To direct the Secretary of Health and Human Services to establish a Healthcare Innovation Zone pilot program.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Healthcare Innovation Zone Pilot Act 
of 2009''.

SEC. 2. HEALTHCARE INNOVATION ZONE PILOT PROGRAM.

    (a) Establishment.--The Secretary of Health and Human Services 
shall establish a Healthcare Innovation Zone pilot program to increase 
health care provider integration and align health care provider 
incentives to reduce the rate of growth of health care costs while 
improving quality of care for Medicare, Medicaid, and privately insured 
patients. The HIZ program, by including teaching hospitals, shall 
provide for the incorporation of new and innovative clinical 
initiatives for the training of the next generation of physicians, 
nurses, and other health professionals in a new model of cost-
effective, high-quality health care.
    (b) Features of Program.--The HIZ pilot program established under 
subsection (a) shall consist of--
            (1) an HIZ planning grant program, as described in section 
        3; and
            (2) an HIZ pilot project, as described in section 4.

SEC. 3. HIZ PLANNING GRANT PROGRAM.

    (a) Establishment.--Within 6 months after the date of the enactment 
of this Act, the Secretary shall begin accepting applications for HIZ 
planning grants. The Secretary will make grants to successful 
applicants for the purposes of researching and preparing an HIZ design 
plan, in accordance with subsection (d).
    (b) Eligibility Requirements.--An applicant for a grant under this 
section shall be a group of clinical or other entities that provides a 
full spectrum of health care, including inpatient, outpatient, post-
acute, and preventive care, to Medicare beneficiaries, Medicaid 
enrollees, and other individuals enrolled in private insurance plans. 
Such applicants must include a teaching hospital, and may include--
            (1) other clinical entities, including community hospitals 
        and health centers or physician group practices;
            (2) schools of medicine or other health professions; and
            (3) other nonclinical entities, including community 
        organizations.
    (c) Application.--An application for a grant under this section 
shall include--
            (1) a description of the geographic region to be included 
        in the HIZ established under section 4, including population 
        and health care provider demographics, as well as an estimate 
        of the number of people that could be cared for in the HIZ;
            (2) a demonstration that the grant applicant has the 
        expertise to engage community and clinical care leaders in 
        developing a design plan for the HIZ that will meet the 
        requirements listed in subsection (e); and
            (3) a proposed budget setting forth the costs to be 
        incurred in creating the HIZ design plan.
    (d) Criteria for Awarding Grants.--The Secretary shall give 
preference to grant applications in which the potential HIZ would care 
for large and diverse populations and that also demonstrate the 
commitment of clinical and community partners to participate in the 
planning process for creating and submitting the HIZ design plan as set 
forth in subsection (e).
    (e) HIZ Design Plan Requirements.--A recipient of a grant under 
this section must submit to the Secretary, within 1 year after 
receiving such grant funds, an HIZ design plan describing the HIZ to be 
created in the pilot program under section 4. Such HIZ design plan must 
contain--
            (1) an estimate of the number of people to whom health care 
        will be delivered by the providers in the HIZ using the models 
        of care described in such plan;
            (2) a description of the legal and management structure of 
        the HIZ Coordinating Entity under which the full spectrum of 
        care would be provided through the HIZ, and that will receive 
        and administer payments received under the pilot program;
            (3) a description of how the full spectrum of care will be 
        provided and by whom;
            (4) a description, including supporting financial 
        documentation, of how the HIZ will reduce the rate of increase 
        in Medicare and other health care spending including the level 
        of the reduction and over what time frame such reduction will 
        be achieved;
            (5) a description of how physician, hospital, and other 
        providers will be integrated and aligned, and how health care 
        delivery processes will be changed to reduce the rate of growth 
        of health care costs while improving quality of care for 
        Medicare, Medicaid, and privately insured patients;
            (6) a description of the target population to be served by 
        the HIZ;
            (7) a list and description of quality metrics that will be 
        used to measure quality improvement, including both quality of 
        care and community health status; and cost indicators that best 
        would track cost containment over time;
            (8) a description of how the HIZ will incorporate the 
        training of the next generation of physicians, nurses, and 
        other health professionals in a new model of cost-effective, 
        high-quality health care;
            (9) a proposal to address non-financial barriers to the 
        provision of the full spectrum of care, including physician 
        self-referral laws, anti-trust considerations, State laws, and 
        accreditation or certification requirements;
            (10) a description of the infrastructure and mechanisms to 
        be used to collect, analyze, and appropriately share data among 
        clinical partners;
            (11) a description of the methods to be used to monitor and 
        track health costs and utilization;
            (12) a description of a strategy to improve prevention and 
        public health and the health status of the community;
            (13) a description of mechanisms to achieve involvement by 
        the community and external experts as ongoing partners in and 
        monitors of the HIZ;
            (14) a description of payment methodology options that 
        address both funding level and mechanisms to distribute funds 
        to HIZ providers; and
            (15) a description of the start-up and other additional 
        costs that would be required to establish and operate the HIZ.
    (f) Number and Amount of Planning Grants.--The Secretary shall 
award no more than 25 grants under this section in an amount of at 
least $250,000 and not more than $1,000,000 per grant.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $25,000,000 for the first fiscal 
year beginning after the date of enactment of this section and such 
sums as may be necessary for subsequent fiscal years.

SEC. 4. HEALTHCARE INNOVATION ZONE PILOT PROJECT.

    (a) Establishment.--The Secretary shall establish an HIZ pilot 
project to test the effectiveness of HIZs in reducing the rate of 
growth of health care costs while improving quality of care for 
Medicare, Medicaid, and privately insured patients.
    (b) Duration.--The pilot project shall operate for a period of at 
least 3 years and shall be subject to renewal at the Secretary's 
discretion.
    (c) Application.--A person who is eligible under section 3(b) may 
submit an application for participation in the HIZ pilot project to the 
Secretary at such time and manner, and containing the information 
described in sections 3(e) and section 4(d) and any such additional 
information, as the Secretary may require.
    (d) Requirements.--In addition to the requirements established by 
the Secretary under subsection (c), to be eligible to participate in 
the HIZ pilot project under this section, the HIZ providers shall--
            (1) provide comprehensive health care services, as defined 
        by the Secretary, to at least 50 percent of the population 
        within the HIZ;
            (2) maintain or improve the quality of health care services 
        provided under the HIZ, according to metrics approved by the 
        Secretary, and submit the information necessary to the 
        Secretary so that the Secretary may determine whether such 
        maintenance or improvement has occurred; and
            (3) collect and submit information on changes that are 
        being made to clinical education processes to reflect changes 
        made in the delivery of health care.
    (e) Payment.--The Secretary shall distribute payments to the HIZ 
Coordinating Entity so that the aggregate level of payment for all 
Medicare beneficiaries participating in the HIZ pilot project will be 
equal to a base level of Medicare payments, as defined by the 
Secretary, increased by a rate of growth that is 1.5 percentage points 
less than the projected rate of growth for the HIZ. The Secretary may 
modify the 1.5 percentage point reduction if the estimated growth rate 
is lower than the national average. The types of payments subject of 
this arrangement and additional payment mechanisms shall be at the 
discretion of the Secretary and each HIZ based on the methodology 
options submitted by the grant recipient, as set forth under section 
3(e)(14).
    (f) Waiver of Rights to Payment Under Public Programs.--A health 
care provider receiving payments for patients under this section shall 
waive any right to additional reimbursement under title XVIII of the 
Social Security Act (42 U.S.C. 1395 et seq.) beyond those established 
under subsection (e) for those services provided to Medicare 
beneficiaries participating in the HIZ pilot.
    (g) Waivers.--The Secretary may waive any requirements under titles 
XI, XVIII, and XIX of the Social Security Act (42 U.S.C. 1301 et seq.; 
42 U.S.C. 1395 et seq.; and 42 U.S.C. 1396 et seq.), including the 
antikickback and civil monetary penalty statutes, and with regard to 
title XIX, statewideness, comparability, and managed care requirements, 
as necessary to carry out the pilot program established under this 
section. In the interest of facilitating the development of HIZ pilot 
projects, the Secretary shall release a streamlined Medicare or 
Medicaid waiver application form. Use of such form is voluntary. 
Nothing contained in the antitrust laws shall be construed to prohibit 
persons providing health care services as part of a pilot project 
authorized under this section from lawfully carrying out the legitimate 
object thereof, nor shall such persons be held or construed to be 
illegal combinations or conspiracies in restraint of trade under the 
antitrust laws, if acting in accordance with the business model 
approved by the Secretary under this section.
    (h) Reports.--
            (1) HIZ report.--A person that establishes an HIZ pilot 
        project under this section shall submit, 2 years after the 
        beginning of such project to the Secretary a report that 
        describes and evaluates the activities of the HIZ.
            (2) Secretary report.--The Secretary shall submit to 
        Congress an evaluation of the current status of the pilot 
        within 6 months after the end of the first year of the pilot 
        and every year thereafter until the end of pilot.

SEC. 5. DEFINITIONS.

    In this Act:
            (1) Planning grant program.--The term ``planning grant 
        program'' means the HIZ planning grant program as described in 
        section 3.
            (2) HIZ.--Each of the terms ``HIZ'' and ``Healthcare 
        Innovation Zone'' mean a geographic region that contains--
                    (A) clinical and other entities that provide a full 
                spectrum of health care, including inpatient, 
                outpatient, post-acute, and preventive care, to 
                Medicare beneficiaries, Medicaid enrollees, and other 
                individuals enrolled in private insurance plans; and
                    (B) a teaching hospital that has the capacity to 
                conduct health services research and provides clinical 
                training for health professionals.
            (3) HIZ coordinating entity.--The term ``HIZ Coordinating 
        Entity'' means a legal and management structure that is 
        responsible for overseeing the delivery of the full spectrum of 
        care in the HIZ, and that will receive and administer payments 
        received under the pilot program.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

Summary: Healthcare Innovation Zone Pilot Act of 2009 - Directs the Secretary of Health and Human Services (HHS) to establish a Healthcare Innovation Zone (HIZ) pilot program to increase health care provider integration and align provider incentives to reduce the rate of growth of health care costs while improving quality of care for Medicare, Medicaid, and privately insured patients. Defines an "HIZ" as a geographic region that contains clinical and other entities that provide a full spectrum of health care to such patients and a teaching hospital that has the capacity to conduct health services research and provide clinical training for health professionals.

Requires the HIZ program to: (1) incorporate innovative clinical initiatives for training health professionals in a new model of cost-effective, high-quality health care; and (2) consist of an HIZ planning grant program and an HIZ pilot project.

Directs the Secretary to make up to 25 HIZ planning grants to eligible health care entities for researching and preparing HIZ design plans, which shall describe the HIZ Coordinating Entity (who will receive and administer payments under the program), how care will be provided, how spending will be reduced, how providers will be integrated and delivery processes changed to reduce costs and improve care, the target population,quality improvement metrics, training, data collection mechanisms, methods for monitoring health costs and use, a strategy to improve prevention, mechanisms to achieve community involvement, payment methodology options, and startup and operating costs.

Directs the Secretary to establish an HIZ pilot project to test the effectiveness of HIZs in reducing the rate of growth of health care costs while improving quality of care.