I 
115TH CONGRESS 
1ST SESSION H. R. 3611 
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 
JULY 28, 2017 
Mr. PAULSEN (for himself, Mr. KIND, and Mr. MARCHANT) introduced the 
following bill; which was referred to the Committee on Ways and Means 
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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; FINDINGS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Healthcare Outcomes Act of 2017’’. 
(b) FINDINGS.—Congress makes the following find-
ings: 
(1) Payment penalties for hospital acquired 
conditions under section 1886(p) of the Social Secu-
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rity Act, as added by section 3008 of the Patient 
Protection and Affordable Care Act, are based on a 
limited number of hospital acquired conditions but 
are applied to all Medicare inpatient prospective 
payments to a hospital (as defined in section 
1886(d) of the Social Security Act), resulting in 
payment penalties that are not proportional to the 
financial impact of the hospital acquired conditions. 
The method of risk adjustment used to determine 
the hospital acquired conditions performance of hos-
pitals does not adequately account for the chronic 
illness burden and severity of illness of Medicare 
beneficiaries. 
(2) Payment penalties for hospital readmissions 
under section 1886(q) of the Social Security Act, as 
added by section 3025 of the Patient Protection and 
Affordable Care Act, are based on a limited number 
of clinical conditions, including readmissions that 
are not related to the prior discharge and are not 
proportional to the overall financial impact of the re-
admission performance of the hospital. The method 
of risk adjustment used to determine the readmis-
sion performance of hospitals does not adequately 
account for the chronic illness burden and severity 
of illness of Medicare beneficiaries. 
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(3) Payment penalties and bonuses for hospital 
Value Based Purchasing under section 1886(o) of 
the Social Security Act, as added by section 3001 of 
the Patient Protection and Affordable Care Act, are 
overly complex and burdensome, are based on arbi-
trary weighting factors, and are not proportional to 
the overall financial impact of the value based pur-
chasing performance of the hospital. The methods of 
risk adjustment used to determine the value based 
purchasing performance of hospitals does not ade-
quately account for the chronic illness burden and 
severity of illness of Medicare beneficiaries. 
(4) Per case payment penalties for hospital ac-
quired conditions under section 1886(d)(4)(D), as 
added by section 5001(c) of the Deficit Reduction 
Act of 2005, are duplicative with the payment pen-
alties for hospital acquired conditions under section 
1886(p) of the Social Security Act, as added by sec-
tion 3008 of the Patient Protection and Affordable 
Care Act. 
(5) The payment penalties for hospital acquired 
conditions and readmissions and the payment pen-
alties and bonuses for hospital value based pur-
chasing should be restructured to be based on a 
comprehensive and clinically credible definition of 
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potentially-avoidable outcomes, including potentially- 
avoidable complications, potentially-avoidable re-
admissions, potentially-avoidable return emergency 
room visits and post-acute case episode expenditures, 
be based on the risk adjusted comparison of the po-
tentially-avoidable outcomes for a hospital to nation-
wide average rates and include both payment pen-
alties and bonuses that are proportional to the ac-
tual financial impact of the potentially-avoidable out-
comes. 
(6) The existing methods of risk adjustment 
used to determine the quality of care performance of 
hospitals under such sections 1886(p), 1886(q), 
1886(o), and 1886(d)(4)(D) of the Social Security 
Act should be replaced by a methodology that is 
composed of exhaustive and mutually exclusive risk 
categories that are clinically credible and explicitly 
recognize the severity of illness and chronic illness 
burden of Medicare beneficiaries, thereby accounting 
for patient characteristics that may impact access to 
care. 
SEC. 2. HOSPITAL OUTCOMES. 
(a) PAYMENT ADJUSTMENTS FOR HOSPITAL OUT-
COMES.—Section 1886 of the Social Security Act (42 
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U.S.C. 1395ww) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(t) HOSPITAL OUTCOMES.— 
‘‘(1) IN GENERAL.—In the case of an applicable 
hospital for an applicable prospective period begin-
ning on or after October 1, 2018— 
‘‘(A) for each discharge of such hospital 
occurring during such period, in addition to and 
after application of any increase under para-
graph (6) of subsection (o) and any adjustment 
under paragraph (7) of such subsection to the 
base operating DRG payment amount (as de-
fined in paragraph (7)(D) of such subsection) 
that would otherwise apply to such hospital 
during such period without application of this 
subsection, such operating DRG payment 
amount shall be adjusted by the value based 
outcome adjustment factor described in para-
graph (2) for the hospital for such period; and 
‘‘(B) the value based outcome adjustment 
factor shall apply only with respect to the appli-
cable prospective period, and the Secretary shall 
not take into account such adjustment factor in 
making payments to hospitals under this sec-
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amount that is equal to the product of 
0.03 and the aggregate amount of 
standardized hospital payments (as 
defined in paragraph (4)(G)(ii)(I)) 
made to the hospital during the data 
collection period with respect to such 
applicable prospective period. 
‘‘(C) BUDGET
NEUTRALITY
OF
VALUE 
BASED OUTCOME ADJUSTMENT FACTOR ACROSS 
ALL
HOSPITALS.—The Secretary shall deter-
mine a budget neutrality reduction fraction 
that, when applied in paragraph (4)(B)(ii), will 
result in a value based outcome adjustment fac-
tor determined under subparagraph (A) for an 
applicable prospective period that reduces the 
total payments under subsection (d) across all 
applicable hospitals and all potentially-avoidable 
outcomes for such period by an amount equal 
to the reduction in payments under such sub-
section for such period that would have resulted 
from the application of subsections (d)(4)(D), 
(o), (p), and (q) if the amendments made by 
the Healthcare Outcomes Act of 2017 had not 
applied. 
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‘‘(4) PROCESS
FOR
DETERMINING
FINANCIAL 
IMPACTS.—For purposes of paragraph (3), the Sec-
retary shall, for each performance category described 
in paragraph (5) and each data collection period 
that is with respect to an applicable prospective pe-
riod beginning on or after October 1, 2018, deter-
mine each of the following: 
‘‘(A) NATIONWIDE-AVERAGE RATES.—With 
respect to each risk category specified under 
paragraph (6)(B), the ratio of— 
‘‘(i) the number of discharges occur-
ring among (or, in the case of the perform-
ance category described in paragraph 
(5)(D), the total amount of standardized 
post acute care episode expenditures made 
with respect to) all applicable hospitals 
during such applicable data collection pe-
riod that are with respect to such risk cat-
egory and that involve the potentially- 
avoidable outcomes in such performance 
category; to 
‘‘(ii) the number of applicable dis-
charges among all applicable hospitals for 
such applicable data collection period and 
risk category. 
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‘‘(B) NATIONWIDE TARGET RATES.—With 
respect to each risk category specified under 
paragraph (6)(B), the product of— 
‘‘(i) subject to subparagraph (H), the 
applicable ratio determined under subpara-
graph (A) for such period and risk cat-
egory; and 
‘‘(ii) the budget neutrality reduction 
fraction 
determined 
under 
paragraph 
(3)(C) for such period. 
‘‘(C) HOSPITAL-SPECIFIC
ACTUAL
NUM-
BER.—With respect to each applicable hospital 
and each such risk category, the number of dis-
charges (or, in the case of the performance cat-
egory described in paragraph (5)(D), the total 
amount of standardized post acute care episode 
expenditures) occurring with respect to such 
hospital during such applicable data collection 
period that involve (or, in the case of such per-
formance category, that are with respect to) the 
potentially-avoidable outcomes in such perform-
ance category. 
‘‘(D) HOSPITAL-SPECIFIC EXPECTED NUM-
BER.—With respect to each applicable hospital, 
each applicable data collection period, and each 
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such risk category, the number that is the prod-
uct of— 
‘‘(i) subject to subparagraph (H), the 
product determined under subparagraph 
(B) for such period and risk category; and 
‘‘(ii) the number of applicable dis-
charges of the hospital for such period and 
risk category. 
‘‘(E) HOSPITAL-SPECIFIC
POTENTIALLY- 
AVOIDABLE
OUTCOME
PERFORMANCE.—With 
respect to each applicable hospital and applica-
ble data collection period, the difference be-
tween— 
‘‘(i) the sum of the numbers deter-
mined under subparagraph (C) for the hos-
pital for such period for all risk categories; 
and 
‘‘(ii) the sum of the numbers deter-
mined under subparagraph (D) for the 
hospital for such period for all risk cat-
egories. 
‘‘(F) FINANCIAL IMPACT.— 
‘‘(i) With respect to each applicable 
hospital and applicable data collection pe-
riod, the financial impact attributable to 
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potentially-avoidable outcomes performance 
within such performance category, deter-
mined as the product of the following: 
‘‘(I) the difference calculated 
under subparagraph (E) for such hos-
pital and period; and 
‘‘(II) the financial conversion fac-
tor determined in accordance with 
clause (ii) for the performance cat-
egory. 
‘‘(ii) FINANCIAL
CONVERSION
FAC-
TORS.—For purposes of clause (i), the Sec-
retary shall determine a financial conver-
sion factor for the performance category 
that— 
‘‘(I) in the case of the perform-
ance category described in paragraph 
(5)(A), is, with respect to inpatient 
hospital services that are furnished 
with respect to a discharge, equal to 
the average amount of increase in the 
standardized payments for such inpa-
tient hospital services for such dis-
charge that is attributable to the po-
tentially-avoidable complication; 
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‘‘(II) in the case of the perform-
ance category described in paragraph 
(5)(B), is, with respect to an initial 
discharge, equal to the average stand-
ardized payment for inpatient hospital 
services that are furnished with re-
spect to a potentially-avoidable read-
mission following the initial discharge; 
‘‘(III) in the case of the perform-
ance category described in paragraph 
(5)(C), is, with respect to an initial 
discharge, equal to the average stand-
ardized payment for hospital emer-
gency room services that are furnished 
with respect to a potentially-avoidable 
return emergency room visit following 
the initial discharge; and 
‘‘(IV) in the case of the perform-
ance category described in paragraph 
(5)(D), is equal to 1.0. 
‘‘(G) DEFINITIONS.—For purposes of this 
section: 
‘‘(i) POTENTIALLY-AVOIDABLE
OUT-
COMES.—The term ‘potentially-avoidable 
outcomes’ means, as applicable— 
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‘‘(I) a potentially-avoidable com-
plication within the category described 
in paragraph (5)(A); 
‘‘(II) a potentially-avoidable read-
mission within the category described 
in paragraph (5)(B); 
‘‘(III) 
a 
potentially-avoidable 
emergency room visit within the cat-
egory described in paragraph (5)(C); 
and 
‘‘(IV) post-acute care episode ex-
penditures within the category de-
scribed in paragraph (5)(D). 
‘‘(ii) STANDARDIZED PAYMENTS.— 
‘‘(I) STANDARDIZED
HOSPITAL 
PAYMENT.—The term ‘standardized 
hospital payment’ means payment for 
inpatient hospital services under sec-
tion 1886(d) furnished by an applica-
ble hospital that is adjusted to remove 
payment adjustments that are not di-
rectly related to the amount and type 
of services to be utilized for patient 
care (such as local or regional price 
differences, graduate indirect medical 
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education payments, disproportionate 
share payments, and such other ad-
justments as may be determined by 
the Secretary). 
‘‘(II) 
STANDARDIZED
POST- 
ACUTE
CARE
EPISODE
EXPENDI-
TURES.—The term ‘standardized post- 
acute 
care 
episode 
expenditures’ 
means post-acute care episode expend-
itures, adjusted to remove any pay-
ment adjustments not directly related 
to the amount and type of services to 
be utilized for patient care (such as 
adjustments for local or regional price 
differences). 
‘‘(iii) 
APPLICABLE
DISCHARGES.— 
With respect to an applicable data collec-
tion period and risk category, the term ‘ap-
plicable discharges’ means, in the case of— 
‘‘(I) the performance category 
described in paragraph (5)(A), dis-
charges occurring during such appli-
cable data collection period that are 
with respect to such risk category; 
and 
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‘‘(II) the performance category 
described in paragraph (5)(B), dis-
charges occurring during such appli-
cable data collection period that are 
with respect to such risk category and 
that are not identified as potentially- 
avoidable 
readmissions 
under 
the 
methodology selected under paragraph 
(6)(A). 
‘‘(iv) DOCUMENTED.—The term ‘doc-
umented’ means, with respect to a read-
mission or discharge (as applicable) of an 
individual entitled to benefits under part 
A, that the circumstances of such readmis-
sion or discharge are documented in the 
medical record of the individual. 
‘‘(H) EXCEPTION TO USE OF NATIONWIDE- 
AVERAGE RATES.—In the case that the method-
ology selected under paragraph (6)(B) for such 
performance category does not meet the criteria 
described in clause (iii) of such paragraph, and 
that there is a systematic negative bias in the 
payment adjustments against hospitals treating 
a disproportionate share of full-benefit dual eli-
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gible 
individuals 
(as 
defined 
in 
section 
1935(c)(6)), the Secretary shall— 
‘‘(i) develop groups of hospitals based 
on the overall proportion of inpatients in 
such hospitals who are full-benefit dual eli-
gible individuals (as defined in section 
1935(c)(6)); 
‘‘(ii) determine, with respect to each 
such group and each risk category speci-
fied under paragraph (6)(B), the ratio 
of— 
‘‘(I) the number of discharges oc-
curring among (or, in the case of the 
performance category described in 
paragraph (5)(D), the total amount of 
standardized post acute care episode 
expenditures made with respect to) all 
applicable hospitals in such group 
during such applicable data collection 
period that are with respect to such 
risk category and that involve the po-
tentially-avoidable outcomes in such 
performance category; to 
‘‘(II) the number of applicable 
discharges occurring among (or, in 
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the case of the performance category 
described in paragraph (5)(D), the 
total amount of standardized post 
acute care episode expenditures made 
with respect to) all applicable hos-
pitals in such group for such applica-
ble data collection period and risk cat-
egory; 
‘‘(iii) treat each reference in this 
paragraph to the ratio determined under 
subparagraph (A) for a period and risk 
category as a reference to the ratio deter-
mined under clause (ii) for a group, period, 
and risk category; and 
‘‘(iv) treat each reference in this para-
graph to the product determined under 
subparagraph (B) for a period and risk 
category as a reference to the ratio deter-
mined under such subparagraph for a 
group, period, and risk category. 
‘‘(5) 
PERFORMANCE
CATEGORIES
DE-
SCRIBED.—The performance categories described in 
this paragraph are the following: 
‘‘(A) POTENTIALLY-AVOIDABLE COMPLICA-
TIONS.—The performance category of complica-
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tions (referred to in this section as ‘potentially- 
avoidable complications’) that, with respect to 
items and services furnished to an individual 
entitled to benefits under part A in an applica-
ble hospital, meet all of the following require-
ments: 
‘‘(i) The complication occurs during 
the stay of the individual and was not 
present at the time of the admission of 
such individual to such hospital as an inpa-
tient. 
‘‘(ii) The complication is a harmful 
event (such as a surgical complication) or 
an acute illness (such as an infection or an 
acute exacerbation of underlying chronic 
disease). 
‘‘(iii) The complication is potentially 
avoidable with adequate care and treat-
ment. 
‘‘(iv) The complication is not a nat-
ural progression of the underlying illnesses 
of the individual that are present on ad-
mission of such individual to such hospital. 
‘‘(v) The complication may be reason-
ably construed as related to the care ren-
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dered during the stay of the individual at 
the hospital. 
‘‘(B) POTENTIALLY-AVOIDABLE
READMIS-
SIONS.— 
‘‘(i) IN GENERAL.—The performance 
category of readmissions (referred to in 
this section as ‘potentially-avoidable re-
admissions’) of individuals entitled to bene-
fits under part A to any hospitals following 
a discharge (referred to in this section as 
an ‘initial discharge’) of such individuals to 
an applicable hospital if the initial dis-
charge and readmission involved satisfy all 
of the following requirements: 
‘‘(I) The readmission of the indi-
vidual could reasonably have been pre-
vented by— 
‘‘(aa) the provision of appro-
priate care during the episode of 
care ending in such initial dis-
charge that was consistent with 
accepted standards; 
‘‘(bb) 
adequate 
discharge 
planning with respect to such ini-
tial discharge; 
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‘‘(cc) 
adequate 
post-dis-
charge follow-up with respect to 
such initial discharge; or 
‘‘(dd) improved coordination 
between the providers furnishing 
the inpatient or outpatient hos-
pital services during the episode 
of care ending in such initial dis-
charge and the providers fur-
nishing care during the post-dis-
charge period with respect to 
such initial discharge. 
‘‘(II) The readmission is for a 
condition or procedure related to the 
episode of care ending in such initial 
discharge, including a readmission for 
a condition or procedure that is any of 
the following: 
‘‘(aa) The same (or a closely 
related) condition or procedure as 
the condition addressed in, or the 
procedure provided during the 
episode of care ending in such 
initial discharge. 
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‘‘(bb) An infection or other 
complication of care provided 
during the episode of care ending 
in such initial discharge. 
‘‘(cc) A condition or proce-
dure indicative of a failed proce-
dure provided during the episode 
of care ending in such initial dis-
charge. 
‘‘(dd) An acute decompensa-
tion of a coexisting chronic dis-
ease that was precipitated by the 
care furnished during the episode 
of care ending in such initial dis-
charge. 
‘‘(III) The readmission is not a 
documented readmission with respect 
to a documented discharge that was 
initiated by the individual contrary to 
medical advice provided to such indi-
vidual during the episode of care with 
respect to such initial discharge. 
‘‘(IV) The readmission could not 
reasonably be considered a planned 
readmission. 
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‘‘(V) The readmission occurs dur-
ing the 30-day period following an in-
patient discharge of such an indi-
vidual from the applicable hospital 
with respect to such initial discharge. 
‘‘(VI) The readmission was not 
due to a traumatic injury that oc-
curred after the episode of care end-
ing in such initial discharge. 
‘‘(VII) The readmission does not 
fall under such other exclusions as the 
Secretary determines appropriate. 
‘‘(ii) 
READMISSION
CHAINS.—For 
purposes of this subsection, in the case 
that an individual has multiple readmis-
sions with respect to an initial discharge 
that, but for the application of this clause, 
would be considered potentially-avoidable 
readmissions with respect to such initial 
discharge, the following shall apply: 
‘‘(I) Only one of such readmis-
sion may be considered a potentially- 
avoidable readmission with respect to 
such initial discharge. 
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‘‘(II) None of such readmissions 
may be considered a new initial dis-
charge for purposes of this subsection. 
‘‘(C) POTENTIALLY-AVOIDABLE
RETURN 
EMERGENCY
ROOM
VISITS.—The performance 
category of return emergency room visits (re-
ferred to in this section as ‘potentially-avoidable 
return emergency room visits’) of individuals 
entitled to benefits under part A to any hos-
pitals following a discharge (referred to in this 
section as an ‘initial discharge’) of such individ-
uals to an applicable hospital if the initial dis-
charge and return emergency room visit in-
volved would satisfy the requirements described 
in subclauses (I), (II), (III), (V), (VI), and 
(VII) if— 
‘‘(i) the references in such subclauses 
to readmissions instead were references to 
return emergency room visits; and 
‘‘(ii) the reference in such subclause 
(V) to a 30-day period instead were a ref-
erence to a 15-day period. 
‘‘(D) POST-ACUTE CARE EPISODE EXPEND-
ITURES.— 
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‘‘(i) IN GENERAL.—The performance 
category, in the case of individuals entitled 
to benefits under part A and enrolled in 
part B who are discharged from an appli-
cable hospital (referred to in this section as 
an ‘initial discharge’), of expenditures (re-
ferred to in this section as ‘post-acute care 
episode expenditures’) that are made (in-
cluding any cost-sharing amounts expended 
by the individual) with respect to items 
and services furnished to such individuals 
for which payment is made under this title 
and that are so furnished during the re-
spective post-acute care episode periods ap-
plicable to such individuals, subject to 
clause (ii), if the initial discharge and indi-
vidual (as applicable) satisfy all of the fol-
lowing requirements: 
‘‘(I) The initial discharge is as-
signed to an applicable DRG (as de-
fined in clause (iii)). 
‘‘(II) The individual was entitled 
to benefits under part A and enrolled 
in part B for the entirety of the post- 
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‘‘(II) Expenditures that are with 
respect to return emergency room vis-
its of an individual that occur during 
the 15-day period following an inpa-
tient discharge of such an individual. 
‘‘(III) Such other expenditures as 
may be specified by the Secretary. 
‘‘(iii) ADDITIONAL DEFINITIONS.— 
‘‘(I) 
APPLICABLE
DRG.—For 
purposes of clause (i)(I), the term ‘ap-
plicable DRG’ means a diagnosis-re-
lated group (including, as applicable, 
a sub-categorization of a diagnosis-re-
lated group) for which there is a rea-
sonable expectation that the pattern 
of post-acute care expenditures is sta-
ble and predictable based on the rea-
son for the initial discharge. 
‘‘(II) POST-ACUTE CARE EPISODE 
PERIOD.— 
‘‘(aa) 
IN
GENERAL.—For 
purposes of clause (i), the term 
‘post-acute care episode period’ 
means, with respect to an initial 
discharge of an individual and 
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subject to item (bb), the period 
consisting of the 30-day period 
that begins with the date of such 
initial discharge. 
‘‘(bb) NO OVERLAP OF PERI-
ODS.—For purposes of this sub-
section, an individual may not be 
considered, at any one time, to be 
within more than one post-acute 
care episode. 
‘‘(6) SELECTION
OF
METHODS
FOR
IDENTI-
FYING
POTENTIALLY-AVOIDABLE
OUTCOMES
AND 
METHOD OF RISK ADJUSTMENT.— 
‘‘(A) METHODS FOR IDENTIFYING POTEN-
TIALLY-AVOIDABLE OUTCOMES.—The Secretary 
shall select a methodology for identifying poten-
tially-avoidable complications and a method-
ology for identifying potentially-avoidable re-
admissions, and shall specify the circumstances 
under which such complications and such re-
admissions would be considered potentially 
avoidable. Each such methodology shall meet 
the following criteria: 
‘‘(i) The methodology shall provide— 
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‘‘(I) in the case of potentially- 
avoidable complications, a comprehen-
sive identification of all conditions 
that could reasonably be considered a 
complication of care that meets the 
requirements under paragraph (5)(A) 
to be included as a potentially-avoid-
able complication; and 
‘‘(II) in the case of potentially- 
avoidable readmissions, a comprehen-
sive identification of all initial dis-
charges described in paragraph (5)(B) 
and corresponding readmissions de-
scribed in such paragraph that each 
meet the requirements for such read-
mission to be included as a poten-
tially-avoidable readmission. 
‘‘(ii) To the extent possible, the meth-
odology shall be a methodology that has 
been successfully implemented for the pur-
pose of adjusting payments to hospitals by 
a State plan under title XIX or by a major 
commercial payer or be a methodology that 
has been certified by an entity with a con-
tract under section 1890(a). 
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‘‘(iii) The methodology shall be open, 
transparent, and available for review and 
comment by the public. 
‘‘(iv) The Secretary may select propri-
etary methodologies that meet the criteria 
in clauses (i) through (iii). 
‘‘(B) SELECTION CRITERIA FOR METHOD 
OF RISK ADJUSTMENT.—For purposes of para-
graph (4), the Secretary shall, with respect to 
each category described in a subparagraph of 
paragraph (5), select a methodology for speci-
fying risk categories and for assigning individ-
uals entitled to benefits under part A to such 
categories, and shall so specify such risk cat-
egories and so assign such individuals to such 
categories. Each such methodology shall meet 
the following criteria: 
‘‘(i) The methodology shall result in 
an exhaustive and mutually exclusive list of 
risk categories. 
‘‘(ii) The methodology shall be clini-
cally credible and explicitly account for the 
severity of illness, chronic illness burden, 
and extensive comorbid diseases and high 
severity of illness of patients. 
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‘‘(iii) The methodology shall account 
for patient characteristics that may impact 
access to care. 
‘‘(iv) The methodology shall assign a 
risk category to an individual based on the 
condition of the individual at the time of— 
‘‘(I) in the case of potentially- 
avoidable complications, hospital ad-
mission; and 
‘‘(II) in the case of potentially- 
avoidable readmissions, hospital dis-
charge with respect to the initial dis-
charge. 
‘‘(v) To the extent possible, the meth-
odology shall be a methodology that has 
been successfully implemented for the pur-
pose of adjusting payments to hospitals by 
a State plan under title XIX or by a major 
commercial payer or be a methodology that 
has been certified by an entity with a con-
tract under section 1890(a). 
‘‘(vi) The methodology shall be open, 
transparent, and available for review and 
comment by the public. 
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‘‘(vii) The Secretary may select pro-
prietary methodologies that meet the cri-
teria in clauses (i) through (vi). 
‘‘(C) PUBLICATION OF SPECIFICATIONS.— 
Not later than 15 days prior to each applicable 
prospective year, the Secretary shall make 
available, such as by publicly posting on the 
Internet Web site of the Centers for Medicare 
& Medicaid Services the annual updates to each 
methodology selected under a subparagraph of 
this paragraph. 
‘‘(7) REPORTING BY SECRETARY.— 
‘‘(A) REPORTS TO HOSPITALS.—For each 
data collection period that is with respect to an 
applicable prospective period beginning on or 
after October 1, 2018, the Secretary shall pro-
vide to each applicable hospital, not later than 
the first day of such applicable prospective pe-
riod, a confidential report with respect to the 
potentially-avoidable outcomes of such hospital 
during such data collection period. 
‘‘(B) REPORTS TO PUBLIC.—For each data 
collection period that is with respect to an ap-
plicable prospective period described in para-
graph (1), the Secretary shall, not later than 90 
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days after the first day of such applicable pro-
spective period, make available to the public 
(including by posting on the Hospital Compare 
Web site) in an easily understandable format 
information regarding the performance of each 
applicable hospital during such data collection 
period with respect to potentially-avoidable out-
comes. 
‘‘(8) DEFINITIONS.—In this subsection: 
‘‘(A) APPLICABLE
HOSPITAL.—The term 
‘applicable hospital’ means a subsection (d) hos-
pital. 
‘‘(B) DATA
COLLECTION
PERIOD.—The 
term ‘data collection period’ means, with re-
spect to an applicable prospective period, a pe-
riod specified by the Secretary that is the most 
recent period for which data are available for 
purposes of determining the potentially-avoid-
able outcome adjustment factor described in 
paragraph (2) to be applied for such applicable 
prospective period. 
‘‘(C) APPLICABLE PROSPECTIVE PERIOD.— 
The term ‘applicable prospective period’ means 
a fiscal year. 
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