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1 ance Trust Fund established under section 1841 of the
2 Social Security Act (42 U.S.C. 1395t) of such funds as
3 are necessary for the costs of carrying out the program.
4 (f) WAIVER AUTHORITY.—The Secretary may waive
5 such requirements of titles XI and XVIII of the Social
6 Security Act (42 U.S.C. 1301 et seq. and 1395 et seq.)
7 as may be necessary for the purpose of carrying out the
8 program.
9 (g) REPORT.—Not later than 12 months after the
10 date of completion of the program, the Secretary shall sub-
11 mit to Congress a report on such program, together with
12 recommendations for such legislation and administrative
13 action as the Secretary determines to be appropriate. The
14 final report shall include an evaluation of the impact of
15 the use of the program on health quality, utilization of
16 health care services, and on improving the quality of life
17 of such beneficiaries.
18 (h) DEFINITIONS.—In this section:
19 (1) ELIGIBLE PROVIDER.—The term ‘‘eligible
20 provider’’ means the following:
21 (A) A primary care practice.
22 (B) A specialty practice.
23 (C) A multispecialty group practice.
24 (D) A hospital.
25 (E) A rural health clinic.

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1 (F) A Federally qualified health center (as
2 defined in section 1861(aa)(4) of the Social Se-
3 curity Act (42 U.S.C. 1395x(aa)(4)).
4 (G) An integrated delivery system.
5 (H) A State cooperative entity that in-
6 cludes the State government and at least one
7 other health care provider which is set up for
8 the purpose of testing shared decision making
9 and patient decision aids.
10 (2) PATIENT DECISION AID.—The term ‘‘pa-
11 tient decision aid’’ means an educational tool (such
12 as the Internet, a video, or a pamphlet) that helps
13 patients (or, if appropriate, the family caregiver of
14 the patient) understand and communicate their be-
15 liefs and preferences related to their treatment op-
16 tions, and to decide with their health care provider
17 what treatments are best for them based on their
18 treatment options, scientific evidence, circumstances,
19 beliefs, and preferences.
20 (3) SHARED DECISION MAKING.—The term
21 ‘‘shared decision making’’ means a collaborative
22 process between patient and clinician that engages
23 the patient in decision making, provides patients
24 with information about trade-offs among treatment

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1 options, and facilitates the incorporation of patient
2 preferences and values into the medical plan.
3 TITLE III—PROMOTING PRI-
4 MARY CARE, MENTAL
5 HEALTH SERVICES, AND CO-
6 ORDINATED CARE
7 SEC. 1301. ACCOUNTABLE CARE ORGANIZATION PILOT

8 PROGRAM.

9 Title XVIII of the Social Security Act is amended by

10 inserting after section 1866C the following new section:
11 ‘‘ACCOUNTABLE CARE ORGANIZATION PILOT PROGRAM

12 ‘‘SEC. 1866D. (a) IN GENERAL.—The Secretary shall

13 conduct a pilot program (in this section referred to as the
14 ‘pilot program’) to test different payment incentive mod-
15 els, including (to the extent practicable) the specific pay-
16 ment incentive models described in subsection (c), de-
17 signed to reduce the growth of expenditures and improve
18 health outcomes in the provision of items and services
19 under this title to applicable beneficiaries (as defined in
20 subsection (d)) by qualifying accountable care organiza-
21 tions (as defined in subsection (b)(1)) in order to—
22 ‘‘(1) promote accountability for a patient popu-
23 lation and coordinate items and services under parts
24 A and B;

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1 ‘‘(2) encourage investment in infrastructure and
2 redesigned care processes for high quality and effi-
3 cient service delivery; and
4 ‘‘(3) reward physician practices and other phy-
5 sician organizational models for the provision of high
6 quality and efficient health care services.
7 ‘‘(b) QUALIFYING ACCOUNTABLE CARE ORGANIZA-
8 TIONS (ACOS).—
9 ‘‘(1) QUALIFYING ACO DEFINED.—In this sec-
10 tion:
11 ‘‘(A) IN GENERAL.—The terms ‘qualifying
12 accountable care organization’ and ‘qualifying
13 ACO’ mean a group of physicians or other phy-
14 sician organizational model (as defined in sub-
15 paragraph (D)) that—
16 ‘‘(i) is organized at least in part for
17 the purpose of providing physicians’ serv-
18 ices; and
19 ‘‘(ii) meets such criteria as the Sec-
20 retary determines to be appropriate to par-
21 ticipate in the pilot program, including the
22 criteria specified in paragraph (2).
23 ‘‘(B) INCLUSION OF OTHER PROVIDERS.—

24 Nothing in this subsection shall be construed as

25 preventing a qualifying ACO from including a

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1 hospital or any other provider of services or
2 supplier furnishing items or services for which
3 payment may be made under this title that is
4 affiliated with the ACO under an arrangement
5 structured so that such provider or supplier
6 participates in the pilot program and shares in
7 any incentive payments under the pilot pro-
8 gram.
9 ‘‘(C) PHYSICIAN.—The term ‘physician’ in-
10 cludes, except as the Secretary may otherwise
11 provide, any individual who furnishes services
12 for which payment may be made as physicians’
13 services.
14 ‘‘(D) OTHER PHYSICIAN ORGANIZATIONAL

15 MODEL.—The term ‘other physician organiza-

16 tion model’ means, with respect to a qualifying
17 ACO any model of organization under which
18 physicians enter into agreements with other
19 providers for the purposes of participation in
20 the pilot program in order to provide high qual-
21 ity and efficient health care services and share
22 in any incentive payments under such program
23 ‘‘(E) OTHER SERVICES.—Nothing in this
24 paragraph shall be construed as preventing a
25 qualifying ACO from furnishing items or serv-

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1 ices, for which payment may not be made under
2 this title, for purposes of achieving performance
3 goals under the pilot program.
4 ‘‘(2) QUALIFYING CRITERIA.—The following are
5 criteria described in this paragraph for an organized
6 group of physicians to be a qualifying ACO:
7 ‘‘(A) The group has a legal structure that
8 would allow the group to receive and distribute
9 incentive payments under this section.
10 ‘‘(B) The group includes a sufficient num-
11 ber of primary care physicians for the applica-
12 ble beneficiaries for whose care the group is ac-
13 countable (as determined by the Secretary).
14 ‘‘(C) The group reports on quality meas-
15 ures in such form, manner, and frequency as
16 specified by the Secretary (which may be for
17 the group, for providers of services and sup-
18 pliers, or both).
19 ‘‘(D) The group reports to the Secretary
20 (in a form, manner and frequency as specified
21 by the Secretary) such data as the Secretary
22 determines appropriate to monitor and evaluate
23 the pilot program.

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1 ‘‘(E) The group provides notice to applica-
2 ble beneficiaries regarding the pilot program (as
3 determined appropriate by the Secretary).
4 ‘‘(F) The group contributes to a best prac-
5 tices network or website, that shall be main-
6 tained by the Secretary for the purpose of shar-
7 ing strategies on quality improvement, care co-
8 ordination, and efficiency that the groups be-
9 lieve are effective.
10 ‘‘(G) The group utilizes patient-centered
11 processes of care, including those that empha-
12 size patient and caregiver involvement in plan-
13 ning and monitoring of ongoing care manage-
14 ment plan.
15 ‘‘(H) The group meets other criteria deter-
16 mined to be appropriate by the Secretary.
17 ‘‘(c) SPECIFIC PAYMENT INCENTIVE MODELS.—The
18 specific payment incentive models described in this sub-
19 section are the following:
20 ‘‘(1) PERFORMANCE TARGET MODEL.—Under

21 the performance target model under this paragraph

22 (in this paragraph referred to as the ‘performance
23 target model’):
24 ‘‘(A) IN GENERAL.—A qualifying ACO
25 qualifies to receive an incentive payment if ex-

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1 penditures for applicable beneficiaries are less
2 than a target spending level or a target rate of
3 growth. The incentive payment shall be made
4 only if savings are greater than would result
5 from normal variation in expenditures for items
6 and services covered under parts A and B.
7 ‘‘(B) COMPUTATION OF PERFORMANCE

8 TARGET.—

9 ‘‘(i) IN GENERAL.—The Secretary

10 shall establish a performance target for
11 each qualifying ACO comprised of a base
12 amount (described in clause (ii)) increased
13 to the current year by an adjustment fac-
14 tor (described in clause (iii)). Such a tar-
15 get may be established on a per capita
16 basis, as the Secretary determines to be
17 appropriate.
18 ‘‘(ii) BASE AMOUNT.—For purposes of
19 clause (i), the base amount in this sub-
20 paragraph is equal to the average total
21 payments (or allowed charges) under parts
22 A and B (and may include part D, if the
23 Secretary determines appropriate) for ap-
24 plicable beneficiaries for whom the quali-
25 fying ACO furnishes items and services in

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