,i  #aac? ,,congress  #b;d ,session  ,h4
 ,r4 #ehbc  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,decemb] #i1 #bjad    
,mr4 ,ma!son introduc$ ! foll[+ bill2   
:i* 0 ref]r$ to ! ,committee on ,en]gy &
 ,comm]ce1 & 9 addition to ! ,committee 
on ,ways & ,means1 = a p]iod to be      
subsequ5tly det]m9$ by ! ,speak]1 9 ea* 
case = consid]ation ( su* provisions z  
fall )9 ! jurisdiction ( ! committee    
conc]n$  ,a ,,bill  ,to am5d title      
,,xviii ( ! ,social ,security ,act to   
create inc5tives = heal?c>e provid]s to 
promote quality heal?c>e outcomes1 & =  
o!r purposes4  #a4 ,%ort title2 f9d+s   
7a7 ,%ort title ,?is ,act may be cit$ z 
! ,inc5tiviz+ ,heal?c>e ,quality        
,outcomes ,act ( #bjad4  7b7 ,f9d+s     
,congress makes ! foll[+ f9d+s3  7#a7   
,heal?c>e deliv]y organizations are fac$
 ) an unmanageable array ( quality      
measures & me?ods ( risk adju/m5t t are 
ov]ly process ori5t$1 may n relate to   
heal? outcomes1 & create a significant  
adm9i/rative burd54  7#b7 ,exi/+ quality

 measures & me?ods ( risk adju/m5t us$  
to adju/ ,m$ic>e paym5ts %\ld be replac$
 ) a compreh5sive & cl9ically cr$ible   
quality measurem5t sy/em bas$ on ! rate 
( occurr5ce ( pot5tially prev5table     
outcomes4  7#c7 ,paym5t adju/m5t =      
quality outcomes %\ld be appli$ to all  
types ( heal?c>e deliv]y organizations  
includ+ hospitals1 heal? sy/ems1 ,m$ic>e
 ,advantage plans1 heal? homes1 &       
acc\ntable c>e organizations z well z   
heal?c>e pr(essionals4  #b4 ,inc5tiviz+ 
heal?c>e quality outcomes  7a7 ,9 g5]al 
,title ,,xviii ( ! ,social ,security    
,act 7#db ,u4,s4,c4 #acie et seq47 is   
am5d$ by add+ at ! end ! foll[+ new     
section3  #ahii;,b4 ,inc5tiviz+ heal?c>e
 quality outcomes  7a7 ,adju/m5t (      
paym5ts to heal?-,c>e deliv]y           
organization = pot5tially prev5table    
outcomes  7#a7 ,9 g5]al ,9 ord] to      
provide an inc5tive = ea* applicable    
heal?c>e deliv]y organization 7z def9$ 9
 subsection 7k77 to r$uce pot5tially    
prev5table outcomes1 ! am\nt ( paym5ts  

to ! organization "u ?is title = an     
applicable prospective p]iod 7z def9$ 9 
su* subsection7 %all be ! am\nt o!rwise 
det]m9$ multipli$ by ! heal?c>e deliv]y 
organization-specific adju/m5t factor   
det]m9$ "u p>agraph 7#b7 = su* p]iod4   
7#b7 ,heal?c>e deliv]y organization     
specific paym5t adju/m5t factor  7,a7 ,9
 g5]al ,= purposes ( p>agraph 7#a71     
subject to subp>agraph 7,b71 ! heal?c>e 
deliv]y organization-specific paym5t    
adju/m5t factor describ$ 9 ?is p>agraph 
= an applicable heal?c>e deliv]y        
organization = an applicable prospective
 p]iod is equal to #a m9us ! ratio      
7express$ z a p]c5tage71 z det]m9$ by ! 
,secret>y1 (--  7i7 ! composite         
aggregate paym5ts = excess pot5tially   
prev5table outcomes 7describ$ 9         
subsection 7c77#a77 = ! organization &  
p]iod2 to  7ii7 ! aggregate paym5ts "u  
?is title to ! organization = su* p]iod4
  7,b7 ,phase-9 ( heal?c>e deliv]y      
organization-specific adju/m5t factor ,9
 no case %all ! heal?c>e deliv]y        

organization-specific paym5t adju/m5t   
factor "u subp>agraph 7,a7 be--  7i7    
less ?an #ig p]c5t or m ?an #ajc p]c5t =
 fiscal ye> #bjaf2  7ii7 be less ?an #id
 p]c5t or m ?an #ajf p]c5t = fiscal ye> 
#bjag2 or  7iii7 be less ?an #ij p]c5t  
or m ?an #aaj p]c5t = fiscal ye> #bjah &
 ea* subsequ5t fiscal ye>4  7b7         
,adju/m5t to ! annual update factor =   
paym5ts to heal?c>e pr(essionals 9 a    
geographic region = pot5tially          
prev5table outcomes  7#a7 ,9 g5]al ,9   
ord] to provide an inc5tive = heal?c>e  
pr(essionals 7t are n "p ( an applicable
 heal?c>e deliv]y organization7 9 a     
geographic region to coord9ate c>e &    
r$uce pot5tially prev5table outcomes1 ! 
annual update factor = traditional      
,m$ic>e fee-=-s]vice paym5ts to all su* 
pr(essionals 9 a geographic region      
e/abli%$ "u p>agraph 7#c7 = an          
applicable prospective p]iod 7beg9n+ on 
or aft] ,octob] #a1 #bjae7 %all be equal
 to ! annual update factor t w\ld       
o!rwise apply multipli$ by !            

geographic-specific pot5tially          
prev5table outcomes adju/m5t factor 7z  
describ$ 9 p>agraph 7#b77 = ! geographic
 region & p]iod4  7#b7                  
,geographic-specific pot5tially         
prev5table outcomes adju/m5t factor     
7,a7 ,9 g5]al ,= purposes ( p>agraph    
7#a71 subject to subp>agraph 7,b71 !    
geographic-specific pot5tially          
prev5table outcomes adju/m5t factor     
describ$ 9 ?is p>agraph = a geographic  
region = an applicable prospective p]iod
 is equal to #a m9us ! ratio 7express$ z
 a p]c5tage71 z det]m9$ by ! ,secret>y1 
(--  7i7 ! sum ( ! composite aggregate  
paym5ts = excess pot5tially prev5table  
outcomes 7describ$ 9 subsection 7c77#a77
 = ,m$ic>e b5efici>ies enroll$ 9        
traditional ,m$ic>e fee-=-s]vice across 
all applicable heal?c>e deliv]y         
organizations physically locat$ 9 !     
geographic region = ! applicable        
hi/orical p]iod2 to  7ii7 ! aggregate   
paym5ts = ,m$ic>e b5efici>ies enroll$ 9 
traditional ,m$ic>e fee-=-s]vice across 

all applicable heal?c>e deliv]y         
organizations physically locat$ 9 !     
geographic region = su* applicable      
hi/orical p]iod4  7,b7 ,phase-9 ,9 no   
case %all ! geographic-specific         
pot5tially prev5table outcomes adju/m5t 
factor = a geographic region "u ?is     
p>agraph--  7i7 be less ?an #ie p]c5t or
 m ?an #aje p]c5t = fiscal ye> #bjaf2   
7ii7 be less ?an #ij p]c5t or m ?an #aaj
 p]c5t = fiscal ye> #bjag2 or  7iii7 be 
less ?an #hj p]c5t or m ?an #abj p]c5t =
 fiscal ye> #bjah & ea* subsequ5t fiscal
 ye>4  7#c7 ,geographic region  7,a7 ,9 
g5]al ,= ! purposes ( ?is subsection &  
subject to subp>agraph 7,b71 ! ,secret>y
 %all e/abli% geographic regions to :i* 
heal?c>e pr(essionals %all be assign$4  
7,b7 ,re/rictions  7i7 ,geographic      
regions ,to ! ext5t practical1 !        
,secret>y %all def9e geographic regions 
bas$ on core base /ati/ical areas z     
def9$ by ! ,director ( ! ,(fice (       
,managem5t & ,budget4  7ii7 ,assignm5t (
 heal?c>e pr(essionals to geographic    

regions ,! geographic region to :i* a   
heal?c>e pr(essional is assign$ %all be 
! geographic region 9 :i* a plurality ( 
,m$ic>e b5efici>ies treat$ by su*       
pr(essional = ! applicable hi/orical    
p]iod reside1 z det]m9$ by ! ,secret>y4 
7#d7 ,report on us+ individual heal?c>e 
pr(essional p]=mance ,no lat] ?an       
,janu>y #a1 #bjag1 ! ,secret>y %all     
submit to ,congress a report propos+ a  
me?od ( comb9+ ! pot5tially prev5table  
outcomes p]=mance ( individual heal?c>e 
pr(essionals ) ! geographic-specific    
pot5tially prev5table outcomes p]=mance 
= a geographic region "u p>agraph 7#b7 =
 ! purpose ( det]m9+ ! pot5tially       
prev5table outcomes adju/m5t factor "u  
p>agraph 7#a7 to ! annual adju/m5t      
factor = paym5ts to su* individual      
heal?c>e pr(essionals4  7c7 ,composite  
aggregate paym5ts = excess pot5tially   
prev5table outcomes  7#a7 ,9 g5]al ,!   
composite aggregate paym5ts = excess    
pot5tially prev5table outcomes = an     
applicable heal?c>e deliv]y organization

 or geographic region = an applicable   
hi/orical p]iod describ$ 9 ?is p>agraph 
is equal to ! sum ( ! foll[+ = !        
heal?c>e deliv]y organization or        
geographic region & p]iod3  7,a7        
,prev5table complications ,! aggregate  
paym5ts = excess inpati5t pot5tially    
prev5table complications 7z def9$ 9     
subsection 7e77#a77;,b774  7,b7         
,prev5table readmissions ,! aggregate   
paym5ts = excess pot5tially prev5table  
readmissions 7z def9$ 9 subsection      
7f77#a77;,b774  7,c7 ,prev5table        
admissions ,! aggregate paym5ts = excess
 pot5tially prev5table admissions       
comput$ 7z def9$ 9 subsection           
7g77#a77;,b774  7,d7 ,prev5table em]g5cy
 room visits ,! aggregate paym5ts =     
excess pot5tially prev5table em]g5cy    
room visits 7z def9$ 9 subsection       
7h77#a77;,b774  7,e7 ,prev5table        
outpati5t ancill>y s]vices ,! aggregate 
paym5ts = excess pot5tially prev5table  
outpati5t ancill>y s]vices 7z def9$ 9   
subsection 7i77#a77;,b774  7#b7 ,(fsett+

 pot5tially prev5table outcome values   
be+ positive or negative ,! aggregate   
paym5ts = individual excess pot5tially  
prev5table outcomes "u subsections      
7e77#a77;,b71 7f77#a77;,b71             
7g77#a77;,b71 7h77#a77;,b71 &           
7i77#a77;,b7 may h a positive value     
7indicat+ ! heal?c>e deliv]y            
organization _h m pot5tially prev5table 
outcomes ?an expect$7 or a negative     
value 7indicat+ ! heal?c>e deliv]y      
organization _h few] pot5tially         
prev5table outcomes ?an expect$74 ,!    
summ+ ( ! individual excess pot5tially  
prev5table outcomes 9 p>agraph 7#a7 =   
pot5tially prev5table outcomes all[s    
negative values = individual pot5tially 
prev5table outcomes to (fset 9 "p or 9  
:ole positive values ( o!r pot5tially   
prev5table outcomes4  7#c7 ,exclusions  
,! ,secret>y %all det]m9e !             
applicability ( ea* type ( pot5tially   
prev5table outcome to diff]5t types (   
heal?c>e deliv]y organizations & may    
exclude pot5tially prev5table outcomes f

 ! calculation ( aggregate paym5ts      
ref]r$ to 9 p>agraph 7#a7 = types (     
heal?c>e deliv]y organizations if !     
,secret>y det]m9es t su* outcomes are n 
applicable = su* types ( organizations4 
7d7 ,sup]s$+ exi/+ paym5t adju/m5ts =   
quality2 budget neutral adju/m5t  7#a7  
,9 g5]al ,= applicable prospective      
p]iods beg9n+ on or aft] ,octob] #a1    
#bjae1 no paym5t adju/m5t = quality     
p]=mance %all be made pursuant any ( !  
foll[+ provisions3  7,a7 ,paym5t        
adju/m5ts = hospital acquir$ conditions 
"u section #ahhf7;d77#d77;,d71 z add$ by
 section #ejja7;c7 ( ,deficit ,r$uction 
,act ( #bjje4  7,b7 ,paym5t adju/m5ts = 
value bas$ pur*as+ = inpati5t hospital  
s]vices "u section #ahhf7o7 & =         
physicians' s]vices "u section #ahdh7p74
  7,c7 ,paym5t adju/m5ts = hospital     
readmissions "u section #ahhf7q71 z add$
 by section #cjbe ( ! ,pati5t           
,protection & ,af=dable ,c>e ,act4  7,d7
 ,paym5t adju/m5ts = hospital acquir$   
conditions "u section #ahhf7p71 z add$  

by section #cjjh ( ! ,pati5t ,protection
 & ,af=dable ,c>e ,act4  7,e7 ,paym5t   
adju/m5ts = ,m$ic>e ,advantage ,plans "u
 ,sections #ahec7n7 & #ahec7o74  7,f7   
,o!r paym5t adju/m5ts = quality z       
det]m9$ by ! ,secret>y4  7#b7 ,paym5t   
adju/m5ts = report+ quality in=mation   
un*ang$ ,paym5t adju/m5ts = report+     
quality in=mation t are unrelat$ to     
actual quality p]=mance "u sections     
#ahcc7t77#ag71 #ahdh7;a71 #ahdh7k71     
#ahdh7m7 & #ahcc7;i77#b77;,d7 %all n be 
affect$ by ?is subsection4  7#c7 ,m&at$ 
r$uctions "u curr5t law ,! ,secret>y    
%all det]m9e ! annual r$uctions 9 paym5t
 m&at$ by ! provisions describ$ 9       
p>agraph 7#a7 = fiscal ye> #bjaf & = ea*
 subsequ5t fiscal ye>4  7#d7 ,paym5t    
r$uction factor to a*ieve budget        
neutrality ,! ,secret>y %all det]m9e a  
paym5t r$uction factor = fiscal ye>     
#bjaf & = ea* subsequ5t fiscal ye>1 to  
be appli$ "u subsections                
7e77#a77;,a77ii71 7f77#a77;,a77ii71     
7g77#a77;,a77ii71 7h77#a77;,a77ii71 &   

7i77#a77;,a77ii71 subject to !          
limitations 9 subsections 7a77#b77;,b7 &
 7b77#b77;,b71 s t !re is an aggregate  
paym5t r$uction "u ?is section = su*    
fiscal ye> equival5t to ! aggregate     
r$uction 9 paym5t det]m9$ "u p>agraph   
7#c7 = su* fiscal ye>4  7e7 ,aggregate  
paym5ts = excess inpati5t pot5tially    
prev5table complications  7#a7 ,excess  
inpati5t pot5tially prev5table          
complications2 aggregate paym5ts =      
excess inpati5t pot5tially prev5table   
complications def9$ ,9 ?is section3     
7,a7 ,excess inpati5t pot5tially        
prev5table complications  7i7 ,9 g5]al  
,! t]m excess inpati5t pot5tially       
prev5table complications means1 = an    
applicable hospital & o!r applicable    
heal?c>e deliv]y organizations det]m9$  
appropriate by ! ,secret>y = an         
applicable hi/orical p]iod = ea* type ( 
inpati5t hospital pot5tially prev5table 
complication id5tifi$ "u p>agraph 7#b71 
! sum across all risk classes 7z def9$ 9
 clause 7iii77 ( ! diff]5ce betwe5--    

7,i7 ! expect$ numb] ( inpati5t hospital
 pot5tially prev5table complications = !
 type ( complication = ! applicable     
hospital bas$ on ! /&>d complication    
rate comput$ "u clause 7ii7 9 ea* risk  
class2 &  7,,ii7 ! applicable hospital's
 actual numb] ( inpati5t hospital       
pot5tially prev5table complications = ! 
type ( inpati5t pot5tially prev5table   
complication 9 ea* risk class 9 !       
applicable hi/orical p]iod4  ,su*       
diff]5ce may be a positive or negative  
numb]4  7ii7 ,/&>d complication rate ,9 
c>ry+ out clause 7i77,i71 ! /&>d        
complication rate %all be bas$ on !     
av]age rate ( ea* type ( inpati5t       
hospital pot5tially prev5table          
complication 9 ea* risk class 9 !       
applicable hi/orical p]iod1 multipli$ by
 ! paym5t r$uction factor e/abli%$ "u   
subsection 7d77#c7 = ! applicable       
prospective p]iod4  7iii7 ,risk classes 
,9 ?is subp>agraph1 ! t]m risk classes  
means su* exhau/ive & mutually exclusive
 risk classes z ! ,secret>y %all e/abli%

 9 ord] to apply a risk-adju/m5t        
me?odology t meets ! crit]ia 9          
subsection 7j77#b7 & acc\nt = ! age1    
reason = admission1 sev]ity ( illness1 &
 o!r risk factors id5tifi$ by !         
,secret>y ( pati5ts at ! "t ( hospital  
admission4  7,b7 ,aggregate paym5ts =   
excess inpati5t hospital pot5tially     
prev5table complications  7i7 ,9 g5]al  
,! t]m aggregate paym5ts = excess       
inpati5t hospital pot5tially prev5table 
complications means1 = an applicable    
hospital & o!r applicable heal?c>e      
deliv]y organizations det]m9$           
appropriate by ! ,secret>y & applicable 
hi/orical p]iod1 = all types ( inpati5t 
hospital pot5tially prev5table          
complications id5tifi$ "u p>agraph 7#b71
 an am\nt equal to ! sum ( ! am\nt      
det]m9$ "u clause 7ii7 = su* hospital & 
o!r applicable heal?c>e deliv]y         
organizations det]m9$ appropriate by !  
,secret>y = ea* type ( inpati5t hospital
 pot5tially prev5table complication =   
su* p]iod4  7ii7 ,am\nt det]m9$ ,! am\nt

 det]m9$ "u ?is clause1 ) respect to an 
applicable hospital & o!r applicable    
heal?c>e deliv]y organizations det]m9$  
appropriate by ! ,secret>y & an         
applicable hi/orical p]iod1 = a type (  
inpati5t hospital pot5tially prev5table 
complication id5tifi$ "u p>agraph 7#b7  
is equal to ! product (--  7,i7 ! excess
 inpati5t hospital pot5tially prev5table
 complications 7z def9$ 9 subp>agraph   
7,a77 ( ! applicable hospital & o!r     
applicable heal?c>e deliv]y             
organizations det]m9$ appropriate by !  
,secret>y = ! type ( inpati5t hospital  
pot5tially prev5table complication dur+ 
! applicable hi/orical p]iod2 &  7,,ii7 
! e/imat$ national av]age /&>diz$       
increm5tal co/ ( t inpati5t hospital    
pot5tially prev5table complication =    
applicable hospitals & o!r applicable   
heal?c>e deliv]y organizations det]m9$  
appropriate by ! ,secret>y dur+ !       
applicable hi/orical p]iod 7z det]m9$ "u
 clause 7iii77 adju/$ by ea* hospital's 
applicable paym5t adju/m5t factors4     

7iii7 ,me?odology = e/imat+ national    
av]age increm5tal co/ ( inpati5t        
hospital pot5tially prev5table          
complications ,9 c>ry+ out clause       
7ii77,,ii71 ! ,secret>y %all e/abli% &  
apply a me?odology to e/imate ! national
 av]age /&>diz$ increm5tal co/ ( ea*    
inpati5t hospital pot5tially prev5table 
complication id5tifi$ "u p>agraph 7#b74 
7#b7 ,inpati5t hospital pot5tially      
prev5table complications ,= purposes (  
?is subsection1 ! ,secret>y %all select 
a me?odology ( id5tify+ pot5tially      
prev5table complications t includes ea* 
inpati5t hospital complication t meets  
all ( ! foll[+ requirem5ts3  7,a7 ,!    
complication occurs dur+ ! /ay & 0 n    
pres5t on admission z an inpati5t4  7,b7
 ,! complication is a h>mful ev5t1 su* z
 a surgical complication1 or an acute   
illness1 su* z an infection or an acute 
exac]bation ( und]ly+ *ronic disease4   
7,c7 ,! complication c\ld reasonably be 
prev5t$ ) adequate c>e & treatm5t & is n
 a natural progression ( a pati5t's     

und]ly+ illnesses pres5t on admission4  
7,d7 ,! complication may be reasonably  
con/ru$ z relat$ to ! c>e r5d]$ dur+ !  
/ay4  7,e7 ,! complication meets crit]ia
 applicable "u subsection 7j77#a7 to !  
outcome describ$ 9 ?is subsection4  7f7 
,aggregate paym5ts = excess pot5tially  
prev5table readmissions  7#a7 ,excess   
pot5tially prev5table readmissions2     
aggregate paym5ts = excess pot5tially   
prev5table readmissions def9$ ,=        
purposes ( ?is subsection3  7,a7 ,excess
 pot5tially prev5table readmissions  7i7
 ,9 g5]al ,! t]m excess pot5tially      
prev5table readmissions means1 = an     
applicable hospital or o!r applicable   
heal?c>e deliv]y organization det]m9$   
appropriate by ! ,secret>y = an         
applicable hi/orical p]iod & ) respect  
to pot5tially prev5table readmissions   
id5tifi$ "u p>agraph 7#b7 = ea* risk    
class 7z def9$ 9 clause 7iii77 !        
diff]5ce betwe5--  7,i7 ! expect$ numb] 
( pot5tially prev5table readmissions = !
 applicable hospital bas$ on ! /&>d     

readmission rate 9 ea* risk class 7z    
def9$ 9 clause 7ii772 &  7,,ii7 !       
applicable hospital's actual numb] (    
pot5tially prev5table readmissions 9 ea*
 risk class = ! applicable hi/orical    
p]iod4  ,su* diff]5ce may be a positive 
or negative numb]4  7ii7 ,/&>d          
readmission rate ,9 c>ry+ out clause    
7i77,i71 ! /&>d readmission rate %all be
 bas$ on ! av]age pot5tially prev5table 
readmission rate 9 ea* risk class1 z    
e/abli%$ "u clause 7iii71 9 ! applicable
 hi/orical p]iod1 multipli$ by ! paym5t 
r$uction factor e/abli%$ "u subsection  
7d77#c7 = ! applicable prospective      
p]iod4  7iii7 ,risk adju/m5t ,9 ?is     
subp>agraph1 ! t]m risk classes means   
su* exhau/ive & mutually exclusive risk 
classes z ! ,secret>y %all e/abli% 9    
ord] to apply a risk-adju/m5t me?odology
 t meets ! crit]ia 9 subsection 7j77#b7 
& acc\nt = ! age1 reason = admission1   
sev]ity ( illness1 & o!r risk factors   
id5tifi$ by ! ,secret>y ( pati5ts t 7   
pres5t 9 pati5ts at ! "t ( hospital     

dis*>ge f ! hospital admission t prec$$ 
_! readmission4  7,b7 ,aggregate paym5ts
 = excess pot5tially prev5table         
readmissions  7i7 ,9 g5]al ,! t]m       
aggregate paym5ts = excess pot5tially   
prev5table readmissions means1 = an     
applicable hi/orical p]iod1 = all       
pot5tially prev5table readmissions      
id5tifi$ "u p>agraph 7#b71 an am\nt     
equal to ! am\nt det]m9$ "u clause 7ii74
  7ii7 ,am\nt det]m9$ ,! am\nt det]m9$  
"u ?is clause1 ) respect to an          
applicable hospital & o!r applicable    
heal?c>e deliv]y organizations det]m9$  
appropriate by ! ,secret>y & an         
applicable hi/orical p]iod1 is equal to 
! sum across all risk classes ( !       
product (--  7,i7 ! excess pot5tially   
prev5table readmissions 9 ! risk class =
 ! applicable hospital & o!r applicable 
heal?c>e deliv]y organizations det]m9$  
appropriate by ! ,secret>y = !          
applicable hi/orical p]iod2 &  7,,ii7 ! 
av]age paym5t = pot5tially prev5table   
readmissions 7z def9$ 9 clause 7iii77 9 

! risk class = applicable hospitals &   
o!r applicable heal?c>e deliv]y         
organizations det]m9$ appropriate by !  
,secret>y = ! applicable hi/orical      
p]iod4  7iii7 ,av]age paym5t =          
pot5tially prev5table readmissions ,9   
clause 7ii77,,ii71 ! t]m av]age paym5t =
 pot5tially prev5table readmissions = a 
risk class means1 = applicable hospitals
 & o!r applicable heal?c>e deliv]y      
organizations det]m9$ appropriate by !  
,secret>y = an applicable hi/orical     
p]iod1 ! av]age paym5t = all pot5tially 
prev5table readmissions t foll[ a prior 
dis*>ge 9 t risk class4  7#b7           
,pot5tially prev5table readmissions ,=  
purposes ( ?is subsection1 ! ,secret>y  
%all select a me?odology ( id5tify+     
pot5tially prev5table readmissions "u   
p>agraph 7#a7 t includes ea* readmission
 t meets all ( ! foll[+ requirem5ts3    
7,a7 ,! readmission is )9 #cj days f !  
date ( ! initial dis*>ge & c\ld         
reasonably h be5 prev5t$ by--  7i7 !    
provision ( appropriate c>e consi/5t )  

accept$ /&>ds 9 ! prior dis*>ge2  7ii7  
adequate dis*>ge plann+2  7iii7 adequate
 po/-dis*>ge foll[up2 or  7iv7 improv$  
coord9ation betwe5 ! inpati5t &         
outpati5t heal?c>e teams4  7,b7 ,!      
readmission is = a condition or proc$ure
 relat$ to ! c>e dur+ ! prior admission 
or dur+ ! c>e imm$iately foll[+ ! prior 
dis*>ge1 includ+--  7i7 a readmission = 
! same or closely relat$ condition or   
proc$ure z ! prior dis*>ge2  7ii7 a     
readmission = an infection or o!r       
complication ( c>e2  7iii7 a readmission
 = a condition or proc$ure indicative ( 
a fail$ surgical int]v5tion2 &  7iv7 a  
readmission = an acute decomp5sation ( a
 coexi/+ *ronic disease4  7,c7 ,!       
readmission is back to ! same hospital  
or to any o!r hospital4  7,d7 ,!        
readmission does n occur "u any ( !     
foll[+ circum/ances3  7i7 ,! orig9al    
dis*>ge 0 a pati5t-initiat$ dis*>ge & 0 
aga9/ m$ical advice & ! circum/ances (  
su* dis*>ge & readmission are docum5t$ 9
 ! pati5t's m$ical record4  7ii7 ,!     

readmission 0 a plann$ readmission4     
7iii7 ,su* o!r exclusion z ! ,secret>y  
det]m9es appropriate4  7,e7 ,!          
readmission meets crit]ia applicable "u 
subsection 7j77#a7 to ! outcome describ$
 9 ?is subsection4  7g7 ,aggregate      
paym5ts = excess pot5tially prev5table  
admissions  7#a7 ,excess pot5tially     
prev5table admissions2 aggregate paym5ts
 = excess pot5tially prev5table         
admissions def9$ ,9 ?is subsection3     
7,a7 ,excess pot5tially prev5table      
admissions  7i7 ,9 g5]al ,! t]m excess  
pot5tially prev5table admissions means1 
= an applicable heal?c>e deliv]y        
organization = an applicable hi/orical  
p]iod & ) respect to pot5tially         
prev5table admissions id5tifi$ "u       
p>agraph 7#b71 = ea* risk class 7z def9$
 9 clause 7iii77 ! diff]5ce betwe5--    
7,i7 ! expect$ numb] ( b5efici>ies ) "o 
or m pot5tially prev5table admissions = 
! applicable heal?c>e deliv]y           
organization bas$ on ! /&>d pot5tially  
prev5table admission rate = b5efici>ies 

9 ea* risk class2 &  7,,ii7 ! applicable
 heal?c>e deliv]y organization's actual 
numb] ( b5efici>ies ) "o or m pot5tially
 prev5table admissions 9 ea* risk class 
= ! applicable hi/orical p]iod =        
b5efici>ies assign$ to ! risk class4    
,su* diff]5ce may be a positive or      
negative numb]4  7ii7 ,/&>d pot5tially  
prev5table admission rate ,9 c>ry+ out  
clause 7i77,i71 ! /&>d pot5tially       
prev5table admission rate %all be bas$  
on ! av]age numb] ( b5efici>ies ) "o or 
m pot5tially prev5table admissions 9 ea*
 risk class1 z def9$ 9 clause 7iii71 9 !
 applicable hi/orical p]iod1 multipli$  
by ! paym5t r$uction factor e/abli%$ "u 
subsection 7d77#c7 = ! applicable       
prospective p]iod4  7iii7 ,risk adju/m5t
 ,9 ?is subp>agraph1 ! t]m risk classes 
means su* exhau/ive & mutually exclusive
 risk classes z ! ,secret>y %all e/abli%
 9 ord] to apply a risk-adju/m5t        
me?odology t meets ! crit]ia 9          
subsection 7j77#b7 & acc\nt = ! age1    
reason = admission1 sev]ity ( illness1 &

 o!r risk factors id5tifi$ by !         
,secret>y4 ,! risk class = a b5efici>y  
%all be assign$ "u ?is subp>agraph bas$ 
on ! b5efici>y's *ronic illness burd5 & 
hi/ory ( heal?c>e s]vices = a "t p]iod (
 n less ?an #f mon?s prec$+ ! beg9n+ ( !
 applicable hi/orical p]iod4  7,b7      
,aggregate paym5ts = excess pot5tially  
prev5table admissions  7i7 ,9 g5]al ,!  
t]m aggregate paym5ts = excess          
pot5tially prev5table admissions means1 
= an applicable hi/orical p]iod1 =      
pot5tially prev5table admissions        
id5tifi$ "u p>agraph 7#b71 an am\nt     
equal to ! am\nt det]m9$ "u clause 7ii74
  7ii7 ,am\nt det]m9$ ,! am\nt det]m9$  
"u ?is clause1 ) respect to an          
applicable heal?c>e deliv]y organization
 & an applicable hi/orical p]iod1 = all 
b5efici>ies ) "o or m pot5tially        
prev5table admissions id5tifi$ "u       
p>agraph 7#b7 is equal to ! sum across  
all risk classes ( ! product (--  7,i7 !
 excess pot5tially prev5table admissions
 7z def9$ 9 subp>agraph 7,a77 9 ! risk  

class = ! applicable heal?c>e deliv]y   
organization dur+ ! applicable hi/orical
 p]iod2 &  7,,ii7 ! av]age paym5t p]    
b5efici>y ( all pot5tially prev5table   
admissions = b5efici>ies 9 ! risk class 
7z det]m9$ "u clause 7iii77 = applicable
 heal?c>e deliv]y organizations dur+ !  
applicable hi/orical p]iod4  7iii7      
,av]age paym5t p] b5efici>y ( all       
pot5tially prev5table admissions ,! t]m 
av]age paym5t p] b5efici>y ( all        
pot5tially prev5table admissions = a    
risk class means1 = applicable heal?c>e 
deliv]y organizations = an applicable   
hi/orical p]iod1 ! av]age paym5t p]     
b5efici>y = all pot5tially prev5table   
admissions 9 ! risk class4  7#b7        
,pot5tially prev5table admissions ,=    
purposes ( ?is subsection1 ! ,secret>y  
%all select a me?odology ( id5tify+     
pot5tially prev5table admissions "u     
p>agraph 7#a7 t includes ea* admission t
 meets all ( ! foll[+ requirem5ts3  7,a7
 ,! admission c\ld reasonably h be5     
prev5t$ ) adequate access to ambulatory 

c>e or coord9at$ heal?c>e s]vices4  7,b7
 ,! s]vices provid$ z "p ( ! admission  
c\ld be safely p]=m$ 9 an outpati5t     
facility4  7,c7 ,! admission is n ( a   
b5efici>y ) ext5sive comorbid disease or
 high sev]ity ( illness t may           
necessitate t c>e be deliv]$ 9 a        
hospital sett+4  7,d7 ,! admission meets
 crit]ia applicable "u subsection       
7j77#a7 to ! outcome describ$ 9 ?is     
subsection4  7h7 ,aggregate paym5ts =   
excess pot5tially prev5table em]g5cy    
room visits  7#a7 ,excess pot5tially    
prev5table em]g5cy room visits2         
aggregate paym5ts = excess pot5tially   
prev5table em]g5cy room visits def9$ ,9 
?is subsection3  7,a7 ,excess pot5tially
 prev5table em]g5cy room visits  7i7 ,9 
g5]al ,! t]m excess pot5tially          
prev5table em]g5cy room visits means1 = 
an applicable heal?c>e deliv]y          
organization = an applicable hi/orical  
p]iod & ) respect to pot5tially         
prev5table em]g5cy room visits id5tifi$ 
"u p>agraph 7#b71 = ea* risk class 7z   

def9$ 9 clause 7iii77 ! diff]5ce        
betwe5--  7,i7 ! expect$ numb] (        
b5efici>ies ) "o or m pot5tially        
prev5table em]g5cy room visits = !      
applicable heal?c>e deliv]y organization
 bas$ on ! /&>d pot5tially prev5table   
em]g5cy room visit rate = b5efici>ies 9 
ea* risk class 7z def9$ 9 clause 7ii772 
&  7,,ii7 ! applicable heal?c>e deliv]y 
organization's actual numb] (           
b5efici>ies ) "o or m pot5tially        
prev5table em]g5cy room visits = !      
applicable hi/orical p]iod = b5efici>ies
 assign$ to ! risk class4  ,su* diff]5ce
 may be a positive or negative numb]4   
7ii7 ,/&>d pot5tially prev5table em]g5cy
 room visit rate ,9 c>ry+ out clause    
7i77,i71 ! /&>d pot5tially prev5table   
em]g5cy room visit rate %all be bas$ on 
! av]age numb] ( b5efici>ies ) "o or m  
pot5tially prev5table em]g5cy room      
visits 9 ea* risk class1 z def9$ 9      
clause 7iii7 9 ! applicable hi/orical   
p]iod1 multipli$ by ! paym5t r$uction   
factor e/abli%$ "u subsection 7d77#c7 = 

! applicable prospective p]iod4  7iii7  
,risk adju/m5t ,9 ?is subp>agraph1 ! t]m
 risk classes means su* exhau/ive &     
mutually exclusive risk classes z !     
,secret>y %all e/abli% 9 ord] to apply a
 risk-adju/m5t me?odology t meets !     
crit]ia 9 subsection 7j77#b7 & acc\nt = 
! age1 reason = admission1 sev]ity (    
illness1 & o!r risk factors id5tifi$ by 
! ,secret>y4 ,! risk class = a b5efici>y
 %all be assign$ bas$ on ! b5efici>y's  
*ronic illness burd5 & hi/ory ( heal?c>e
 s]vices = a "t p]iod ( n less ?an #f   
mon?s prec$+ ! beg9n+ ( ! applicable    
hi/orical p]iod4  7,b7 ,aggregate       
paym5ts = excess pot5tially prev5table  
em]g5cy room visits  7i7 ,9 g5]al ,! t]m
 aggregate paym5ts = excess pot5tially  
prev5table em]g5cy room visits means1 = 
an applicable hi/orical p]iod1 =        
pot5tially prev5table em]g5cy room      
visits id5tifi$ "u p>agraph 7#b71 an    
am\nt equal to ! am\nt det]m9$ "u clause
 7ii74  7ii7 ,am\nt det]m9$ ,! am\nt    
det]m9$ "u ?is clause1 ) respect to an  

applicable heal?c>e deliv]y organization
 & an applicable hi/orical p]iod1 = all 
b5efici>ies ) "o or m pot5tially        
prev5table em]g5cy room visits id5tifi$ 
"u p>agraph 7#b7 is equal to ! sum      
across all risk classes ( ! product (-- 
7,i7 ! excess pot5tially prev5table     
em]g5cy room visits 7z def9$ 9          
subp>agraph 7,a77 9 ! risk class = !    
applicable heal?c>e deliv]y organization
 dur+ ! applicable hi/orical p]iod2 &   
7,,ii7 ! av]age paym5t p] b5efici>y (   
all pot5tially prev5table em]g5cy room  
visits = b5efici>ies 9 ! risk class 7z  
det]m9$ "u clause 7iii77 = applicable   
heal?c>e deliv]y organizations dur+ !   
applicable hi/orical p]iod4  7iii7      
,av]age paym5t p] b5efici>y ( all       
pot5tially prev5table em]g5cy room      
visits ,! t]m av]age paym5t p] b5efici>y
 ( all pot5tially prev5table em]g5cy    
room visits means1 = applicable heal?c>e
 deliv]y organizations = an applicable  
hi/orical p]iod = a risk class1 ! av]age
 paym5t p] b5efici>y = all pot5tially   

prev5table em]g5cy room visits 9 ! risk 
class4  7#b7 ,pot5tially prev5table     
em]g5cy room visits ,= purposes ( ?is   
subsection1 ! ,secret>y %all select a   
me?odology ( id5tify+ pot5tially        
prev5table em]g5cy room visits "u       
p>agraph 7#a7 t includes ea* su* visit t
 meets all ( ! foll[+ requirem5ts3  7,a7
 ,! visit did n require em]g5cy m$ical  
att5tion because ! condition c\ld be    
treat$ or prev5t$ by a physician or o!r 
heal?c>e provid] 9 a nonem]g5cy sett+4  
7,b7 ,! b5efici>y involv$ does n h an   
ext5sive comorbid disease or high       
sev]ity ( illness t may necessitate t   
c>e be deliv]$ 9 an em]g5cy room sett+4 
7,c7 ,! visit meets crit]ia applicable  
"u subsection 7j77#a7 to ! outcome      
describ$ 9 ?is subsection4  7i7         
,aggregate paym5ts = excess pot5tially  
prev5table outpati5t proc$ures & te/s   
7#a7 ,excess pot5tially prev5table      
outpati5t proc$ures & te/s2 aggregate   
paym5ts = excess pot5tially prev5table  
outpati5t proc$ures & te/s def9$ ,9 ?is 

subsection3  7,a7 ,excess pot5tially    
prev5table outpati5t proc$ures & te/s   
7i7 ,9 g5]al ,! t]m excess pot5tially   
prev5table outpati5t proc$ures & te/s   
means1 = an applicable heal?c>e deliv]y 
organization = an applicable hi/orical  
p]iod & ) respect to pot5tially         
prev5table outpati5t proc$ures & te/s   
id5tifi$ "u p>agraph 7#b71 = ea* risk   
class 7z def9$ 9 clause 7iii77 !        
diff]5ce betwe5--  7,i7 ! expect$ numb] 
( b5efici>ies ) "o or m pot5tially      
prev5table outpati5t proc$ures & te/s = 
! applicable heal?c>e deliv]y           
organization bas$ on ! /&>d pot5tially  
prev5table rate ( pot5tially prev5table 
outpati5t proc$ures & te/s = b5efici>ies
 9 ea* risk class 7z def9$ 9 clause     
7ii772 &  7,,ii7 ! applicable heal?c>e  
deliv]y organization's actual numb] (   
b5efici>ies ) "o or m pot5tially        
prev5table outpati5t proc$ures & te/s 9 
ea* risk class = ! applicable hi/orical 
p]iod = b5efici>ies assign$ to ! risk   
class4  ,su* diff]5ce may be a positive 

or negative numb]4  7ii7 ,/&>d          
pot5tially prev5table rate ( outpati5t  
proc$ures & te/s ,9 c>ry+ out clause    
7i77,i71 ! /&>d pot5tially prev5table   
rate ( outpati5t proc$ures & te/s %all  
be bas$ on ! av]age numb] ( b5efici>ies 
) "o or m pot5tially prev5table         
outpati5t proc$ures & te/s 9 ea* risk   
class1 z def9$ 9 clause 7iii7 9 !       
applicable hi/orical p]iod1 multipli$ by
 ! paym5t r$uction factor e/abli%$ "u   
subsection 7d77#c7 = ! applicable       
prospective p]iod4  7iii7 ,risk adju/m5t
 ,9 ?is subp>agraph1 ! t]m risk classes 
means su* exhau/ive & mutually exclusive
 risk classes z ! ,secret>y %all e/abli%
 9 ord] to apply a risk-adju/m5t        
me?odology t meets ! crit]ia 9          
subsection 7j77#b7 & acc\nt = ! age1    
reason = admission1 sev]ity ( illness1 &
 o!r risk factors id5tifi$ by !         
,secret>y4 ,! risk class = a b5efici>y  
%all be assign$ bas$ on ! b5efici>y's   
*ronic illness burd5 & hi/ory ( heal?c>e
 s]vices = a "t p]iod ( n less ?an #f   

mon?s prec$+ ! beg9n+ ( ! applicable    
hi/orical p]iod4  7,b7 ,aggregate       
paym5ts = excess pot5tially prev5table  
outpati5t proc$ures & te/s  7i7 ,9 g5]al
 ,! t]m aggregate paym5ts = excess      
pot5tially prev5table outpati5t         
proc$ures & te/s means1 = an applicable 
hi/orical p]iod1 = all b5efici>ies ) "o 
or m pot5tially prev5table outpati5t    
proc$ures & te/s id5tifi$ "u p>agraph   
7#b71 an am\nt equal to ! am\nt det]m9$ 
"u clause 7ii74  7ii7 ,am\nt det]m9$ ,! 
am\nt det]m9$ "u ?is clause1 ) respect  
to an applicable heal?c>e deliv]y       
organization & an applicable hi/orical  
p]iod1 = pot5tially prev5table outpati5t
 proc$ures & te/s id5tifi$ "u p>agraph  
7#b7 is equal to ! sum across all risk  
classes ( ! product (--  7,i7 ! excess  
pot5tially prev5table outpati5t         
proc$ures & te/s 7z def9$ 9 subp>agraph 
7,a77 = ! risk class = ! applicable     
heal?c>e deliv]y organization dur+ !    
applicable hi/orical p]iod2 &  7,,ii7 ! 
av]age paym5t p] b5efici>y ( all        

pot5tially prev5table outpati5t         
proc$ures & te/s = b5efici>ies 9 ! risk 
class 7z det]m9$ "u clause 7iii77 =     
applicable heal?c>e deliv]y             
organizations dur+ ! applicable         
hi/orical p]iod4  7iii7 ,av]age paym5t  
p] b5efici>y ( all pot5tially prev5table
 outpati5t proc$ures & te/s ,! t]m      
av]age paym5t p] b5efici>y ( all        
pot5tially prev5table outpati5t         
proc$ures & te/s = a risk class means1 =
 applicable heal?c>e deliv]y            
organizations = an applicable hi/orical 
p]iod1 ! av]age paym5t p] b5efici>y (   
all pot5tially prev5table outpati5t     
proc$ures & te/s 9 ! risk class4  7#b7  
,pot5tially prev5table outpati5t        
proc$ures & te/s ,= purposes ( ?is      
subsection1 ! ,secret>y %all select a   
me?odology ( id5tify+ pot5tially        
prev5table outpati5t proc$ures & te/s t 
includes ea* proc$ure or te/ t meets all
 ( ! foll[+ requirem5ts3  7,a7 ,!       
proc$ure or te/ is provid$ or ord]$ by a
 physician or o!r heal?c>e provid] to   

supplem5t or support ! evaluation or    
treatm5t ( a b5efici>y includ+ a        
proc$ure1 diagno/ic te/1 laboratory te/1
 !rapy s]vice1 or radiology s]vice4     
7,b7 ,! proc$ure or te/ may be ov]us$ 9 
! provision heal?c>e or treatm5t4  7,c7 
,! proc$ure or te/ is n = a b5efici>y ) 
ext5sive comorbid disease or high       
sev]ity ( illness t may necessitate     
frequ5t monitor+ ) outpati5t proc$ures &
 te/s4  7,d7 ,! proc$ure or te/ meets   
crit]ia applicable "u subsection 7j77#a7
 to ! outcome describ$ 9 ?is subsection4
  7j7 ,selection ( me?ods = id5tify+    
pot5tially prev5table outcomes & me?od (
 risk adju/m5t  7#a7 ,selection crit]ia 
= me?od = id5tify+ pot5tially prev5table
 outcomes ,! ,secret>y %all select a    
me?odology ( id5tify+ ea* ( ! pot5tially
 prev5table outcomes4 ,= ea* type (     
pot5tially prev5table outcome !         
me?odology select$ %all meet ! foll[+   
crit]ia3  7,a7 ,be compreh5sive ) a     
uni=m /ructure4  7,b7 ,h available a    
me?od ( risk adju/m5t t meets ! crit]ia 

9 p>agraph 7#b74  7,c7 ,be cl9ically    
mean+ful hav+ exclusions = b5efici>ies =
 :om ! outcome is n pot5tially          
prev5table includ+ ^? b5efici>ies )     
ext5sive comorbid disease or high       
sev]ity ( illness4  7,d7 ,to ! ext5t    
possible h be5 successfully implem5t$ 9 
! paym5t organization ( a ,/ate ,m$icaid
 program or a major pay] or be c]tifi$  
by an entity ) a contract "u section    
#ahij7;a74  7,e7 ,be op51 transp>5t1 &  
available = review & comm5t4  7,f7 ,to !
 ext5t possible1 be 9 ! public doma94   
7,g7 ,if comm]cially available me?ods   
are ! only viable me?ods t meet !       
crit]ia 9 subp>agraphs 7,a71 7,b71 7,c71
 & 7,d71 ! ,secret>y may select su*     
comm]cial me?ods z long z su* me?ods    
meet ! crit]ia 9 subp>agraph 7,e74  7#b7
 ,selection crit]ia = me?od ( risk      
adju/m5t ,! ,secret>y %all select a     
me?odology = risk adju/+ ! rate ( ea* ( 
! pot5tially prev5table outcomes4 ,= ea*
 type ( pot5tially prev5table outcome1 !
 me?odology = risk adju/m5t %all meet ! 

foll[+ crit]ia3  7,a7 ,! me?odology is  
compreh5sive ) a uni=m /ructure4  7,b7  
,! me?odology is cl9ically mean+ful &   
explicitly recognize sev]ity ( illness1 
*ronic illness burd51 & pati5ts )       
ext5sive comorbid disease or high       
sev]ity ( illness4  7,c7 ,to ! ext5t    
possible1 ! me?odology has be5          
successfully implem5t$ 9 paym5t "u a    
,/ate ,m$icaid program or by a major    
pay] or is c]tifi$ by an entity ) a     
contract "u section #ahij7;a74  7,d7 ,! 
me?odology is op5 & transp>5t &         
available = review & comm5t4  7,e7 ,to !
 ext5t possible1 ! me?odology is 9 !    
public doma94  7,f7 ,if comm]cially     
available me?ods are ! only viable      
me?ods t meet ! crit]ia 9 subp>agraphs  
7,a71 7,b71 & 7,c71 ! ,secret>y may     
select su* comm]cial me?ods z long z su*
 me?ods meet ! crit]ia 9 subp>agraph    
7,d74  7k7 ,def9itions ,9 ?is section3  
7#a7 ,applicable heal?c>e deliv]y       
organization ,! t]m applicable heal?c>e 
deliv]y organization means a ,m$ic>e    

,advantage ,plan receiv+ paym5ts "u "p  
,c1 heal? home1 acc\ntable c>e          
organization1 applicable hospital 7z    
def9$ 9 subp>agraph 7,c771 ambulatory   
surg]y c5t]1 f$]ally qualifi$ heal?     
c5t]1 or o!r heal?c>e deliv]y           
organization id5tifi$ by ! ,secret>y4   
7#b7 ,applicable hi/orical p]iod ,! t]m 
applicable hi/orical p]iod means1 )     
respect to an applicable heal?c>e       
deliv]y organization = a fiscal ye>1 !  
mo/ rec5t #b-ye> p]iod = :i* data f !   
organization are available = purposes ( 
?is section4  7#c7 ,applicable hospital 
,! t]m applicable hospitals means a     
subsection 7d7 hospital 7z def9$ 9      
section #ahhf7;d77#a77;,b74  7#d7       
,applicable prospective p]iod ,! t]m    
applicable prospective p]iod means--    
7,a7 ) respect to an organization1 !    
fiscal ye> 9 :i* ! heal?c>e deliv]y     
organization specific adju/m5t factor "u
 subsection 7a77#b7 = an applicable     
hi/orical p]iod applies to ! paym5ts to 
! heal?c>e deliv]y organization2 &  7,b7

 ) respect to heal?c>e pr(essionals1 !  
ye> 9 :i* ! geographic-specific         
pot5tially prev5table outcomes adju/m5t 
factor "u subsection 7b77#b7 = an       
applicable hi/orical p]iod applies to   
paym5ts to ! pr(essionals4  7#e7        
,pot5tially prev5table outcomes ,! t]m  
pot5tially prev5table outcomes means    
inpati5t pot5tially prev5table          
complications "u subsection 7e77#b71    
pot5tially prev5table readmissions "u   
subsection 7f77#b71 pot5tially          
prev5table admissions "u subsection     
7g77#b71 pot5tially prev5table em]g5cy  
room visits "u subsection 7h77#b71 &    
pot5tially prev5table outpati5t         
proc$ures & te/s "u subsection 7i77#b74 
4  7b7 ,report+ ( pot5tially prev5table 
outcomes  7#a7 ,report+ to heal?c>e     
deliv]y organizations ,= ea* applicable 
hi/orical p]iod1 ! ,secret>y ( ,heal? & 
,human ,s]vices 79 ?is section ref]r$ to
 z ! ,secret>y7 %all provide confid5tial
 reports to applicable heal?c>e deliv]y 
organizations ) respect to pot5tially   

prev5table outcomes4 ,! confid5tial     
reports %all be provid$ to a heal?c>e   
deliv]y organization at lea/ #ij days   
be=e ! date ( _! release to ! public    
reg>d+ pot5tially prev5table outcomes ( 
! heal?c>e deliv]y organization4  7#b7  
,report+ heal? deliv]y organization     
specific in=mation  7,a7 ,9 g5]al ,!    
,secret>y %all make in=mation available 
to ! public reg>d+ pot5tially prev5table
 outcomes ( ea* applicable heal?c>e     
deliv]y organization4  7,b7 ,opportunity
 to review & submit corrections ,!      
,secret>y %all ensure t an applicable   
heal?c>e deliv]y organization has !     
opportunity to review1 & submit         
corrections =1 ! in=mation to be made   
public prior to su* in=mation be+ made  
public4  7,c7 ,web site po/+ ,su*       
in=mation %all be po/$ on ! ,hospital   
,comp>e ,int]net ,web ,site 9 an easily 
und]/&able =mat4  7c7 ,applicability to 
m$icaid ,! ,secret>y %all apply to ,/ate
 plans 7or waiv]s7 "u title ,,xix ( !   
,social ,security ,act regulations      

relat+ to paym5t adju/m5ts = pot5tially 
prev5table outcomes 7z def9$ 9 section  
#ahii;,b7k7 ( su* ,act7 z appropriate = 
! ,m$icaid program4 ,su* regulations    
%all be 9 effect no lat] ?an ,octob] #a1
 #bjag4  7d7 ,quality improvem5t grants 
7#a7 ,9 g5]al ,subject to p>agraph      
7#d77;,d71 beg9n+ 9 fiscal ye> #bjag !  
,secret>y %all aw>d quality improvem5t  
grants to eligible heal?c>e deliv]y     
organizations describ$ 9 p>agraph 7#b7 t
 meet ! crit]ia e/abli%$ "u p>agraph    
7#c74  7#b7 ,eligible heal?c>e deliv]y  
organization ,= purposes ( ?is          
subsection = a fiscal ye>1 an eligible  
heal?c>e deliv]y organization is an     
applicable heal?c>e deliv]y organization
 t has a heal?c>e deliv]y               
organization-specific adju/m5t factor = 
! fiscal ye> 7z det]m9$ "u section      
#ahii;,b7a77#b7 ( ! ,social ,security   
,act1 z add$ by subsection 7a771 t is   
l[] ?an ! heal?c>e deliv]y              
organization-specific adju/m5t factor   
7"u su* section7 = #ge p]c5t ( all o!r  

heal?c>e deliv]y organizations 9 su*    
fiscal ye>4  7#c7 ,crit]ia ,! ,secret>y 
%all e/abli% crit]ia = aw>d+ grants "u  
?is subsection4  7#d7 ,limitations  7,a7
 ,use ( grant funds ,a heal?c>e deliv]y 
organization t applies = & receives a   
grant "u ?is subsection %all use su*    
grant to implem5t processes t l[] ! rate
 ( pot5tially prev5table outcomes4  7,b7
 ,t]m ( grant ,grants "u ?is subsection 
%all be = #b ye>s4  7,c7 ,reports ,a    
heal?c>e deliv]y organization t applies 
= & receives a grant "u ?is subsection  
%all1 n lat] ?an #cj mon?s aft] ! date (
 receiv+ su* grant1 submit a report to !
 ,secret>y on ! processes fund$ by su*  
grant & ! result+ impact on rates (     
pot5tially prev5table outcomes4  7,d7   
,am\nt ( grants ,! aggregate am\nt (    
funds aw>d$ z grants "u ?is subsection =
 a fiscal ye> %all n exce$ #e p]c5t ( ! 
sum ( ! composite aggregate paym5ts =   
excess pot5tially prev5table outcomes = 
all heal?c>e deliv]y organizations 9 !  
applicable hi/orical p]iod 7z det]m9$ "u

 section #ahii;,b7c77#a7 ( ! ,social    
,security ,act74  7#e7 ,au?orization (  
appropriations ,!re are au?oriz$ to be  
appropriat$ to c>ry out ?is subsection  
su* sums z may be necess>y = ea* (      
fiscal ye>s #bjag ?r\gh #bjba4  7e7     
,,gao report ,n lat] ?an ,janu>y #a1    
#bjah1 ! ,comptroll] ,g5]al ( ! ,unit$  
,/ates %all submit to ,congress a report
 on ! impact ( section #ahii;,b ( !     
,social ,security ,act1 z add$ by       
subsection 7a71 on ,m$ic>e b5efici>ies  
c>e1 ,m$ic>e exp5ditures1 & ,m$ic>e     
provid]s1 includ+ ! quality ( c>e       
furni%$ "u ! ,m$ic>e program4  7f7      
,application ( def9itions ,9 ?is        
section1 ! t]ms applicable heal?c>e     
deliv]y organization1 applicable        
hi/orical p]iod1 pot5tially prev5table  
outcomes h ! mean+s giv5 su* t]ms 9     
section #ahii;,b7j7 ( ! ,social         
,security ,act1 z add$ by subsection    
7a74