I 
111TH CONGRESS 
1ST SESSION H. R. 3664 
To direct the Secretary of Health and Human Services to establish a 
Healthcare Innovation Zone pilot program. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 29, 2009 
Ms. SCHWARTZ introduced the following bill; which was referred to the Com-
mittee 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Healthcare Innovation 
Zone Pilot Act of 2009’’. 
SEC. 2. HEALTHCARE INNOVATION ZONE PILOT PROGRAM. 
(a) ESTABLISHMENT.—The Secretary of Health and 
Human Services shall establish a Healthcare Innovation 
Zone pilot program to increase health care provider inte-
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gration and align health care provider incentives to reduce 
the rate of growth of health care costs while improving 
quality of care for Medicare, Medicaid, and privately in-
sured patients. The HIZ program, by including teaching 
hospitals, shall provide for the incorporation of new and 
innovative clinical initiatives for the training of the next 
generation of physicians, nurses, and other health profes-
sionals in a new model of cost-effective, high-quality health 
care. 
(b) FEATURES OF PROGRAM.—The HIZ pilot pro-
gram established under subsection (a) shall consist of— 
(1) an HIZ planning grant program, as de-
scribed in section 3; and 
(2) an HIZ pilot project, as described in section 
4. 
SEC. 3. HIZ PLANNING GRANT PROGRAM. 
(a) ESTABLISHMENT.—Within 6 months after the 
date of the enactment of this Act, the Secretary shall 
begin accepting applications for HIZ planning grants. The 
Secretary will make grants to successful applicants for the 
purposes of researching and preparing an HIZ design 
plan, in accordance with subsection (d). 
(b) ELIGIBILITY REQUIREMENTS.—An applicant for 
a grant under this section shall be a group of clinical or 
other entities that provides a full spectrum of health care, 
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including inpatient, outpatient, post-acute, and preventive 
care, to Medicare beneficiaries, Medicaid enrollees, and 
other individuals enrolled in private insurance plans. Such 
applicants must include a teaching hospital, and may in-
clude— 
(1) other clinical entities, including community 
hospitals and health centers or physician group prac-
tices; 
(2) schools of medicine or other health profes-
sions; and 
(3) other nonclinical entities, including commu-
nity organizations. 
(c) APPLICATION.—An application for a grant under 
this section shall include— 
(1) a description of the geographic region to be 
included in the HIZ established under section 4, in-
cluding population and health care provider demo-
graphics, as well as an estimate of the number of 
people that could be cared for in the HIZ; 
(2) a demonstration that the grant applicant 
has the expertise to engage community and clinical 
care leaders in developing a design plan for the HIZ 
that will meet the requirements listed in subsection 
(e); and 
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(3) a proposed budget setting forth the costs to 
be incurred in creating the HIZ design plan. 
(d) CRITERIA FOR AWARDING GRANTS.—The Sec-
retary shall give preference to grant applications in which 
the potential HIZ would care for large and diverse popu-
lations and that also demonstrate the commitment of clin-
ical and community partners to participate in the planning 
process for creating and submitting the HIZ design plan 
as set forth in subsection (e). 
(e) HIZ DESIGN PLAN REQUIREMENTS.—A recipient 
of a grant under this section must submit to the Secretary, 
within 1 year after receiving such grant funds, an HIZ 
design plan describing the HIZ to be created in the pilot 
program under section 4. Such HIZ design plan must con-
tain— 
(1) an estimate of the number of people to 
whom health care will be delivered by the providers 
in the HIZ using the models of care described in 
such plan; 
(2) a description of the legal and management 
structure of the HIZ Coordinating Entity under 
which the full spectrum of care would be provided 
through the HIZ, and that will receive and admin-
ister payments received under the pilot program; 
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(3) a description of how the full spectrum of 
care will be provided and by whom; 
(4) a description, including supporting financial 
documentation, of how the HIZ will reduce the rate 
of increase in Medicare and other health care spend-
ing including the level of the reduction and over 
what time frame such reduction will be achieved; 
(5) a description of how physician, hospital, and 
other providers will be integrated and aligned, and 
how health care delivery processes will be changed to 
reduce the rate of growth of health care costs while 
improving quality of care for Medicare, Medicaid, 
and privately insured patients; 
(6) a description of the target population to be 
served by the HIZ; 
(7) a list and description of quality metrics that 
will be used to measure quality improvement, includ-
ing both quality of care and community health sta-
tus; and cost indicators that best would track cost 
containment over time; 
(8) a description of how the HIZ will incor-
porate the training of the next generation of physi-
cians, nurses, and other health professionals in a 
new model of cost-effective, high-quality health care; 
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(9) a proposal to address non-financial barriers 
to the provision of the full spectrum of care, includ-
ing physician self-referral laws, anti-trust consider-
ations, State laws, and accreditation or certification 
requirements; 
(10) a description of the infrastructure and 
mechanisms to be used to collect, analyze, and ap-
propriately share data among clinical partners; 
(11) a description of the methods to be used to 
monitor and track health costs and utilization; 
(12) a description of a strategy to improve pre-
vention and public health and the health status of 
the community; 
(13) a description of mechanisms to achieve in-
volvement by the community and external experts as 
ongoing partners in and monitors of the HIZ; 
(14) a description of payment methodology op-
tions that address both funding level and mecha-
nisms to distribute funds to HIZ providers; and 
(15) a description of the start-up and other ad-
ditional costs that would be required to establish and 
operate the HIZ. 
(f) NUMBER AND AMOUNT OF PLANNING GRANTS.— 
The Secretary shall award no more than 25 grants under 
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this section in an amount of at least $250,000 and not 
more than $1,000,000 per grant. 
(g) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
$25,000,000 for the first fiscal year beginning after the 
date of enactment of this section and such sums as may 
be necessary for subsequent fiscal years. 
SEC. 4. HEALTHCARE INNOVATION ZONE PILOT PROJECT. 
(a) ESTABLISHMENT.—The Secretary shall establish 
an HIZ pilot project to test the effectiveness of HIZs in 
reducing the rate of growth of health care costs while im-
proving quality of care for Medicare, Medicaid, and pri-
vately insured patients. 
(b) DURATION.—The pilot project shall operate for 
a period of at least 3 years and shall be subject to renewal 
at the Secretary’s discretion. 
(c) APPLICATION.—A person who is eligible under 
section 3(b) may submit an application for participation 
in the HIZ pilot project to the Secretary at such time and 
manner, and containing the information described in sec-
tions 3(e) and section 4(d) and any such additional infor-
mation, as the Secretary may require. 
(d) REQUIREMENTS.—In addition to the require-
ments established by the Secretary under subsection (c), 
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to be eligible to participate in the HIZ pilot project under 
this section, the HIZ providers shall— 
(1) provide comprehensive health care services, 
as defined by the Secretary, to at least 50 percent 
of the population within the HIZ; 
(2) maintain or improve the quality of health 
care services provided under the HIZ, according to 
metrics approved by the Secretary, and submit the 
information necessary to the Secretary so that the 
Secretary may determine whether such maintenance 
or improvement has occurred; and 
(3) collect and submit information on changes 
that are being made to clinical education processes 
to reflect changes made in the delivery of health 
care. 
(e) PAYMENT.—The Secretary shall distribute pay-
ments to the HIZ Coordinating Entity so that the aggre-
gate level of payment for all Medicare beneficiaries partici-
pating in the HIZ pilot project will be equal to a base 
level of Medicare payments, as defined by the Secretary, 
increased by a rate of growth that is 1.5 percentage points 
less than the projected rate of growth for the HIZ. The 
Secretary may modify the 1.5 percentage point reduction 
if the estimated growth rate is lower than the national 
average. The types of payments subject of this arrange-
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ment and additional payment mechanisms shall be at the 
discretion of the Secretary and each HIZ based on the 
methodology options submitted by the grant recipient, as 
set forth under section 3(e)(14). 
(f) WAIVER OF RIGHTS TO PAYMENT UNDER PUBLIC 
PROGRAMS.—A health care provider receiving payments 
for patients under this section shall waive any right to ad-
ditional reimbursement under title XVIII of the Social Se-
curity Act (42 U.S.C. 1395 et seq.) beyond those estab-
lished under subsection (e) for those services provided to 
Medicare beneficiaries participating in the HIZ pilot. 
(g) WAIVERS.—The Secretary may waive any re-
quirements under titles XI, XVIII, and XIX of the Social 
Security Act (42 U.S.C. 1301 et seq.; 42 U.S.C. 1395 et 
seq.; and 42 U.S.C. 1396 et seq.), including the 
antikickback and civil monetary penalty statutes, and with 
regard to title XIX, statewideness, comparability, and 
managed care requirements, as necessary to carry out the 
pilot program established under this section. In the inter-
est of facilitating the development of HIZ pilot projects, 
the Secretary shall release a streamlined Medicare or Med-
icaid waiver application form. Use of such form is vol-
untary. Nothing contained in the antitrust laws shall be 
construed to prohibit persons providing health care serv-
ices as part of a pilot project authorized under this section 
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from lawfully carrying out the legitimate object thereof, 
nor shall such persons be held or construed to be illegal 
combinations or conspiracies in restraint of trade under 
the antitrust laws, if acting in accordance with the busi-
ness model approved by the Secretary under this section. 
(h) REPORTS.— 
(1) HIZ REPORT.—A person that establishes an 
HIZ pilot project under this section shall submit, 2 
years after the beginning of such project to the Sec-
retary a report that describes and evaluates the ac-
tivities of the HIZ. 
(2) SECRETARY REPORT.—The Secretary shall 
submit to Congress an evaluation of the current sta-
tus of the pilot within 6 months after the end of the 
first year of the pilot and every year thereafter until 
the end of pilot. 
SEC. 5. DEFINITIONS. 
In this Act: 
(1) PLANNING
GRANT
PROGRAM.—The term 
‘‘planning grant program’’ means the HIZ planning 
grant program as described in section 3. 
(2) HIZ.—Each of the terms ‘‘HIZ’’ and 
‘‘Healthcare Innovation Zone’’ mean a geographic 
region that contains— 
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