I 

113TH CONGRESS 

1ST SESSION H. R. 1487 

To amend titles XVIII and XI of the Social Security Act to establish an 

exception from the physician self-referral prohibition and a safe harbor 

from Federal antikickback and other sanctions for incentive payments 

made by hospitals to physicians under certain incentive payment programs. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 11, 2013 

Mr. MCDERMOTT 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 titles XVIII and XI of the Social Security Act 

to establish an exception from the physician self-referral 

prohibition and a safe harbor from Federal antikickback 

and other sanctions for incentive payments made by hospitals to physicians under certain incentive payment programs. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Improved Health Care 

3 at Lower Cost Act of 2013’’. 

4 SEC. 2. EXCEPTION AND SAFE HARBOR FROM FEDERAL 

5 SANCTIONS FOR INCENTIVE PAYMENTS 

6 FROM HOSPITALS TO PHYSICIANS UNDER 

7 CERTAIN INCENTIVE PAYMENT PROGRAMS. 

8 (a) FINDINGS.—Congress finds the following: 

9 (1) The Department of Health and Human 

10 Services has been engaged in approving, on a 

11 project-by-project basis, gain-sharing arrangements 

12 under demonstration authority for nearly a decade. 

13 Based on the knowledge gained from such dem14 onstration projects, the Department is capable of de15 veloping and applying standards for permitting such 

16 arrangements more generally without the use of 

17 such authority. 

18 (2) The Inspector General of the Department of 

19 Health and Human Services has issued a special ad20 visory bulletin in July 1999 that indicates that there 

21 is no general authority for waiving sanctions for any 

22 gain-sharing arrangements between physicians and 

23 hospitals. 

24 (3) Due to lack of capitalization, size limita25 tions, risk characteristics, and other factors, many 

26 hospitals and physicians have been unable or unwillVerDate Mar 15 2010 02:02 Apr 18, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1487.IH H1487

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1 ing to enter into gain-sharing types of arrangements 

2 that meet the requirements of the shared savings 

3 program. 

4 (b) PURPOSE.—The purpose of this section is to es5 tablish general statutory authority within the Department 

6 of Health and Human Services to recognize gain-sharing 

7 and other incentive payment programs, other than the 

8 shared savings program, that align incentives among hos9 pitals and physicians to improve efficiency and decrease 

10 costs while maintaining or improving quality care. 

11 (c) EXCEPTION FROM PHYSICIAN SELF-REFERRAL

12 PROHIBITION.—Section 1877(e) of the Social Security Act 

13 (42 U.S.C. 1395nn(e)) is amended by adding at the end 

14 the following new paragraph: 

15 ‘‘(9) PAYMENTS UNDER CERTAIN INCENTIVE

16 PAYMENT PROGRAMS BETWEEN HOSPITALS AND

17 PHYSICIANS.— 

18 ‘‘(A) IN GENERAL.—In the case of a mone19 tary incentive payment which is made by a hos20 pital to a physician under an incentive payment 

21 program (as defined in subparagraph (B)) that 

22 meets requirements established by the Secretary 

23 in consultation with the Attorney General and 

24 the Inspector General of the Department of 


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1 Health and Human Services for purposes of 

2 this paragraph. 

3 ‘‘(B) INCENTIVE PAYMENT PROGRAM DE4 FINED.—In this paragraph, the term ‘incentive 

5 payment program’ means a program that is de6 signed to align incentives among hospitals and 

7 physicians (through techniques such as product 

8 standardization, the substitution of lower cost 

9 products, and care coordination initiatives that 

10 encourage medically appropriate decreases in 

11 length of stay) to improve efficiency and de12 crease costs while maintaining or improving 

13 quality.’’. 

14 (d) SAFE HARBOR FROM ANTIKICKBACK AND OTHER

15 FEDERAL SANCTIONS.— 

16 (1) Section 1128B(b)(3) of the Social Security 

17 Act (42 U.S.C. 1320a–7b(b)(3)) is amended— 

18 (A) by striking ‘‘and’’ at the end of sub19 paragraph (I); 

20 (B) in subparagraph (J), by moving the in21 dentation 2 ems to the left and by striking the 

22 period at the end and inserting ‘‘; and’’; and 

23 (C) by adding at the end the following new 

24 subparagraph: 


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1 ‘‘(K) any monetary incentive payment which is 

2 made by a hospital to a physician under an incentive 

3 payment program (as defined in subparagraph (B) 

4 of section 1877(e)(9)) that meets requirements es5 tablished by the Inspector General of the Depart6 ment of Health and Human Services in consultation 

7 with the Attorney General for purposes of applying 

8 this subparagraph (which requirements needs not be 

9 the same as those established under subparagraph 

10 (A) of such section).’’. 

11 (2) Section 1128A(b)(1) of the Social Security 

12 Act (42 U.S.C. 1320a–7a(b)(1)) is amended by in13 serting ‘‘(other than a monetary incentive payment 

14 described in section 1128B(b)(3)(K))’’ after ‘‘makes 

15 a payment’’. 

16 (e) PUBLICATION OF GUIDANCE.—The Secretary of 

17 Health and Human Services and the Inspector General 

18 of the Department of Health and Human Services— 

19 (1) not later than 6 months after the date of 

20 the enactment of this Act, shall jointly publish a so21 licitation of comments to carry out the amendments 

22 made by this section; and 

23 (2) not later than 12 months after such date of 

24 enactment, shall publish, jointly or separately, such 

25 guidance or rules, which may be effective on an inVerDate Mar 15 2010 02:02 Apr 18, 2013 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1487.IH H1487

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1 terim, final basis, as may be necessary to carry out 

2 such amendments in a timely manner. 

3 (f) CONSTRUCTION.—Nothing in this section (or the 

4 amendments made by this section) shall be construed as 

5 affecting the operation of the shared savings program. 

6 (g) SHARED SAVINGS PROGRAM DEFINED.—In this 

7 section, the term ‘‘shared savings program’’ means such 

8 program under section 1899 of the Social Security Act (42 

9 U.S.C. 1395jjj). 

Æ 


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