through such means as the Secretary deter-
mines to be most effective, including meetings 
and surveys, to determine the type of informa-
tion that is useful to the various stakeholders 
and the format that best facilitates use of the 
reports and of the Hospital Compare Internet 
website maintained by the Department of 
Health and Human Services. 
‘‘(B) INFORMATION
AND
FORMAT.—The 
Secretary shall modify the Hospital Compare 
Internet website maintained by the Department 
of Health and Human Services to make the use 
and navigation of that website readily available 
to individuals accessing it. The Secretary shall 
develop a flexible format to meet the differing 
needs of the various stakeholders and shall 
modify the website to permit a user to easily 
customize queries. 
‘‘(f) PERFORMANCE-BASED PAYMENT PROGRAM.— 
‘‘(1) ESTABLISHMENT.—The Secretary shall es-
tablish a program under which performance-based 
payments are made each fiscal year to hospitals that 
provide high quality inpatient hospital services to in-
dividuals who are entitled to benefits under part A 
and who are inpatients of the hospital. The Sec-
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
retary shall implement the program under this sub-
section so that performance-based payments are 
made to such hospitals in fiscal year 2011 and each 
subsequent fiscal year. 
‘‘(2) ADJUSTMENT
IN
PAYMENT
BASED
ON 
QUALITY PERFORMANCE.— 
‘‘(A) PAYMENT
BASED
ON
PERFORM-
ANCE.— 
‘‘(i) INCREASE IN AMOUNT OF PAY-
MENT
FOR
OPERATING
COSTS
OF
INPA-
TIENT
HOSPITAL
SERVICES.—Subject to 
subparagraph (B), from payment amounts 
reduced by the Secretary for operational 
costs of inpatient hospital services of a 
hospital 
for 
specified 
diagnosis-related 
groups under section 1886(d)(1)(F)(i) with 
respect to a fiscal year, the Secretary shall 
make a performance-based payment to that 
hospital for such costs for that fiscal year 
in the amount determined under clause (ii) 
and in the manner specified in section 
1886(d)(1)(F)(iv). 
‘‘(ii) METHODOLOGY TO DETERMINE 
THE
AMOUNT
OF
PAYMENT.—The Sec-
retary shall determine the amount of the 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
performance-based payment based on the 
hospital’s performance on each specified 
clinical condition or performance area dur-
ing the preceding year to individuals who 
are entitled to benefits under part A and 
are inpatients of the hospital using the 
payment and scoring methodologies con-
tained in the Report to Congress submitted 
by the Centers for Medicare & Medicaid 
Services on November 21, 2007, as modi-
fied by the succeeding provisions of this 
subsection. 
‘‘(B) REQUIREMENT TO SUBMIT DATA.—In 
order for a hospital to be eligible for a perform-
ance-based payment with respect to a fiscal 
year, the hospital must have complied with the 
requirements under subsection (a)(1) to submit 
data for specified quality measures. 
‘‘(C) MEASURED
CLINICAL
CONDITIONS 
FOR PERFORMANCE-BASED PAYMENTS IN FIS-
CAL YEAR 2011.— 
‘‘(i) CONDITIONS
MEASURED.—With 
respect to performance-based payments 
made to a hospital under this paragraph in 
fiscal year 2011, the Secretary shall meas-
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
ure quality performance only for the fol-
lowing four specific conditions or clinical 
performance areas: acute myocardial in-
farction (AMI), heart failure, pneumonia, 
and Surgical Care Improvement Project 
(formerly referred to as ‘Surgical Infection 
Prevention’ for discharges occurring before 
July 2006). 
‘‘(ii) MEASURES CITED IN NOVEMBER 
2007
CMS
REPORT
TO
CONGRESS.—In 
measuring quality performance for the con-
ditions specified under clause (i), the Sec-
retary shall use the specified quality meas-
ures identified as initial performance meas-
ures in the report referred to in subpara-
graph (A)(ii). 
‘‘(iii) 
HCAHPS 
MEASURES
EX-
CLUDED
FROM
INITIAL
PERFORMANCE- 
BASED PAYMENTS.— 
‘‘(I) IN GENERAL.—In measuring 
quality performance under clause (i), 
except as provided in subclause (II), 
the Secretary may not include speci-
fied quality measures with respect to 
the Hospital Consumer Assessment of 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
Healthcare Providers and Systems 
Survey (HCAHPS). 
‘‘(II) 
USE
IN
SUBSEQUENT 
YEARS.—Subject 
to 
subparagraph 
(D)(ii), the Secretary shall collect 
data on measures relating to assess-
ment of care by consumers and make 
refinements to such measures for use 
in measuring performance for fiscal 
years after fiscal year 2011 for per-
formance-based payments under this 
paragraph. 
‘‘(iv) 30-DAY
MORTALITY
MEASURES 
EXCLUDED FROM INITIAL PERFORMANCE- 
BASED PAYMENTS.— 
‘‘(I) IN GENERAL.—In measuring 
quality performance under clause (i), 
except as provided in subclause (II), 
the Secretary may not include speci-
fied quality measures with respect to 
mortality. 
‘‘(II) 
USE
IN
SUBSEQUENT 
YEARS.—Subject 
to 
subparagraph 
(D)(ii), the Secretary may include 
specified quality measures with re-
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
spect to 30-day mortality rates for use 
in measuring performance for fiscal 
years after fiscal year 2011 for per-
formance-based payments under this 
paragraph insofar as the Secretary es-
tablishes a mechanism for hospitals to 
receive timely information from the 
Secretary to enable hospitals to evalu-
ate performance on such measures. 
‘‘(D) MEASURED
CLINICAL
CONDITIONS 
AND PERFORMANCE AREAS FOR FISCAL YEARS 
AFTER FISCAL YEAR 2011.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), with respect to performance-based 
payments made to a hospital under this 
paragraph during a fiscal year after fiscal 
year 2011, the Secretary may expand the 
specified quality measures used in meas-
uring performance under subparagraph (C) 
for performance-based payments under this 
paragraph for fiscal year 2011. 
‘‘(ii) REQUIREMENT FOR NOTICE AND 
COMMENT
RULEMAKING.—The Secretary 
may only exercise the authority under 
clause (i) by regulation, after notice of the 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
proposed regulation in the Federal Reg-
ister and a period of not less than 60 days 
for public comment thereon. 
‘‘(E) ADVANCE PUBLICATION OF FULL-IN-
CENTIVE
BENCHMARKS.—The Secretary shall 
provide for the publication of full-incentive 
quality benchmarks (determined under para-
graph (4)(C)) sufficiently in advance of a fiscal 
year so that hospitals may make such changes 
as are required to meet full-incentive quality 
benchmarks applicable during the fiscal year in-
volved, and in no case shall the publication of 
the full-incentive quality benchmark be later 
than two years before the start of the fiscal 
year involved. 
‘‘(3) DETERMINATION OF HOSPITAL PERFORM-
ANCE.— 
‘‘(A) METHODOLOGY
FOR
SCORES.—The 
Secretary shall evaluate the performance of 
each hospital for the purpose of determining 
performance-based payments under paragraph 
(2). Subject to subparagraph (B), the Secretary 
shall determine a set of performance scores for 
each such hospital based on the performance 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
scoring methodology described in the report re-
ferred to in paragraph (2)(A)(ii). 
‘‘(B) CALCULATION OF SEPARATE SCORES 
BY
CLINICAL
CONDITION
OR
PERFORMANCE 
AREA.—The Secretary shall calculate composite 
performance scores separately for each specified 
clinical condition or performance area. The Sec-
retary may not calculate a single overall per-
formance score for each hospital. 
‘‘(C) CONSIDERATION
OF
RESULTS
AND 
IMPROVEMENT.—In 
calculating 
performance 
scores for each specified quality measure for 
each specified clinical condition or performance 
area, the Secretary shall determine a score for 
both the performance level attained by the hos-
pital and the degree of improvement of the per-
formance of the hospital. The final score for 
each such measure shall be equal to the greater 
of such attainment or such degree of improve-
ment on the measure. 
‘‘(D) EQUAL
WEIGHT
FOR
INDIVIDUAL 
MEASURES.—In calculating a composite per-
formance score for each specified clinical condi-
tion or performance area, the Secretary shall 
weight equally the individual specified quality 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
measures involved in assessing performance for 
such clinical condition or area. 
‘‘(E) REQUIREMENT
FOR
NOTICE
AND 
COMMENT RULEMAKING.—The Secretary shall 
describe in detail the methodology to be used to 
calculate performance scores under this sub-
paragraph by regulation, after notice of the pro-
posed regulation in the Federal Register and a 
period of not less than 60 days for public com-
ment thereon. 
‘‘(4) CALCULATION
OF
PERFORMANCE-BASED 
PAYMENT AMOUNT.— 
‘‘(A) METHODOLOGY.— 
‘‘(i) REPORT PROPOSAL.—Subject to 
the succeeding provisions of this sub-
section, the Secretary shall calculate the 
amount of performance-based payment 
under paragraph (2) for a hospital by con-
verting performance scores of a hospital to 
a payment amount for that hospital using 
the methodology contained in the report 
referred to in paragraph (2)(A)(ii). 
‘‘(ii) REQUIREMENT FOR NOTICE AND 
COMMENT
RULEMAKING.—The Secretary 
shall describe in detail the methodology to 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00026
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
be used to calculate the amount of per-
formance-based payment under paragraph 
(2) by regulation, after notice of the pro-
posed regulation in the Federal Register 
and a period of not less than 60 days for 
public comment thereon. 
‘‘(B) MINIMUM THRESHOLD.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall establish a performance threshold for 
a fiscal year of zero for all specified clinical 
conditions or performance areas. 
‘‘(ii) PERFORMANCE
THRESHOLD.— 
No amount of performance-based payment 
under paragraph (2) for a fiscal year may 
be made to a hospital unless the perform-
ance score of that hospital with respect a 
specified clinical condition or performance 
area during the preceding fiscal year ex-
ceeds the performance threshold estab-
lished under clause (i). 
‘‘(C) FULL-INCENTIVE
QUALITY
BENCH-
MARK.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall determine for each fiscal year a per-
formance level for each clinical condition or 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00027
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
performance area under a quality bench-
mark which, if met by a hospital, would 
qualify the hospital to receive 100 percent 
of the performance-based payment amount 
available under paragraph (2) for the asso-
ciated diagnosis-related groups. 
‘‘(ii) DETERMINATION OF LEVELS.— 
‘‘(I) INITIAL
LEVEL.—The per-
formance level referred to in clause (i) 
shall be initially set at a level that the 
Secretary determines that all hospitals 
can reasonably achieve. 
‘‘(II) MODIFICATION
OF
LEV-
ELS.—The Secretary may revise the 
performance level set under subclause 
(I) to a higher level from time to time 
as hospital performance improves. 
‘‘(iii) CONSIDERATIONS
IN
SETTING 
LEVELS.—In determining such perform-
ance level, the Secretary shall take into ac-
count practical experience with specified 
quality measures involved, historical per-
formance levels, improvement rates, the 
opportunity for continued improvement, 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00028
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
and the results of the review of bench-
marks conducted under paragraph (5). 
‘‘(5) REVIEW AND MODIFICATION OF BENCH-
MARKS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
reevaluate a quality benchmark established 
under this subsection if the Secretary deter-
mines with respect to a fiscal year that a sig-
nificant proportion of hospitals failed to meet 
the benchmark. The Secretary shall determine 
whether extenuating circumstances, such as 
measure definition changes, prevented hospitals 
from meeting the benchmark. 
‘‘(B) MODIFICATION FOR PERFORMANCE- 
BASED PAYMENTS.—The Secretary may make 
modifications to a benchmark described in sub-
paragraph (A), as applied to measure hospital 
performance in a fiscal year, and reassess such 
hospital performance in that fiscal year using 
such modified benchmark for purposes of calcu-
lating the amount of performance-based pay-
ment under paragraph (2). 
‘‘(6) BUDGET NEUTRALITY FOR PAYMENTS.— 
‘‘(A) REQUIREMENT
FOR
BUDGET
NEU-
TRALITY.—The aggregate amount of perform-
VerDate Nov 24 2008 
01:19 Apr 01, 2009
Jkt 079200
PO 00000
Frm 00029
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
based payments made under paragraph (2) in 
that fiscal year. 
‘‘(C) 
DETERMINATION
OF
PAYMENT 
AMOUNT.—Performance-based bonus payments 
under the program established in subparagraph 
(A) shall be made in such amount as the Sec-
retary determines to be appropriate. 
‘‘(D) REQUIRED AGGREGATE AMOUNT OF 
PAYMENTS.—The Secretary shall make aggre-
gate payments in a fiscal year under the per-
formance-based bonus payment program estab-
lished in subparagraph (A) in an amount equal 
to the difference between the aggregate amount 
of reductions under section 1886(d)(1)(F)(i) for 
the fiscal year involved and the aggregate 
amount of performance-based payments made 
under paragraph (2) for such fiscal year. 
‘‘(8) ADDITIONAL PERFORMANCE-BASED INCEN-
TIVE PAYMENTS.— 
‘‘(A) INDEPENDENT ACTUARIAL ESTIMATE 
OF SAVINGS.—With respect to each fiscal year 
beginning after fiscal year 2009, the Secretary 
shall enter into arrangements for the analysis 
by a qualified independent entity or organiza-
tion of the actuarial value of cost savings under 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00031
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
part A attributable to the improvement in the 
delivery of inpatient hospital services by hos-
pitals by reason of this section. 
‘‘(B) 
PERFORMANCE-BASED
INCENTIVE 
PAYMENT FUND.— 
‘‘(i) IN
GENERAL.—Amounts identi-
fied as savings under subparagraph (A) for 
a fiscal year shall be available to the Sec-
retary to make performance-based pay-
ments in addition to those available under 
paragraphs (2) and (7) as incentives to 
hospitals to continue to improve the quality 
of inpatient hospital services provided to 
patients. 
‘‘(ii) INCENTIVE
PAYMENTS.—Addi-
tional payments under clause (i) shall be 
made in such form, manner, and perio-
dicity as the Secretary may specify. 
‘‘(9) ALTERNATIVE PERFORMANCE MEASURE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
evaluate the appropriateness of applying an al-
ternative method for the measurement of the 
quality of care provided by hospitals to individ-
uals who are entitled to benefits under part A 
and who are inpatients of the hospitals. 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00032
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
‘‘(B) 
METHODOLOGY.—The 
alternative 
method under subparagraph (A) shall measure 
the extent to which such individuals are reliably 
being provided evidence-based care by hospitals, 
expressed as the percentage of occasions on 
which a hospital provides the individual with all 
of the appropriate actions identified under qual-
ity measures during a fiscal year. 
‘‘(C) PUBLIC
AVAILABILITY.—The Sec-
retary shall measure the performance of hos-
pitals using the alternative method under sub-
paragraph (A), and shall make the results of 
such performance measurement available to the 
public. 
‘‘(D) USE FOR EVALUATION OF FUTURE 
MEASURES.—The Secretary shall evaluate the 
appropriateness of using the alternative meas-
ure under subparagraph (A) for the purpose of 
making performance-based payments under this 
subsection. 
‘‘(g) FINANCING.— 
‘‘(1) REDUCTION IN DRG PAYMENT AMOUNT.— 
The Secretary shall make performance-based pay-
ments under paragraphs (2) and (7) of subsection 
(f) from amounts credited to the Federal Hospital 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00033
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
Insurance Trust Fund under section 1817 in the fis-
cal year by reason of the application of the reduction 
under section 1886(d)(1)(F)(i). 
‘‘(2) NO
EFFECT
ON
ADJUSTMENTS
FOR 
OUTLIER, IME, DSH, OR CAPITAL-RELATED COSTS.— 
The adjustments under paragraphs (5)(A), (5)(B), 
and (5)(F) of section 1886(d), and payments for 
capital-related costs under section 1886(g), shall be 
computed without regard to the adjustments made 
by reason of section 1886(d)(1)(F). 
‘‘(h) PROVISIONS
RELATING
TO
DATA
SUBMIS-
SION.— 
‘‘(1) IN GENERAL.—Subject to the succeeding 
provisions of this subsection, each hospital shall sub-
mit data on measures selected under this section to 
the Secretary in a form and manner, and at a time, 
specified by the Secretary for purposes of subsection 
(a). 
‘‘(2) DATA SUBMISSION AND RESUBMISSION.— 
‘‘(A) PERIOD FOR SUBMISSION AND VALI-
DATION.—The Secretary shall provide a 135- 
day period after the close of a calendar quarter 
for hospitals to submit data required under sub-
section (a) for such quarter. 
‘‘(B) RESUBMISSION PERIOD.— 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00034
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
‘‘(i) IN GENERAL.—Subject to clause 
(ii), insofar as an additional period of time 
is required after the end of the 135-day 
period referred to in subparagraph (A) to 
correct errors with respect to the data sub-
mitted by hospitals, the Secretary shall 
provide for an additional 30-day period, 
beginning on the day after the date of the 
end of such 135-day period, for the correc-
tion of such errors and resubmission of the 
revised data. 
‘‘(ii) 
EXCEPTION.—The 
Secretary 
may not provide for an additional 30-day 
period under clause (i) if the data sub-
mitted by the hospital have been used to 
determine an amount performance-based 
payments under subsection (f) for that 
hospital. 
‘‘(C) REPORT ON SHORTER TIMEFRAME.— 
The Secretary shall submit to Congress a report 
on the feasibility and advisability of reducing 
the length of the 135-day period under subpara-
graph (A) to 60 days for the submission and 
validation of data. 
‘‘(3) VALIDATION OF DATA.— 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00035
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
‘‘(A) IMPLEMENTATION OF PROCESS.—The 
Secretary shall implement a process for the val-
idation of data submitted by hospitals under 
subsection (a). Such process shall provide for 
the selection of hospitals with respect to data 
submitted by such hospitals on both a random 
basis and on the basis of specific criteria, and 
shall include standards for the validation of 
data at the level of specified quality measures. 
‘‘(B) VALIDATION
FOR
NEW
QUALITY 
MEASURES.—With respect to proposed new 
quality measures, the Secretary shall not estab-
lish standards for the validation of data for the 
period of time that the Secretary determines 
hospitals require to gain experience with the 
new quality measures to properly report data 
with respect to such measure. The Secretary 
may use processes such as re-abstraction and 
validation as a learning tool for hospitals in-
stead of establishing such standards. 
‘‘(4) OPPORTUNITY
TO
REVIEW
DATA.—The 
Secretary shall provide a hospital the opportunity to 
review data reported by the hospital before such 
data is made available to the public under subsection 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00036
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
(e) or used for purposes of the performance-based 
payment program under subsection (f). 
‘‘(i) RULE OF CONSTRUCTION WITH RESPECT TO 
APPEAL RIGHTS.—Nothing in this section shall be con-
strued as effecting the right of a subsection (d) hospital 
to seek reconsideration or judicial review under section 
1869, 1878, or otherwise of a determination of the Sec-
retary with respect to the provisions of this section, includ-
ing the application of the performance-based payment pro-
gram. 
‘‘(j) REPORTS TO CONGRESS.— 
‘‘(1) QUALITY
ASSESSMENTS.—The Secretary 
shall conduct assessments of the quality measure-
ment and performance-based payment program 
under this section, which shall be used in developing 
the reports under paragraph (2). 
‘‘(2) REPORTS BASED ON ASSESSMENTS.—The 
Secretary shall submit to Congress by not later than 
March 31, 2012, and every 18 months thereafter, a 
report that— 
‘‘(A) identifies the accomplishments of the 
program under this section; 
‘‘(B) 
identifies 
any 
unintended 
con-
sequences of such program for hospitals and 
patients; 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00037
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
‘‘(C) provides recommendations for legisla-
tive and other modifications to the program; 
‘‘(D) includes evidence indicating changes 
in access to, quality of, and efficiency and out-
comes in care related to the program; 
‘‘(E) assesses the program’s impact on dis-
parities in care by race and ethnicity; and 
‘‘(F) identifies the impact of the program 
on hospitals of differing size and patient acuity 
levels, including safety net hospitals and hos-
pitals with a substantial medical education com-
mitment. 
‘‘(3) GAO EVALUATION.—Not later than Sep-
tember 30, 2012, the Comptroller General shall con-
duct an independent evaluation of the impact of the 
program under this section on hospitals and pa-
tients. Such evaluation shall include the items de-
scribed in paragraph (2) as well as barriers to the 
program achieving its full potential.’’. 
(b) CONFORMING AMENDMENTS TO QUALITY RE-
PORTING AND PAYMENT UNDER INPATIENT HOSPITAL 
PROSPECTIVE PAYMENT SYSTEM.— 
(1) REPORTING
OF
QUALITY
DATA.—Section 
1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)) is amended— 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00038
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
(A) in clause (i), by inserting ‘‘and subject 
to section 1886A(a)(1),’’ after ‘‘during a fiscal 
year,’’; and 
(B) in clause (viii)(I), by striking ‘‘fiscal 
year 2007 and each subsequent fiscal year’’ and 
inserting ‘‘fiscal years 2007, 2008, and 2009’’. 
(2) ADJUSTMENT
TO
PAYMENTS
FOR
OPER-
ATING COSTS OF INPATIENT HOSPITAL SERVICES.— 
Section 1886(d)(1) of such Act (42 U.S.C. 
1395ww(d)(1)) is amended by adding at the end the 
following new subparagraph: 
‘‘(F) ADJUSTMENT
FOR
PERFORMANCE- 
BASED PAYMENT PROGRAM.— 
‘‘(i) TARGETED REDUCTIONS.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), in the case of a sub-
section (d) hospital that complies with 
the data submission requirements 
under section 1886A(a)(1) for a fiscal 
year, beginning with fiscal year 2011, 
the Secretary shall reduce the amount 
of the payment with respect to the op-
erating costs of inpatient hospital 
services determined under subpara-
graph (A) for specified diagnosis-re-
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00039
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
lated groups (as defined in clause (ii)) 
for that fiscal year by the perform-
ance-based payment offset percent (as 
defined in clause (iii)). 
‘‘(II) EXCEPTION.—There shall 
be no reduction under subclause (I) 
by reason of clause (ii)(II) before fis-
cal year 2012. 
‘‘(ii) SPECIFIED DIAGNOSIS-RELATED 
GROUPS DEFINED.— 
‘‘(I) 
DIAGNOSIS-RELATED 
GROUPS
EVALUATED
UNDER
COM-
POSITE
PERFORMANCE
MEASURES.— 
For purposes of clause (i) and subject 
to subclause (II), the term ‘specified 
diagnosis-related groups’ means only 
those diagnosis-related groups that 
are evaluated through specified qual-
ity measures (as defined in section 
1886A(a)(4)(A))— 
‘‘(aa) that are used for a fis-
cal year to measure the perform-
ance of a subsection (d) hospital 
under section 1886A(f) for pur-
poses of performance-based pay-
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00040
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
ments to that hospital under 
paragraph (2) or (7) of such sec-
tion; 
‘‘(bb) that have been rec-
ommended by the Hospital Qual-
ity Alliance; and 
‘‘(cc) data from which are 
made publicly available through 
the use of the Hospital Compare 
Internet website maintained by 
the Department of Health and 
Human Services (or such similar 
website of the Department) as 
meets the requirements of section 
1886A(e). 
‘‘(II) ACROSS THE BOARD APPLI-
CATION
FOR
HCAHPS.—With respect 
only to specified quality measures re-
lating to the Hospital Consumer As-
sessment of Healthcare Providers and 
Systems Survey (HCAHPS) and for 
which a diagnosis-related group is eli-
gible to report, such term includes a 
group. Nothing in this subclause shall 
be construed as applying a reduction 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00041
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
under this subparagraph to hospitals 
that are not subsection (d) hospitals. 
‘‘(iii) PERFORMANCE-BASED PAYMENT 
OFFSET PERCENT.— 
‘‘(I) IN GENERAL.—For purposes 
of clause (i) and subject to subclauses 
(II) and (III), the term ‘performance- 
based payment offset percent’ means 
the percent determined by the Sec-
retary for a fiscal year that results in 
aggregate reductions in payments 
under clause (i) in that fiscal year in 
an amount equal to the aggregate 
amount of performance-based pay-
ments that the Secretary elects to 
make under section 1886A(f)(2) for 
that fiscal year. 
‘‘(II) INDIVIDUAL MAXIMUM OFF-
SETS.—Subject to subclause (III), in 
no case may the percent determined 
under subclause (I) for a fiscal year 
exceed— 
‘‘(aa) with respect to speci-
fied quality measures described 
in clause (ii)(I), 2.0 percent; and 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00042
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
‘‘(bb) with respect to speci-
fied quality measures described 
in clause (ii)(II), 0.25 percent. 
‘‘(III) 
AGGREGATE
MAXIMUM 
OFFSET.—In no case may the percent 
determined under subclause (I) for a 
fiscal year exceed— 
‘‘(aa) 0.50 percent for fiscal 
year 2011; 
‘‘(bb) 1.0 percent for fiscal 
year 2012; 
‘‘(cc) 1.5 percent for fiscal 
year 2013; and 
‘‘(dd) 2.0 percent for fiscal 
year 2014 and succeeding years. 
‘‘(iv) INCREASE
IN
PPS
PAYMENT 
AMOUNT
FOR
PERFORMANCE-BASED
PAY-
MENT.—In the case of a subsection (d) 
hospital that received a performance-based 
payment under paragraph (2) or (7), or 
both, of section 1886A(f) for a fiscal year 
for a specified diagnosis-related group, the 
amount of the payment with respect to the 
operating costs of inpatient hospital serv-
ices determined under subparagraph (A) 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00043
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
for such specified diagnosis-related group 
shall be increased by the amount of such 
performance-based payment or payments 
for that fiscal year.’’. 
SEC. 3. CONSULTATION FOR APPROPRIATE APPLICATION 
OF 
PERFORMANCE-BASED 
PAYMENTS 
TO 
SMALL HOSPITALS. 
(a) CONSULTATION.—The Secretary of Health and 
Human Services shall consult with representatives of small 
hospitals, including critical access hospitals under section 
1820 of the Social Security Act (42 U.S.C. 1395i–4), to 
determine appropriate and effective methods for such hos-
pitals to participate in programs for performance-based 
payments for inpatient hospital services (or inpatient crit-
ical access hospital services) furnished to individuals who 
are entitled to benefits under part A of title XVIII of the 
Social Security Act (42 U.S.C. 1395c et seq.) and who 
are inpatients of the hospitals. 
(b) CONSIDERATION.—The Secretary shall consider 
innovative methods of measuring and rewarding quality 
inpatient hospital services furnished by small hospitals, in-
cluding critical access hospitals, which may be difficult to 
quantify due to the low volume of services provided by 
such hospitals for which quality measures have been devel-
oped. 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00044
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
(c) REPORT
TO CONGRESS.—Not later than two 
years after the date of enactment of this Act, the Sec-
retary shall submit to Congress a report on the consulta-
tion required under this section. The report shall include 
recommendations of the Secretary with respect to the ap-
propriate application of performance-based payment and 
payment incentive programs to small hospitals, including 
critical access hospitals, for the provision of quality inpa-
tient hospital services. 
SEC. 4. PRIORITY OF ASSISTANCE FROM QUALITY IM-
PROVEMENT ORGANIZATIONS AND OTHER 
QUALITY ORGANIZATIONS FOR HOSPITALS 
WITH 
RESULTS 
BELOW 
PERFORMANCE- 
BASED PAYMENT BENCHMARKS. 
(a) PRIORITY OF ASSISTANCE TO LOW-PERFORMING 
HOSPITALS.—Section 1154(a) of the Social Security Act 
(42 U.S.C. 1320c–3(a)) is amended by adding at the end 
the following new paragraph: 
‘‘(18)(A) The organization shall give priority in 
the provision of quality improvement assistance to 
subsection (d) hospitals that fail to meet quality 
benchmarks established under section 1886A(f). 
‘‘(B) In this paragraph, the term ‘quality im-
provement assistance’ includes the following: 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00045
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
‘‘(i) Education on quality improvement ini-
tiatives, strategies, and techniques. 
‘‘(ii) Instruction on how to collect, submit, 
aggregate, and interpret data on measures used 
for quality improvement, public reporting, and 
payment under section 1886A. 
‘‘(iii) Technical assistance to support qual-
ity improvement. 
‘‘(iv) Technical assistance and instruction 
in the conduct of root-cause analyses. 
‘‘(v) Facilitating adoption of procedures 
that encourage timely candid feedback from pa-
tients and their families concerning perceived 
problems. 
‘‘(vi) Guidance on redesigning clinical proc-
esses, including the adoption and effective use 
of health information technology, to improve the 
coordination, effectiveness, and safety of care.’’. 
(b) EVALUATION OF QUALITY IMPROVEMENT ORGA-
NIZATIONS.—Section 1153(c)(2) of such Act (42 U.S.C. 
1320c–2(c)(2)) is amended by inserting before the semi-
colon at the end the following: ‘‘, including the effective-
ness of the organization in improving the ability of a hos-
pital referred to in section 1154(a)(18)(A) to meet quality 
benchmarks established under section 1886A(f)’’. 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00046
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS
(c) ASSISTANCE FROM ALTERNATIVE QUALITY OR-
GANIZATIONS.—Section 1886A of the Social Security Act, 
as inserted by section 2(a), is amended— 
(1) by redesignating subsection (j) as sub-
section (k); and 
(2) by inserting after subsection (i) the fol-
lowing new subsection (j): 
‘‘(j) ASSISTANCE FROM ALTERNATIVE QUALITY OR-
GANIZATIONS.— 
‘‘(1) PRIVATE QUALITY ORGANIZATIONS.—The 
Secretary shall establish a program under which a 
hospital seeking to improve the quality of the provi-
sion of inpatient hospital services based on the re-
sults of a performance evaluation under this section 
may apply to the Secretary to receive quality im-
provement assistance from a private quality organi-
zation with expertise in supporting improvement in 
the quality of the provision of inpatient hospital 
services. 
‘‘(2) ACCREDITATION.—Before entering into ar-
rangements with a private quality organization for 
the provision of assistance under paragraph (1), the 
Secretary shall ensure that the organization has 
been accredited or certified by a recognized accredi-
tation or certification agency or body. 
VerDate Nov 24 2008 
20:49 Mar 31, 2009
Jkt 079200
PO 00000
Frm 00047
Fmt 6652
Sfmt 6201
E:\BILLS\H1776.IH
H1776
mstockstill on PROD1PC66 with BILLS