tity has demonstrated success in facilitating clinical and 
administrative system redesign to improve the coordina-
tion, effectiveness, and safety of health care, and in facili-
tating cooperation among stakeholders in quality improve-
ment. 
‘‘(B) The Secretary shall ensure that the entity com-
plies with standards to ensure organizational integrity, in-
cluding— 
‘‘(i) appropriate representation of consumers 
and other stakeholders in the composition of the 
governing body; 
‘‘(ii) market-based compensation of board mem-
bers and executives; 
‘‘(iii) avoidance and mitigation of board mem-
ber conflict of interest; and 
‘‘(iv) safeguards to ensure appropriate travel 
expenses. 
To the extent practicable, the Secretary shall utilize stand-
ards developed in the private sector for purposes of car-
rying out this subparagraph and shall conduct audits as 
necessary to ensure compliance with such standards.’’. 
(b) USE OF STATES FOR GEOGRAPHIC AREAS.—Sub-
section (a) of such section is amended to read as follows: 
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‘‘(a) The Secretary shall designate each State as a 
geographic area with respect to which contracts under this 
part will be made.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contract periods beginning after 
the date of the enactment of this Act. 
SEC. 8. COORDINATION WITH MEDICAID. 
(a) PERMITTING ALTERNATIVE QUALITY IMPROVE-
MENT PROGRAM.—Section 1902(a)(30) of the Social Se-
curity Act (42 U.S.C. 1396a(a)(30)) is amended by strik-
ing ‘‘and’’ at the end of subparagraph (A), by adding 
‘‘and’’ and the end of subparagraph (B), and by adding 
at the end the following new subparagraph: 
‘‘(C) provide, at the discretion of the State 
plan, for a quality improvement program in 
place of the program described in subparagraph 
(A), in whole or in part, that— 
‘‘(i) establishes priorities for achieving 
significant measurable improvement in the 
quality of health care services provided to 
individuals eligible under this title, and re-
views such priorities at least every five 
years for the purpose of making appro-
priate revisions; 
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‘‘(ii) provides quality improvement as-
sistance to providers and practitioners con-
sistent with such priorities; and 
‘‘(iii) provides for an annual report to 
the Secretary on quality performance 
under such plan of providers and practi-
tioners using nationally standardized qual-
ity measures;’’. 
(b) ROLE OF QIOS.—Section 1902(d) of such Act 
(42 U.S.C. 1396a(d)) is amended— 
(1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) If a State contracts with a Quality Improvement 
Organization having a contract with the Secretary under 
part B of title XI for the performance of quality improve-
ment program activities required by subsection (a)(30)(C), 
such requirements shall be deemed to be met for those 
activities by delegation to such an Organization if the con-
tract provides for the performance of activities not incon-
sistent with part B of title XI and provides for such assur-
ances of satisfactory performance by such an entity or or-
ganization as the Secretary may prescribe.’’. 
(c) FUNDING.—Section 1903(a)(3)(C) of such Act 
(42 U.S.C. 1396b(a)(3)(C)) is amended— 
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