[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2396 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 2396

 To amend title XI of the Social Security Act to modernize the quality 
                improvement organization (QIO) program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 16, 2007

  Mr. Hatch (for himself, Mr. Rockefeller, Mr. Lott, and Mr. Kennedy) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend title XI of the Social Security Act to modernize the quality 
                improvement organization (QIO) program.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Quality 
Improvement Organization Modernization Act of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Quality improvement activities.
Sec. 3. Improved program administration.
Sec. 4. Data disclosure.
Sec. 5. Use of evaluation and competition.
Sec. 6. Quality improvement organization program funding.
Sec. 7. Qualifications of QIOs.
Sec. 8. Conforming name to ``quality improvement organizations''.

SEC. 2. QUALITY IMPROVEMENT ACTIVITIES.

    (a) Inclusion of Quality Improvement Functions.--Section 1154(a) of 
the Social Security Act (42 U.S.C. 1320c-3(a)) is amended by adding at 
the end the following new paragraph:
            ``(18)(A) The organization shall offer quality improvement 
        assistance to providers and practitioners who provide health 
        care items and services to individuals who are dually eligible 
        for benefits under titles XVIII and XIX, including such 
        individuals with mental and cognitive disabilities, and 
        programs that provide items and services to such individuals.
            ``(B) In this paragraph, the term `quality improvement 
        assistance' includes the following:
                    ``(i) Education on quality improvement initiatives, 
                strategies, and techniques.
                    ``(ii) Instruction on how to collect, submit, 
                aggregate, and interpret data on measures that may be 
                used for quality improvement, public reporting, and 
                payment.
                    ``(iii) Technical assistance to support quality 
                improvement.
                    ``(iv) Technical assistance and instruction in the 
                conduct of root-cause analyses.
                    ``(v) Technical assistance for providers and 
                practitioners in beneficiary education to facilitate 
                patient self-management and improve patient health 
                literacy.
                    ``(vi) Facilitating cooperation among various local 
                stakeholders in quality improvement.
                    ``(vii) Facilitating adoption of procedures that 
                encourage timely candid feedback from patients and 
                their families concerning perceived problems.
                    ``(viii) Guidance on redesigning clinical 
                processes, including the adoption and effective use of 
                health information technology, to improve the 
                coordination, effectiveness, and safety of care.
                    ``(ix) Assistance in improving the quality of care 
                delivered in rural and frontier areas and reducing 
                health care disparities among racial and ethnic 
                minorities, as well as gender disparities, including 
                efforts to prevent or address any disparities or delays 
                in the rate of adoption of health information 
                technology and in the effective use of such technology 
                among such entities that serve communities designated 
                by the Secretary as medically underserved communities 
                or individuals dually eligible for benefits under 
                titles XVIII and XIX or that furnish such services in 
                rural areas.
                    ``(x) Assistance in improving coordination of care 
                as patients transition between providers and 
                practitioners, including developing the capacity to 
                securely exchange electronic health information and 
                helping providers and practitioners to effectively use 
                secure electronic health information to improve 
                quality.
                    ``(xi) Outreach to beneficiaries.
            ``(C)(i) The organization should give priority to funding 
        quality improvement assistance described in subparagraph 
        (B)(iv).
            ``(ii) In this paragraph, the term `root-cause analysis' 
        means the systematic examination of managerial processes behind 
        a series of actions that lead up to an event.''.
    (b) Medicare Quality Accountability Program and Medical Review 
Audit.--
            (1) Medicare quality accountability program.--Paragraph 
        (14) of section 1154(a) of such Act (42 U.S.C. 1320c-3(a)) is 
        amended to read as follows:
            ``(14)(A) The organization shall conduct a review of all 
        written complaints about the quality of services (for which 
        payment may otherwise be made under title XVIII) not meeting 
        professionally recognized standards of health care, if the 
        complaint is filed with the organization by an individual 
        entitled to benefits for such services under such title (or a 
        person acting on the individual's behalf). Before the 
        organization concludes that the quality of services does not 
        meet professionally recognized standards of health care, the 
        organization must provide the practitioner, plan, or person 
        concerned with reasonable notice and opportunity for 
        discussion.
            ``(B) The organization shall establish and operate a 
        Medicare quality accountability program consistent with the 
        following:
                    ``(i) The organization shall actively educate 
                Medicare beneficiaries of their right to bring quality 
                concerns to quality improvement organizations.
                    ``(ii) The organization shall report findings of 
                its investigations to the beneficiary involved or a 
                representative of such beneficiary, regardless of 
                whether such findings involve a provider, physician, or 
                other practitioner. Such report shall describe whether 
                the organization confirms the allegations in the 
                complaint and any actions taken by the provider, 
                practitioner, or plan, respectively, with respect to 
                such findings. Such findings may not be used in any 
                form in a medical malpractice action.
                    ``(iii) The organization shall assist providers, 
                practitioners, and plans in adopting best practices for 
                soliciting and welcoming feedback about patient 
                concerns, and assist providers, practitioners, and 
                plans in remedying patient-reported problems that are 
                confirmed by the organization and shall report findings 
                of patient-reported problems to the provider, 
                practitioner, or plan involved before disclosing 
                investigation results to the patient or patient's 
                representative.
                    ``(iv) The organization shall determine whether the 
                complaint allegations about clinical quality of care 
                are confirmed and assist providers, practitioners, and 
                plans in remedying confirmed complaints.
                    ``(v) The organization shall assist providers, 
                practitioners, and plans in preventing recurrence of 
                quality problems caused by unsafe processes of care, 
                and refer to an appropriate regulatory body providers, 
                practitioners, or plans that are unwilling or unable to 
                improve.
                    ``(vi) The organization shall publish annual 
                reports on the quality of care provided to individuals 
                entitled to benefits for services under title XVIII in 
                each State in which the organization functions under a 
                contract under this section, including aggregate 
                complaint data.
                    ``(vii) The organization shall promote beneficiary 
                awareness of standardized quality measures that may be 
                used for evaluating care and for choosing providers, 
                practitioners, and plans.
            ``(C) If an individual entitled to benefits for services 
        under title XVIII (or a person acting on the individual's 
        behalf) makes a credible written request for additional review 
        of a written complaint submitted by such individual (or such a 
        person) to the organization and reviewed under subparagraph 
        (A), the Secretary shall provide for prompt binding independent 
        review of the complaint determination made by the organization 
        as a result of such review.
            ``(D) The Secretary shall monitor and report to Congress, 
        regarding--
                    ``(i) the reliability of complaint determinations 
                made by quality improvement organizations; and
                    ``(ii) the effect of the disclosure of complaint 
                findings on the availability of primary- and specialty-
                care physician reviewers.''.
            (2) Medical review audit.--Section 1156 of the Social 
        Security Act (42 U.S.C. 1320c-5) is amended by adding at the 
        end the following new subsection:
    ``(d) Medical Review Audit.--
            ``(1) The Secretary, acting through the Inspector General 
        of the Department of Health and Human Services, shall enter 
        into a contract with an entity under which the entity shall 
        conduct a medical review audit to evaluate whether quality 
        improvement organizations are making appropriate determinations 
        and recommendations to the Secretary under subsection (b). Such 
        audit shall be conducted in accordance with the following 
        requirements:
                    ``(A) The audit shall consist of a medical review 
                of a randomly selected sample of clinical records 
                involved in not less than 10 percent of all reviews of 
                complaints about the quality of services filed by an 
                individual entitled to benefits for such services under 
                title XVIII (or a person acting on the individual's 
                behalf) that are conducted by quality improvement 
                organizations in 1 year during each 5-year contract 
                period beginning on or after the date of enactment of 
                this subsection, except that--
                            ``(i) not more than 50 of such complaint 
                        reviews conducted by each quality improvement 
                        organization shall be selected for such medical 
                        review in the year; and
                            ``(ii) in the case where a quality 
                        improvement organization conducted a total of 
                        30 or less of such complaint reviews during the 
                        sampling period, all such complaint reviews 
                        conducted shall be selected for such medical 
                        review in the year.
                    ``(B) The complaint reviews selected for medical 
                review under subparagraph (A) with respect to a year 
                during a contract period shall be reviews which were 
                initiated and with respect to which action has been 
                completed by the quality improvement organization 
                during that contract period.
                    ``(C) The Secretary shall ensure that the entity 
                the Secretary contracts with to conduct the medical 
                review audit under this paragraph retains appropriately 
                qualified individuals, in accordance with subsections 
                (a)(7)(A) and (b) of section 1154, to conduct the 
                medical review of clinical records under subparagraph 
                (A).
                    ``(D) In evaluating whether quality improvement 
                organizations are making appropriate determinations and 
                recommendations to the Secretary under subsection (b), 
                the entity the Secretary contracts with to conduct the 
                medical review audit under this paragraph shall--
                            ``(i) rely on the conclusions reached by a 
                        panel of physicians who have--
                                    ``(I) reviewed the same clinical 
                                information the quality improvement 
                                organization reviewed with respect to 
                                each complaint review selected for the 
                                medical review under subparagraph (A); 
                                and
                                    ``(II) come to an agreement with 
                                respect to whether a sanction 
                                recommendation was appropriate with 
                                respect to each such complaint review 
                                selected; and
                            ``(ii) ensure that the individuals 
                        conducting the medical review under 
                        subparagraph (A), and any other individuals 
                        involved in the medical review audit process 
                        under this paragraph, adhere to the procedures 
                        and rules applicable to entities that 
                        contracted with quality improvement 
                        organizations at the time the complaint reviews 
                        selected for such medical review were 
                        originally conducted by the quality improvement 
                        organization.
                    ``(E) A quality improvement organization shall 
                disclose any data and information needed to conduct the 
                medical review audit under this paragraph to the entity 
                the Secretary contracts with to conduct such audit. 
                Such disclosure shall be considered necessary to carry 
                out the purposes of this part and subject to the 
                exception to the prohibition against disclosure under 
                section 1160(a)(1), except that any subsequent 
                disclosure of such data and information that identifies 
                a patient or practitioner by any individual associated 
                with such audit shall be subject to the prohibition 
                against disclosure under section 1160(a).
            ``(2) Not later than 180 days after the date on which the 
        medical review audit under paragraph (1) is completed with 
        respect to a year during the first contract period beginning 
        after the date of enactment of this subsection, the Inspector 
        General of the Department of Health and Human Services shall 
        submit a report to the Committee on Finance of the Senate and 
        the Committee on Ways and Means and the Committee on Energy and 
        Commerce of the House of Representatives containing the results 
        of the medical review audit with respect to such year, 
        including--
                    ``(A) a brief review of the peer-reviewed 
                literature relevant to such medical review audit that 
                is published prior to such year;
                    ``(B) a characterization of the quality of care 
                issues identified in complaints selected for the 
                medical review under paragraph (1)(A) with respect to 
                such year;
                    ``(C) a review of published studies on consumer 
                complaint behavior within and outside of the health 
                care field;
                    ``(D) a description of actions taken by quality 
                improvement organizations to address issues alleged in 
                complaints selected for such medical review with 
                respect to such year (including facilitated mediation, 
                agreements with providers and practitioners, referrals 
                to State or Federal authorities for regulatory action, 
                and any other actions taken by such organizations to 
                address such issues);
                    ``(E) information on the extent to which--
                            ``(i) the panel of physicians described in 
                        paragraph (1)(D)(i) comes to an agreement that 
                        a sanction recommendation was appropriate with 
                        respect to such complaints; and
                            ``(ii) such agreement differs from the 
                        recommendations of the quality improvement 
                        organization that originally reviewed such 
                        complaint;
                    ``(F) a description of the disposition by the 
                Secretary of recommendations received from quality 
                improvement organizations pursuant to subsection (b), 
                including the reasons for such disposition; and
                    ``(G) recommendations for improving the sanction 
                referral process with respect to complaints about the 
                quality of services that are filed with a quality 
                improvement organization by an individual entitled to 
                benefits for such services under title XVIII (or a 
                person acting on the individual's behalf).
            ``(3) The Secretary shall--
                    ``(A) take into consideration the findings of the 
                medical review audit under paragraph (1) in evaluating 
                the performance of a quality improvement organization 
                during each contract period beginning after the date 
                enactment of this subsection; and
                    ``(B) require that a quality improvement 
                organization take corrective action when appropriate.
            ``(4) The cost of implementing the medical review audit 
        under paragraph (1) (including the cost of entering into a 
        contract with an entity to conduct such medical review audit) 
        shall be payable as an expense under section 1159.''.
    (c) Business Agreements.--Section 1154 of the Social Security Act 
(42 U.S.C. 1320c-3) is amended by adding at the end the following new 
subsection:
    ``(d)(1) A quality improvement organization may enter into business 
agreements with public or private entities, including health care 
plans, providers, practitioners, and purchasers, to provide quality 
improvement technical assistance or other services, if--
            ``(A) the services provided to a specific business partner 
        by the organization are not already being paid for under a 
        contract with the organization under this part; and
            ``(B) the organization has a qualifying arrangement under 
        this subsection to avoid or mitigate potential conflicts of 
        interest.
    ``(2) A quality improvement organization shall be deemed to have a 
qualifying arrangement under this subsection that permits the 
organization to enter into a business agreement with a public or 
private entity without the Secretary's approval if the arrangement 
satisfies 1 or more of the following criteria:
            ``(A) The organization's business agreement is with an 
        entity that is not subject to review by the organization under 
        its contract under this part.
            ``(B) The organization's business agreement with the entity 
        yields revenue of less than 5 percent of the total annual 
        revenue yielded by the organization under its contract under 
        this part.
            ``(C) The organization's business agreement is with an 
        agency of local, State, or national government, including a 
        nation other than the United States, unless that agency is an 
        individual provider or practitioner that is subject to review 
        by the organization under its contract under this part.
            ``(D) The organization's business agreement is with an 
        association or other group of plans, providers, or 
        practitioners that represent a significant number of entities 
        engaged in competition with one another.
            ``(E) The organization has arranged for another quality 
        improvement organization to make review determinations that may 
        arise pertaining to a plan, provider, or practitioner that is 
        paying the organization for services and which would otherwise 
        be subject to review by the organization under its contract 
        under this part. Under such arrangement, review determinations 
        shall be made by reviewers that are licensed in the State where 
        the health care services under review are provided.
    ``(3) A quality improvement organization may apply to the Secretary 
for approval of an arrangement for avoiding or mitigating a potential 
conflict of interest that is not an arrangement described in paragraph 
(2). If the Secretary does not formally respond to the application in 
writing, accompanied by an explanation of the reasons for any adverse 
decision, by not later than the 30th business day following receipt of 
the application, the application shall be deemed approved. In the case 
where the Secretary makes an adverse decision with respect to an 
application, the organization may submit a revised application. If the 
Secretary does not formally responded to the revised application in 
writing, accompanied by an explanation of the reasons for any adverse 
decision, by not later than the 30th business day following receipt of 
the revised application, the revised application shall be deemed 
approved.
    ``(4) The Secretary may be reimbursed from funds available to 
administer the provisions of this part for the reasonable costs--
            ``(A) of training and maintaining qualified personnel to 
        review proposed arrangements to avoid or mitigate potential 
        conflicts of interest; and
            ``(B) of establishing and maintaining agreements with 1 or 
        more independent review entities.''.

SEC. 3. IMPROVED PROGRAM ADMINISTRATION.

    Part B of title XI of the Social Security Act is amended by adding 
at the end the following new section:

``SEC. 1164. PROGRAM ADMINISTRATION.

    ``(a) Improved Program Management.--
            ``(1) Report on management of the qio program.--The 
        Comptroller General of the United States shall submit to 
        Congress reports on the implementation by the Secretary and the 
        Director of the Office of Management and Budget of this part 
        and their overall management of the program under this part, 
        according to the following schedule:
                    ``(A) Not later than 1 year after the date of 
                enactment of this section, a report with respect to the 
                review conducted under subparagraphs (F), (G), and (I) 
                of paragraph (2).
                    ``(B) Not later than 1 year following the end of 
                the first statement of work that begins after the date 
                of enactment of this section, a report with respect to 
                the review conducted under subparagraphs (A), (B), (C), 
                (D), (E), and (H) of such paragraph.
            ``(2) Program management.--In accordance with the schedule 
        under paragraph (1), the reports under such paragraph shall 
        include a review of the following:
                    ``(A) Implementation of the priorities, 
                recommendations, and strategies of the strategic 
                advisory committee under subsection (c).
                    ``(B) Implementation of appropriate program and 
                quality improvement organization evaluation.
                    ``(C) Ensuring timely issuance of statements of 
                work.
                    ``(D) Ensuring timely and priority QIO access to 
                Medicare data for quality improvement purposes.
                    ``(E) Ensuring timely apportionment of funding.
                    ``(F) Ensuring funding levels are commensurate with 
                new work added to the QIO contract, as described in the 
                second sentence of section 1159(b)(1).
                    ``(G) The process of developing the apportionment 
                request and determining the funding allocation to QIOs.
                    ``(H) The identification of, and progress toward, 
                measures of effective management by the Secretary of 
                the QIO program.
                    ``(I) A review of the experience and qualifications 
                of staff of the Centers for Medicare & Medicaid 
                Services in overseeing the program.
            ``(3) Innovation.--The Secretary shall ensure that quality 
        improvement organizations are provided flexibility in designing 
        and applying intervention strategies for local quality 
        improvement, but must comply with national topic assignments 
        and standardized measures.
    ``(b) Assuring Data Access.--The Secretary shall ensure that 
quality improvement organizations have timely access to data for all 
parts of the program under title XVIII that are pertinent to contract 
activities, in a form allowing the data to be integrated and analyzed 
by such organizations according to the needs of partners and Medicare 
beneficiaries in each jurisdiction.
    ``(c) Determination of Strategic Priorities.--
            ``(1) Appointment of strategic advisory committee.--The 
        Secretary shall appoint an independent strategic advisory 
        committee chaired by the Director of the Agency for Healthcare 
        Research and Quality, composed of national quality measurement 
        and improvement experts and a diverse range of stakeholders, 
        such as the following:
                    ``(A) Medicare beneficiaries.
                    ``(B) The Health Resources and Services 
                Administration.
                    ``(C) The Federal Employee Health Benefits Program.
                    ``(D) The Indian Health Service.
                    ``(E) The TRICARE program.
                    ``(F) The Veterans Health Affairs program.
                    ``(G) State Medicaid programs.
                    ``(H) Private purchasers.
                    ``(I) Health care providers.
                    ``(J) Physicians.
                    ``(K) Pharmacists.
                    ``(L) Nurses.
                    ``(M) quality improvement organizations.
            ``(2) Duties of committee.--Such committee shall--
                    ``(A) advise the Secretary on methods to ensure 
                that the quality measures used under the program under 
                this part are--
                            ``(i) the same as or coordinated with 
                        measures under other Federal and non-Federal 
                        quality programs; and
                            ``(ii) reliable and valid (as used under 
                        the program for measuring the quality of care 
                        provided and the performance of quality 
                        improvement organizations);
                    ``(B) advise the Secretary as to how the function 
                and structure of the program under this part may be 
                made to better correspond with the strategic priorities 
                for improvement in the quality of care recommended by 
                the Institute of Medicine's 6 aims for health care 
                improvement, including safety, effectiveness, patient 
                centeredness, timeliness, efficiency, and equity;
                    ``(C) advise the Secretary as to how evaluation of 
                quality improvement organizations under the program 
                under this part may be improved, taking into account--
                            ``(i) the value of longitudinal tracking of 
                        performance and comparison groups in assessing 
                        change attributable to the program;
                            ``(ii) the value of stakeholder 
                        partnerships;
                            ``(iii) the activities of stakeholders that 
                        may affect evaluation of the performance of 
                        those partnering with quality improvement 
                        organizations;
                            ``(iv) the availability of timely, valid, 
                        and reliable data for evaluating the 
                        performance of quality improvement 
                        organizations; and
                            ``(v) the cost of such performance 
                        evaluation; and
                    ``(D) prepare and provide for public comment a 
                draft statement of work for each program cycle.
            ``(3) Funding.--The Secretary shall apportion funds for the 
        strategic advisory committee under this subsection from the 
        Federal Hospital Insurance Trust Fund and the Federal 
        Supplementary Medical Insurance Trust Fund in the same manner, 
        and in addition to, the amounts that would otherwise be 
        apportioned for contracts with organizations under section 
        1159(b).
    ``(d) Taking Into Account Recommendations From Stakeholders in 
Statements of Work.--Each statement of work under this part for a 
contract period beginning on or after August 1, 2008, shall include a 
task for the contracting quality improvement organization to convene 
stakeholders to identify high priority quality problems for work in the 
next contract period that are relevant to Medicare beneficiaries in the 
State. Each such organization shall propose, to be incorporated as part 
of such statement, 1 or more projects to the Secretary taking into 
consideration the recommendations of such stakeholders, along with 
suggested performance measures to evaluate progress on such projects.
    ``(e) Quality Coordination.--quality improvement organizations 
holding contracts under this part shall be an integral part of Federal 
performance improvement initiatives and each organization's activities 
shall be coordinated with initiatives developed by the Secretary and 
other Federal agencies.''.

SEC. 4. DATA DISCLOSURE.

    Section 1160 of the Social Security Act (42 U.S.C. 1320c-9) is 
amended--
            (1) in subsection (a)(3), by striking ``subsection (b)'' 
        and inserting ``subsections (b) and (f)''; and
            (2) by adding at the end the following new subsection:
    ``(f)(1) An organization with a contract with the Secretary under 
this part may share individual-specific data with a physician treating 
the individual, for quality improvement and patient safety purposes.
    ``(2) The Secretary shall promulgate, not later than 180 days after 
the date of the enactment of this subsection, a regulation that permits 
the sharing of data under paragraph (1).
    ``(3) Nothing in this subsection shall be construed to limit, 
alter, or affect the requirements imposed by the regulations 
promulgated under section 264(c) of the Health Insurance Portability 
and Accountability Act of 1996.''.

SEC. 5. USE OF EVALUATION AND COMPETITION.

    Section 1153 of the Social Security Act (42 U.S.C. 1320c-2) is 
amended--
            (1) by amending paragraph (3) of subsection (c) to read as 
        follows:
            ``(3) contract terms are consistent with subsection (j);'';
            (2) in subsection (c)(1), by inserting ``, at the sole 
        discretion of the organization,'' after ``or may subcontract'';
            (3) in subsection (e), by striking paragraph (1) and 
        inserting the following:
            ``(1) Contracting authority of the Secretary under this 
        section shall be carried out in accordance with the Federal 
        Acquisition Regulation issued in accordance with section 25 of 
        the Office of Federal Procurement Policy Act (41 U.S.C. 
        421).''; and
            (4) by adding at the end the following new subsections:
    ``(j)(1) Subject to the succeeding provisions of this subsection, 
each contract with an organization under this section shall be for an 
initial term of 5 years, beginning and ending on a common date for all 
quality improvement organizations as required under this subsection and 
shall be renewable for 5 year terms thereafter.
    ``(2) Before publishing a request for proposals for a contract 
period, the Secretary shall, in consultation with the strategic 
advisory committee appointed under section 1164(c)(1) establish 
measurable goals for each task to be included in such proposal. The 
contract shall include performance thresholds by which an organization 
holding a contract under this section may demonstrate excellent 
performance. The Secretary may not establish such performance 
thresholds in such a way as to predetermine or limit either the number 
or percentage of organizations which may demonstrate excellent 
performance.
    ``(3) In evaluating proposals from bidders for a contract under 
this section, the Secretary shall consider the performance of the 
incumbent contractor bidding in each State, and if the incumbent 
contractor has demonstrated excellent performance (as defined under the 
process described in paragraph (2)) in fulfilling the terms of the 
contract during the previous contract period, the Secretary shall add 
to the score of the technical proposal of such contractor a bonus 
equivalent to 10 percent of the total possible score for the proposal.
    ``(4) The Secretary shall publish the request for proposals not 
later than 4 months prior to the beginning of each contract period.
    ``(5) The Secretary shall utilize the strategic advisory committee 
appointed under section 1164(c)(1) to qualify the performance measures 
to be used in evaluating the performance of the quality improvement 
organizations on a program-wide basis and individually.
    ``(6) The Secretary may not reduce the amount of a contract award 
below the amount proposed by the bidder prevailing in a competitive 
bidding process unless the scope of work has been reduced. In the case 
where the scope of work has been reduced, any reduction in the contract 
award shall be commensurate with the reduction in the scope of work.
    ``(7) The Secretary shall design the process for performance 
evaluation of contracts under this section--
            ``(A) to hold harmless and not penalize quality improvement 
        organizations when performance is impaired or delayed by 
        failures of the Secretary, personnel of the Department of 
        Health and Human Services, or entities or individuals that 
        contract with the Secretary, to provide timely deliverables;
            ``(B) to use a continuous measurement strategy with 
        provision for frequent performance updates for evaluating 
        interim progress; and
            ``(C) to require that evaluation metrics be monitored and 
        permit their adjustment based on experience or evolving science 
        over the course of a contract cycle, subject to subparagraph 
        (A).
    ``(k)(1) Notwithstanding the provisions of section 1153(c)(3), the 
Secretary shall extend each contract under this section for which the 
contract period began on or after August 1, 2005, to ensure that the 
subsequent contract period for all quality improvement organizations 
begins on October 1, 2009.
    ``(2) The Secretary shall apportion adequate funding so that 
organizations with contracts extended under this subsection can perform 
existing and new tasks, as determined by the Secretary, during the 
period of the contract extension.
    ``(3) There are authorized to be appropriated such sums as are 
necessary to respond to increased personnel requirements resulting from 
starting all contracts simultaneously, as provided under this 
subsection.''.

SEC. 6. QUALITY IMPROVEMENT ORGANIZATION PROGRAM FUNDING.

    Section 1159 of the Social Security Act (42 U.S.C. 1320c-8) is 
amended--
            (1) by inserting ``(a)'' before ``Expenses incurred''; and
            (2) by adding at the end the following new subsections:
    ``(b)(1) The aggregate annual funding for contracts under this part 
that begin after August 1, 2008, shall not be less than $421,666,000. 
In addition, there are authorized to be apportioned for contract 
periods in subsequent years such additional amounts as may be necessary 
to adequately fund any resource needs in excess of the amount provided 
under the previous sentence.
    ``(2) The Secretary shall determine the total program resource 
needs for a contract period. The determination shall take into account 
factors including any new work added via contract modification during 
the course of the contract period or added from 1 contract cycle to the 
next cycle. New work includes--
            ``(A) additional core contract tasks, requirements, 
        deliverables, and performance thresholds;
            ``(B) technical assistance for additional providers, 
        practitioners, and health plans and in additional provider 
        settings;
            ``(C) increased outreach and communications to Medicare 
        beneficiaries, providers, practitioners, and plans; and
            ``(D) increased volume of medical reviews.
Nothing in this paragraph shall be construed as limiting the ability of 
the Secretary to negotiate contracts under this part individually with 
each quality improvement organization.
    ``(3) With respect to the apportionment of funds under this part 
for a contract period--
            ``(A) the Secretary shall submit a proposed apportionment 
        to the Director of the Office of Management and Budget not 
        later than 1 year before the first date of the contract period;
            ``(B) such Director shall approve an apportionment not 
        later than 9 months before the first date of such contract 
        period;
            ``(C) for tasks the Secretary proposes to continue from the 
        previous contract period, if the apportionment is not 
        authorized by the deadline specified in subparagraph (B), 
        funding shall continue for the next contract period at a level 
        no less than the level for the previous contract period, 
        increased by the percentage increase in the consumer price 
        index for all urban consumers during the most recent 12-month 
        period.
    ``(4) A quality improvement organization shall have the ability to 
meet the terms of its contract under this part by allocating funds to 
the functions provided under such contract at its discretion. The 
Secretary shall review whether the organization met the functions and 
goals set out for the organization, without regard to the allocation of 
funds at the time of the initial acceptance of the contract.
    ``(5) Organizations with a contract under this part may utilize 
funding allocated to such contracts to pay for food costs at meetings 
and conferences if--
            ``(A) meals and refreshments are incidental to the meeting 
        or conference;
            ``(B) attendance at the meals and when refreshments are 
        provided is important for the host agency to ensure full 
        participation in essential discussions, lectures, or speeches 
        concerning the purpose of the meeting or conference; and
            ``(C) the meals and refreshments are part of a formal 
        conference that includes (in addition to the meals and 
        refreshment) discussions, speeches, or other business that may 
        take place when the meals and refreshments are served and also 
        includes substantial functions occurring separately from when 
        the food is served.
    ``(c)(1) Not later than 180 days after the date of enactment of 
this subsection, the Secretary shall enter into an arrangement under 
which the Institute of Medicine of the National Academy of Sciences (in 
this subsection referred to as the `Institute') shall conduct a study 
on--
            ``(A) the adequacy of overall funding of the program under 
        this part to meet program goals, based on the most recent 
        statement of work for which the Office of Management and Budget 
        has made a funding decision;
            ``(B) a recommended national percentage of funding for 
        quality improvement organizations, to be used for the core 
        contract work with providers, practitioners, plans, and 
        beneficiaries and on national initiatives established by the 
        Secretary;
            ``(C) a recommended national percentage of such funding to 
        be used for local initiatives, identified by quality 
        improvement organizations in consultation with stakeholders in 
        each State; and
            ``(D) a recommended national percentage of overall funds 
        under the program under this part that will not be available 
        for the work of quality improvement organizations in the field 
        and that may be used by the Secretary for central management of 
        the program.
    ``(2) Not later than 2 years after the date of enactment of this 
subsection, the Institute shall submit a report to the Committee on 
Finance of the Senate and the Committees on Ways and Means and Energy 
and Commerce of the House of Representatives, containing the results of 
the study conducted under paragraph (1) together with recommendations 
for such legislation and administrative action as the Institute 
determines appropriate.
    ``(3)(A) On or before the date that the proposal for each statement 
of work is submitted to the Office of Management and Budget, the 
Secretary shall enter into an arrangement under which the Institute 
shall conduct a study on the issues described in subparagraphs (A) 
through (D) of paragraph (1).
    ``(B) Not later than 180 days after the date on which the proposal 
for each statement of work is submitted to the Office of Management and 
Budget, the Institute shall submit a report to the Committee on Finance 
of the Senate and the Committees on Ways and Means and Energy and 
Commerce of the House of Representatives, containing the results of the 
studies conducted under subparagraph (A) and paragraph (1) together 
with recommendations for such legislation and administrative action as 
the Institute determines appropriate.
    ``(4) The Secretary shall apportion funds for the studies conducted 
by the Institute of Medicine under this subsection from the Federal 
Hospital Insurance Trust Fund and the Federal Supplementary Medical 
Insurance Trust Fund in the same manner, and in addition to, the 
amounts that would otherwise be apportioned for contracts with 
organizations under subsection (b).''.

SEC. 7. QUALIFICATIONS OF QIOS.

    (a) In General.--Subsection (b) of section 1153 of the Social 
Security Act (42 U.S.C. 1320c-2) is amended by adding at the end the 
following new paragraph:
            ``(4)(A) The Secretary shall not enter into or renew a 
        contract under this section with an entity unless the entity 
        has demonstrated success in facilitating clinical and 
        administrative system redesign to improve the coordination, 
        effectiveness, and safety of health care, and in facilitating 
        cooperation among stakeholders in quality improvement.
            ``(B) The Secretary shall ensure that the entity complies 
        with standards to ensure organizational integrity, including--
                    ``(i) appropriate representation of consumers, 
                quality assurance experts, and stakeholders in the 
                composition of the governing body;
                    ``(ii) market-based compensation of board members 
                and executives;
                    ``(iii) avoidance and mitigation of board member 
                conflict of interest; and
                    ``(iv) safeguards to ensure appropriate travel 
                expenses.
        To the extent practicable, the Secretary shall utilize 
        standards developed in the private sector for purposes of 
        carrying out this subparagraph and shall conduct audits as 
        necessary to ensure compliance with such standards.''.
    (b) Use of States for Geographic Areas.--Subsection (a) of such 
section is amended to read as follows:
    ``(a) The Secretary shall designate each State as a geographic area 
with respect to which contracts under this part will be made.''.
    (c) Removal of Physician-Access and Physician-Sponsored 
Requirements for Organizations.--
            (1) In general.--Section 1152 of the Social Security Act 
        (42 U.S.C. 1320c-1) is amended by striking paragraph (1).
            (2) Conforming amendment.--Section 1153(b)(1) of the Social 
        Security Act (42 U.S.C. 1320c-2(b)(1)) is amended by striking 
        the second sentence.
    (d) Effective Date.--The amendments made by this section shall 
apply to contract periods beginning after the date of the enactment of 
this Act.

SEC. 8. CONFORMING NAME TO ``QUALITY IMPROVEMENT ORGANIZATIONS''.

    Part C of title XI of the Social Security Act is amended by 
striking ``utilization and quality control peer review'' (and ``peer 
review'') each place it appears before ``organization'' or 
``organizations'' and inserting ``quality improvement''.
                                 <all>