[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5841 Introduced in House (IH)]

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114th CONGRESS
  2d Session
                                H. R. 5841

    To amend title XVIII of the Social Security Act to establish a 
population based payment demonstration project under which Patient Care 
     Networks are paid prospective monthly capitated payments for 
         coordinated care furnished to Medicare beneficiaries.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 14, 2016

  Mr. Kelly of Pennsylvania (for himself 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 establish a 
population based payment demonstration project under which Patient Care 
     Networks are paid prospective monthly capitated payments for 
         coordinated care furnished to Medicare beneficiaries.

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

SECTION 1. POPULATION BASED PAYMENT DEMONSTRATION PROJECT.

    Title XVIII of the Social Security Act (42 U.S.C. 1395x et seq.) is 
amended by adding at the end the following new section:

``SEC. 1899C. POPULATION BASED PAYMENT DEMONSTRATION PROJECT.

    ``(a) In General.--Beginning not later than January 1, 2017, the 
Secretary shall establish a 5-year Population Based Payment 
Demonstration Project (in this section referred to as the 
`demonstration project') to promote efficiency of care and improve 
health outcomes for Medicare fee-for-service beneficiaries (as defined 
in subsection (m)). Under the demonstration project, providers of 
services and suppliers may, in accordance with the subsequent 
subsections of this section, form Patient Care Networks (in this 
section referred to as `PCNs')--
            ``(1) through which providers of services and suppliers 
        shall furnish items and services for which payment would 
        otherwise be made under parts A and B to participating 
        beneficiaries, as defined in subsection (m);
            ``(2) which shall, with respect to participating 
        beneficiaries of such PCN, provide for payment, in accordance 
        with subsection (b)(2)(C), for all items and services for which 
        payment would otherwise be made under parts A and B furnished 
        to such beneficiaries; and
            ``(3) to which the Secretary shall prospectively make, 
        instead of any other payment that would otherwise be made under 
        such parts for such items and services furnished to such 
        participating beneficiaries, capitated payments in accordance 
        with subsection (d), for each month during a year for which the 
        PCN participates in the demonstration project for all such 
        items and services furnished to such participating 
        beneficiaries.
    ``(b) Patient Care Networks.--
            ``(1) Eligible pcns.--Subject to the succeeding provisions 
        of this subsection, as determined appropriate by the Secretary, 
        a group composed of at least the following providers of 
        services and suppliers which has established a mechanism for 
        shared governance is eligible to enter into agreement under 
        paragraph (2) to participate as a PCN under the demonstration 
        program under this section:
                    ``(A) Physicians (as defined in section 1861(r)(1)) 
                and practitioners (as described in section 
                1842(b)(18)(C)(i)) in group practice arrangements.
                    ``(B) At least one hospital.
                    ``(C) Federally qualified health center (as defined 
                in section 1861(aa)(4)).
                    ``(D) Such other providers of services and 
                suppliers as the Secretary determines appropriate.
            ``(2) Requirements.--A PCN shall meet the following 
        requirements to participate in the demonstration project:
                    ``(A) The PCN shall be an integrated system of care 
                which directly provides items and services under parts 
                A and B.
                    ``(B) The PCN shall employ and enter into 
                appropriate contractual arrangements--
                            ``(i) with a sufficient number, as 
                        determined by the Secretary, of primary care 
                        physicians to furnish items and services 
                        described in subparagraph (A) to at least 
                        twenty thousand participating beneficiaries; 
                        and
                            ``(ii) agree to enter into appropriate 
                        contractual arrangements to establish a network 
                        of providers of services and suppliers to 
                        provide sufficient access for participating 
                        beneficiaries with respect to such PCN to items 
                        and services for which payment may otherwise be 
                        made under parts A and B.
                    ``(C) The PCN shall, subject to paragraph (5), be 
                responsible for--
                            ``(i) payment to providers of services and 
                        suppliers participating in or otherwise 
                        entering into agreements with the PCN for items 
                        and services furnished to participating 
                        beneficiaries with respect to such PCN, in such 
                        amounts as specified by the PCN for such items 
                        and services; and
                            ``(ii) payment to providers of services and 
                        suppliers not described in clause (i) for items 
                        and services furnished to participating 
                        beneficiaries with respect to such PCN, in such 
                        amounts as specified by the PCN for such items 
                        and services furnished by a provider of 
                        services or supplier that is described in such 
                        clause.
                    ``(D) The PCN shall be willing to become 
                accountable for the quality, cost, and overall care of 
                participating beneficiaries with respect to such PCN.
                    ``(E) The PCN shall enter into an agreement with 
                the Secretary under paragraph (3).
                    ``(F) The PCN shall have a formal legal structure 
                that would allow the organization to receive and 
                distribute payments made to the PCN under subsection 
                (d) to participating providers of services and 
                suppliers.
                    ``(G) The PCN shall provide the Secretary with such 
                information regarding providers of services and 
                suppliers participating in the PCN as the Secretary 
                determines necessary to support the assignment of 
                Medicare fee-for-service beneficiaries to a PCN, the 
                implementation of quality requirements under subsection 
                (f), other reporting requirements, and the 
                determination of payments to the PCN under subsection 
                (d).
                    ``(H) The PCN shall have in place a leadership and 
                management structure that includes clinical and 
                administrative systems.
                    ``(I) The PCN shall provide for beneficiary 
                protections for Medicare fee-for-service beneficiaries 
                participating in such PCN under the demonstration, 
                including with respect to network adequacy, appeals 
                rights, and out-of-pocket costs.
            ``(3) Participation agreement.--
                    ``(A) In general.--Each PCN that applies for 
                participation in the demonstration project and is 
                approved for such participation by the Secretary shall 
                enter into an agreement with the Secretary to 
                participate in the demonstration project for at least 3 
                years. Under such agreement, the Secretary may require 
                a PCN to demonstrate, through financial instruments 
                including surety bonds, lines of credit, or other 
                means, sufficient financial resources in order to meet 
                reasonably anticipated obligations that would arise as 
                a result of participation in the demonstration project.
                    ``(B) Renewal.--An agreement under subparagraph (A) 
                may be renewed or extended by mutual agreement of the 
                PCN and the Secretary for up to a total of 5 years.
                    ``(C) Termination.--The Secretary may terminate an 
                agreement under this paragraph with a PCN before the 
                end of the term of the agreement if the PCN fails to 
                meet minimum quality standards established by the 
                Secretary pursuant to subsection (f) or for any other 
                reason specified by the Secretary.
            ``(4) Treatment of entities in existing agreements.--An 
        organization of providers of services and suppliers that would 
        otherwise be a PCN eligible to participate in the demonstration 
        project, but that has entered into another agreement with the 
        Secretary that involves shared savings under this title and 
        includes downside risk may elect to apply under paragraph (3) 
        to transition from such other agreement into an agreement with 
        the Secretary under paragraph (3) to participate in the 
        demonstration project under this section. Any such organization 
        that transitions under this paragraph to the demonstration 
        project under this section shall do so in a manner that is 
        consistent with any transition provisions as the Secretary may 
        specify.
            ``(5) Cost-sharing.--
                    ``(A) In general.--Under the demonstration project, 
                cost-sharing that would otherwise apply with respect to 
                an item or service under this title shall apply with 
                respect to such item or service furnished through a 
                PCN, except to the extent such PCN may modify such 
                cost-sharing pursuant to a waiver under subsection (h) 
                and subparagraph (B).
                    ``(B) Secretarial approval.--The Secretary shall 
                establish a process under which a PCN participating 
                under the demonstration program may apply to the 
                Secretary for a waiver under subsection (h) in order to 
                modify cost-sharing for items and services furnished 
                through such PCN under the demonstration program.
    ``(c) Beneficiary Assignment.--
            ``(1) Assignment to pcn.--
                    ``(A) In general.--Upon entering in a contract with 
                a PCN under subsection (b)(3), the Secretary shall 
                establish a process to, with respect to each year 
                during the demonstration project, prospectively assign 
                Medicare fee-for-service beneficiaries to such PCN for 
                such year. Such assignment shall be based on 
                utilization of primary care services furnished under 
                this title by a provider of services or supplier 
                participating in the PCN involved.
                    ``(B) Selection.--The Secretary shall allow PCNs to 
                establish a pilot program under which such PCNs have a 
                process through which Medicare fee-for-service 
                beneficiaries may select a PCN. Such selection by the 
                beneficiary shall be treated for purposes of this 
                section as the assignment of the beneficiary to the PCN 
                and shall supercede any other assignment by the 
                Secretary under subparagraph (A) with respect to such 
                beneficiary.
                    ``(C) Opt out.--The process under paragraph (1) 
                shall allow for Medicare fee-for-service beneficiaries 
                to opt out of this section.
            ``(2) Primary care physician assignment.--Upon assignment 
        under paragraph (1) of a Medicare fee-for-service beneficiary 
        to a PCN, the Secretary shall allow the PCN to contact the 
        beneficiary to designate a primary care physician participating 
        in the PCN who shall be accountable for the coordination of the 
        medical care of the beneficiary. The Secretary shall also allow 
        the PCN to communicate with other individuals entitled to 
        benefits under part A or enrolled under part B in the region 
        served by the PCN regarding the opportunity to participate in 
        th PCN. The Secretary shall promulgate regulations to govern 
        the assignment of an individual to a primary care physician 
        participating in the PCN in the absence of such designation by 
        the individual in a manner that promotes patient engagement and 
        stability in assignment and that takes into account primary 
        care visits by physicians, nurse practitioners, and physician 
        assistants.
            ``(3) Payments with respect to population.--Except in 
        circumstances specified by the Secretary, during the period for 
        which a Medicare fee-for-service beneficiary is a participating 
        beneficiary with respect to a PCN under this section, payment 
        may not be made under part A or B with respect to such 
        beneficiary other than under this section.
            ``(4) Services from out-of-pcn providers.--
                    ``(A) In general.--In the case of an item or 
                service covered under the demonstration project which 
                is furnished to a participating beneficiary, with 
                respect to a PCN, during the period in which the 
                beneficiary is participating in such PCN under the 
                demonstration project from a provider of services or 
                supplier not participating in or otherwise entering 
                into an agreement with the PCN with respect to such 
                item or service (in this paragraph referred to as an 
                `out-of-network provider', with respect to such PCN), 
                in addition to any cost-sharing responsibility 
                specified by the PCN, the beneficiary shall be 
                responsible for any amount by which--
                            ``(i) the amount payable under part A or B 
                        for such item or service; exceeds
                            ``(ii) the payment amount that would be 
                        paid by the PCN for such item or service if 
                        such item or service were furnished by a 
                        provider of services or supplier who is 
                        participating in, or otherwise has an agreement 
                        with, the PCN with respect to such item or 
                        service.
                    ``(B) Reimbursement by pcn.--
                            ``(i) In general.--In applying this 
                        paragraph, the Secretary shall ensure that an 
                        out-of-network provider, with respect to a PCN 
                        that furnishes an item or service to a 
                        participating beneficiary, with respect to such 
                        PCN, is reimbursed by the PCN in such a manner 
                        that avoids fraud and duplication of payment. 
                        For purposes of the previous sentence, the 
                        Secretary shall establish a process by which 
                        such a provider may establish a contractual 
                        relationship with a PCN for reimbursement, 
                        subject to clause (ii), for items and services 
                        furnished to participating beneficiaries, with 
                        respect to such PCN.
                            ``(ii) Limitation.--Any out-of-network 
                        provider, with respect to a PCN, may not be 
                        reimbursed by the PCN for an item or service by 
                        an amount that is more than 90 percent of the 
                        amount that would otherwise be payable for such 
                        item or service under part A or part B, as 
                        applicable.
    ``(d) Calculation of Population Health Budgets and Payments to 
PCNs.--
            ``(1) Calculation of population health budgets.--Under the 
        demonstration project, the Secretary shall calculate PCN 
        specific monthly prospective population health budgets to PCNs 
        as follows:
                    ``(A) Base annual population health budget.--
                Subject to subparagraph (C), the Secretary shall 
                calculate a base annual prospective population health 
                budget for each PCN, which shall be the actual annual 
                per capita total costs payable under parts A and B 
                during the year prior to the first year of the 
                demonstration project attributable to all individuals 
                enrolled under Medicare fee-for-service.
                    ``(B) PCN specific population health budget.--
                Subject to subparagraphs (C) and (D), for each year for 
                which a PCN participates under the demonstration 
                project, the Secretary shall calculate the PCN specific 
                prospective population health budget for the PCN by--
                            ``(i) adjusting the base annual prospective 
                        population health budget under subparagraph (A) 
                        for such year for beneficiary characteristics 
                        (including age, gender, and health status) of 
                        the participating beneficiaries with respect to 
                        such PCN and the geographic factors with 
                        respect to such PCN;
                            ``(ii) updating such budget annually to 
                        account for changes in population;
                            ``(iii) updating such budget by the 
                        projected growth in parts A and B services 
                        under the original Medicare fee-for-service 
                        program, as estimated by the Secretary; and
                            ``(iv) multiplying such budget by the 
                        number of participating beneficiaries accounted 
                        for in the previous payment year in the PCN 
                        service area.
                    ``(C) Non-application of certain provisions.--In 
                calculating the base annual population health budget 
                under subparagraph (A) and the PCN specific population 
                health budgets under subparagraph (B), subsections (p) 
                and (q) of section 1886 shall not be taken into 
                account.
                    ``(D) Limitations.--
                            ``(i) Initial 3 years.--The PCN specific 
                        prospective population health budgets under 
                        subparagraph (B) for all PCNs shall be 
                        established in a manner that will result in 
                        total expenditures under this section being--
                                    ``(I) for the first year of the 
                                demonstration project, not more than 99 
                                percent of the total expenditures under 
                                parts A and B that otherwise would have 
                                been expended for such participating 
                                beneficiaries for such year, as 
                                prospectively estimated by the 
                                Secretary; and
                                    ``(II) for the second and third 
                                years of the demonstration project, not 
                                less than 97 percent of the total 
                                expenditures under parts A and B that 
                                otherwise would have been expended for 
                                such participating beneficiaries for 
                                the year, as prospectively estimated by 
                                the Secretary.
                            ``(ii) Subsequent years.--The Secretary may 
                        establish a generally applicable savings 
                        benchmark for all PCNs in the demonstration 
                        project for any year subsequent to the third 
                        year of the demonstration project, provided 
                        that in establishing such benchmark the 
                        Secretary shall not recapture the savings 
                        retained by PCNs in prior years in any manner.
            ``(2) Payments to pcns.--
                    ``(A) In general.--For each month of each year a 
                PCN participates in the demonstration project, the 
                Secretary shall pay each PCN a prospective, monthly 
                payment equal to one-twelfth of the PCN specific 
                population health budget under paragraph (1)(B) 
                calculated for such PCN for such year. In carrying out 
                the previous sentence, any payment so made shall be 
                made to the PCN and not to a provider of services or 
                supplier participating in such PCN.
                    ``(B) Special circumstances.--The Secretary shall 
                identify special circumstances in which payment may be 
                made under parts A and B with respect to a 
                participating beneficiary other than under this 
                section. The Secretary shall ensure that each PCN 
                establishes a mechanism for reimbursement and budget 
                adjustment in the case of such special circumstances 
                attributable to participating beneficiaries and a 
                method for adjusting the PCN specific prospective 
                population health budgets to the PCNs involved in such 
                cases to account for payments made under parts A and B 
                in such circumstances for such participating 
                beneficiaries to providers of services and suppliers 
                that are not participating in (or contracting with) the 
                PCN involved.
    ``(e) Data Sharing.--The Secretary shall promptly provide necessary 
data on a regular basis to a PCN, including each claim for items and 
services for which payment may be made under parts A, B, and D 
associated with participating beneficiaries of such PCN, to enable the 
coordination of care for participating beneficiaries with respect to 
such PCN.
    ``(f) Quality Reports.--The Secretary shall establish performance 
standards (and a method to assess the performance of PCNs with respect 
to such quality standards) to assess the quality of care furnished by 
PCNs. Such assessment shall initially be based on the quality measures 
used for organizations that have entered into shared savings agreements 
pursuant to sections 1115A and 1899. The Secretary shall seek to 
improve the quality of care furnished by PCNs over time by specifying 
higher standards, new measures, or both for purposes of assessing such 
quality of care.
    ``(g) Coordination.--The Secretary may, in such manner and 
according to such methods as specified by the Secretary, coordinate the 
activities of PCNs with respect to covered part D drugs in order to 
increase the quality and availability of health care items or services 
to participating beneficiaries and may elect to contract with PCNs to 
provide prescription drug coverage.
    ``(h) Waiver Authority.--The Secretary shall waive such 
requirements of sections 1128A and 1128B of this title as may be 
necessary to carry out the provisions of this section. Such waivers 
shall include, without limitation, a waiver of prohibition on 
beneficiary inducements in the form of co-pay waivers, medical 
transportation, provision of tele-health and medical monitoring 
equipment for home use, contracts with providers of services and 
suppliers participating in the PCN, and waivers allowing the provision 
of other supplies and services that permit the efficient delivery of 
care in home, post-acute, and alternative settings. Any waivers 
established pursuant to section 1899(f) shall also apply to the 
demonstration project.
    ``(i) Administration.--Chapter 35 of title 44, United States Code, 
shall not apply to the demonstration project.
    ``(j) State Insurance Laws; Preemption.--A PCN shall not be 
required to be licensed as a health insurance company or health 
maintenance organization under the laws of any State. Any State law 
that would undermine the purpose of this section is preempted.
    ``(k) Reports to Congress.--The Secretary shall for each year of 
the demonstration project submit to Congress a report on the status and 
results of the demonstration project.
    ``(l) Expansion of Project.--The Secretary may, through rulemaking, 
expand (including implementation on a nationwide basis) the duration 
and the scope of the demonstration project, to the extent determined 
appropriate by the Secretary, if--
            ``(1) the Secretary determines that such expansion is 
        expected to--
                    ``(A) reduce spending under this title without 
                reducing the quality of care; or
                    ``(B) improve the quality of patient care without 
                increasing spending;
            ``(2) the Chief Actuary of the Centers for Medicare & 
        Medicaid Services certifies that such expansion would reduce 
        (or would not result in any increase in) net program spending 
        under this title; and
            ``(3) the Secretary determines that such expansion would 
        not deny or limit the coverage or provision of benefits under 
        the applicable title for applicable individuals.
    ``(m) Definitions.--In this section:
            ``(1) The term `hospital' means a subsection (d) hospital 
        (as defined in section 1886(d)(1)(B)).
            ``(2) The term `Medicare fee-for-service beneficiary' has 
        the meaning given such term in section 1899(h)(3).
            ``(3) The term `participating beneficiary' means, with 
        respect to a PCN, a Medicare fee-for-service beneficiary who 
        has been assigned under subsection (c) to such PCN.''.
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