SECTION 1. SHORT TITLE.

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

SEC. 2. HEALTHCARE INNOVATION ZONE DEMONSTRATION PROGRAM.

    (a) Establishment.--Not later than 6 months after the date of 
enactment of this Act, the Secretary of Health and Human Services shall 
establish a Healthcare Innovation Zone pilot program to increase 
healthcare provider integration and align healthcare provider 
incentives to improve health and to reduce healthcare costs.
    (b) Features of Program.--The HIZ pilot program established under 
subsection (a) shall consist of the following:
            (1) An HIZ planning grant program, as described in section 
        3.
            (2) An HIZ demonstration project, as described in section 
        4.
    (c) Definitions.--In this Act:
            (1) Grant program.--The term ``grant program'' means the 
        HIZ planning grant program as described in section 3.
            (2) HIZ.--The term ``HIZ'' means a Healthcare Innovation 
        Zone, consisting of an integrated healthcare delivery network 
        that works with local employers, community leaders, and private 
        and governmental payors in a geographic region, that--
                    (A) provides a full spectrum of care, including 
                inpatient, outpatient, post-acute, and preventive care, 
                to individuals including Medicare beneficiaries;
                    (B) has an academic medical center that provides 
                tertiary and quaternary care, has existing capabilities 
                to conduct health services research, and provides 
                clinical training for health professionals; and
                    (C) is able to accept alternative payment 
                structures beyond fee-for-service and per diem amounts.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

SEC. 3. HIZ PLANNING GRANT PROGRAM.

    (a) Establishment.--The Secretary shall make grants to eligible 
entities for the purposes of researching and preparing an HIZ model 
plan, in accordance with subsection (f).
    (b) Conditions.--A grant recipient under this section must apply 
for the HIZ demonstration project described in section 4. If a grant 
recipient under this section is not selected to participate in such 
project, then such recipient must return any unused grant funds to the 
Secretary.
    (c) Eligibility.--The following persons are eligible entities for 
purposes of this section:
            (1) A healthcare institution or provider licensed and 
        accredited in the United States.
            (2) An academic medical center.
            (3) A large multispecialty group practice.
            (4) Any other clinical organization.
            (5) Any other organization that is able to establish, 
        through a memorandum of understanding or by other means to be 
        defined by the Secretary, an intent to collaborate with a 
        person listed in paragraphs (1) through (4).
    (d) Application.--An application for a grant under this section 
shall include the following:
            (1) A demonstration that the grant applicant is located in 
        a geographic region that has the necessary breadth of 
        healthcare providers to support the HIZ.
            (2) The support and endorsement of the HIZ concept by the 
        following persons:
                    (A) At least one leader of a clinical entity that 
                provides the full spectrum of care.
                    (B) At least one private payer.
            (3) A demonstration that the grant applicant has the 
        resources and expertise to implement the features listed in 
        subsection (f).
            (4) A proposed budget setting forth the costs to be 
        incurred in creating the model HIZ plan.
    (e) Criteria for Awarding Grants.--The Secretary shall give 
preference to a grant application that demonstrates a likelihood that 
the HIZ model plan will meet the requirements of subsection (f).
    (f) HIZ Model Plan Requirements.--A recipient of a grant under this 
section must submit to the Secretary, within 6 months of receiving such 
grant, an HIZ model plan describing the HIZ to be implemented in the 
demonstration project under section 4. Such HIZ model plan must contain 
the following:
            (1) A description of innovative models of care that improve 
        quality and decrease costs.
            (2) A provider network that will provide the full spectrum 
        of care.
            (3) A target population and mechanisms to enroll such 
        population, supported by evidence that such population is 
        willing to participate in an HIZ demonstration.
            (4) A mechanism to provide for knowledge and information-
        sharing across the HIZ participants.
            (5) A description of how the HIZ would incorporate the 
        training of the next generation of physicians, nurses, and 
        allied health professionals in a new model of cost-effective 
        quality healthcare.
            (6) A description of the governance of the HIZ, and how it 
        would affect the administration of the model and management of 
        the organizational and cultural changes necessary for a 
        successful HIZ.
            (7) A description of non-financial barriers to innovation 
        that must be addressed for the creation of a successful HIZ, 
        including physician self-referral laws, anti-trust 
        considerations, State laws, and accreditation or certification 
        requirements.
            (8) A process for data reporting, annual site visits, and 
        developing community health impact assessments.
            (9) A set of indicators to help track performance and 
        success of the HIZ model plan, including measures to address 
        cost containment, access to care, and quality improvement, and 
        how the HIZ model plan would facilitate achievement of these 
        improvements.
            (10) A description of mechanisms to achieve involvement by 
        the community and external experts as ongoing monitors of the 
        success of the HIZ model plan.
            (11) Payment methodology options that address both funding 
        mechanisms to the HIZ as well as how the HIZ would distribute 
        funds to the HIZ participants.
    (g) Number and Amount of Planning Grants.--The Secretary shall 
award at least 10 but not more than 25 grants under this section in an 
amount of at least $250,000 and not more than $1,000,000 per grant.
    (h) Funding.--Amounts made available under the heading ``Agency for 
Healthcare Research and Quality--Healthcare Research and Quality'' in 
title VIII of division I of the American Recovery and Reinvestment Act 
of 2009 (Public Law 111-5) may be used by the Secretary to make grants 
under this section.

SEC. 4. HEALTHCARE INNOVATION ZONE DEMONSTRATION PROJECT.

    (a) Establishment.--The Secretary shall establish an HIZ 
demonstration project in order to test the effectiveness of HIZs in 
increasing healthcare provider integration, improving healthcare 
services, and reducing healthcare costs. Such demonstration project 
shall not be subject to current requirements regarding shared savings 
under demonstration projects. The Secretary shall select demonstration 
project participants from the persons that have received grants under 
section 3.
    (b) Duration.--The demonstration project shall operate for a period 
of at least 3 years, and shall be subject to renewal at the Secretary's 
discretion.
    (c) Application.--An eligible entity shall submit an application 
for participation in the HIZ demonstration project to the Secretary at 
such time and manner, and containing such information as the Secretary 
may require.
    (d) Eligibility.--To be eligible to participate in the 
demonstration project established under this section, a person must--
            (1) have submitted an HIZ model plan in accordance with 
        section 3(f) that is approved by the Secretary;
            (2) agree to submit the necessary data so that Secretary 
        can assess the costs, quality of care, and access to care for 
        the population participating in the HIZ demonstration project;
            (3) demonstrate a culture of innovation and commitment to 
        preventive and public health;
            (4) possess structural elements to provide the full range 
        of care necessary for a successful HIZ;
            (5) provide clinical training for healthcare professionals 
        in a medical environment that emphasizes coordinated, 
        integrated, high-quality care delivered at a controlled cost;
            (6) have the ability to allocate resources within the 
        members of the HIZ;
            (7) have a broad research infrastructure that supports data 
        gathering, analytics, and synthesis of unrelated population 
        elements, including quality-related data elements;
            (8) have significant investment in health information 
        technology that extends across the system to include healthcare 
        providers, physicians, and other clinicians;
            (9) possess advance innovations including, but not limited 
        to, creation of medical homes, pay for performance, and other 
        cost-effective delivery platforms;
            (10) demonstrate long-term economic sustainability;
            (11) demonstrate strong hospital and physician leadership 
        and the willingness to undergo a full portfolio assessment and 
        reengineering of core patient care and administrative 
        processes;
            (12) possess robust financial infrastructure and 
        administrative support to assure the HIZ's success; and
            (13) demonstrate arrangements that maintain oversight and 
        accreditation standards.
    (e) HIZ Requirements.--An HIZ established under this section 
shall--
            (1) provide healthcare services to individuals who 
        voluntarily enroll to receive such services for multi-year 
        periods from the HIZ; and
            (2) provide comprehensive healthcare services, as described 
        in subsection (f).
    (f) Comprehensive Healthcare Services.--The comprehensive 
healthcare services referred to in subsection (e)(2) shall consist of 
hospital care, physician services, post-acute care, preventive care, 
education, tertiary and quaternary care, and palliative care, and shall 
include the following:
            (1) For a primary care practice, contractual agreements 
        with practices that deliver both primary and preventive care.
            (2) For a teaching hospital or other hospital, arrangements 
        with teaching and nonteaching hospitals and arrangements with 
        community hospitals.
            (3) For a network of outpatient facilities, arrangements 
        with outpatient facilities, including Federally Qualified 
        Health Centers and community health providers.
            (4) For a network of post-acute care providers, 
        arrangements with post-acute care providers for rehabilitation 
        services, home health services, hospice services, skilled 
        nursing services, and such other post-acute care services as 
        the Secretary determines to be appropriate.
            (5) For a network of community services, arrangements for 
        the provision of ambulance services and community outreach 
        service.
            (6) Arrangements for the provision such additional services 
        as the Secretary may require.
    (g) Payment.--The Secretary may determine the payments that are 
required to be made for receipt of healthcare services provided under a 
model plan implemented with a grant under this section. The Secretary 
shall determine those amounts based on the methodology options 
submitted through the grant program established under section 3.
    (h) Assumption of Financial Risk for Costs Above HIZ Payment 
Amounts.--An HIZ established under this section shall assume the full 
financial risk for the costs of healthcare services delivered to an 
individual receiving services from the HIZ that are in excess of any 
payments made to the HIZ and must have sufficient reserves to 
accommodate any such additional costs.
    (i) Waiver of Rights to Payment Under Private or Public Programs.--
An HIZ established with amounts provided under this section shall waive 
any right to additional reimbursement under any Federal healthcare 
entitlement program, including under titles XVIII and XIX of the Social 
Security Act (42 U.S.C. 1395 et seq.; 42 U.S.C. 1396 et seq.), and 
under any group health plan or from any health insurance issuer 
offering group or individual health insurance coverage for healthcare 
services furnished to an individual receiving healthcare services from 
the HIZ and for which payment is made under this subsection for such 
services.
    (j) Scoring Cost Savings.--The Secretary shall collaborate with the 
Government Accountability Office in scoring the healthcare costs and 
savings associated with implementing HIZs on a nationwide basis.
    (k) Waiver.--Any requirements under titles XI and XVIII of the 
Social Security Act (42 U.S.C. 1301 et seq.; 42 U.S.C. 1395 et seq.), 
or under any other provision of law that would preclude the 
establishment or operation of an HIZ under this section, shall not 
apply with respect to such establishment or operation.
    (l) Reports.--
            (1) HIZ report.--An entity that establishes an HIZ under 
        this section shall submit 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 
        demonstration program within 6 months after the end of the 
        first year of the demonstration program, and every 6 months 
        thereafter until the end of the demonstration program.
Output: Healthcare Innovation Zone Program Act of 2009 - Directs the Secretary of Health and Human Services (HHS) to establish a Healthcare Innovation Zone (HIZ) pilot program, consisting of an HIZ planning grant program and an HIZ demonstration project, to increase health care provider integration and align health care provider incentives to improve health and reduce health care costs.

Defines an "HIZ" as an integrated health care delivery network that works with local employers, community leaders, and private and governmental payors in a geographic region and that: (1) provides a full spectrum of care, including inpatient, outpatient, post-acute, and preventive care, to individuals, including Medicare beneficiaries; (2) has an academic medical center that provides tertiary and quaternary care, has existing capabilities to conduct health services research, and provides clinical training for health professionals; and (3) is able to accept alternative payment structures beyond fee-for-service and per diem amounts.

Directs the Secretary to award between 10 and 25 grants of $250,000 to $1 million each to eligible entities for purposes of researching and preparing an HIZ model plan. Lists required contents of a plan, including: (1) a description of innovative models of care that improve quality and decrease costs; (2) a provider network that will provide the full spectrum of care; and (3) a target population and mechanisms to enroll such population.

Directs the Secretary to: (1) establish an HIZ demonstration project to test the effectiveness of HIZs in increasing health care provider integration, improving health care services, and reducing health care costs; and (2) select project participants from HIV model plan grant recipients. Requires the project to operate for at least three years, subject to renewal at the Secretary's discretion.

Requires an HIZ established under this Act to provide comprehensive health care services to individuals who voluntarily enroll to receive such services for multi-year periods from the HIZ.