I 
113TH CONGRESS 
1ST SESSION H. R. 1487 
To amend titles XVIII and XI of the Social Security Act to establish an 
exception from the physician self-referral prohibition and a safe harbor 
from Federal antikickback and other sanctions for incentive payments 
made by hospitals to physicians under certain incentive payment pro-
grams. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 11, 2013 
Mr. MCDERMOTT introduced the following bill; which was referred to the 
Committee 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 amend titles XVIII and XI of the Social Security Act 
to establish an exception from the physician self-referral 
prohibition and a safe harbor from Federal antikickback 
and other sanctions for incentive payments made by hos-
pitals to physicians under certain incentive payment pro-
grams. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Improved Health Care 
at Lower Cost Act of 2013’’. 
SEC. 2. EXCEPTION AND SAFE HARBOR FROM FEDERAL 
SANCTIONS 
FOR 
INCENTIVE 
PAYMENTS 
FROM HOSPITALS TO PHYSICIANS UNDER 
CERTAIN INCENTIVE PAYMENT PROGRAMS. 
(a) FINDINGS.—Congress finds the following: 
(1) The Department of Health and Human 
Services has been engaged in approving, on a 
project-by-project basis, gain-sharing arrangements 
under demonstration authority for nearly a decade. 
Based on the knowledge gained from such dem-
onstration projects, the Department is capable of de-
veloping and applying standards for permitting such 
arrangements more generally without the use of 
such authority. 
(2) The Inspector General of the Department of 
Health and Human Services has issued a special ad-
visory bulletin in July 1999 that indicates that there 
is no general authority for waiving sanctions for any 
gain-sharing arrangements between physicians and 
hospitals. 
(3) Due to lack of capitalization, size limita-
tions, risk characteristics, and other factors, many 
hospitals and physicians have been unable or unwill-
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ing to enter into gain-sharing types of arrangements 
that meet the requirements of the shared savings 
program. 
(b) PURPOSE.—The purpose of this section is to es-
tablish general statutory authority within the Department 
of Health and Human Services to recognize gain-sharing 
and other incentive payment programs, other than the 
shared savings program, that align incentives among hos-
pitals and physicians to improve efficiency and decrease 
costs while maintaining or improving quality care. 
(c) EXCEPTION FROM PHYSICIAN SELF-REFERRAL 
PROHIBITION.—Section 1877(e) of the Social Security Act 
(42 U.S.C. 1395nn(e)) is amended by adding at the end 
the following new paragraph: 
‘‘(9) PAYMENTS
UNDER
CERTAIN
INCENTIVE 
PAYMENT
PROGRAMS
BETWEEN
HOSPITALS
AND 
PHYSICIANS.— 
‘‘(A) IN GENERAL.—In the case of a mone-
tary incentive payment which is made by a hos-
pital to a physician under an incentive payment 
program (as defined in subparagraph (B)) that 
meets requirements established by the Secretary 
in consultation with the Attorney General and 
the Inspector General of the Department of 
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Health and Human Services for purposes of 
this paragraph. 
‘‘(B) INCENTIVE PAYMENT PROGRAM DE-
FINED.—In this paragraph, the term ‘incentive 
payment program’ means a program that is de-
signed to align incentives among hospitals and 
physicians (through techniques such as product 
standardization, the substitution of lower cost 
products, and care coordination initiatives that 
encourage medically appropriate decreases in 
length of stay) to improve efficiency and de-
crease costs while maintaining or improving 
quality.’’. 
(d) SAFE HARBOR FROM ANTIKICKBACK AND OTHER 
FEDERAL SANCTIONS.— 
(1) Section 1128B(b)(3) of the Social Security 
Act (42 U.S.C. 1320a–7b(b)(3)) is amended— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (I); 
(B) in subparagraph (J), by moving the in-
dentation 2 ems to the left and by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
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‘‘(K) any monetary incentive payment which is 
made by a hospital to a physician under an incentive 
payment program (as defined in subparagraph (B) 
of section 1877(e)(9)) that meets requirements es-
tablished by the Inspector General of the Depart-
ment of Health and Human Services in consultation 
with the Attorney General for purposes of applying 
this subparagraph (which requirements needs not be 
the same as those established under subparagraph 
(A) of such section).’’. 
(2) Section 1128A(b)(1) of the Social Security 
Act (42 U.S.C. 1320a–7a(b)(1)) is amended by in-
serting ‘‘(other than a monetary incentive payment 
described in section 1128B(b)(3)(K))’’ after ‘‘makes 
a payment’’. 
(e) PUBLICATION OF GUIDANCE.—The Secretary of 
Health and Human Services and the Inspector General 
of the Department of Health and Human Services— 
(1) not later than 6 months after the date of 
the enactment of this Act, shall jointly publish a so-
licitation of comments to carry out the amendments 
made by this section; and 
(2) not later than 12 months after such date of 
enactment, shall publish, jointly or separately, such 
guidance or rules, which may be effective on an in-
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terim, final basis, as may be necessary to carry out 
such amendments in a timely manner. 
(f) CONSTRUCTION.—Nothing in this section (or the 
amendments made by this section) shall be construed as 
affecting the operation of the shared savings program. 
(g) SHARED SAVINGS PROGRAM DEFINED.—In this 
section, the term ‘‘shared savings program’’ means such 
program under section 1899 of the Social Security Act (42 
U.S.C. 1395jjj). 
Æ 
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