‘‘(ii) the management of chronic dis-
ease and end-of-life care;
‘‘(E) encourage resource allocation deci-
sions based on efficient practice benchmarks;
‘‘(F) promote the conservative delivery of
care when more intensive care is wasteful if not
harmful; and
‘‘(G) reward such centers for improving
the quality of care and achieving efficient allo-
cation of resources.
‘‘(2) ADMINISTRATION BY CONTRACT.—Except
as otherwise specifically provided, the Secretary may
administer the demonstration program under this
section in accordance with section 1866C.
‘‘(3) WAIVER AUTHORITY.—The Secretary may
waive such requirements of this title and title XI as
may be necessary for the purpose of carrying out the
demonstration program under this section.
‘‘(4) DEFINITIONS.—In this section:
‘‘(A) 
BENEFICIARY.—The 
term 
‘bene-
ficiary’ means a beneficiary under this title who
is enrolled in the original medicare fee-for-serv-
ice program under parts A and B and not
under the Medicare+Choice program under
part C.
‘‘(B) COMPREHENSIVE CENTER FOR MED-
ICAL EXCELLENCE.—The term ‘comprehensive
center for medical excellence’ means a health
care group (as defined in subparagraph (C)) or
an organization representing regional coalitions
of health care groups.
‘‘(C) HEALTH CARE GROUP.—
‘‘(i) IN GENERAL.—The term ‘health
care group’ means—
‘‘(I) a group of physicians (as de-
fined in subparagraph (D)) organized
at least in part for the purpose of pro-
viding physicians’ services under this
title; or
‘‘(II) an integrated delivery sys-
tem that delivers care through coordi-
nated hospitals, clinics, and employed
and contracted physicians.
‘‘(ii) INCLUSION.—As the Secretary
finds appropriate, a health care group may
include a hospital or any other individual
or entity furnishing items or services for
which payment may be made under this
title that is affiliated with the health care
group under an arrangement structured so
that such individual or entity participates
in a demonstration project under this sec-
tion.
‘‘(D) PHYSICIAN.—Except as the Secretary
may otherwise provide, the term ‘physician’
means any individual who furnishes services
which may be paid for as physicians’ services
under this title.
‘‘(b) PLANNING
AND IMPLEMENTATION
OF DEM-
ONSTRATION PROGRAM.—
‘‘(1) PLANNING PHASE.—
‘‘(A) SELECTION OF 4 SITES.—The Sec-
retary shall select 4 comprehensive centers for
medical excellence to participate in the planning
phase of the demonstration program described
in subparagraph (B).
‘‘(B) OPERATION.—During the 18-month
period beginning after the selection of the cen-
ters under subparagraph (A), the Secretary, in
consultation with the National Steering Com-
mittee for Comprehensive Centers for Medical
Excellence Demonstration Program (established
under subsection (g)) and the Center for the
Evaluative Clinical Sciences at Dartmouth Col-
lege, shall work with the 4 centers selected
under subparagraph (A) with regard to the fol-
lowing:
‘‘(i) Subject to subsection (c), the es-
tablishment of criteria that the comprehen-
sive centers for medical excellence must
meet in order to be eligible to participate
in a demonstration project under this sec-
tion.
‘‘(ii) The establishment of standards
to determine whether a comprehensive cen-
ter for medical excellence meets the criteria
established under clause (i).
‘‘(iii) The development of appropriate
alternative payment systems under sub-
paragraph (D).
‘‘(iv) Any other aspect of the dem-
onstration program determined appropriate
by the Secretary to improve the implemen-
tation of the program under paragraph
(2).
‘‘(C) 
ESTABLISHMENT
OF
MEDICARE
CLAIMS-BASED
INFORMATION
SYSTEM
THAT
LINKS
INDIVIDUAL
SITES
AND
PROVIDES
BENCHMARKS FOR EVALUATING HEALTH CARE
QUALITY AND EFFICIENCY.—
‘‘(i) IN
GENERAL.—During the 18-
month period described in subparagraph
(B), the Secretary, in consultation with the
Center for the Evaluative Clinical Sciences
at Dartmouth College, shall establish and
implement a health information system
that—
‘‘(I) is modeled after the Dart-
mouth Atlas of Health Care Project;
‘‘(II) provides information on
practice variations based on cross sec-
tional and longitudinal profiles; and
‘‘(III) links to the registry data
developed under subsection (c)(2)(A).
‘‘(ii) 
AVAILABILITY
OF
INFORMA-
TION.—In order to make the information
described in clause (i)(II) as useful as pos-
sible for evaluating the quality and effi-
ciency of care, the Secretary shall ensure
that such information incorporates relevant
claims data within 3 months after such
claims have been adjudicated under this
title.
‘‘(D) DEVELOPMENT
OF
ALTERNATIVE
PAYMENT SYSTEMS.—
‘‘(i) IN
GENERAL.—During the 18-
month period described in subparagraph
(B), a comprehensive center for medical
excellence selected under subparagraph (A)
shall develop a proposal for an alternative
payment system for items and services pro-
vided by the center to beneficiaries under
the demonstration program. The alter-
native payment system shall be designed
to—
‘‘(I) maximize flexibility in deliv-
ering high-quality care and accom-
plishing the goals described in sub-
section (a)(1); and
‘‘(II) streamline or eliminate doc-
umentation and reporting require-
ments otherwise required under this
title.
‘‘(ii) BENEFITS.—In order to accom-
plish the goals described in subsection
(a)(1), a comprehensive center for medical
excellence may include in the proposal de-
scribed in clause (i) modifications to the
package of benefits available under the
original medicare fee-for-service program
under parts A and B, such as—
‘‘(I) providing additional items
and services than are available under
such program; and
‘‘(II) waiving part or all of bene-
ficiary 
cost-sharing 
requirements
under such program.
‘‘(2) IMPLEMENTATION PHASE.—
‘‘(A) IN GENERAL.—As soon a practicable
after the 18-month period described in para-
graph (1)(B), the Secretary shall fully imple-
ment the demonstration program under this
section.
‘‘(B) APPLICATION.—A comprehensive cen-
ter for medical excellence seeking to participate
in the demonstration program under this sec-
tion shall submit an application to the Sec-
retary at such time, in such manner, and con-
taining such information, as the Secretary may
require. The Secretary shall require that an ap-
plication include the center’s proposal for an al-
ternative payment system (as described in para-
graph (1)(D)).
‘‘(C) SELECTION OF SITES.—
if the demonstration program had not been
implemented.
‘‘(3) URBAN
AND
RURAL
SITES.—Notwith-
standing section 1866C(a)(2)(A), in selecting the
centers pursuant to paragraphs (1)(A) and (2)(B),
the Secretary shall ensure that the needs of bene-
ficiaries residing in urban and rural areas are ad-
dressed.
‘‘(c) ELIGIBILITY CRITERIA.—The criteria estab-
lished under subsection (b)(1)(B)(i) shall include the fol-
lowing:
‘‘(1) QUALITY IMPROVEMENT.—
‘‘(A) IN
GENERAL.—The comprehensive
center for medical excellence has the ability to
practice continuous quality improvement aimed
at integrating community-based support serv-
ices, primary care, and referral care in order to
meet the needs of beneficiaries.
‘‘(B) CONSIDERATIONS.—In determining
whether a comprehensive center for medical ex-
cellence meets the criteria described in subpara-
graph (A), the Secretary shall consider the
mechanisms that the comprehensive center will
utilize in order to—
‘‘(i) enhance the delivery of effective
care to beneficiaries;
‘‘(ii) ensure patient participation in
preference-based decisions, including the
use of shared decision-making tools;
‘‘(iii) implement an effective disease
management program for beneficiaries
with chronic conditions; and
‘‘(iv) address the specific needs of
beneficiaries with terminal illnesses, includ-
ing beneficiaries receiving hospice care
under a hospice program.
‘‘(2) INFORMATION SYSTEMS.—The comprehen-
sive center for medical excellence provides assur-
ances that it will—
‘‘(A) develop uniform and comprehensive
registries that track population-based rates of
use of health care resources and services to pro-
vide resource allocation and disease manage-
ment support; and
‘‘(B) participate in the health information
system established by the Secretary pursuant to
subsection (b)(1)(C)(i).
‘‘(3) ORGANIZATIONAL
AND
ADMINISTRATIVE
STRUCTURES.—The comprehensive center for med-
ical excellence has in place organizational and ad-
ministrative structures that ensure accountability,
leadership, and community involvement.
‘‘(4) DATA
REPORTING.—The comprehensive
center for medical excellence provides assurances
that it will report to the Secretary such data, at
such times and in such format as the Secretary re-
quires, for purposes of monitoring and evaluation of
the demonstration project.
‘‘(d) PAYMENTS TO CENTERS PARTICIPATING IN IM-
PLEMENTATION PHASE OF PROGRAM.—A comprehensive
center for medical excellence participating in a demonstra-
tion project under this section shall agree with respect to
items and services furnished to beneficiaries within the
scope of the demonstration project (as determined under
subsection (e))—
‘‘(1) to be paid based on the center’s proposal
for an alternative payment system (submitted pursu-
ant to subsection (b)(2)(B)); and
‘‘(2) that payment with respect to all such
items and services furnished by the comprehensive
center for medical excellence to such beneficiaries
shall (where determined appropriate by the Sec-
retary) be made to the center.
‘‘(e) BENEFICIARIES
WITHIN
SCOPE
OF
DEM-
ONSTRATION.—
‘‘(1) IN GENERAL.—The Secretary shall specify,
in accordance with this subsection, the criteria for
identifying those beneficiaries who are patients of a
comprehensive center for medical excellence who
shall be considered within the scope of the dem-
onstration program under this section and for as-
sessment of the effectiveness of the center in achiev-
ing the objectives of this section.
‘‘(2) OTHER CRITERIA.—The Secretary may es-
tablish additional criteria for inclusion of bene-
ficiaries within a demonstration project under this
section, which may include frequency of contact with
physicians in the center or other factors or criteria
that the Secretary finds to be appropriate.
‘‘(3) NOTICE REQUIREMENTS.—In the case of
each beneficiary determined to be within the scope
of a demonstration project under this section with
respect to a specific comprehensive center for med-
ical excellence, the Secretary shall ensure that such
beneficiary is notified of any waivers of coverage or
payment rules, applicable to such center under the
demonstration project.
‘‘(f) PARTICIPATION
AND SUPPORT
BY FEDERAL
AGENCIES.—In carrying out the demonstration program
under this section the Secretary may direct—
‘‘(1) the Director of the National Institutes of
Health to expand the efforts of the Institutes to
evaluate current medical technologies and improve
the foundation for evidence-based practice; and
‘‘(2) the Administrator of the Agency for
Healthcare Research and Quality to, where possible
and appropriate, use the demonstration program
under this section as a laboratory for the study of
quality improvement strategies for the national
health care system.
‘‘(g) NATIONAL STEERING COMMITTEE FOR COM-
PREHENSIVE CENTERS FOR MEDICAL EXCELLENCE DEM-
ONSTRATION PROJECTS.—
‘‘(1) ESTABLISHMENT.—The Secretary shall es-
tablish within the Department of Health and
Human Services a National Steering Committee for
Comprehensive Centers for Medical Excellence Dem-
onstration Projects (in this subsection referred to as
the ‘Steering Committee’) to carry out the duties de-
scribed in paragraph (3).
‘‘(2) MEMBERSHIP.—The Steering Committee
shall include the following members:
‘‘(A) At least 1 representative from—
‘‘(i) the National Institutes of Health;
‘‘(ii) the Agency for Healthcare Re-
search and Quality; and
‘‘(iii) the Centers for Medicare & Med-
icaid Services.
‘‘(B) A nationally recognized leader from
the field of health care quality improvement.
‘‘(C) An employer.
‘‘(D) A consumer.
‘‘(E) At least 2 health care providers.
‘‘(3) DUTIES.—The duties of the Steering Com-
mittee shall be to—
‘‘(A) make recommendations to the Sec-
retary regarding—
‘‘(i) the design of the demonstration
program under this section;
‘‘(ii) the development of the perform-
ance monitoring systems for the com-
prehensive centers for medical excellence
participating in the demonstration pro-
gram under this section;
‘‘(iii) which requirements of titles XI
and XVIII will need to be waived by the
Secretary pursuant to subsection (a)(3) in