‘‘(b)(1) The aggregate annual funding for contracts 
under this part that begin after August 1, 2009, 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 resources 
needs for a contract period, taking into account any new 
work added by contract modification, during the course 
of the contract period or added from one contract cycle 
to the next cycle. New work includes— 
‘‘(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. 
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‘‘(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 
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. 
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‘‘(6) Such organizations shall be permitted discretion 
to allocate contract funds as needed to accomplish the 
tasks to be performed for a contract awarded under this 
title. 
‘‘(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. 6. 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-
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; 
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‘‘(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: 
‘‘(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. 7. 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: 
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‘‘(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; 
‘‘(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: 
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‘‘(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— 
(1) in clause (i), by striking ‘‘1902(d)’’ and in-
serting ‘‘1902(d)(1)’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(iii) 75 percent of the sums expended 
with respect to costs incurred during such 
quarter (as found necessary by the Sec-
retary for the proper and efficient adminis-
tration of the State plan) as are attrib-
utable to the performance of quality im-
provement program activities under a con-
tract entered into under section 1902(d)(2) 
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by an organization holding a contract 
under section 1153; and’’. 
(d) 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. CONFORMING NAME TO ‘‘QUALITY IMPROVEMENT 
ORGANIZATIONS’’. 
Part C of title XI of the Social Security Act is amend-
ed by striking ‘‘utilization and quality control peer review’’ 
and ‘‘peer review’’ each place either appears before ‘‘orga-
nization’’ or ‘‘organizations’’ and inserting ‘‘quality im-
provement’’. 
Æ 
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