MEDICARE DEMONSTRATION PROJECTS TO PERMIT GAINSHARING ARRANGEMENTS.

SEC. 5007. MEDICARE DEMONSTRATION PROJECTS TO PERMIT GAINSHARING ARRANGEMENTS.(a) Establishment.—The Secretary shall establish under this section a qualified gainsharing demonstration program under which the Secretary shall approve demonstration projects by not later than November 1, 2006, to test and evaluate methodologies and arrangements between hospitals and physicians designed to govern the utilization of inpatient hospital resources and physician work to improve the quality and efficiency of care provided to Medicare beneficiaries and to develop improved operational and financial hospital performance with sharing of remuneration as specified in the project. Such projects shall be operational by not later than January 1, 2007. (b) Requirements Described.—A demonstration project under this section shall meet the following requirements for purposes of maintaining or improving quality while achieving cost savings: (1) Arrangement for remuneration as share of savings.—The demonstration project shall involve an arrangement between a hospital and a physician under which the hospital provides remuneration to the physician that represents solely a share of the savings incurred directly as a result of collaborative efforts between the hospital and the physician. (2) Written plan agreement.—The demonstration project shall be conducted pursuant to a written agreement that—(A) is submitted to the Secretary prior to implementation of the project; and (B) includes a plan outlining how the project will achieve improvements in quality and efficiency. (3) Patient notification.—The demonstration project shall include a notification process to inform patients who are 120 STAT. 35 treated in a hospital participating in the project of the participation of the hospital in such project. (4) Monitoring quality and efficiency of care.—The demonstration project shall provide measures to ensure that the quality and efficiency of care provided to patients who are treated in a hospital participating in the demonstration project is continuously monitored to ensure that such quality and efficiency is maintained or improved. (5) Independent review.—The demonstration project shall certify, prior to implementation, that the elements of the demonstration project are reviewed by an organization that is not affiliated with the hospital or the physician participating in the project. (6) Referral limitations.—The demonstration project shall not be structured in such a manner as to reward any physician participating in the project on the basis of the volume or value of referrals to the hospital by the physician. (c) Waiver of Certain Restrictions.—(1) In general.—An incentive payment made by a hospital to a physician under and in accordance with a demonstration project shall not constitute—(A) remuneration for purposes of section 1128B of the Social Security Act (42 U.S.C. 1320a–7b); (B) a payment intended to induce a physician to reduce or limit services to a patient entitled to benefits under Medicare or a State plan approved under title XIX of such Act in violation of section 1128A of such Act (42 U.S.C. 1320a–7a); or (C) a financial relationship for purposes of section 1877 of such Act (42 U.S.C. 1395nn). (2) Protection for existing arrangements.—In no case shall the failure to comply with the requirements described in paragraph (1) affect a finding made by the Inspector General of the Department of Health and Human Services prior to the date of the enactment of this Act that an arrangement between a hospital and a physician does not violate paragraph (1) or (2) of section 1128A(a) of the Social Security Act (42 U.S.C. 1320a–7(a)). (d) Program Administration.—(1) Solicitation of applications.—By not later than 90 days after the date of the enactment of this Act, the Secretary shall solicit applications for approval of a demonstration project, in such form and manner, and at such time specified by the Secretary. (2) Number of projects approved.—The Secretary shall approve not more than 6 demonstration projects, at least 2 of which shall be located in a rural area. (3) Duration.—The qualified gainsharing demonstration program under this section shall be conducted for the period beginning on January 1, 2007, and ending on December 31, 2009. (e) Reports.—(1) Initial report.—By not later than December 1, 2006, the Secretary shall submit to Congress a report on the number of demonstration projects that will be conducted under this section. 120 STAT. 36(2) Project update.—By not later than December 1, 2007, the Secretary shall submit to Congress a report on the details of such projects (including the project improvements towards quality and efficiency described in subsection (b)(2)(B)). (3) Quality improvement and savings.—By not later than December 1, 2008, the Secretary shall submit to Congress a report on quality improvement and savings achieved as a result of the qualified gainsharing demonstration program established under subsection (a). (4) Final report.—By not later than May 1, 2010, the Secretary shall submit to Congress a final report on the information described in paragraph (3).(f) Funding.—(1) In general.—Out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary for fiscal year 2006 $6,000,000, to carry out this section.(2) Availability.—Funds appropriated under paragraph (1) shall remain available for expenditure through fiscal year 2010.(g) Definitions.—For purposes of this section: (1) Demonstration project.—The term “demonstration project” means a project implemented under the qualified gainsharing demonstration program established under subsection (a). (2) Hospital.—The term “hospital” means a hospital that receives payment under section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)), and does not include a critical access hospital (as defined in section 1861(mm) of such Act (42 U.S.C. 1395x(mm))). (3) Medicare.—The term “Medicare” means the programs under title XVIII of the Social Security Act. (4) Physician.—The term “physician” means, with respect to a demonstration project, a physician described in paragraph (1) or (3) of section 1861(r) of the Social Security Act (42 U.S.C. 1395x(r)) who is licensed as such a physician in the area in which the project is located and meets requirements to provide services for which benefits are provided under Medicare. Such term shall be deemed to include a practitioner described in section 1842(e)(18)(C) of such Act (42 U.S.C. 1395u(e)(18)(C)). (5) Secretary.—The term “Secretary” means the Secretary of Health and Human Services.