ning and monitoring of ongoing care manage-
ment plan. 
‘‘(I) The group meets other criteria deter-
mined to be appropriate by the Secretary. 
‘‘(c) SPECIFIC PAYMENT INCENTIVE MODELS.—The 
specific payment incentive models described in this sub-
section are the following: 
‘‘(1) PERFORMANCE
TARGET
MODEL.—Under 
the performance target model under this paragraph 
(in this paragraph referred to as the ‘performance 
target model’): 
‘‘(A) IN
GENERAL.—A qualifying ACO 
qualifies to receive an incentive payment if ex-
penditures for applicable beneficiaries are less 
than a target spending level or a target rate of 
growth. The incentive payment shall be made 
only if savings are greater than would result 
from normal variation in expenditures for items 
and services covered under parts A and B. 
‘‘(B) COMPUTATION
OF
PERFORMANCE 
TARGET.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall establish a performance target for 
each qualifying ACO comprised of a base 
amount (described in clause (ii)) increased 
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to the current year by an adjustment fac-
tor (described in clause (iii)). Such a tar-
get may be established on a per capita 
basis, as the Secretary determines to be 
appropriate. 
‘‘(ii) BASE AMOUNT.—For purposes of 
clause (i), the base amount in this sub-
paragraph is equal to the average total 
payments (or allowed charges) under parts 
A and B (and may include part D, if the 
Secretary determines appropriate) for ap-
plicable beneficiaries for whom the quali-
fying ACO furnishes items and services in 
a base period determined by the Secretary. 
Such base amount may be determined on 
a per capita basis. 
‘‘(iii) 
ADJUSTMENT
FACTOR.—For 
purposes of clause (i), the adjustment fac-
tor in this clause may equal an annual per 
capita amount that reflects changes in ex-
penditures from the period of the base 
amount to the current year that would rep-
resent an appropriate performance target 
for applicable beneficiaries (as determined 
by the Secretary). Such adjustment factor 
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may be determined as an amount or rate, 
may be determined on a national, regional, 
local, or organization-specific basis, and 
may be determined on a per capita basis. 
Such adjustment factor also may be ad-
justed for risk as determined appropriate 
by the Secretary. 
‘‘(iv) REBASING.—Under this model 
the Secretary shall periodically rebase the 
base expenditure amount described in 
clause (ii). 
‘‘(C) MEETING TARGET.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), a qualifying ACO that meet or exceeds 
annual quality and performance targets for 
a year shall receive an incentive payment 
for such year equal to a portion (as deter-
mined appropriate by the Secretary) of the 
amount by which payments under this title 
for such year relative are estimated to be 
below the performance target for such 
year, as determined by the Secretary. The 
Secretary may establish a cap on incentive 
payments for a year for a qualifying ACO. 
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‘‘(ii) 
LIMITATION.—The 
Secretary 
shall limit incentive payments to each 
qualifying ACO under this paragraph as 
necessary to ensure that the aggregate ex-
penditures with respect to applicable bene-
ficiaries for such ACOs under this title in-
clusive of incentive payments described in 
this subparagraph do not exceed the 
amount that the Secretary estimates would 
be expended for such ACO for such bene-
ficiaries if the pilot program under this 
section were not implemented. 
‘‘(D) REPORTING
AND
OTHER
REQUIRE-
MENTS.—In carrying out such model, the Sec-
retary may (as the Secretary determines to be 
appropriate) 
incorporate 
reporting 
require-
ments, incentive payments, and penalties re-
lated to the physician quality reporting initia-
tive (PQRI), electronic prescribing, electronic 
health records, and other similar initiatives 
under section 1848, and may use alternative 
criteria than would otherwise apply under such 
section for determining whether to make such 
payments. The incentive payments described in 
this subparagraph shall not be included in the 
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limit described in subparagraph (C)(ii) or in the 
performance target model described in this 
paragraph. 
‘‘(2) PARTIAL CAPITATION MODEL.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a partial capitation model described 
in this paragraph (in this paragraph referred to 
as a ‘partial capitation model’) is a model in 
which a qualifying ACO would be at financial 
risk for some, but not all, of the items and serv-
ices covered under parts A and B, such as at 
risk for some or all physicians’ services or all 
items and services under part B. The Secretary 
may limit a partial capitation model to ACOs 
that are highly integrated systems of care and 
to ACOs capable of bearing risk, as determined 
to be appropriate by the Secretary. 
‘‘(B) NO ADDITIONAL PROGRAM EXPENDI-
TURES.—Payments to a qualifying ACO for ap-
plicable beneficiaries for a year under the par-
tial capitation model shall be established in a 
manner that does not result in spending more 
for such ACO for such beneficiaries than would 
otherwise be expended for such ACO for such 
beneficiaries for such year if the pilot program 
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were not implemented, as estimated by the Sec-
retary. 
‘‘(3) OTHER PAYMENT MODELS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary may develop other 
payment models that meet the goals of this 
pilot program to improve quality and efficiency. 
‘‘(B) NO ADDITIONAL PROGRAM EXPENDI-
TURES.—Subparagraph (B) of paragraph (2) 
shall apply to a payment model under subpara-
graph (A) in a similar manner as such subpara-
graph (B) applies to the payment model under 
paragraph (2). 
‘‘(d) APPLICABLE BENEFICIARIES.— 
‘‘(1) IN GENERAL.—In this section, the term 
‘applicable beneficiary’ means, with respect to a 
qualifying ACO, an individual who— 
‘‘(A) is enrolled under part B and entitled 
to benefits under part A; 
‘‘(B) is not enrolled in a Medicare Advan-
tage plan under part C or a PACE program 
under section 1894; and 
‘‘(C) meets such other criteria as the Sec-
retary determines appropriate, which may in-
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clude criteria relating to frequency of contact 
with physicians in the ACO. 
‘‘(2) 
FOLLOWING
APPLICABLE
BENE-
FICIARIES.—The Secretary may monitor data on ex-
penditures and quality of services under this title 
after an applicable beneficiary discontinues receiving 
services under this title through a qualifying ACO. 
‘‘(e) IMPLEMENTATION.— 
‘‘(1) STARTING DATE.—The pilot program shall 
begin no later than January 1, 2011. An agreement 
with a qualifying ACO under the pilot program may 
cover a multi-year period of between 3 and 5 years. 
‘‘(2) WAIVER.—The Secretary may waive such 
provisions of this title and title XI as the Secretary 
determines necessary in order implement the pilot 
program. 
‘‘(3) PERFORMANCE RESULTS REPORTS.—The 
Secretary shall report performance results to quali-
fying ACOs under the pilot program at least annu-
ally. 
‘‘(4) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of— 
‘‘(A) the elements, parameters, scope, and 
duration of the pilot program; 
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‘‘(B) the selection of qualifying ACOs for 
the pilot program; 
‘‘(C) the establishment of targets, meas-
urement of performance, determinations with 
respect to whether savings have been achieved 
and the amount of savings; 
‘‘(D) determinations regarding whether, to 
whom, and in what amounts incentive payments 
are paid; and 
‘‘(E) decisions about the extension of the 
program under subsection (g), expansion of the 
program under subsection (h) or extensions 
under subsection (i). 
‘‘(5) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code shall not apply to this section. 
‘‘(f) EVALUATION.—The Secretary shall evaluate the 
payment incentive model for each qualifying ACO under 
the pilot program to assess impacts on beneficiaries, pro-
viders of services, suppliers and the program under this 
title. The Secretary shall make such evaluation publicly 
available within 60 days of the date of completion of such 
report. 
‘‘(g) EXTENSION OF PILOT AGREEMENT WITH SUC-
CESSFUL ORGANIZATIONS.— 
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‘‘(1) REPORTS TO CONGRESS.—Not later than 
2 years after the date the first agreement is entered 
into under this section, and biennially thereafter for 
six years, the Secretary shall report to Congress on 
the use of authorities under the pilot program. Each 
report shall address the impact of the use of those 
authorities on expenditures, access, and quality 
under this title. 
‘‘(2) EXTENSION.—Subject to the monitoring 
described in paragraph (1), with respect to a quali-
fying ACO, the Secretary may extend the duration 
of the agreement for such ACO under the pilot pro-
gram as the Secretary determines appropriate if— 
‘‘(A) the ACO receives incentive payments 
with respect to any of the first 4 years of the 
pilot agreement and is consistently meeting 
quality standards; or 
‘‘(B) the ACO is consistently exceeding 
quality standards and is not increasing spend-
ing under the program. 
‘‘(3) TERMINATION.—The Secretary may termi-
nate an agreement with a qualifying ACO under the 
pilot program if such ACO did not receive incentive 
payments or consistently failed to meet quality 
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standards in any of the first 3 years under the pro-
gram. 
‘‘(h) EXPANSION TO ADDITIONAL ACOS.— 
‘‘(1) TESTING AND REFINEMENT OF PAYMENT 
INCENTIVE MODELS.—Subject to the evaluation de-
scribed in subsection (f), the Secretary may enter 
into agreements under the pilot program with addi-
tional qualifying ACOs to further test and refine 
payment incentive models with respect to qualifying 
ACOs. 
‘‘(2) EXPANDING USE OF SUCCESSFUL MODELS 
TO PROGRAM IMPLEMENTATION.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary may issue regulations 
to implement, on a permanent basis, the compo-
nents of the pilot program that are beneficial to 
the program under this title, as determined by 
the Secretary. 
‘‘(B) CERTIFICATION.—The Chief Actuary 
of the Centers for Medicare & Medicaid Serv-
ices shall certify that the expansion of the com-
ponents of the program described in subpara-
graph (A) would result in estimated spending 
that would be less than what spending would 
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otherwise be estimated to be in the absence of 
such expansion. 
‘‘(i) TREATMENT OF PHYSICIAN GROUP PRACTICE 
DEMONSTRATION.— 
‘‘(1) EXTENSION.—The Secretary may enter in 
to an agreement with a qualifying ACO under the 
demonstration under section 1866A, subject to re-
basing and other modifications deemed appropriate 
by the Secretary, until the pilot program under this 
section is operational. 
‘‘(2) TRANSITION.—For purposes of extension 
of an agreement with a qualifying ACO under sub-
section (g)(2), the Secretary shall treat receipt of an 
incentive payment for a year by an organization 
under the physician group practice demonstration 
pursuant to section 1866A as a year for which an 
incentive payment is made under such subsection, as 
long as such practice group practice organization 
meets the criteria under subsection (b)(2). 
‘‘(j) ADDITIONAL PROVISIONS.— 
‘‘(1) AUTHORITY
FOR
SEPARATE
INCENTIVE 
ARRANGEMENTS.—The Secretary may create sepa-
rate incentive arrangements (including using mul-
tiple years of data, varying thresholds, varying 
shared savings amounts, and varying shared savings 
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limits) for different categories of qualifying ACOs to 
reflect natural variations in data availability, vari-
ation in average annual attributable expenditures, 
program integrity, and other matters the Secretary 
deems appropriate. 
‘‘(2) ELIGIBILITY FOR MEDICAL HOME BONUS 
PAYMENTS.—A qualifying ACO shall be eligible for 
bonus or incentive payments for provision of a med-
ical home (or similar model of care delivery) under 
section 204 of the Medicare Improvement and Ex-
tension Act of 2006 (division B of Public Law 109– 
432) in the same manner as health care providers 
participating in the ACO are so eligible. 
‘‘(3) ENCOURAGEMENT OF PARTICIPATION OF 
SMALLER ORGANIZATIONS.—In order to encourage 
the participation of smaller accountable care organi-
zations under the pilot program, the Secretary may 
limit a qualifying ACO’s exposure to high cost pa-
tients under the program. 
‘‘(4) INVOLVEMENT IN PRIVATE PAY ARRANGE-
MENTS.—Nothing in this section shall be construed 
as preventing qualifying ACOs participating in the 
pilot program from negotiating similar contracts 
with private payers. 
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‘‘(5) ANTIDISCRIMINATION
LIMITATION.—The 
Secretary shall not enter into an agreement with an 
entity to provide health care items or services under 
the pilot program, or with an entity to administer 
the program, unless such entity guarantees that it 
will not deny, limit, or condition the coverage or pro-
vision of benefits under the program, for individuals 
eligible to be enrolled under such program, based on 
any health status-related factor described in section 
2702(a)(1) of the Public Health Service Act.’’. 
Æ 
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