‘‘(i) the sum of the composite aggre20 gate payments for excess potentially pre21 ventable outcomes (described in subsection 

22 (c)(1)) for Medicare beneficiaries enrolled 

23 in traditional Medicare fee-for-service 

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1 graphic region for the applicable historical 

2 period; to 

3 ‘‘(ii) the aggregate payments for 

4 Medicare beneficiaries enrolled in tradi5 tional Medicare fee-for-service across all 

6 applicable healthcare delivery organizations 

7 physically located in the geographic region 

8 for such applicable historical period. 

9 ‘‘(B) PHASE-IN.—In no case shall the geo10 graphic-specific potentially preventable out11 comes adjustment factor for a geographic re12 gion under this paragraph— 

13 ‘‘(i) be less than 95 percent or more 

14 than 105 percent for fiscal year 2016; 

15 ‘‘(ii) be less than 90 percent or more 

16 than 110 percent for fiscal year 2017; or 

17 ‘‘(iii) be less than 80 percent or more 

18 than 120 percent for fiscal year 2018 and 

19 each subsequent fiscal year. 

20 ‘‘(3) GEOGRAPHIC REGION.— 

21 ‘‘(A) IN GENERAL.—For the purposes of 

22 this subsection and subject to subparagraph 

23 (B), the Secretary shall establish geographic re24 gions to which healthcare professionals shall be 

25 assigned. 


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1 ‘‘(B) RESTRICTIONS.— 

2 ‘‘(i) GEOGRAPHIC REGIONS.—To the 

3 extent practical, the Secretary shall define 

4 geographic regions based on core base sta5 tistical areas as defined by the Director of 

6 the Office of Management and Budget. 

7 ‘‘(ii) ASSIGNMENT OF HEALTHCARE

8 PROFESSIONALS TO GEOGRAPHIC RE9 GIONS.—The geographic region to which a 

10 healthcare professional is assigned shall be 

11 the geographic region in which a plurality 

12 of Medicare beneficiaries treated by such 

13 professional for the applicable historical 

14 period reside, as determined by the Sec15 retary. 

16 ‘‘(4) REPORT ON USING INDIVIDUAL

17 HEALTHCARE PROFESSIONAL PERFORMANCE.—No 

18 later than January 1, 2017, the Secretary shall sub19 mit to Congress a report proposing a method of 

20 combining the potentially preventable outcomes per21 formance of individual healthcare professionals with 

22 the geographic-specific potentially preventable out23 comes performance for a geographic region under 

24 paragraph (2) for the purpose of determining the 

25 potentially preventable outcomes adjustment factor 


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1 under paragraph (1) to the annual adjustment fac2 tor for payments to such individual healthcare pro3 fessionals. 

4 ‘‘(c) COMPOSITE AGGREGATE PAYMENTS FOR EX5 CESS POTENTIALLY PREVENTABLE OUTCOMES.— 

6 ‘‘(1) IN GENERAL.—The composite aggregate 

7 payments for excess potentially preventable outcomes 

8 for an applicable healthcare delivery organization or 

9 geographic region for an applicable historical period 

10 described in this paragraph is equal to the sum of 

11 the following for the healthcare delivery organization 

12 or geographic region and period: 

13 ‘‘(A) PREVENTABLE COMPLICATIONS.— 

14 The aggregate payments for excess inpatient 

15 potentially preventable complications (as de16 fined in subsection (e)(1)(B)). 

17 ‘‘(B) PREVENTABLE READMISSIONS.—The 

18 aggregate payments for excess potentially pre19 ventable readmissions (as defined in subsection 

20 (f)(1)(B)). 

21 ‘‘(C) PREVENTABLE ADMISSIONS.—The 

22 aggregate payments for excess potentially pre23 ventable admissions computed (as defined in 

24 subsection (g)(1)(B)). 


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1 ‘‘(D) PREVENTABLE EMERGENCY ROOM

2 VISITS.—The aggregate payments for excess po3 tentially preventable emergency room visits (as 

4 defined in subsection (h)(1)(B)). 

5 ‘‘(E) PREVENTABLE OUTPATIENT ANCIL6 LARY SERVICES.—The aggregate payments for 

7 excess potentially preventable outpatient ancil8 lary services (as defined in subsection 

9 (i)(1)(B)). 

10 ‘‘(2) OFFSETTING POTENTIALLY PREVENTABLE

11 OUTCOME VALUES BEING POSITIVE OR NEGATIVE.— 

12 The aggregate payments for individual excess poten13 tially preventable outcomes under subsections 

14 (e)(1)(B), (f)(1)(B), (g)(1)(B), (h)(1)(B), and 

15 (i)(1)(B) may have a positive value (indicating the 

16 healthcare delivery organization had more potentially 

17 preventable outcomes than expected) or a negative 

18 value (indicating the healthcare delivery organization 

19 had fewer potentially preventable outcomes than ex20 pected). The summing of the individual excess po21 tentially preventable outcomes in paragraph (1) for 

22 potentially preventable outcomes allows negative val23 ues for individual potentially preventable outcomes 

24 to offset in part or in whole positive values of other 

25 potentially preventable outcomes. 


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1 ‘‘(3) EXCLUSIONS.—The Secretary shall deter2 mine the applicability of each type of potentially pre3 ventable outcome to different types of healthcare de4 livery organizations and may exclude potentially pre5 ventable outcomes from the calculation of aggregate 

6 payments referred to in paragraph (1) for types of 

7 healthcare delivery organizations if the Secretary de8 termines that such outcomes are not applicable for 

9 such types of organizations. 

10 ‘‘(d) SUPERSEDING EXISTING PAYMENT ADJUST11 MENTS FOR QUALITY; BUDGET NEUTRAL ADJUST12 MENT.— 

13 ‘‘(1) IN GENERAL.—For applicable prospective 

14 periods beginning on or after October 1, 2015, no 

15 payment adjustment for quality performance shall be 

16 made pursuant any of the following provisions: 

17 ‘‘(A) Payment adjustments for hospital ac18 quired conditions under section 1886(d)(4)(D), 

19 as added by section 5001(c) of Deficit Reduc20 tion Act of 2005. 

21 ‘‘(B) Payment adjustments for value based 

22 purchasing for inpatient hospital services under 

23 section 1886(o) and for physicians’ services 

24 under section 1848(p). 


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1 ‘‘(C) Payment adjustments for hospital re2 admissions under section 1886(q), as added by 

3 section 3025 of the Patient Protection and Af4 fordable Care Act. 

5 ‘‘(D) Payment adjustments for hospital ac6 quired conditions under section 1886(p), as 

7 added by section 3008 of the Patient Protection 

8 and Affordable Care Act. 

9 ‘‘(E) Payment adjustments for Medicare 

10 Advantage Plans under Sections 1853(n) and 

11 1853(o). 

12 ‘‘(F) Other payment adjustments for qual13 ity as determined by the Secretary. 

14 ‘‘(2) PAYMENT ADJUSTMENTS FOR REPORTING

15 QUALITY INFORMATION UNCHANGED.—Payment ad16 justments for reporting quality information that are 

17 unrelated to actual quality performance under sec18 tions 1833(t)(17), 1848(a), 1848(k), 1848(m) and 

19 1833(i)(2)(D) shall not be affected by this sub20 section. 

21 ‘‘(3) MANDATED REDUCTIONS UNDER CURRENT

22 LAW.—The Secretary shall determine the annual re23 ductions in payment mandated by the provisions de24 scribed in paragraph (1) for fiscal year 2016 and for 

25 each subsequent fiscal year. 


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1 ‘‘(4) PAYMENT REDUCTION FACTOR TO

2 ACHIEVE BUDGET NEUTRALITY.—The Secretary 

3 shall determine a payment reduction factor for fiscal 

4 year 2016 and for each subsequent fiscal year, to be 

5 applied under subsections (e)(1)(A)(ii), (f)(1)(A)(ii), 

6 (g)(1)(A)(ii), (h)(1)(A)(ii), and (i)(1)(A)(ii), subject 

7 to the limitations in subsections (a)(2)(B) and 

8 (b)(2)(B), so that there is an aggregate payment re9 duction under this section for such fiscal year equiv10 alent to the aggregate reduction in payment deter11 mined under paragraph (3) for such fiscal year. 

12 ‘‘(e) AGGREGATE PAYMENTS FOR EXCESS INPA13 TIENT POTENTIALLY PREVENTABLE COMPLICATIONS.— 

14 ‘‘(1) EXCESS INPATIENT POTENTIALLY PRE15 VENTABLE COMPLICATIONS; AGGREGATE PAYMENTS

16 FOR EXCESS INPATIENT POTENTIALLY PREVENT17 ABLE COMPLICATIONS DEFINED.—In this section: 

18 ‘‘(A) EXCESS INPATIENT POTENTIALLY

19 PREVENTABLE COMPLICATIONS.— 

20 ‘‘(i) IN GENERAL.—The term ‘excess 

21 inpatient potentially preventable complica22 tions’ means, for an applicable hospital 

23 and other applicable healthcare delivery or24 ganizations determined appropriate by the 

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1 riod for each type of inpatient hospital po2 tentially preventable complication identified 

3 under paragraph (2), the sum across all 

4 risk classes (as defined in clause (iii)) of 

5 the difference between— 

6 ‘‘(I) the expected number of in7 patient hospital potentially prevent8 able complications for the type of 

9 complication for the applicable hos10 pital based on the standard complica11 tion rate computed under clause (ii) 

12 in each risk class; and 

13 ‘‘(II) the applicable hospital’s ac14 tual number of inpatient hospital po15 tentially preventable complications for 

16 the type of inpatient potentially pre17 ventable complication in each risk 

18 class in the applicable historical pe19 riod. 

20 Such difference may be a positive or nega21 tive number. 

22 ‘‘(ii) STANDARD COMPLICATION

23 RATE.—In carrying out clause (i)(I), the 

24 standard complication rate shall be based 

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1 tient hospital potentially preventable com2 plication in each risk class in the applica3 ble historical period, multiplied by the pay4 ment reduction factor established under 

5 subsection (d)(3) for the applicable pro6 spective period. 

7 ‘‘(iii) RISK CLASSES.—In this sub8 paragraph, the term ‘risk classes’ means 

9 such exhaustive and mutually exclusive 

10 risk classes as the Secretary shall establish 

11 in order to apply a risk-adjustment meth12 odology that meets the criteria in sub13 section (j)(2) and account for the age, rea14 son for admission, severity of illness, and 

15 other risk factors identified by the Sec16 retary of patients at the time of hospital 

17 admission. 

18 ‘‘(B) AGGREGATE PAYMENTS FOR EXCESS

19 INPATIENT HOSPITAL POTENTIALLY PREVENT20 ABLE COMPLICATIONS.— 

21 ‘‘(i) IN GENERAL.—The term ‘aggre22 gate payments for excess inpatient hospital 

23 potentially preventable complications’ 

24 means, for an applicable hospital and other 

25 applicable healthcare delivery organizations 


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1 determined appropriate by the Secretary 

2 and applicable historical period, for all 

3 types of inpatient hospital potentially pre4 ventable complications identified under 

5 paragraph (2), an amount equal to the 

6 sum of the amount determined under 

7 clause (ii) for such hospital and other ap8 plicable healthcare delivery organizations 

9 determined appropriate by the Secretary 

10 for each type of inpatient hospital poten11 tially preventable complication for such pe12 riod. 

13 ‘‘(ii) AMOUNT DETERMINED.—The 

14 amount determined under this clause, with 

15 respect to an applicable hospital and other 

16 applicable healthcare delivery organizations 

17 determined appropriate by the Secretary 

18 and an applicable historical period, for a 

19 type of inpatient hospital potentially pre20 ventable complication identified under 

21 paragraph (2) is equal to the product of— 

22 ‘‘(I) the excess inpatient hospital 

23 potentially preventable complications 

24 (as defined in subparagraph (A)) of 

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1 plicable healthcare delivery organiza2 tions determined appropriate by the 

3 Secretary for the type of inpatient 

4 hospital potentially preventable com5 plication during the applicable histor6 ical period; and 

7 ‘‘(II) the estimated national aver8 age standardized incremental cost of 

9 that inpatient hospital potentially pre10 ventable complication for applicable 

11 hospitals and other applicable 

12 healthcare delivery organizations de13 termined appropriate by the Secretary 

14 during the applicable historical period 

15 (as determined under clause (iii)) ad16 justed by each hospital’s applicable 

17 payment adjustment factors. 

18 ‘‘(iii) METHODOLOGY FOR ESTI19 MATING NATIONAL AVERAGE INCRE20 MENTAL COST OF INPATIENT HOSPITAL

21 POTENTIALLY PREVENTABLE COMPLICA22 TIONS.—In carrying out clause (ii)(II), the 

23 Secretary shall establish and apply a meth24 odology to estimate the national average 

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1 tient hospital potentially preventable com2 plication identified under paragraph (2). 

3 ‘‘(2) INPATIENT HOSPITAL POTENTIALLY PRE4 VENTABLE COMPLICATIONS.—For purposes of this 

5 subsection, the Secretary shall select a methodology 

6 of identifying potentially preventable complications 

7 that includes each inpatient hospital complication 

8 that meets all of the following requirements: 

9 ‘‘(A) The complication occurs during the 

10 stay and was not present on admission as an 

11 inpatient. 

12 ‘‘(B) The complication is a harmful event, 

13 such as a surgical complication, or an acute ill14 ness, such as an infection or an acute exacer15 bation of underlying chronic disease. 

16 ‘‘(C) The complication could reasonably be 

17 prevented with adequate care and treatment 

18 and is not a natural progression of a patient’s 

19 underlying illnesses present on admission. 

20 ‘‘(D) The complication may be reasonably 

21 construed as related to the care rendered dur22 ing the stay. 

23 ‘‘(E) The complication meets criteria appli24 cable under subsection (j)(1) to the outcome de25 scribed in this subsection. 


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1 ‘‘(f) AGGREGATE PAYMENTS FOR EXCESS POTEN2 TIALLY PREVENTABLE READMISSIONS.— 

3 ‘‘(1) EXCESS POTENTIALLY PREVENTABLE RE4 ADMISSIONS; AGGREGATE PAYMENTS FOR EXCESS

5 POTENTIALLY PREVENTABLE READMISSIONS DE6 FINED.—For purposes of this subsection: 

7 ‘‘(A) EXCESS POTENTIALLY PREVENTABLE

8 READMISSIONS.— 

9 ‘‘(i) IN GENERAL.—The term ‘excess 

10 potentially preventable readmissions’ 

11 means, for an applicable hospital or other 

12 applicable healthcare delivery organization 

13 determined appropriate by the Secretary 

14 for an applicable historical period and with 

15 respect to potentially preventable readmis16 sions identified under paragraph (2) for 

17 each risk class (as defined in clause (iii)) 

18 the difference between— 

19 ‘‘(I) the expected number of po20 tentially preventable readmissions for 

21 the applicable hospital based on the 

22 standard readmission rate in each risk 

23 class (as defined in clause (ii)); and 

24 ‘‘(II) the applicable hospital’s ac25 tual number of potentially preventable 


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1 readmissions in each risk class for the 

2 applicable historical period. 

3 Such difference may be a positive or nega4 tive number. 

5 ‘‘(ii) STANDARD READMISSION

6 RATE.—In carrying out clause (i)(I), the 

7 standard readmission rate shall be based 

8 on the average potentially preventable re9 admission rate in each risk class, as estab10 lished under clause (iii), in the applicable 

11 historical period, multiplied by the pay12 ment reduction factor established under 

13 subsection (d)(3) for the applicable pro14 spective period. 

15 ‘‘(iii) RISK ADJUSTMENT.—In this 

16 subparagraph, the term ‘risk classes’ 

17 means such exhaustive and mutually exclu18 sive risk classes as the Secretary shall es19 tablish in order to apply a risk-adjustment 

20 methodology that meets the criteria in sub21 section (j)(2) and account for the age, rea22 son for admission, severity of illness, and 

23 other risk factors identified by the Sec24 retary of patients that were present in pa25 tients at the time of hospital discharge 


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1 from the hospital admission that preceded 

2 their readmission. 

3 ‘‘(B) AGGREGATE PAYMENTS FOR EXCESS

4 POTENTIALLY PREVENTABLE READMISSIONS.— 

5 ‘‘(i) IN GENERAL.—The term ‘aggre6 gate payments for excess potentially pre7 ventable readmissions’ means, for an appli8 cable historical period, for all potentially 

9 preventable readmissions identified under 

10 paragraph (2), an amount equal to the 

11 amount determined under clause (ii). 

12 ‘‘(ii) AMOUNT DETERMINED.—The 

13 amount determined under this clause, with 

14 respect to an applicable hospital and other 

15 applicable healthcare delivery organizations 

16 determined appropriate by the Secretary 

17 and an applicable historical period, is equal 

18 to the sum across all risk classes of the 

19 product of— 

20 ‘‘(I) the excess potentially pre21 ventable readmissions in the risk class 

22 for the applicable hospital and other 

23 applicable healthcare delivery organi24 zations determined appropriate by the 


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1 Secretary for the applicable historical 

2 period; and 

3 ‘‘(II) the average payment for po4 tentially preventable readmissions (as 

5 defined in clause (iii)) in the risk class 

6 for applicable hospitals and other ap7 plicable healthcare delivery organiza8 tions determined appropriate by the 

9 Secretary for the applicable historical 

10 period. 

11 ‘‘(iii) AVERAGE PAYMENT FOR POTEN12 TIALLY PREVENTABLE READMISSIONS.—In 

13 clause (ii)(II), the term ‘average payment 

14 for potentially preventable readmissions for 

15 a risk class’ means, for applicable hospitals 

16 and other applicable healthcare delivery or17 ganizations determined appropriate by the 

18 Secretary for an applicable historical pe19 riod, the average payment for all poten20 tially preventable readmissions that follow 

21 a prior discharge in that risk class. 

22 ‘‘(2) POTENTIALLY PREVENTABLE READMIS23 SIONS.—For purposes of this subsection, the Sec24 retary shall select a methodology of identifying po25 tentially preventable readmissions under paragraph 


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1 (1) that includes each readmission that meets all of 

2 the following requirements: 

3 ‘‘(A) The readmission is within 30 days 

4 from the date of the initial discharge and could 

5 reasonably have been prevented by— 

6 ‘‘(i) the provision of appropriate care 

7 consistent with accepted standards in the 

8 prior discharge; 

9 ‘‘(ii) adequate discharge planning; 

10 ‘‘(iii) adequate post-discharge fol11 lowup; or 

12 ‘‘(iv) improved coordination between 

13 the inpatient and outpatient healthcare 

14 teams. 

15 ‘‘(B) The readmission is for a condition or 

16 procedure related to the care during the prior 

17 admission or during the care immediately fol18 lowing the prior discharge, including— 

19 ‘‘(i) a readmission for the same or 

20 closely related condition or procedure as 

21 the prior discharge; 

22 ‘‘(ii) a readmission for an infection or 

23 other complication of care; 


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1 ‘‘(iii) a readmission for a condition or 

2 procedure indicative of a failed surgical 

3 intervention; and 

4 ‘‘(iv) a readmission for an acute de5 compensation of a coexisting chronic dis6 ease. 

7 ‘‘(C) The readmission is back to the same 

8 hospital or to any other hospital. 

9 ‘‘(D) The readmission does not occur 

10 under any of the following circumstances: 

11 ‘‘(i) The original discharge was a pa12 tient-initiated discharge and was against 

13 medical advice and the circumstances of 

14 such discharge and readmission are docu15 mented in the patient’s medical record. 

16 ‘‘(ii) The readmission was a planned 

17 readmission. 

18 ‘‘(iii) Such other exclusion as the Sec19 retary determines appropriate. 

20 ‘‘(E) The readmission meets criteria appli21 cable under subsection (j)(1) to the outcome de22 scribed in this subsection. 

23 ‘‘(g) AGGREGATE PAYMENTS FOR EXCESS POTEN24 TIALLY PREVENTABLE ADMISSIONS.— 


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1 ‘‘(1) EXCESS POTENTIALLY PREVENTABLE AD2 MISSIONS; AGGREGATE PAYMENTS FOR EXCESS PO3 TENTIALLY PREVENTABLE ADMISSIONS DEFINED.— 

4 In this subsection: 

5 ‘‘(A) EXCESS POTENTIALLY PREVENTABLE

6 ADMISSIONS.— 

7 ‘‘(i) IN GENERAL.—The term ‘excess 

8 potentially preventable admissions’ means, 

9 for an applicable healthcare delivery orga10 nization for an applicable historical period 

11 and with respect to potentially preventable 

12 admissions identified under paragraph (2), 

13 for each risk class (as defined in clause 

14 (iii)) the difference between— 

15 ‘‘(I) the expected number of 

16 beneficiaries with one or more poten17 tially preventable admissions for the 

18 applicable healthcare delivery organi19 zation based on the standard poten20 tially preventable admission rate for 

21 beneficiaries in each risk class; and 

22 ‘‘(II) the applicable healthcare 

23 delivery organization’s actual number 

24 of beneficiaries with one or more po25 tentially preventable admissions in 


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1 each risk class for the applicable his2 torical period for beneficiaries as3 signed to the risk class. 

4 Such difference may be a positive or nega5 tive number. 

6 ‘‘(ii) STANDARD POTENTIALLY PRE7 VENTABLE ADMISSION RATE.—In carrying 

8 out clause (i)(I), the standard potentially 

9 preventable admission rate shall be based 

10 on the average number of beneficiaries 

11 with one or more potentially preventable 

12 admissions in each risk class, as defined in 

13 clause (iii), in the applicable historical pe14 riod, multiplied by the payment reduction 

15 factor established under subsection (d)(3) 

16 for the applicable prospective period. 

17 ‘‘(iii) RISK ADJUSTMENT.—In this 

18 subparagraph, the term ‘risk classes’ 

19 means such exhaustive and mutually exclu20 sive risk classes as the Secretary shall es21 tablish in order to apply a risk-adjustment 

22 methodology that meets the criteria in sub23 section (j)(2) and account for the age, rea24 son for admission, severity of illness, and 

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1 retary. The risk class for a beneficiary 

2 shall be assigned under this subparagraph 

3 based on the beneficiary’s chronic illness 

4 burden and history of healthcare services 

5 for a time period of not less than 6 months 

6 preceding the beginning of the applicable 

7 historical period. 

8 ‘‘(B) AGGREGATE PAYMENTS FOR EXCESS

9 POTENTIALLY PREVENTABLE ADMISSIONS.— 

10 ‘‘(i) IN GENERAL.—The term ‘aggre11 gate payments for excess potentially pre12 ventable admissions’ means, for an applica13 ble historical period, for potentially pre14 ventable admissions identified under para15 graph (2), an amount equal to the amount 

16 determined under clause (ii). 

17 ‘‘(ii) AMOUNT DETERMINED.—The 

18 amount determined under this clause, with 

19 respect to an applicable healthcare delivery 

20 organization and an applicable historical 

21 period, for all beneficiaries with one or 

22 more potentially preventable admissions 

23 identified under paragraph (2) is equal to 

24 the sum across all risk classes of the prod25 uct of— 


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1 ‘‘(I) the excess potentially pre2 ventable admissions (as defined in 

3 subparagraph (A)) in the risk class 

4 for the applicable healthcare delivery 

5 organization during the applicable his6 torical period; and 

7 ‘‘(II) the average payment per 

8 beneficiary of all potentially prevent9 able admissions for beneficiaries in 

10 the risk class (as determined under 

11 clause (iii)) for applicable healthcare 

12 delivery organizations during the ap13 plicable historical period. 

14 ‘‘(iii) AVERAGE PAYMENT PER BENE15 FICIARY OF ALL POTENTIALLY PREVENT16 ABLE ADMISSIONS.—The term ‘average 

17 payment per beneficiary of all potentially 

18 preventable admissions’ for a risk class 

19 means, for applicable healthcare delivery 

20 organizations for an applicable historical 

21 period, the average payment per bene22 ficiary for all potentially preventable ad23 missions in the risk class. 

24 ‘‘(2) POTENTIALLY PREVENTABLE ADMIS25 SIONS.—For purposes of this subsection, the SecVerDate Sep 11 2014 02:58 Dec 17, 2014 Jkt 049200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\H5823.IH H5823

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1 retary shall select a methodology of identifying po2 tentially preventable admissions under paragraph (1) 

3 that includes each admission that meets all of the 

4 following requirements: 

5 ‘‘(A) The admission could reasonably have 

6 been prevented with adequate access to ambula7 tory care or coordinated healthcare services. 

8 ‘‘(B) The services provided as part of the 

9 admission could be safely performed in an out10 patient facility. 

11 ‘‘(C) The admission is not of a beneficiary 

12 with extensive comorbid disease or high severity 

13 of illness that may necessitate that care be de14 livered in a hospital setting. 

15 ‘‘(D) The admission meets criteria applica16 ble under subsection (j)(1) to the outcome de17 scribed in this subsection. 

18 ‘‘(h) AGGREGATE PAYMENTS FOR EXCESS POTEN19 TIALLY PREVENTABLE EMERGENCY ROOM VISITS.— 

20 ‘‘(1) EXCESS POTENTIALLY PREVENTABLE

21 EMERGENCY ROOM VISITS; AGGREGATE PAYMENTS

22 FOR EXCESS POTENTIALLY PREVENTABLE EMER23 GENCY ROOM VISITS DEFINED.—In this subsection: 

24 ‘‘(A) EXCESS POTENTIALLY PREVENTABLE

25 EMERGENCY ROOM VISITS.— 


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1 ‘‘(i) IN GENERAL.—The term ‘excess 

2 potentially preventable emergency room 

3 visits’ means, for an applicable healthcare 

4 delivery organization for an applicable his5 torical period and with respect to poten6 tially preventable emergency room visits 

7 identified under paragraph (2), for each 

8 risk class (as defined in clause (iii)) the 

9 difference between— 

10 ‘‘(I) the expected number of 

11 beneficiaries with one or more poten12 tially preventable emergency room vis13 its for the applicable healthcare deliv14 ery organization based on the stand15 ard potentially preventable emergency 

16 room visit rate for beneficiaries in 

17 each risk class (as defined in clause 

18 (ii)); and 

19 ‘‘(II) the applicable healthcare 

20 delivery organization’s actual number 

21 of beneficiaries with one or more po22 tentially preventable emergency room 

23 visits for the applicable historical pe24 riod for beneficiaries assigned to the 

25 risk class. 


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1 Such difference may be a positive or nega2 tive number. 

3 ‘‘(ii) STANDARD POTENTIALLY PRE4 VENTABLE EMERGENCY ROOM VISIT

5 RATE.—In carrying out clause (i)(I), the 

6 standard potentially preventable emergency 

7 room visit rate shall be based on the aver8 age number of beneficiaries with one or 

9 more potentially preventable emergency 

10 room visits in each risk class, as defined in 

11 clause (iii) in the applicable historical pe12 riod, multiplied by the payment reduction 

13 factor established under subsection (d)(3) 

14 for the applicable prospective period. 

15 ‘‘(iii) RISK ADJUSTMENT.—In this 

16 subparagraph, the term ‘risk classes’ 

17 means such exhaustive and mutually exclu18 sive risk classes as the Secretary shall es19 tablish in order to apply a risk-adjustment 

20 methodology that meets the criteria in sub21 section (j)(2) and account for the age, rea22 son for admission, severity of illness, and 

23 other risk factors identified by the Sec24 retary. The risk class for a beneficiary 

25 shall be assigned based on the beneficiary’s 


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1 chronic illness burden and history of 

2 healthcare services for a time period of not 

3 less than 6 months preceding the begin4 ning of the applicable historical period. 

5 ‘‘(B) AGGREGATE PAYMENTS FOR EXCESS

6 POTENTIALLY PREVENTABLE EMERGENCY

7 ROOM VISITS.— 

8 ‘‘(i) IN GENERAL.—The term ‘aggre9 gate payments for excess potentially pre10 ventable emergency room visits’ means, for 

11 an applicable historical period, for poten12 tially preventable emergency room visits 

13 identified under paragraph (2), an amount 

14 equal to the amount determined under 

15 clause (ii). 

16 ‘‘(ii) AMOUNT DETERMINED.—The 

17 amount determined under this clause, with 

18 respect to an applicable healthcare delivery 

19 organization and an applicable historical 

20 period, for all beneficiaries with one or 

21 more potentially preventable emergency 

22 room visits identified under paragraph (2) 

23 is equal to the sum across all risk classes 

24 of the product of— 


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1 ‘‘(I) the excess potentially pre2 ventable emergency room visits (as de3 fined in subparagraph (A)) in the risk 

4 class for the applicable healthcare de5 livery organization during the applica6 ble historical period; and 

7 ‘‘(II) the average payment per 

8 beneficiary of all potentially prevent9 able emergency room visits for bene10 ficiaries in the risk class (as deter11 mined under clause (iii)) for applica12 ble healthcare delivery organizations 

13 during the applicable historical period. 

14 ‘‘(iii) AVERAGE PAYMENT PER BENE15 FICIARY OF ALL POTENTIALLY PREVENT16 ABLE EMERGENCY ROOM VISITS.—The 

17 term ‘average payment per beneficiary of 

18 all potentially preventable emergency room 

19 visits’ means, for applicable healthcare de20 livery organizations for an applicable his21 torical period for a risk class, the average 

22 payment per beneficiary for all potentially 

23 preventable emergency room visits in the 

24 risk class. 


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1 ‘‘(2) POTENTIALLY PREVENTABLE EMERGENCY

2 ROOM VISITS.—For purposes of this subsection, the 

3 Secretary shall select a methodology of identifying 

4 potentially preventable emergency room visits under 

5 paragraph (1) that includes each such visit that 

6 meets all of the following requirements: 

7 ‘‘(A) The visit did not require emergency 

8 medical attention because the condition could 

9 be treated or prevented by a physician or other 

10 healthcare provider in a nonemergency setting. 

11 ‘‘(B) The beneficiary involved does not 

12 have an extensive comorbid disease or high se13 verity of illness that may necessitate that care 

14 be delivered in an emergency room setting. 

15 ‘‘(C) The visit meets criteria applicable 

16 under subsection (j)(1) to the outcome de17 scribed in this subsection. 

18 ‘‘(i) AGGREGATE PAYMENTS FOR EXCESS POTEN19 TIALLY PREVENTABLE OUTPATIENT PROCEDURES AND

20 TESTS.— 

21 ‘‘(1) EXCESS POTENTIALLY PREVENTABLE

22 OUTPATIENT PROCEDURES AND TESTS; AGGREGATE

23 PAYMENTS FOR EXCESS POTENTIALLY PREVENT24 ABLE OUTPATIENT PROCEDURES AND TESTS DE25 FINED.—In this subsection: 


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1 ‘‘(A) EXCESS POTENTIALLY PREVENTABLE

2 OUTPATIENT PROCEDURES AND TESTS.— 

3 ‘‘(i) IN GENERAL.—The term ‘excess 

4 potentially preventable outpatient proce5 dures and tests’ means, for an applicable 

6 healthcare delivery organization for an ap7 plicable historical period and with respect 

8 to potentially preventable outpatient proce9 dures and tests identified under paragraph 

10 (2), for each risk class (as defined in 

11 clause (iii)) the difference between— 

12 ‘‘(I) the expected number of 

13 beneficiaries with one or more poten14 tially preventable outpatient proce15 dures and tests for the applicable 

16 healthcare delivery organization based 

17 on the standard potentially prevent18 able rate of potentially preventable 

19 outpatient procedures and tests for 

20 beneficiaries in each risk class (as de21 fined in clause (ii)); and 

22 ‘‘(II) the applicable healthcare 

23 delivery organization’s actual number 

24 of beneficiaries with one or more po25 tentially preventable outpatient proceVerDate Sep 11 2014 02:58 Dec 17, 2014 Jkt 049200 PO 00000 Frm 00034 Fmt 6652 Sfmt 6201 E:\BILLS\H5823.IH H5823

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1 dures and tests in each risk class for 

2 the applicable historical period for 

3 beneficiaries assigned to the risk 

4 class. 

5 Such difference may be a positive or nega6 tive number. 

7 ‘‘(ii) STANDARD POTENTIALLY PRE8 VENTABLE RATE OF OUTPATIENT PROCE9 DURES AND TESTS.—In carrying out 

10 clause (i)(I), the standard potentially pre11 ventable rate of outpatient procedures and 

12 tests shall be based on the average number 

13 of beneficiaries with one or more poten14 tially preventable outpatient procedures 

15 and tests in each risk class, as defined in 

16 clause (iii) in the applicable historical pe17 riod, multiplied by the payment reduction 

18 factor established under subsection (d)(3) 

19 for the applicable prospective period. 

20 ‘‘(iii) RISK ADJUSTMENT.—In this 

21 subparagraph, the term ‘risk classes’ 

22 means such exhaustive and mutually exclu23 sive risk classes as the Secretary shall es24 tablish in order to apply a risk-adjustment 

25 methodology that meets the criteria in subVerDate Sep 11 2014 02:58 Dec 17, 2014 Jkt 049200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\H5823.IH H5823

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1 section (j)(2) and account for the age, rea2 son for admission, severity of illness, and 

3 other risk factors identified by the Sec4 retary. The risk class for a beneficiary 

5 shall be assigned based on the beneficiary’s 

6 chronic illness burden and history of 

7 healthcare services for a time period of not 

8 less than 6 months preceding the begin9 ning of the applicable historical period. 

10 ‘‘(B) AGGREGATE PAYMENTS FOR EXCESS

11 POTENTIALLY PREVENTABLE OUTPATIENT PRO12 CEDURES AND TESTS.— 

13 ‘‘(i) IN GENERAL.—The term ‘aggre14 gate payments for excess potentially pre15 ventable outpatient procedures and tests’ 

16 means, for an applicable historical period, 

17 for all beneficiaries with one or more po18 tentially preventable outpatient procedures 

19 and tests identified under paragraph (2), 

20 an amount equal to the amount determined 

21 under clause (ii). 

22 ‘‘(ii) AMOUNT DETERMINED.—The 

23 amount determined under this clause, with 

24 respect to an applicable healthcare delivery 

25 organization and an applicable historical 


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1 period, for potentially preventable out2 patient procedures and tests identified 

3 under paragraph (2) is equal to the sum 

4 across all risk classes of the product of— 

5 ‘‘(I) the excess potentially pre6 ventable outpatient procedures and 

7 tests (as defined in subparagraph (A)) 

8 for the risk class for the applicable 

9 healthcare delivery organization dur10 ing the applicable historical period; 

11 and 

12 ‘‘(II) the average payment per 

13 beneficiary of all potentially prevent14 able outpatient procedures and tests 

15 for beneficiaries in the risk class (as 

16 determined under clause (iii)) for ap17 plicable healthcare delivery organiza18 tions during the applicable historical 

19 period. 

20 ‘‘(iii) AVERAGE PAYMENT PER BENE21 FICIARY OF ALL POTENTIALLY PREVENT22 ABLE OUTPATIENT PROCEDURES AND

23 TESTS.—The term ‘average payment per 

24 beneficiary of all potentially preventable 

25 outpatient procedures and tests’ for a risk 


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1 class means, for applicable healthcare de2 livery organizations for an applicable his3 torical period, the average payment per 

4 beneficiary of all potentially preventable 

5 outpatient procedures and tests in the risk 

6 class. 

7 ‘‘(2) POTENTIALLY PREVENTABLE OUTPATIENT

8 PROCEDURES AND TESTS.—For purposes of this 

9 subsection, the Secretary shall select a methodology 

10 of identifying potentially preventable outpatient pro11 cedures and tests that includes each procedure or 

12 test that meets all of the following requirements: 

13 ‘‘(A) The procedure or test is provided or 

14 ordered by a physician or other healthcare pro15 vider to supplement or support the evaluation 

16 or treatment of a beneficiary including a proce17 dure, diagnostic test, laboratory test, therapy 

18 service, or radiology service. 

19 ‘‘(B) The procedure or test may be over20 used in the provision healthcare or treatment. 

21 ‘‘(C) The procedure or test is not for a 

22 beneficiary with extensive comorbid disease or 

23 high severity of illness that may necessitate fre24 quent monitoring with outpatient procedures 

25 and tests. 


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1 ‘‘(D) The procedure or test meets criteria 

2 applicable under subsection (j)(1) to the out3 come described in this subsection. 

4 ‘‘(j) SELECTION OF METHODS FOR IDENTIFYING PO5 TENTIALLY PREVENTABLE OUTCOMES AND METHOD OF

6 RISK ADJUSTMENT.— 

7 ‘‘(1) SELECTION CRITERIA FOR METHOD FOR

8 IDENTIFYING POTENTIALLY PREVENTABLE OUT9 COMES.—The Secretary shall select a methodology 

10 of identifying each of the potentially preventable out11 comes. For each type of potentially preventable out12 come the methodology selected shall meet the fol13 lowing criteria: 

14 ‘‘(A) Be comprehensive with a uniform 

15 structure. 

16 ‘‘(B) Have available a method of risk ad17 justment that meets the criteria in paragraph 

18 (2). 

19 ‘‘(C) Be clinically meaningful having exclu20 sions for beneficiaries for whom the outcome is 

21 not potentially preventable including those 

22 beneficiaries with extensive comorbid disease or 

23 high severity of illness. 

24 ‘‘(D) To the extent possible have been suc25 cessfully implemented in the payment organizaVerDate Sep 11 2014 02:58 Dec 17, 2014 Jkt 049200 PO 00000 Frm 00039 Fmt 6652 Sfmt 6201 E:\BILLS\H5823.IH H5823

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1 tion of a State Medicaid program or a major 

2 payer or be certified by an entity with a con3 tract under section 1890(a). 

4 ‘‘(E) Be open, transparent, and available 

5 for review and comment. 

6 ‘‘(F) To the extent possible, be in the pub7 lic domain. 

8 ‘‘(G) If commercially available methods are 

9 the only viable methods that meet the criteria 

10 in subparagraphs (A), (B), (C), and (D), the 

11 Secretary may select such commercial methods 

12 as long as such methods meet the criteria in 

13 subparagraph (E). 

14 ‘‘(2) SELECTION CRITERIA FOR METHOD OF

15 RISK ADJUSTMENT.—The Secretary shall select a 

16 methodology for risk adjusting the rate of each of 

17 the potentially preventable outcomes. For each type 

18 of potentially preventable outcome, the methodology 

19 for risk adjustment shall meet the following criteria: 

20 ‘‘(A) The methodology is comprehensive 

21 with a uniform structure. 

22 ‘‘(B) The methodology is clinically mean23 ingful and explicitly recognize severity of illness, 

24 chronic illness burden, and patients with exten25 sive comorbid disease or high severity of illness. 


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1 ‘‘(C) To the extent possible, the method2 ology has been successfully implemented in pay3 ment under a State Medicaid program or by a 

4 major payer or is certified by an entity with a 

5 contract under section 1890(a). 

6 ‘‘(D) The methodology is open and trans7 parent and available for review and comment. 

8 ‘‘(E) To the extent possible, the method9 ology is in the public domain. 

10 ‘‘(F) If commercially available methods are 

11 the only viable methods that meet the criteria 

12 in subparagraphs (A), (B), and (C), the Sec13 retary may select such commercial methods as 

14 long as such methods meet the criteria in sub15 paragraph (D). 

16 ‘‘(k) DEFINITIONS.—In this section: 

17 ‘‘(1) APPLICABLE HEALTHCARE DELIVERY OR18 GANIZATION.—The term ‘applicable healthcare deliv19 ery organization’ means a Medicare Advantage Plan 

20 receiving payments under part C, health home, ac21 countable care organization, applicable hospital (as 

22 defined in subparagraph (C)), ambulatory surgery 

23 center, federally qualified health center, or other 

24 healthcare delivery organization identified by the 

25 Secretary. 


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1 ‘‘(2) APPLICABLE HISTORICAL PERIOD.—The 

2 term ‘applicable historical period’ means, with re3 spect to an applicable healthcare delivery organiza4 tion for a fiscal year, the most recent 2-year period 

5 for which data from the organization are available 

6 for purposes of this section. 

7 ‘‘(3) APPLICABLE HOSPITAL.—The term ‘appli8 cable hospitals’ means a subsection (d) hospital (as 

9 defined in section 1886(d)(1)(B). 

10 ‘‘(4) APPLICABLE PROSPECTIVE PERIOD.—The 

11 term ‘applicable prospective period’ means— 

12 ‘‘(A) with respect to an organization, the 

13 fiscal year in which the healthcare delivery or14 ganization specific adjustment factor under sub15 section (a)(2) for an applicable historical period 

16 applies to the payments to the healthcare deliv17 ery organization; and 

18 ‘‘(B) with respect to healthcare profes19 sionals, the year in which the geographic-spe20 cific potentially preventable outcomes adjust21 ment factor under subsection (b)(2) for an ap22 plicable historical period applies to payments to 

23 the professionals. 

24 ‘‘(5) POTENTIALLY PREVENTABLE OUT25 COMES.—The term ‘potentially preventable outVerDate Sep 11 2014 02:58 Dec 17, 2014 Jkt 049200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\H5823.IH H5823

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1 comes’ means inpatient potentially preventable com2 plications under subsection (e)(2), potentially pre3 ventable readmissions under subsection (f)(2), poten4 tially preventable admissions under subsection 

5 (g)(2), potentially preventable emergency room visits 

6 under subsection (h)(2), and potentially preventable 

7 outpatient procedures and tests under subsection 

8 (i)(2).’’. 

9 (b) REPORTING OF POTENTIALLY PREVENTABLE

10 OUTCOMES.— 

11 (1) REPORTING TO HEALTHCARE DELIVERY OR12 GANIZATIONS.—For each applicable historical pe13 riod, the Secretary of Health and Human Services 

14 (in this section referred to as the ‘‘Secretary’’) shall 

15 provide confidential reports to applicable healthcare 

16 delivery organizations with respect to potentially pre17 ventable outcomes. The confidential reports shall be 

18 provided to a healthcare delivery organization at 

19 least 90 days before the date of their release to the 

20 public regarding potentially preventable outcomes of 

21 the healthcare delivery organization. 

22 (2) REPORTING HEALTH DELIVERY ORGANIZA23 TION SPECIFIC INFORMATION.— 

24 (A) IN GENERAL.—The Secretary shall 

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1 garding potentially preventable outcomes of 

2 each applicable healthcare delivery organization. 

3 (B) OPPORTUNITY TO REVIEW AND SUB4 MIT CORRECTIONS.—The Secretary shall ensure 

5 that an applicable healthcare delivery organiza6 tion has the opportunity to review, and submit 

7 corrections for, the information to be made pub8 lic prior to such information being made public. 

9 (C) WEB SITE POSTING.—Such informa10 tion shall be posted on the Hospital Compare 

11 Internet Web Site in an easily understandable 

12 format. 

13 (c) APPLICABILITY TO MEDICAID.—The Secretary 

14 shall apply to State plans (or waivers) under title XIX 

15 of the Social Security Act regulations relating to payment 

16 adjustments for potentially preventable outcomes (as de17 fined in section 1899B(k) of such Act) as appropriate for 

18 the Medicaid program. Such regulations shall be in effect 

19 no later than October 1, 2017. 

20 (d) QUALITY IMPROVEMENT GRANTS.— 

21 (1) IN GENERAL.—Subject to paragraph 

22 (4)(D), beginning in fiscal year 2017 the Secretary 

23 shall award quality improvement grants to eligible 

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1 graph (2) that meet the criteria established under 

2 paragraph (3). 

3 (2) ELIGIBLE HEALTHCARE DELIVERY ORGANI4 ZATION.—For purposes of this subsection for a fis5 cal year, an eligible healthcare delivery organization 

6 is an applicable healthcare delivery organization that 

7 has a healthcare delivery organization-specific ad8 justment factor for the fiscal year (as determined 

9 under section 1899B(a)(2) of the Social Security 

10 Act, as added by subsection (a)), that is lower than 

11 the healthcare delivery organization-specific adjust12 ment factor (under such section) for 75 percent of 

13 all other healthcare delivery organizations in such 

14 fiscal year. 

15 (3) CRITERIA.—The Secretary shall establish 

16 criteria for awarding grants under this subsection. 

17 (4) LIMITATIONS.— 

18 (A) USE OF GRANT FUNDS.—A healthcare 

19 delivery organization that applies for and re20 ceives a grant under this subsection shall use 

21 such grant to implement processes that lower 

22 the rate of potentially preventable outcomes. 

23 (B) TERM OF GRANT.—Grants under this 

24 subsection shall be for 2 years. 


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1 (C) REPORTS.—A healthcare delivery orga2 nization that applies for and receives a grant 

3 under this subsection shall, not later than 30 

4 months after the date of receiving such grant, 

5 submit a report to the Secretary on the proc6 esses funded by such grant and the resulting 

7 impact on rates of potentially preventable out8 comes. 

9 (D) AMOUNT OF GRANTS.—The aggregate 

10 amount of funds awarded as grants under this 

11 subsection for a fiscal year shall not exceed 5 

12 percent of the sum of the composite aggregate 

13 payments for excess potentially preventable out14 comes for all healthcare delivery organizations 

15 in the applicable historical period (as deter16 mined under section 1899B(c)(1) of the Social 

17 Security Act). 

18 (5) AUTHORIZATION OF APPROPRIATIONS.— 

19 There are authorized to be appropriated to carry out 

20 this subsection such sums as may be necessary for 

21 each of fiscal years 2017 through 2021. 

22 (e) GAO REPORT.—Not later than January 1, 2018, 

23 the Comptroller General of the United States shall submit 

24 to Congress a report on the impact of section 1899B of 

25 the Social Security Act, as added by subsection (a), on 


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1 Medicare beneficiaries care, Medicare expenditures, and 

2 Medicare providers, including the quality of care furnished 

3 under the Medicare program. 

4 (f) APPLICATION OF DEFINITIONS.—In this section, 

5 the terms ‘‘applicable healthcare delivery organization’’, 

6 ‘‘applicable historical period’’, ‘‘potentially preventable 

7 outcomes’’ have the meanings given such terms in section 

8 1899B(j) of the Social Security Act, as added by sub9 section (a). 

Æ 


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