I 

111TH CONGRESS 

1ST SESSION H. R. 2959 

To amend title XVIII of the Social Security Act to establish an accountable 

care organization pilot program to reduce the growth of expenditures 

and improve health outcomes under the Medicare Program. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 18, 2009 

Mr. WELCH (for himself, Mr. POMEROY, Mr. VAN HOLLEN, Mr. CARNEY, Mr. 

KIND, Mr. LEVIN, Ms. LINDA T. SA ́NCHEZ of California, Mr. INSLEE, 

Mr. HIGGINS, Mr. THOMPSON of California, Mr. LEWIS of Georgia, Mr. 

PASCRELL, Ms. SCHWARTZ, Mr. SPACE, Mr. MARKEY of Massachusetts, 

Mr. COOPER, Mr. PERLMUTTER, Mr. BRALEY of Iowa, Mr. 

BLUMENAUER, Mr. YARMUTH, and Mr. TANNER) introduced the following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committee on Energy and Commerce, 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 establish 

an accountable care organization pilot program to reduce 

the growth of expenditures and improve health outcomes 

under the Medicare Program. 

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 ‘‘Accountable Care Pro3 motion Act of 2009’’. 

4 SEC. 2. ACCOUNTABLE CARE ORGANIZATION PILOT PRO5 GRAM. 

6 Title XVIII of the Social Security Act is amended by 

7 inserting after section 1866C the following new section: 

8 ‘‘ACCOUNTABLE CARE ORGANIZATION PILOT PROGRAM

9 ‘‘SEC. 1866D. (a) IN GENERAL.—The Secretary shall 

10 conduct a pilot program (in this section referred to as the 

11 ‘pilot program’) to test different payment incentive mod12 els, including (to the extent practicable) the specific pay13 ment incentive models described in subsection (c), de14 signed to reduce the growth of expenditures and improve 

15 health outcomes in the provision of items and services 

16 under this title to applicable beneficiaries (as defined in 

17 subsection (d)) by qualifying accountable care organiza18 tions (as defined in subsection (b)(1)) in order to— 

19 ‘‘(1) promote accountability for a patient popu20 lation and coordinate items and services under parts 

21 A and B; 

22 ‘‘(2) encourage investment in infrastructure and 

23 redesigned care processes for high quality and effi24 cient service delivery; and 


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1 ‘‘(3) reward physician practices for the provi2 sion of high quality and efficient health care serv3 ices. 

4 ‘‘(b) QUALIFYING ACCOUNTABLE CARE ORGANIZA5 TIONS (ACOS).— 

6 ‘‘(1) QUALIFYING ACO DEFINED.— 

7 ‘‘(A) IN GENERAL.—In this section, the 

8 terms ‘qualifying accountable care organization’ 

9 and ‘qualifying ACO’ mean a group of physi10 cians that— 

11 ‘‘(i) is organized at least in part for 

12 the purpose of providing physicians’ serv13 ices; and 

14 ‘‘(ii) meets such criteria as the Sec15 retary determines to be appropriate to par16 ticipate in the pilot program, including the 

17 criteria specified in paragraph (2). 

18 ‘‘(B) INCLUSION OF OTHER PROVIDERS.— 

19 Nothing in this subsection shall be construed as 

20 preventing a qualifying ACO from including a 

21 hospital or any other provider of services or 

22 supplier furnishing items or services for which 

23 payment may be made under this title that is 

24 affiliated with the ACO under an arrangement 

25 structured so that such provider or supplier 


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1 participates in the pilot program and shares in 

2 any incentive payments under the pilot pro3 gram. 

4 ‘‘(C) PHYSICIAN.—In this section, the 

5 term ‘physician’ includes, except as the Sec6 retary may otherwise provide, any individual 

7 who furnishes services for which payment may 

8 be made as physicians’ services. 

9 ‘‘(D) OTHER SERVICES.—Nothing in this 

10 paragraph shall be construed as preventing a 

11 qualifying ACO from furnishing items or serv12 ices, for which payment may not made under 

13 this title, for purposes of achieving performance 

14 goals under the pilot program. 

15 ‘‘(2) QUALIFYING CRITERIA.—The following are 

16 criteria described in this paragraph for an organized 

17 group of physicians to be a qualifying ACO: 

18 ‘‘(A) The group has a legal structure that 

19 would allow the group to receive and distribute 

20 incentive payments under this section. 

21 ‘‘(B) The group includes a sufficient num22 ber of primary care physicians for the applica23 ble beneficiaries for whose care the group is ac24 countable (as determined by the Secretary). 


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1 ‘‘(C) The group is comprised of only par2 ticipating physicians. 

3 ‘‘(D) The group reports on quality meas4 ures in such form, manner, and frequency as 

5 specified by the Secretary (which may be for 

6 the group, for providers of services and sup7 pliers, or both). 

8 ‘‘(E) The group reports to the Secretary 

9 (in a form, manner, and frequency as specified 

10 by the Secretary) such data as the Secretary 

11 determines appropriate to monitor and evaluate 

12 the pilot program. 

13 ‘‘(F) The group provides notice to applica14 ble beneficiaries regarding the pilot program (as 

15 determined appropriate by the Secretary). 

16 ‘‘(G) The group contributes to a best prac17 tices network or website, that shall be main18 tained by the Secretary for the purpose of shar19 ing strategies on quality improvement, care co20 ordination, and efficiency that the groups be21 lieve are effective. 

22 ‘‘(H) The group utilizes patient-centered 

23 processes of care, including those that empha24 size patient and caregiver involvement in planVerDate Nov 24 2008 02:53 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2959.IH H2959

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1 ning and monitoring of ongoing care manage2 ment plan. 

3 ‘‘(I) The group meets other criteria deter4 mined to be appropriate by the Secretary. 

5 ‘‘(c) SPECIFIC PAYMENT INCENTIVE MODELS.—The 

6 specific payment incentive models described in this sub7 section are the following: 

8 ‘‘(1) PERFORMANCE TARGET MODEL.—Under 

9 the performance target model under this paragraph 

10 (in this paragraph referred to as the ‘performance 

11 target model’): 

12 ‘‘(A) IN GENERAL.—A qualifying ACO 

13 qualifies to receive an incentive payment if ex14 penditures for applicable beneficiaries are less 

15 than a target spending level or a target rate of 

16 growth. The incentive payment shall be made 

17 only if savings are greater than would result 

18 from normal variation in expenditures for items 

19 and services covered under parts A and B. 

20 ‘‘(B) COMPUTATION OF PERFORMANCE

21 TARGET.— 

22 ‘‘(i) IN GENERAL.—The Secretary 

23 shall establish a performance target for 

24 each qualifying ACO comprised of a base 

25 amount (described in clause (ii)) increased 


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1 to the current year by an adjustment fac2 tor (described in clause (iii)). Such a tar3 get may be established on a per capita 

4 basis, as the Secretary determines to be 

5 appropriate. 

6 ‘‘(ii) BASE AMOUNT.—For purposes of 

7 clause (i), the base amount in this sub8 paragraph is equal to the average total 

9 payments (or allowed charges) under parts 

10 A and B (and may include part D, if the 

11 Secretary determines appropriate) for ap12 plicable beneficiaries for whom the quali13 fying ACO furnishes items and services in 

14 a base period determined by the Secretary. 

15 Such base amount may be determined on 

16 a per capita basis. 

17 ‘‘(iii) ADJUSTMENT FACTOR.—For 

18 purposes of clause (i), the adjustment fac19 tor in this clause may equal an annual per 

20 capita amount that reflects changes in ex21 penditures from the period of the base 

22 amount to the current year that would rep23 resent an appropriate performance target 

24 for applicable beneficiaries (as determined 

25 by the Secretary). Such adjustment factor 


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1 may be determined as an amount or rate, 

2 may be determined on a national, regional, 

3 local, or organization-specific basis, and 

4 may be determined on a per capita basis. 

5 Such adjustment factor also may be ad6 justed for risk as determined appropriate 

7 by the Secretary. 

8 ‘‘(iv) REBASING.—Under this model 

9 the Secretary shall periodically rebase the 

10 base expenditure amount described in 

11 clause (ii). 

12 ‘‘(C) MEETING TARGET.— 

13 ‘‘(i) IN GENERAL.—Subject to clause 

14 (ii), a qualifying ACO that meet or exceeds 

15 annual quality and performance targets for 

16 a year shall receive an incentive payment 

17 for such year equal to a portion (as deter18 mined appropriate by the Secretary) of the 

19 amount by which payments under this title 

20 for such year relative are estimated to be 

21 below the performance target for such 

22 year, as determined by the Secretary. The 

23 Secretary may establish a cap on incentive 

24 payments for a year for a qualifying ACO. 


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1 ‘‘(ii) LIMITATION.—The Secretary 

2 shall limit incentive payments to each 

3 qualifying ACO under this paragraph as 

4 necessary to ensure that the aggregate ex5 penditures with respect to applicable bene6 ficiaries for such ACOs under this title in7 clusive of incentive payments described in 

8 this subparagraph do not exceed the 

9 amount that the Secretary estimates would 

10 be expended for such ACO for such bene11 ficiaries if the pilot program under this 

12 section were not implemented. 

13 ‘‘(D) REPORTING AND OTHER REQUIRE14 MENTS.—In carrying out such model, the Sec15 retary may (as the Secretary determines to be 

16 appropriate) incorporate reporting require17 ments, incentive payments, and penalties re18 lated to the physician quality reporting initia19 tive (PQRI), electronic prescribing, electronic 

20 health records, and other similar initiatives 

21 under section 1848, and may use alternative 

22 criteria than would otherwise apply under such 

23 section for determining whether to make such 

24 payments. The incentive payments described in 

25 this subparagraph shall not be included in the 


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1 limit described in subparagraph (C)(ii) or in the 

2 performance target model described in this 

3 paragraph. 

4 ‘‘(2) PARTIAL CAPITATION MODEL.— 

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B), a partial capitation model described 

7 in this paragraph (in this paragraph referred to 

8 as a ‘partial capitation model’) is a model in 

9 which a qualifying ACO would be at financial 

10 risk for some, but not all, of the items and serv11 ices covered under parts A and B, such as at 

12 risk for some or all physicians’ services or all 

13 items and services under part B. The Secretary 

14 may limit a partial capitation model to ACOs 

15 that are highly integrated systems of care and 

16 to ACOs capable of bearing risk, as determined 

17 to be appropriate by the Secretary. 

18 ‘‘(B) NO ADDITIONAL PROGRAM EXPENDI19 TURES.—Payments to a qualifying ACO for ap20 plicable beneficiaries for a year under the par21 tial capitation model shall be established in a 

22 manner that does not result in spending more 

23 for such ACO for such beneficiaries than would 

24 otherwise be expended for such ACO for such 

25 beneficiaries for such year if the pilot program 


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1 were not implemented, as estimated by the Sec2 retary. 

3 ‘‘(3) OTHER PAYMENT MODELS.— 

4 ‘‘(A) IN GENERAL.—Subject to subpara5 graph (B), the Secretary may develop other 

6 payment models that meet the goals of this 

7 pilot program to improve quality and efficiency. 

8 ‘‘(B) NO ADDITIONAL PROGRAM EXPENDI9 TURES.—Subparagraph (B) of paragraph (2) 

10 shall apply to a payment model under subpara11 graph (A) in a similar manner as such subpara12 graph (B) applies to the payment model under 

13 paragraph (2). 

14 ‘‘(d) APPLICABLE BENEFICIARIES.— 

15 ‘‘(1) IN GENERAL.—In this section, the term 

16 ‘applicable beneficiary’ means, with respect to a 

17 qualifying ACO, an individual who— 

18 ‘‘(A) is enrolled under part B and entitled 

19 to benefits under part A; 

20 ‘‘(B) is not enrolled in a Medicare Advan21 tage plan under part C or a PACE program 

22 under section 1894; and 

23 ‘‘(C) meets such other criteria as the Sec24 retary determines appropriate, which may inVerDate Nov 24 2008 02:53 Jun 20, 2009 Jkt 079200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2959.IH H2959

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1 clude criteria relating to frequency of contact 

2 with physicians in the ACO. 

3 ‘‘(2) FOLLOWING APPLICABLE BENE4 FICIARIES.—The Secretary may monitor data on ex5 penditures and quality of services under this title 

6 after an applicable beneficiary discontinues receiving 

7 services under this title through a qualifying ACO. 

8 ‘‘(e) IMPLEMENTATION.— 

9 ‘‘(1) STARTING DATE.—The pilot program shall 

10 begin no later than January 1, 2011. An agreement 

11 with a qualifying ACO under the pilot program may 

12 cover a multi-year period of between 3 and 5 years. 

13 ‘‘(2) WAIVER.—The Secretary may waive such 

14 provisions of this title and title XI as the Secretary 

15 determines necessary in order implement the pilot 

16 program. 

17 ‘‘(3) PERFORMANCE RESULTS REPORTS.—The 

18 Secretary shall report performance results to quali19 fying ACOs under the pilot program at least annu20 ally. 

21 ‘‘(4) LIMITATIONS ON REVIEW.—There shall be 

22 no administrative or judicial review under section 

23 1869, section 1878, or otherwise of— 

24 ‘‘(A) the elements, parameters, scope, and 

25 duration of the pilot program; 


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1 ‘‘(B) the selection of qualifying ACOs for 

2 the pilot program; 

3 ‘‘(C) the establishment of targets, meas4 urement of performance, determinations with 

5 respect to whether savings have been achieved 

6 and the amount of savings; 

7 ‘‘(D) determinations regarding whether, to 

8 whom, and in what amounts incentive payments 

9 are paid; and 

10 ‘‘(E) decisions about the extension of the 

11 program under subsection (g), expansion of the 

12 program under subsection (h) or extensions 

13 under subsection (i). 

14 ‘‘(5) ADMINISTRATION.—Chapter 35 of title 44, 

15 United States Code shall not apply to this section. 

16 ‘‘(f) EVALUATION.—The Secretary shall evaluate the 

17 payment incentive model for each qualifying ACO under 

18 the pilot program to assess impacts on beneficiaries, pro19 viders of services, suppliers and the program under this 

20 title. The Secretary shall make such evaluation publicly 

21 available within 60 days of the date of completion of such 

22 report. 

23 ‘‘(g) EXTENSION OF PILOT AGREEMENT WITH SUC24 CESSFUL ORGANIZATIONS.— 


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1 ‘‘(1) REPORTS TO CONGRESS.—Not later than 

2 2 years after the date the first agreement is entered 

3 into under this section, and biennially thereafter for 

4 six years, the Secretary shall report to Congress on 

5 the use of authorities under the pilot program. Each 

6 report shall address the impact of the use of those 

7 authorities on expenditures, access, and quality 

8 under this title. 

9 ‘‘(2) EXTENSION.—Subject to the monitoring 

10 described in paragraph (1), with respect to a quali11 fying ACO, the Secretary may extend the duration 

12 of the agreement for such ACO under the pilot pro13 gram as the Secretary determines appropriate if— 

14 ‘‘(A) the ACO receives incentive payments 

15 with respect to any of the first 4 years of the 

16 pilot agreement and is consistently meeting 

17 quality standards; or 

18 ‘‘(B) the ACO is consistently exceeding 

19 quality standards and is not increasing spend20 ing under the program. 

21 ‘‘(3) TERMINATION.—The Secretary may termi22 nate an agreement with a qualifying ACO under the 

23 pilot program if such ACO did not receive incentive 

24 payments or consistently failed to meet quality 


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1 standards in any of the first 3 years under the pro2 gram. 

3 ‘‘(h) EXPANSION TO ADDITIONAL ACOS.— 

4 ‘‘(1) TESTING AND REFINEMENT OF PAYMENT

5 INCENTIVE MODELS.—Subject to the evaluation de6 scribed in subsection (f), the Secretary may enter 

7 into agreements under the pilot program with addi8 tional qualifying ACOs to further test and refine 

9 payment incentive models with respect to qualifying 

10 ACOs. 

11 ‘‘(2) EXPANDING USE OF SUCCESSFUL MODELS

12 TO PROGRAM IMPLEMENTATION.— 

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graph (B), the Secretary may issue regulations 

15 to implement, on a permanent basis, the compo16 nents of the pilot program that are beneficial to 

17 the program under this title, as determined by 

18 the Secretary. 

19 ‘‘(B) CERTIFICATION.—The Chief Actuary 

20 of the Centers for Medicare & Medicaid Serv21 ices shall certify that the expansion of the com22 ponents of the program described in subpara23 graph (A) would result in estimated spending 

24 that would be less than what spending would 


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1 otherwise be estimated to be in the absence of 

2 such expansion. 

3 ‘‘(i) TREATMENT OF PHYSICIAN GROUP PRACTICE

4 DEMONSTRATION.— 

5 ‘‘(1) EXTENSION.—The Secretary may enter in 

6 to an agreement with a qualifying ACO under the 

7 demonstration under section 1866A, subject to re8 basing and other modifications deemed appropriate 

9 by the Secretary, until the pilot program under this 

10 section is operational. 

11 ‘‘(2) TRANSITION.—For purposes of extension 

12 of an agreement with a qualifying ACO under sub13 section (g)(2), the Secretary shall treat receipt of an 

14 incentive payment for a year by an organization 

15 under the physician group practice demonstration 

16 pursuant to section 1866A as a year for which an 

17 incentive payment is made under such subsection, as 

18 long as such practice group practice organization 

19 meets the criteria under subsection (b)(2). 

20 ‘‘(j) ADDITIONAL PROVISIONS.— 

21 ‘‘(1) AUTHORITY FOR SEPARATE INCENTIVE

22 ARRANGEMENTS.—The Secretary may create sepa23 rate incentive arrangements (including using mul24 tiple years of data, varying thresholds, varying 

25 shared savings amounts, and varying shared savings 


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1 limits) for different categories of qualifying ACOs to 

2 reflect natural variations in data availability, vari3 ation in average annual attributable expenditures, 

4 program integrity, and other matters the Secretary 

5 deems appropriate. 

6 ‘‘(2) ELIGIBILITY FOR MEDICAL HOME BONUS

7 PAYMENTS.—A qualifying ACO shall be eligible for 

8 bonus or incentive payments for provision of a med9 ical home (or similar model of care delivery) under 

10 section 204 of the Medicare Improvement and Ex11 tension Act of 2006 (division B of Public Law 109– 

12 432) in the same manner as health care providers 

13 participating in the ACO are so eligible. 

14 ‘‘(3) ENCOURAGEMENT OF PARTICIPATION OF

15 SMALLER ORGANIZATIONS.—In order to encourage 

16 the participation of smaller accountable care organi17 zations under the pilot program, the Secretary may 

18 limit a qualifying ACO’s exposure to high cost pa19 tients under the program. 

20 ‘‘(4) INVOLVEMENT IN PRIVATE PAY ARRANGE21 MENTS.—Nothing in this section shall be construed 

22 as preventing qualifying ACOs participating in the 

23 pilot program from negotiating similar contracts 

24 with private payers. 


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1 ‘‘(5) ANTIDISCRIMINATION LIMITATION.—The 

2 Secretary shall not enter into an agreement with an 

3 entity to provide health care items or services under 

4 the pilot program, or with an entity to administer 

5 the program, unless such entity guarantees that it 

6 will not deny, limit, or condition the coverage or pro7 vision of benefits under the program, for individuals 

8 eligible to be enrolled under such program, based on 

9 any health status-related factor described in section 

10 2702(a)(1) of the Public Health Service Act.’’. 

Æ 


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