[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3796 Introduced in House (IH)]

113th CONGRESS
  1st Session
                                H. R. 3796

To amend title XVIII of the Social Security Act to provide for bundled 
 payments for certain episodes of care surrounding a hospitalization, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 19, 2013

 Mrs. Black (for herself and Mr. Neal) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
      to the Committee on Energy and Commerce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to provide for bundled 
 payments for certain episodes of care surrounding a hospitalization, 
                        and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Comprehensive Care Payment 
Innovation Act''.

SEC. 2. PERMANENT, NATIONAL VOLUNTARY PAYMENT BUNDLING.

    Title XVIII of the Social Security Act is amended by inserting 
after section 1866E (42 U.S.C. 1395cc-5) the following new section:

                 ``national voluntary payment bundling

    ``Sec. 1866F.  (a) Establishment and Implementation.--
            ``(1) In general.--The Secretary shall provide for bundled 
        payments under this section for integrated care furnished by a 
        qualified entity during an episode of care to an applicable 
        beneficiary for applicable conditions involving a 
        hospitalization.
            ``(2) Deadline.--The Secretary shall implement this section 
        not later than January 1, 2015.
            ``(3) Applicable beneficiary defined.--In this section, the 
        term `applicable beneficiary' means an individual who is 
        entitled to, or enrolled for, benefits under part A and 
        enrolled for benefits under part B, but not enrolled under part 
        C or in a PACE program under section 1894, and who is admitted 
        to a hospital for an applicable condition.
    ``(b) Qualified Entity and Application Process.--
            ``(1) Definitions.--In this section:
                    ``(A) In general.--The term `qualified entity' 
                means a qualified applicant that has an application 
                approved by the Secretary to receive bundled payments 
                for furnishing applicable services to applicable 
                individuals under this section.
                    ``(B) Qualified applicant.--The term `qualified 
                applicant' means a corporation, partnership, or limited 
                liability company, that is authorized in writing by a 
                group of providers of services and suppliers, including 
                at least a hospital, that are otherwise participating 
                under this title to act as their agent for the purpose 
                of receiving and distributing bundled payments on their 
                behalf under this section. A qualified applicant may 
                (but is not required to) be a provider of services or 
                supplier that is otherwise participating under this 
                title.
            ``(2) Application.--
                    ``(A) In general.--A qualified applicant may submit 
                to the Secretary an application to become a qualified 
                entity to receive bundled payments under this section.
                    ``(B) Contents.--An application under subparagraph 
                (A) with respect to a group of providers of services 
                and suppliers--
                            ``(i) shall contain such information and 
                        assurances as the Secretary may specify, 
                        including with respect to the requirements 
                        under subsection (c)(1); and
                            ``(ii) shall indicate the applicable 
                        conditions with respect to which the group 
                        seeks to furnish applicable services during the 
                        episode of care involved and the bundled 
                        payment methodology under subsection (g) or (h) 
                        under which the group would be paid for such 
                        services.
            ``(3) Choice among applicable conditions.--A qualified 
        entity may select one or more applicable conditions for bundled 
        payments under this section. Nothing in this section shall be 
        construed as requiring, or authorizing the Secretary to 
        require, a qualified entity to select any particular applicable 
        condition under this section.
            ``(4) Expedited application process for qualified 
        applicants successfully participating in the cmi bundled 
        payment demonstration.--In the case of any qualified applicant 
        that the Secretary determines has successfully participated in 
        any of the payment and service delivery models tested by the 
        Center for Medicare and Medicaid Innovation under section 1115A 
        through the Bundled Payments for Care Improvement (BPCI) 
        Initiative, the Secretary shall provide for an expedited 
        application process under this subsection.
    ``(c) Requirements for Qualified Entities.--
            ``(1) Requirements.--
                    ``(A) In general.--The Secretary shall develop 
                requirements for qualified entities to receive bundled 
                payments for furnishing applicable services for 
                applicable conditions during an episode of care under 
                this section.
                    ``(B) Agreement period.--Under such requirements, a 
                qualified entity shall agree to receive bundled 
                payments for the furnishing of such services for a 5-
                year period (each such year in such period referred to 
                in this section as an `agreement year').
                    ``(C) Beneficiary transparency.--Such requirements 
                shall ensure transparency between a qualified entity 
                and applicable beneficiaries such that notice is 
                provided to an applicable beneficiary sufficiently in 
                advance, to the extent practicable, of the 
                beneficiary's inpatient admission for the applicable 
                condition and episode of care involved. Such a notice 
                shall include--
                            ``(i) appropriate notice of bundled 
                        payments for the applicable condition for the 
                        episode of care involved; and
                            ``(ii) a statement informing the 
                        beneficiary of the beneficiary's right to 
                        select the providers of services and suppliers 
                        furnishing items and services related to the 
                        episode of care.
                    ``(D) Methodology and measures for quality and 
                efficiency arrangements.--Insofar as a qualified entity 
                uses or seeks to implement a quality and efficiency 
                arrangement under subsection (i), the qualified entity 
                shall specify in the application to the Secretary in 
                detail the methodology for allocating savings under the 
                arrangement and the specific measures to be used to 
                assess the quality of care under the arrangement.
            ``(2) Provision of data by secretary.--
                    ``(A) Claims data.--The Secretary shall furnish to 
                a group of providers of services and suppliers 
                interested in submitting an application under 
                subsection (b)(2) claims data under parts A and B, 
                including complete claims files, for applicable 
                conditions relating to the providers and suppliers in 
                the group that are sufficiently specific to permit such 
                group to determine whether to submit such application. 
                Such claims data shall also be furnished to a qualified 
                entity monthly during the agreement period described in 
                paragraph (1)(B) of any approved application with 
                respect to an applicable condition.
                    ``(B) Quality data.--The Secretary shall furnish to 
                a qualified entity data on quality measures with 
                respect to any applicable condition under an approved 
                application during the agreement period for the entity 
                for each episode of care and across the continuum of 
                care.
    ``(d) Applicable Conditions.--
            ``(1) Initial conditions.--In this section, the term 
        `applicable condition' means any of the following procedures 
        furnished as part of inpatient hospital services:
                    ``(A) Hip/Knee joint replacement.
                    ``(B) Lumbar spine fusion.
                    ``(C) Coronary artery bypass graft.
                    ``(D) Heart valve replacement.
                    ``(E) Percutaneous coronary intervention with 
                stent.
                    ``(F) Colon resection.
            ``(2) Discretion to add conditions.--Such term also 
        includes such additional procedures or conditions as the 
        Secretary may select. In selecting such procedures or 
        conditions, the Secretary may take into consideration the 
        factors described in section 1866D(a)(2)(B).
    ``(e) Applicable Services; Episode of Care.--In this section:
            ``(1) Applicable services.--The term `applicable services' 
        means the following items and services:
                    ``(A) Acute care inpatient services.
                    ``(B) Physicians' services delivered in and outside 
                of an acute care hospital setting.
                    ``(C) Outpatient hospital services.
                    ``(D) Post-acute care services, including home 
                health services, skilled nursing services, inpatient 
                rehabilitation services, and inpatient hospital 
                services furnished by a long-term care hospital.
                    ``(E) Other services the Secretary determines 
                appropriate.
            ``(2) Episode of care.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `episode of care' means, with respect to an 
                applicable condition and an applicable beneficiary, the 
                period consisting of--
                            ``(i) the 3 days prior to the admission of 
                        the applicable beneficiary to a hospital with 
                        respect to the applicable condition;
                            ``(ii) the duration of the applicable 
                        beneficiary's initial inpatient stay in such 
                        hospital for the applicable condition; and
                            ``(iii) the 90 days following the discharge 
                        of the applicable beneficiary from such 
                        hospital.
                    ``(B) Establishment of period by the secretary.--
                The Secretary, as appropriate, may establish a period 
                (other than the period described in subparagraph (A)) 
                for an episode of care under this section based on data 
                analyses.
            ``(3) Discharging hospital.--The term `discharging 
        hospital' means, with respect to applicable services in an 
        episode of care, the hospital referred to in paragraph (2)(A).
    ``(f) Bundled Payment Development.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, the Secretary shall develop bundled payments 
        for qualified entities. A bundled payment shall provide for 
        comprehensive payment for the costs of applicable services 
        furnished to an applicable beneficiary during an episode of 
        care for an applicable condition, including readmissions 
        related to the applicable condition but excluding unrelated 
        readmissions, under either a fee-for-service model with shared 
        savings and losses (under subsection (g)) or under a 
        prospective payment model for advanced qualified entities 
        (under subsection (h)). Bundled payments shall be based on the 
        spending targets computed under paragraph (2).
            ``(2) Computation of spending targets.--
                    ``(A) In general.--The Secretary shall compute 
                under this paragraph, for each qualified entity for 
                each applicable condition for an episode of care 
                beginning in an agreement year (beginning with 2015) 
                that is attributable to a discharging hospital, a 
                spending target equal to the updated amount computed 
                under subparagraph (C) for that entity, episode, and 
                year.
                    ``(B) Initial weighted average calculation for 
                discharging hospitals.--
                            ``(i) In general.--Using fee-for-service 
                        claims data from the base period (as defined in 
                        subparagraph (D)), subject to clause (ii), the 
                        Secretary shall first calculate a base average 
                        spending target for each applicable condition 
                        for each discharging hospital equal to a 
                        weighted average of spending under parts A and 
                        B for all applicable services for such 
                        applicable condition associated with initial 
                        admissions to such hospital computed as the sum 
                        of the following (with respect to such 
                        hospital):
                                    ``(I) 60 percent of the 
                                standardized spending per episode in 
                                the most recent year in the base 
                                period.
                                    ``(II) 30 percent of the 
                                standardized spending per episode in 
                                the previous year.
                                    ``(III) 10 percent of the 
                                standardized spending per episode in 
                                the second previous year.
                            ``(ii) Exclusion of outliers and 
                        standardization.--In calculating the amount of 
                        the base average spending target for an 
                        applicable condition under clause (i) for a 
                        discharging hospital, the Secretary shall--
                                    ``(I) exclude from the calculation 
                                payments for episodes of care for the 
                                applicable condition that exceed the 
                                95th percentile of all such spending 
                                for such episodes of care and 
                                applicable condition, as estimated by 
                                the Secretary, based on the most recent 
                                data available; and
                                    ``(II) standardize the spending 
                                made in each year in the base period to 
                                each provider of service or supplier to 
                                remove the spending adjustments in 
                                effect in such year relating to 
                                provider or supplier location (such as 
                                area wage indices) and provider type 
                                (such as indirect medical education 
                                adjustments and disproportionate share 
                                hospital adjustments).
                    ``(C) Trending the spending targets based on 
                national growth rates to agreement year; periodic 
                rebasing for new agreement periods.--
                            ``(i) In general.--The Secretary shall 
                        update the base average spending targets for 
                        all discharging hospitals under subparagraph 
                        (B) for each applicable condition and agreement 
                        year based on trends in the national fee-for-
                        service claims data for applicable services 
                        furnished during an episode of care for an 
                        applicable condition from the base period to 
                        the agreement year involved. Such update shall 
                        not vary by discharging hospital.
                            ``(ii) Periodic rebasing for new agreement 
                        periods.--At the start of each new agreement 
                        period, the Secretary shall update the base 
                        period and calculate new spending targets under 
                        the previous provisions of this paragraph for a 
                        discharging hospital and applicable conditions, 
                        including providing for adjustments by provider 
                        location and provider type of the type 
                        described in subparagraph (B)(ii)(II).
                    ``(D) Base period defined.--In this paragraph, 
                except as provided in subparagraph (C)(ii), the term 
                `base period' means the most recent 3-year period for 
                which complete data are available to carry out this 
                subsection.
    ``(g) Fee-for-Service Bundled Payment Model With Shared Savings and 
Shared Losses.--
            ``(1) Fee-for-service-based payment.--If the payment model 
        under this subsection is selected by a qualified entity, the 
        Secretary shall pay providers of services and suppliers of the 
        entity for applicable services for an applicable condition 
        during an episode of care amounts payable under parts A and B 
        for such services in the same manner as such providers and 
        suppliers would otherwise be paid under such parts (referred to 
        in this subsection as `fee-for-service payments').
            ``(2) Shared savings and losses.--
                    ``(A) Computation of each qualified entity's actual 
                standardized average spending per episode of care.--In 
                applying this subsection, in calculating the actual 
                standardized average fee-for-service spending per 
                episode of care for a discharging hospital for each 
                applicable condition in each agreement year, the 
                Secretary shall exclude outlier episodes of care 
                described in subsection (f)(2)(B)(ii)(I), as estimated 
                by the Secretary, based on data applicable to payments 
                in the agreement year and shall standardize such 
                spending per episode of care in the manner provided in 
                subsection (f)(2)(B)(ii)(II). For the purpose of 
                identifying outlier episodes of care for each 
                applicable condition, the percentile ranking of each 
                episode of care and applicable condition and the 95th 
                percentile shall be based on payments standardized by 
                adjustments for provider location and provider type of 
                the type described in subsection (f)(2)(B)(ii)(II).
                    ``(B) Computation of gross shared savings and 
                shared losses for each applicable condition for each 
                discharging hospital.--For purposes of applying 
                subparagraph (C), if actual standardized average fee-
                for-service payments to a qualified entity for all 
                episodes of care for an applicable condition in an 
                agreement year for a discharging hospital, as 
                calculated under subparagraph (A), are--
                            ``(i) less than the applicable spending 
                        target under subsection (f)(2)(C) for such 
                        condition, year, and hospital, there shall be a 
                        gross shared savings for such applicable 
                        condition, year, and hospital equal to 60 
                        percent of the difference between such actual 
                        average payments and the spending target for 
                        such condition, year, and hospital; or
                            ``(ii) greater than such applicable 
                        spending target, there shall be a gross shared 
                        loss for such applicable condition, year, and 
                        hospital equal to 60 percent of such 
                        difference.
                    ``(C) Retrospective reconciliation.--
                            ``(i) Totaling gross shared savings and 
                        losses for all conditions and all discharging 
                        hospitals for a qualified entity.--At the end 
                        of each agreement year for each qualified 
                        entity, for purposes of applying clauses (ii) 
                        and (iii), the Secretary shall aggregate the 
                        gross shared savings and the gross shared 
                        losses under subparagraph (B) of such entity 
                        for the year for all applicable conditions and 
                        for all discharging hospitals.
                            ``(ii) Payment to entity of net savings.--
                        Subject to clause (iv) and subsection (j)(3) 
                        (relating to quality performance thresholds), 
                        if such aggregate gross shared savings exceeds 
                        such aggregate gross shared losses for a 
                        qualified entity for an agreement year, the 
                        Secretary shall pay to the qualified entity a 
                        lump sum amount equal to such excess for such 
                        year.
                            ``(iii) Collection from entity of net 
                        losses.--Subject to clause (iv), if such 
                        aggregate gross shared losses exceeds such 
                        aggregate gross shared savings for a qualified 
                        entity for an agreement year, the qualified 
                        entity shall pay to the Secretary (and the 
                        Secretary shall collect from the entity) a lump 
                        sum amount equal to such excess for such year.
                            ``(iv) Cap on payments.--In no case shall 
                        the payment under clause (ii) or (iii) with 
                        respect to a qualified entity for an agreement 
                        year exceed 10 percent of the aggregate 
                        spending target for that qualified entity for 
                        all applicable conditions and all discharging 
                        hospitals for that year.
    ``(h) Prospective Bundled Payment Model for Advanced Qualified 
Entities.--
            ``(1) In general.--Subject to approval by the Secretary, if 
        the payment model under this subsection is selected, a 
        qualified entity may elect to receive a prospective bundled 
        payment for each episode of care for each applicable condition 
        and discharging hospital in the agreement year equal to the 
        spending target for such episode, year, and hospital under 
        subsection (f)(2) and the provisions of subsection (g) do not 
        apply. Such spending target shall be adjusted, in the same 
        manner described in subsection (g)(2)(B), in order to take into 
        account outlier episodes of care and standardized adjustments 
        for provider location and provider type of the type described 
        in subsection (f)(2)(B)(ii)(II).
            ``(2) Rule of construction.--Nothing in this section shall 
        be construed as prohibiting a qualified entity that receives 
        bundled payments under this subsection from participating in an 
        accountable care organization under section 1899.
            ``(3) Relationship to bpci.--The Secretary may not 
        terminate the Bundled Payments for Care Improvement initiative 
        conducted pursuant to section 1115A until the prospective 
        bundled payment model is implemented under this subsection.
    ``(i) Quality and Efficiency Arrangements.--
            ``(1) In general.--Subject to subsection (c)(1)(D) 
        (relating to application requirements for notice of quality and 
        efficiency arrangements and their structure) and subsection 
        (j)(3) (relating to minimum quality performance thresholds), 
        qualified entities participating in either the fee-for-service 
        bundled payment model under subsection (g) or the prospective 
        bundled payment model under subsection (h) may enter into 
        quality and efficiency arrangements under which physicians and 
        other health care practitioners work to improve the quality and 
        efficiency of care under this title.
            ``(2) Types of arrangements.--The arrangements under 
        paragraph (1) shall take into account the utilization of the 
        resources of providers of services and suppliers and may 
        provide for a distribution of a portion of any shared savings 
        (or internal saving, as the case may be) realized under this 
        section to qualifying providers and suppliers.
    ``(j) Quality Measures.--
            ``(1) Selection; development.--
                    ``(A) Selection.--For each applicable condition, 
                the Secretary shall select quality measures related to 
                care provided by providers of services and suppliers 
                through qualified entities to which bundled payments 
                are made under this section. In selecting quality 
                measures, to the extent appropriate and practicable, 
                the Secretary shall choose measures that--
                            ``(i) are endorsed and validated by the 
                        entity with a contract under section 1890;
                            ``(ii) pertain to the National Quality 
                        Strategy's six priorities;
                            ``(iii) are used by the Secretary under 
                        other provisions of this title; and
                            ``(iv) minimize the incremental data 
                        extraction and reporting burden on providers 
                        and suppliers.
                    ``(B) Development of electronically specified 
                episodic measures.--The Secretary shall develop 
                longitudinal quality and efficiency measures to assess 
                performance of qualified entities with respect to 
                patient outcomes and the care provided for each 
                applicable condition across the associated episodes of 
                care. Such measures shall be electronically specified 
                for submittal through the use of qualified electronic 
                health records (as defined in section 3000(13) of the 
                Public Health Service Act (42 U.S.C. 300jj(13))).
            ``(2) Reporting on quality measures.--
                    ``(A) In general.--A qualified entity shall submit 
                data to the Secretary on quality measures selected 
                under paragraph (1) for each agreement year in a form 
                and manner specified by the Secretary consistent with 
                the succeeding provisions of this paragraph.
                    ``(B) Submission of data through electronic health 
                record.--To the extent practicable, such data shall be 
                submitted through the use of a qualified electronic 
                health record (as defined in section 3000(13) of the 
                Public Health Service Act (42 U.S.C. 300jj(13))).
                    ``(C) Submission of data used in other programs.--
                Insofar as quality measures established under paragraph 
                (1) are the same as those measures used by the 
                Secretary under other provisions of this title, such as 
                those selected under section 1886(b)(3)(B)(viii), the 
                Secretary shall use existing processes for the 
                submission of data for such measures under this 
                paragraph.
            ``(3) Quality performance thresholds.--
                    ``(A) Establishment.--For each applicable 
                condition, the Secretary shall establish minimum 
                quality performance thresholds for the measures 
                established under paragraph (1). In the case of a 
                quality and efficiency arrangement, such performance 
                thresholds shall be developed using the quality 
                measures identified by the qualified entity in its 
                application under subsection (c)(1)(D) if approved by 
                the Secretary.
                    ``(B) Loss of shared savings payment and quality 
                and efficiency arrangements for failure to meet minimum 
                quality performance thresholds.--If a qualified entity 
                fails to meet the minimum quality performance 
                thresholds established under subparagraph (A) for an 
                agreement year--
                            ``(i) no payment may be made to the entity 
                        under subsection (g)(2)(C)(ii) with respect to 
                        that year; and
                            ``(ii) the entity may not implement any 
                        quality and efficiency arrangement under 
                        subsection (i) for that year.
    ``(k) Waivers.--
            ``(1) In general.--The Secretary shall waive such 
        provisions of this title and title XI as may be necessary to 
        carry out the program, including the following:
                    ``(A) With respect to authorizing quality and 
                efficiency arrangements between qualified entities and 
                providers of services and suppliers, section 1877(a) 
                (relating to physician self-referral), paragraphs (1) 
                and (2) of sections 1128A(b) (relating to the 
                gainsharing civil money penalties), and paragraphs (1) 
                and (2) of section 1128B(b) (relating to the anti-
                kickback statute).
                    ``(B) Section 1128A(a)(5) of the Act (relating to 
                the inducement civil money penalties).
                    ``(C) Section 1861(i) (relating to the 3-day acute 
                hospitalization prerequisite before eligibility for 
                post-hospital extended care services).
                    ``(D) With respect to home health services--
                            ``(i) sections 1814(a)(2)(C) and 
                        1835(a)(2)(A) (relating to the requirement that 
                        an individual be confined to home in order to 
                        be eligible for benefits for home health 
                        services);
                            ``(ii) limitations on the amount, 
                        frequency, and duration on home health 
                        services; and
                            ``(iii) prohibitions of free preoperative 
                        home safety assessments by home health agencies 
                        for patients scheduled to undergo surgery (such 
                        as under Advisory Opinion No. 06-01 of the 
                        Inspector General of the Department of Health 
                        and Human Services).
            ``(2) Authority to modify waivers under certain 
        circumstances.--
                    ``(A) In general.--In the case of a qualified 
                entity with respect to which one or more waivers under 
                paragraph (1) is in effect, if upon a review of the 
                performance or an audit of the entity the Secretary 
                finds a pattern of deficiencies or harm to applicable 
                beneficiaries, the Secretary may modify or revoke any 
                such waiver at any time as applied to that qualified 
                entity.
                    ``(B) Termination of certain waivers in the case of 
                excess shared losses.--
                            ``(i) In general.--Subject to the process 
                        described in clause (ii), in the case of a 
                        qualified entity that has selected the payment 
                        model under subsection (g) and has gross shared 
                        losses exceeding the cap under subsection 
                        (g)(2)(C)(iv) with respect to an applicable 
                        condition, the Secretary shall terminate 
                        waivers described in paragraphs (1)(C) and 
                        (1)(D) with respect to such qualified entity 
                        and applicable condition.
                            ``(ii) Pre-termination notice.--The 
                        Secretary shall establish a process whereby a 
                        qualified entity is furnished notice of any 
                        deficiency that may give rise to a termination 
                        of waivers under clause (i) not later than 6 
                        months before the proposed effective date of 
                        the termination.
    ``(l) Independent Evaluation and Reports on Program.--
            ``(1) Independent evaluation.--The Secretary shall conduct 
        an independent evaluation of the impact of providing bundled 
        payments to qualified entities under this section. Such 
        evaluation shall include an examination of the extent to which 
        the bundling of payments this section have resulted in--
                    ``(A) improved health outcomes;
                    ``(B) improved access to care for applicable 
                beneficiaries;
                    ``(C) reduced spending under this title; and
                    ``(D) improvement in performance on quality 
                measures selected under subsection (j)(1)(A).
            ``(2) Reports.--
                    ``(A) Interim report.--Not later than March 1, 
                2018, the Secretary shall submit to Congress a report 
                on the initial results of the independent evaluation 
                conducted under paragraph (1).
                    ``(B) Final report.--Not later than March 1, 2020, 
                the Secretary shall submit to Congress a report on the 
                final results of the independent evaluation conducted 
                under paragraph (1) and may include recommendations for 
                the expansion of bundled payment methodologies and 
                applicable conditions under this section as the 
                Secretary determines to be appropriate.''.
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