‘‘(2) If an incumbent organization achieves excellent 
performance as described in paragraph (3), then the Sec-
retary may renew the contract with that organization 
without full and open competition, but in no case may an 
organization be permitted to hold a contract for more than 
10 years without being subject to full and open competi-
tion. 
‘‘(3) Before publishing a request for proposal for a 
contract period, the Secretary shall, in consultation with 
the strategic advisory committee appointed under section 
1164(c)(1), establish measurable goals for each task to be 
included in such proposal. The contract shall include per-
formance thresholds by which an organization holding a 
contract under this section may demonstrate excellent per-
formance. The Secretary may not establish such perform-
ance thresholds in such a way as to predetermine or limit 
either the number or percentage of organizations which 
may demonstrate excellent performance. 
‘‘(4) The Secretary shall publish the request for pro-
posals no later than four months prior to the beginning 
of such contract period. 
‘‘(5) The Secretary shall utilize the strategic advisory 
committee appointed under section 1164(c)(1) to qualify 
the validity, reliability, and feasibility of measures to be 
used in evaluating the performance of organizations hold-
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ing a contract under this section. Before any performance 
measure may be used for such purpose, it must have been 
designated by such committee to be valid, reliable, and fea-
sible for use under similar circumstances, as demonstrated 
in at least one reliable and valid study. 
‘‘(6) In the case of an open competition for a contract 
under this section, if the incumbent organization bidding 
for the contract in the State in which it holds the contract 
demonstrates excellent performance in fulfilling the terms 
of such contract during the previous contract period, the 
Secretary shall award such organization a bonus equiva-
lent to ten percent of the total possible score for the pro-
posal. 
‘‘(7) The Secretary may not reduce the amount of 
a contract award below the amount proposed by the bidder 
prevailing in a competitive bidding process. 
‘‘(8) The Secretary shall design the process for per-
formance evaluation of contracts under this section— 
‘‘(A) to avoid interfering with the work of con-
tractors with plans, providers, and practitioners; 
‘‘(B) to hold harmless and not penalize contrac-
tors when performance is impaired or delayed by 
failures of the Secretary, personnel of the Depart-
ment of Health and Human Services, or contractors 
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of the Secretary, to provide timely deliverables by 
other entities; 
‘‘(C) to use a continuous measurement strategy 
with provision for frequent performance updates for 
evaluating interim progress; and 
‘‘(D) to require that evaluation metrics be mon-
itored and permit their adjustment based on experi-
ence or evolving science over the course of a contract 
cycle. 
‘‘(k)(1) The Secretary shall extend each contract 
under this section the contract period for which began on 
or after August 1, 2005, and before February 1, 2006, 
so that the subsequent contract period begins on October 
1, 2009. 
‘‘(2) The Secretary shall apportion adequate funding 
so that organizations with contracts extended under this 
subsection can perform existing and new tasks, as deter-
mined by the Secretary, during the period of the contract 
extension. 
‘‘(3) There are authorized to be appropriated such 
sums as are necessary to respond to increased personnel 
requirements resulting from starting all contracts simulta-
neously, as provided under this subsection.’’. 
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SEC. 6. QUALITY IMPROVEMENT FUNDING. 
Section 1159 of the Social Security Act (42 U.S.C. 
1320c–8) is amended— 
(1) by inserting ‘‘(a)’’ before ‘‘Expenses in-
curred’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(b)(1) The aggregate annual funding for contracts 
under this part that begin after August 1, 2008, shall not 
be less than $421,666,000. In addition, there are author-
ized to be apportioned for contract periods in subsequent 
years such additional amounts as may be necessary to ade-
quately fund any resource needs in excess of the amount 
provided under the previous sentence. 
‘‘(2) At least 80 percent of the funding under this 
part in a contract period shall be expended to directly fund 
the contracts held by organizations, as required under sec-
tion 1153(b). 
‘‘(3) The Secretary shall determine the resource 
needs for a contract period in consultation with represent-
atives from existing contractors. The determination shall 
take into account factors including any new work added 
via contract modification during the course of the contract 
period or added from one contract cycle to the next cycle. 
New work includes— 
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‘‘(A) additional core contract tasks, require-
ments, deliverables, and performance thresholds; 
‘‘(B) technical assistance for additional pro-
viders, practitioners, and health plans and additional 
provider settings; 
‘‘(C) increased outreach and communications to 
Medicare beneficiaries, providers, practitioners, and 
plans; and 
‘‘(D) increased volume of medical reviews. 
‘‘(4) With respect to the apportionment of funds 
under this part for a contract period— 
‘‘(A) the Secretary shall submit a proposed ap-
portionment to the Director of the Office of Manage-
ment and Budget no later than 1 year before the 
first date of the contract period; 
‘‘(B) such Director shall approve an proposed 
apportionment no later than 9 months before the 
first date of such contract period; 
‘‘(C) for tasks the Secretary proposes to con-
tinue from the previous contract period, if the ap-
portionment is not authorized by the deadline speci-
fied in subparagraph (B), funding shall continue for 
the next contract period at a level no less than the 
level for the previous contract period, increased by 
the percentage increase in the consumer price index 
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for all urban consumers during the preceding 12- 
month period. 
‘‘(5) Organizations with a contract under this part 
may enter into contracts with public or private entities in-
cluding providers, practitioners, and payers other than the 
Secretary, to provide quality improvement or other serv-
ices if there are arrangements made to avoid or mitigate 
potential conflicts of interest. 
‘‘(6) Such organizations shall have the ability to meet 
the terms of a contract by allocating funds to functions 
established by the Secretary at its discretion. The Sec-
retary shall review whether the organization met the func-
tions and goals set out for the organization, regardless of 
allocation of funds at the initial acceptance of the con-
tract. 
‘‘(7) Organizations with a contract under this part 
may utilize funding allocated to such contracts to pay for 
food costs directly related to fulfilling contract require-
ments.’’. 
SEC. 7. QUALIFICATIONS FOR QIOS. 
(a) IN GENERAL.—Subsection (b) of section 1153 of 
the Social Security Act (42 U.S.C. 1320c–2) is amended 
by adding at the end the following new paragraph: 
‘‘(4)(A) The Secretary shall not enter into or renew 
a contract under this section with an entity unless the en-
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