(1) Establishment (A) In general Subject to the succeeding provisions of this subsection, the Secretary shall establish a hospital value-based purchasing program (in this subsection referred to as the “Program”) under which value-based incentive payments are made in a fiscal year to hospitals that meet the performance standards under paragraph (3) for the performance period for such fiscal year (as established under paragraph (4)). (B) Program to begin in fiscal year 2013 The Program shall apply to payments for discharges occurring on or after October 1, 2012 . (C) Applicability of Program to hospitals (i) In general For purposes of this subsection, subject to clause (ii), the term “hospital” means a subsection (d) hospital (as defined in subsection (d)(1)(B)). (ii) Exclusions The term “hospital” shall not include, with respect to a fiscal year, a hospital— (I) that is subject to the payment reduction under subsection (b)(3)(B)(viii)(I) for such fiscal year; (II) for which, during the performance period for such fiscal year, the Secretary has cited deficiencies that pose immediate jeopardy to the health or safety of patients; (III) for which there are not a minimum number (as determined by the Secretary) of measures that apply to the hospital for the performance period for such fiscal year; or (IV) for which there are not a minimum number (as determined by the Secretary) of cases for the measures that apply to the hospital for the performance period for such fiscal year. (iii) Independent analysis For purposes of determining the minimum numbers under subclauses (III) and (IV) of clause (ii), the Secretary shall have conducted an independent analysis of what numbers are appropriate. (iv) Exemption In the case of a hospital that is paid under section 1395f(b)(3) of this title , the Secretary may exempt such hospital from the application of this subsection if the State which is paid under such section submits an annual report to the Secretary describing how a similar program in the State for a participating hospital or hospitals achieves or surpasses the measured results in terms of patient health outcomes and cost savings established under this subsection.