I 

111TH CONGRESS 

1ST SESSION H. R. 3134 

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

Healthcare Innovation Zone pilot program. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 8, 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 Program Act of 2009’’. 

6 SEC. 2. HEALTHCARE INNOVATION ZONE DEMONSTRATION 

7 PROGRAM. 

8 (a) ESTABLISHMENT.—Not later than 6 months after 

9 the date of enactment of this Act, the Secretary of Health 


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1 and Human Services shall establish a Healthcare Innova2 tion Zone pilot program to increase healthcare provider 

3 integration and align healthcare provider incentives to im4 prove health and to reduce healthcare costs. 

5 (b) FEATURES OF PROGRAM.—The HIZ pilot pro6 gram established under subsection (a) shall consist of the 

7 following: 

8 (1) An HIZ planning grant program, as de9 scribed in section 3. 

10 (2) An HIZ demonstration project, as described 

11 in section 4. 

12 (c) DEFINITIONS.—In this Act: 

13 (1) GRANT PROGRAM.—The term ‘‘grant pro14 gram’’ means the HIZ planning grant program as 

15 described in section 3. 

16 (2) HIZ.—The term ‘‘HIZ’’ means a 

17 Healthcare Innovation Zone, consisting of an inte18 grated healthcare delivery network that works with 

19 local employers, community leaders, and private and 

20 governmental payors in a geographic region, that— 

21 (A) provides a full spectrum of care, in22 cluding inpatient, outpatient, post-acute, and 

23 preventive care, to individuals including Medi24 care beneficiaries; 


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1 (B) has an academic medical center that 

2 provides tertiary and quaternary care, has ex3 isting capabilities to conduct health services re4 search, and provides clinical training for health 

5 professionals; and 

6 (C) is able to accept alternative payment 

7 structures beyond fee-for-service and per diem 

8 amounts. 

9 (3) SECRETARY.—The term ‘‘Secretary’’ means 

10 the Secretary of Health and Human Services. 

11 SEC. 3. HIZ PLANNING GRANT PROGRAM. 

12 (a) ESTABLISHMENT.—The Secretary shall make 

13 grants to eligible entities for the purposes of researching 

14 and preparing an HIZ model plan, in accordance with sub15 section (f). 

16 (b) CONDITIONS.—A grant recipient under this sec17 tion must apply for the HIZ demonstration project de18 scribed in section 4. If a grant recipient under this section 

19 is not selected to participate in such project, then such 

20 recipient must return any unused grant funds to the Sec21 retary. 

22 (c) ELIGIBILITY.—The following persons are eligible 

23 entities for purposes of this section: 

24 (1) A healthcare institution or provider licensed 

25 and accredited in the United States. 


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1 (2) An academic medical center. 

2 (3) A large multispecialty group practice. 

3 (4) Any other clinical organization. 

4 (5) Any other organization that is able to estab5 lish, through a memorandum of understanding or by 

6 other means to be defined by the Secretary, an in7 tent to collaborate with a person listed in para8 graphs (1) through (4). 

9 (d) APPLICATION.—An application for a grant under 

10 this section shall include the following: 

11 (1) A demonstration that the grant applicant is 

12 located in a geographic region that has the necessary 

13 breadth of healthcare providers to support the HIZ. 

14 (2) The support and endorsement of the HIZ 

15 concept by the following persons: 

16 (A) At least one leader of a clinical entity 

17 that provides the full spectrum of care. 

18 (B) At least one private payer. 

19 (3) A demonstration that the grant applicant 

20 has the resources and expertise to implement the 

21 features listed in subsection (f). 

22 (4) A proposed budget setting forth the costs to 

23 be incurred in creating the model HIZ plan. 

24 (e) CRITERIA FOR AWARDING GRANTS.—The Sec25 retary shall give preference to a grant application that 


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1 demonstrates a likelihood that the HIZ model plan will 

2 meet the requirements of subsection (f). 

3 (f) HIZ MODEL PLAN REQUIREMENTS.—A recipient 

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

5 within 6 months of receiving such grant, an HIZ model 

6 plan describing the HIZ to be implemented in the dem7 onstration project under section 4. Such HIZ model plan 

8 must contain the following: 

9 (1) A description of innovative models of care 

10 that improve quality and decrease costs. 

11 (2) A provider network that will provide the full 

12 spectrum of care. 

13 (3) A target population and mechanisms to en14 roll such population, supported by evidence that 

15 such population is willing to participate in an HIZ 

16 demonstration. 

17 (4) A mechanism to provide for knowledge and 

18 information-sharing across the HIZ participants. 

19 (5) A description of how the HIZ would incor20 porate the training of the next generation of physi21 cians, nurses, and allied health professionals in a 

22 new model of cost-effective quality healthcare. 

23 (6) A description of the governance of the HIZ, 

24 and how it would affect the administration of the 


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1 model and management of the organizational and 

2 cultural changes necessary for a successful HIZ. 

3 (7) A description of non-financial barriers to in4 novation that must be addressed for the creation of 

5 a successful HIZ, including physician self-referral 

6 laws, anti-trust considerations, State laws, and ac7 creditation or certification requirements. 

8 (8) A process for data reporting, annual site 

9 visits, and developing community health impact as10 sessments. 

11 (9) A set of indicators to help track perform12 ance and success of the HIZ model plan, including 

13 measures to address cost containment, access to 

14 care, and quality improvement, and how the HIZ 

15 model plan would facilitate achievement of these im16 provements. 

17 (10) A description of mechanisms to achieve in18 volvement by the community and external experts as 

19 ongoing monitors of the success of the HIZ model 

20 plan. 

21 (11) Payment methodology options that address 

22 both funding mechanisms to the HIZ as well as how 

23 the HIZ would distribute funds to the HIZ partici24 pants. 


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1 (g) NUMBER AND AMOUNT OF PLANNING GRANTS.— 

2 The Secretary shall award at least 10 but not more than 

3 25 grants under this section in an amount of at least 

4 $250,000 and not more than $1,000,000 per grant. 

5 (h) FUNDING.—Amounts made available under the 

6 heading ‘‘Agency for Healthcare Research and Quality— 

7 Healthcare Research and Quality’’ in title VIII of division 

8 I of the American Recovery and Reinvestment Act of 2009 

9 (Public Law 111–5) may be used by the Secretary to make 

10 grants under this section. 

11 SEC. 4. HEALTHCARE INNOVATION ZONE DEMONSTRATION 

12 PROJECT. 

13 (a) ESTABLISHMENT.—The Secretary shall establish 

14 an HIZ demonstration project in order to test the effec15 tiveness of HIZs in increasing healthcare provider integra16 tion, improving healthcare services, and reducing 

17 healthcare costs. Such demonstration project shall not be 

18 subject to current requirements regarding shared savings 

19 under demonstration projects. The Secretary shall select 

20 demonstration project participants from the persons that 

21 have received grants under section 3. 

22 (b) DURATION.—The demonstration project shall op23 erate for a period of at least 3 years, and shall be subject 

24 to renewal at the Secretary’s discretion. 


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1 (c) APPLICATION.—An eligible entity shall submit an 

2 application for participation in the HIZ demonstration 

3 project to the Secretary at such time and manner, and 

4 containing such information as the Secretary may require. 

5 (d) ELIGIBILITY.—To be eligible to participate in the 

6 demonstration project established under this section, a 

7 person must— 

8 (1) have submitted an HIZ model plan in ac9 cordance with section 3(f) that is approved by the 

10 Secretary; 

11 (2) agree to submit the necessary data so that 

12 Secretary can assess the costs, quality of care, and 

13 access to care for the population participating in the 

14 HIZ demonstration project; 

15 (3) demonstrate a culture of innovation and 

16 commitment to preventive and public health; 

17 (4) possess structural elements to provide the 

18 full range of care necessary for a successful HIZ; 

19 (5) provide clinical training for healthcare pro20 fessionals in a medical environment that emphasizes 

21 coordinated, integrated, high-quality care delivered 

22 at a controlled cost; 

23 (6) have the ability to allocate resources within 

24 the members of the HIZ; 


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1 (7) have a broad research infrastructure that 

2 supports data gathering, analytics, and synthesis of 

3 unrelated population elements, including quality-re4 lated data elements; 

5 (8) have significant investment in health infor6 mation technology that extends across the system to 

7 include healthcare providers, physicians, and other 

8 clinicians; 

9 (9) possess advance innovations including, but 

10 not limited to, creation of medical homes, pay for 

11 performance, and other cost-effective delivery plat12 forms; 

13 (10) demonstrate long-term economic sustain14 ability; 

15 (11) demonstrate strong hospital and physician 

16 leadership and the willingness to undergo a full port17 folio assessment and reengineering of core patient 

18 care and administrative processes; 

19 (12) possess robust financial infrastructure and 

20 administrative support to assure the HIZ’s success; 

21 and 

22 (13) demonstrate arrangements that maintain 

23 oversight and accreditation standards. 

24 (e) HIZ REQUIREMENTS.—An HIZ established 

25 under this section shall— 


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1 (1) provide healthcare services to individuals 

2 who voluntarily enroll to receive such services for 

3 multi-year periods from the HIZ; and 

4 (2) provide comprehensive healthcare services, 

5 as described in subsection (f). 

6 (f) COMPREHENSIVE HEALTHCARE SERVICES.—The 

7 comprehensive healthcare services referred to in sub8 section (e)(2) shall consist of hospital care, physician serv9 ices, post-acute care, preventive care, education, tertiary 

10 and quaternary care, and palliative care, and shall include 

11 the following: 

12 (1) For a primary care practice, contractual 

13 agreements with practices that deliver both primary 

14 and preventive care. 

15 (2) For a teaching hospital or other hospital, 

16 arrangements with teaching and nonteaching hos17 pitals and arrangements with community hospitals. 

18 (3) For a network of outpatient facilities, ar19 rangements with outpatient facilities, including Fed20 erally Qualified Health Centers and community 

21 health providers. 

22 (4) For a network of post-acute care providers, 

23 arrangements with post-acute care providers for re24 habilitation services, home health services, hospice 

25 services, skilled nursing services, and such other 


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1 post-acute care services as the Secretary determines 

2 to be appropriate. 

3 (5) For a network of community services, ar4 rangements for the provision of ambulance services 

5 and community outreach service. 

6 (6) Arrangements for the provision such addi7 tional services as the Secretary may require. 

8 (g) PAYMENT.—The Secretary may determine the 

9 payments that are required to be made for receipt of 

10 healthcare services provided under a model plan imple11 mented with a grant under this section. The Secretary 

12 shall determine those amounts based on the methodology 

13 options submitted through the grant program established 

14 under section 3. 

15 (h) ASSUMPTION OF FINANCIAL RISK FOR COSTS

16 ABOVE HIZ PAYMENT AMOUNTS.—An HIZ established 

17 under this section shall assume the full financial risk for 

18 the costs of healthcare services delivered to an individual 

19 receiving services from the HIZ that are in excess of any 

20 payments made to the HIZ and must have sufficient re21 serves to accommodate any such additional costs. 

22 (i) WAIVER OF RIGHTS TO PAYMENT UNDER PRI23 VATE OR PUBLIC PROGRAMS.—An HIZ established with 

24 amounts provided under this section shall waive any right 

25 to additional reimbursement under any Federal healthcare 


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1 entitlement program, including under titles XVIII and 

2 XIX of the Social Security Act (42 U.S.C. 1395 et seq.; 

3 42 U.S.C. 1396 et seq.), and under any group health plan 

4 or from any health insurance issuer offering group or indi5 vidual health insurance coverage for healthcare services 

6 furnished to an individual receiving healthcare services 

7 from the HIZ and for which payment is made under this 

8 subsection for such services. 

9 (j) SCORING COST SAVINGS.—The Secretary shall 

10 collaborate with the Government Accountability Office in 

11 scoring the healthcare costs and savings associated with 

12 implementing HIZs on a nationwide basis. 

13 (k) WAIVER.—Any requirements under titles XI and 

14 XVIII of the Social Security Act (42 U.S.C. 1301 et seq.; 

15 42 U.S.C. 1395 et seq.), or under any other provision of 

16 law that would preclude the establishment or operation of 

17 an HIZ under this section, shall not apply with respect 

18 to such establishment or operation. 

19 (l) REPORTS.— 

20 (1) HIZ REPORT.—An entity that establishes 

21 an HIZ under this section shall submit to the Sec22 retary a report that describes and evaluates the ac23 tivities of the HIZ. 

24 (2) SECRETARY REPORT.—The Secretary shall 

25 submit to Congress an evaluation of the current staVerDate Nov 24 2008 05:09 Jul 09, 2009 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H3134.IH H3134

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1 tus of the demonstration program within 6 months 

2 after the end of the first year of the demonstration 

3 program, and every 6 months thereafter until the 

4 end of the demonstration program. 

Æ 


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