I 

113TH CONGRESS 

2D SESSION H. R. 4673 

To amend title XVIII of the Social Security Act to provide bundled payments 

for post-acute care services under parts A and B of Medicare, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 2014 

Mr. MCKINLEY (for himself and Mr. PRICE of Georgia) 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 

bundled payments for post-acute care services under 

parts A and B of Medicare, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Bundling and Coordi5 nating Post-Acute Care Act of 2014’’ and as the 

6 ‘‘BACPAC Act of 2014’’. 


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1 SEC. 2. PURPOSES. 

2 The purposes of this Act are to— 

3 (1) foster the delivery of high-quality post-acute 

4 care services in the most cost-effective manner pos5 sible; 

6 (2) preserve the ability of patients, with the 

7 guidance of their physicians, to select their preferred 

8 providers of post-acute care services; 

9 (3) promote competition among post-acute care 

10 providers on the basis of quality, cost, account11 ability, and customer service; 

12 (4) achieve long-term sustainability by ensuring 

13 operational stability through regional breadth and 

14 the engagement of experienced care PAC coordina15 tors; 

16 (5) advance innovation in fields including tele17 health, care coordination, medication management, 

18 and hospitalization avoidance; and 

19 (6) provide for the financial security of the 

20 Medicare program by achieving substantial program 

21 savings through maximized efficiencies, cost avoid22 ance, and outcomes improvement. 


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1 SEC. 3. PROVIDING BUNDLED PAYMENTS FOR POST-ACUTE 

2 CARE SERVICES UNDER PARTS A AND B OF 

3 MEDICARE. 

4 Title XVIII of the Social Security Act is amended by 

5 inserting after section 1866E (42 U.S.C. 1395cc–5) the 

6 following new section: 

7 ‘‘PROVIDING BUNDLED PAYMENTS FOR POST-ACUTE CARE

8 SERVICES

9 ‘‘SEC. 1866F. (a) IN GENERAL.—For a PAC bundle 

10 with respect to qualifying discharges occurring on or after 

11 January 1, 2016, instead of the payment otherwise pro12 vided under parts A and B, there shall be paid a single 

13 payment amount (determined under subsection (d) and as 

14 limited under paragraph (4) of such subsection) to be paid 

15 to a PAC coordinator (as described in subsection (c)) se16 lected by an individual under such subsection. 

17 ‘‘(b) PAC-RELATED DEFINITIONS.—In this section: 

18 ‘‘(1) PAC BUNDLE.—The term ‘PAC bundle’ 

19 means PAC services furnished to an individual dur20 ing a PAC period in a PAC area. 

21 ‘‘(2) PAC SERVICES.— 

22 ‘‘(A) IN GENERAL.—The term ‘PAC serv23 ices’ includes— 

24 ‘‘(i) post-hospital extended care serv25 ices, subject to subparagraph (C)(i); 


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1 ‘‘(ii) home health services, subject to 

2 subparagraph (C)(ii); 

3 ‘‘(iii) inpatient services provided in a 

4 rehabilitation facility, subject to subpara5 graph (C)(iii); 

6 ‘‘(iv) inpatient hospital services pro7 vided by a long-term care hospital, subject 

8 to subparagraph (C)(iv); 

9 ‘‘(v) durable medical equipment; 

10 ‘‘(vi) outpatient prescription drugs 

11 and biologicals; and 

12 ‘‘(vii) skilled nursing facility services. 

13 ‘‘(B) EXCEPTIONS.—Such term does not 

14 include— 

15 ‘‘(i) physicians’ services; 

16 ‘‘(ii) hospice care; 

17 ‘‘(iii) outpatient hospital services; 

18 ‘‘(iv) ambulance services; 

19 ‘‘(v) outpatient physical therapy serv20 ices; 

21 ‘‘(vi) outpatient occupational therapy 

22 services; 

23 ‘‘(vii) outpatient speech-language pa24 thology services; and 


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1 ‘‘(viii) the items and services de2 scribed in section 1861(s)(9). 

3 ‘‘(C) NONAPPLICATION OF CERTAIN COV4 ERAGE LIMITATIONS.— 

5 ‘‘(i) WAIVER OF SKILLED NURSING

6 FACILITY THREE-DAY STAY REQUIRE7 MENT.—In applying subparagraph (A)(i), 

8 the 3-day stay requirement described in 

9 section 1861(i) (requiring that an individ10 ual’s inpatient stay in a discharging hos11 pital be for a duration of not less than 3 

12 consecutive days) shall not apply. 

13 ‘‘(ii) WAIVER OF HOMEBOUND RE14 QUIREMENT FOR HOME HEALTH SERV15 ICES.—In applying subparagraph (A)(ii), 

16 the requirements cited in sections 

17 1814(a)(2)(C) and 1835(a)(2)(A) that 

18 home health services are or were required 

19 because the individual is or was confined to 

20 the home of the individual shall not apply. 

21 ‘‘(iii) NONAPPLICATION OF REHABILI22 TATION FACILITY PERCENTAGE REQUIRE23 MENT.—In applying subparagraph (A)(iii), 

24 any requirement that a specified percent25 age of the inpatient population served by 


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1 the facility require intensive rehabilitation 

2 services for treatment of one or more of 

3 the conditions specified in section 

4 412.29(b)(2) of title 42, Code of Federal 

5 Regulations, as of December 19, 2013, 

6 shall not apply. 

7 ‘‘(iv) NONAPPLICATION OF LONG8 TERM CARE HOSPITAL PERCENTAGE RE9 QUIREMENT.—In applying subparagraph 

10 (A)(iv), any requirement that a specified 

11 percentage of the discharged Medicare in12 patient population of the long-term care 

13 hospital or its satellite facility be admitted 

14 to the hospital or its satellite facility from 

15 its co-located hospital shall not apply. 

16 ‘‘(3) PAC PERIOD.—The term ‘PAC period’ 

17 means the period beginning on the date of a quali18 fying discharge (as defined in paragraph (10)) and 

19 ending on the date that is the earlier of the fol20 lowing: 

21 ‘‘(A) The date that is 90 days after the 

22 date of such discharge. 

23 ‘‘(B) The date on which the individual is 

24 admitted to a hospital for purposes of receiving 

25 services for a condition that is not related to 


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1 the condition for which the individual received 

2 the acute care inpatient hospital services de3 scribed in paragraph (10)(A). 

4 ‘‘(4) PAC AREA.—The term ‘PAC area’ means 

5 an area with respect to which a PAC coordinator 

6 has a PAC agreement in effect under subsection 

7 (c)(1)(B). 

8 ‘‘(5) PAC PHYSICIAN.—The term ‘PAC physi9 cian’ means, with respect to an individual receiving 

10 a PAC bundle, the physician who has primary re11 sponsibility with respect to supervising the delivery 

12 of services during the course of a PAC period. 

13 ‘‘(6) PAC PROVIDER.—The term ‘PAC pro14 vider’ means, with respect to PAC services, the pro15 vider of services or supplier furnishing such services. 

16 ‘‘(7) PAC NETWORK AGREEMENT.—The term 

17 ‘PAC network agreement’ means, in the case that an 

18 individual has selected a PAC coordinator under 

19 subsection (c)(4)(A) for the furnishing of PAC serv20 ices, an agreement of a PAC coordinator with one 

21 or more PAC providers to provide such services to 

22 such individual. 

23 ‘‘(8) PAC READMISSION.—The term ‘PAC re24 admission’ means, with respect to an individual re25 ceiving a PAC bundle, the individual’s admission to 


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1 a hospital within 90 days of the date of the quali2 fying discharge of the individual, for purposes of re3 ceiving services for a condition that is related to the 

4 condition for which the individual received the acute 

5 care inpatient hospital services described in para6 graph (10)(A). 

7 ‘‘(9) PAC ASSESSMENT TOOL.—The term ‘PAC 

8 assessment tool’ means the Continuity Assessment 

9 Record and Evaluation (CARE) tool (or such equiv10 alent assessment tool as the Secretary may specify). 

11 ‘‘(10) QUALIFYING DISCHARGE.—Subject to 

12 subsection (e), the term ‘qualifying discharge’ means 

13 a discharge after receiving acute care inpatient hos14 pital services (as defined by the Secretary) in a sub15 section (d) hospital (as defined in section 

16 1886(d)(1)(B)) for which the discharge plan in17 cludes the furnishing of PAC services. 

18 ‘‘(11) CRG.—The term ‘CRG’ means a condi19 tion-related group established under subsection 

20 (d)(1). 

21 ‘‘(c) PAC COORDINATORS.— 

22 ‘‘(1) IN GENERAL.—In this section, the term 

23 ‘PAC coordinator’ means an entity (such as a hos24 pital, health insurance issuer, third-party benefit 

25 manager, or PAC provider) that— 


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1 ‘‘(A) is certified, under a process estab2 lished by the Secretary, as meeting appropriate 

3 requirements specified by the Secretary, includ4 ing the requirements specified in paragraph (2); 

5 and 

6 ‘‘(B) has entered into and has in effect a 

7 PAC agreement with the Secretary described in 

8 paragraph (3). 

9 ‘‘(2) REQUIREMENTS.—The requirements speci10 fied in this paragraph, with respect to an entity 

11 serving a PAC area, are the following: 

12 ‘‘(A) FINANCIAL SOLVENCY.—The entity 

13 has the capacity, and provides sufficient assur14 ances of solvency, to bear financial risk as a 

15 PAC coordinator under this section. 

16 ‘‘(B) CAPACITY TO MANAGE CARE AND

17 FUNDING.—The entity has the capability to 

18 manage the care and funding for PAC services 

19 in such area. 

20 ‘‘(C) PAC NETWORK AGREEMENTS.— 

21 ‘‘(i) NETWORK CAPACITY TO SERVE

22 PAC AREA.—The entity has entered into 

23 PAC network agreements with one or more 

24 PAC providers in a PAC area in a manner 

25 sufficient to ensure the availability of PAC 


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1 services for individuals residing in the area 

2 who select the entity for the furnishing of 

3 PAC services. 

4 ‘‘(ii) LIMITATION ON BALANCE BILL5 ING.—Such a PAC network agreement 

6 shall provide that the PAC provider shall 

7 accept as payment in full for PAC services 

8 furnished by such PAC provider the appli9 cable amount described in paragraph 

10 (3)(C). 

11 ‘‘(iii) QUALITY ASSURANCE.—Such a 

12 PAC network agreement shall provide that 

13 the PAC provider shall have in effect a 

14 written plan of quality assurance and im15 provement, and procedures implementing 

16 such plan, that meet such quality stand17 ards as the Secretary may specify. 

18 ‘‘(D) CREDIT-WORTHINESS.—The entity 

19 has demonstrated credit-worthiness. 

20 ‘‘(E) MEDICAL DIRECTOR.—The entity em21 ploys or contracts with a medical director who 

22 has an appropriate medical background. 

23 ‘‘(3) TERMS OF PAC AGREEMENT.—The PAC 

24 agreement described in this paragraph between an 

25 entity and the Secretary shall, with respect to the 


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1 PAC area specified under subparagraph (B), have 

2 such terms and conditions as are specified by the 

3 Secretary consistent with this section and shall in4 clude the following: 

5 ‘‘(A) CARE COORDINATION.—With respect 

6 to an individual who selects the entity under 

7 paragraph (4)(A)— 

8 ‘‘(i) the entity shall select one or more 

9 PAC providers in such area to furnish, di10 rectly or indirectly, clinically appropriate 

11 PAC services (as determined through the 

12 use of the PAC assessment tool) to the in13 dividual; and 

14 ‘‘(ii) the entity shall coordinate the 

15 furnishing of all such services for the indi16 vidual. 

17 ‘‘(B) PAC AREA COVERED.—The PAC 

18 agreement shall specify the PAC area under the 

19 PAC agreement. 

20 ‘‘(C) PAYMENT AMOUNT FOR PAC SERV21 ICES.—For PAC services furnished by a PAC 

22 provider and furnished with respect to a quali23 fying discharge that occurs— 

24 ‘‘(i) before January 1, 2019, the enti25 ty shall pay the PAC provider under the 


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1 PAC network agreement between the enti2 ty and the PAC provider— 

3 ‘‘(I) with respect to such PAC 

4 services that are services for which 

5 the PAC provider would receive pay6 ment under this title without regard 

7 to this section, an amount that is not 

8 less than the amount that would oth9 erwise be paid to such PAC provider 

10 under this title for such services; and 

11 ‘‘(II) with respect to such PAC 

12 services that are services for which 

13 the PAC provider would not receive 

14 payment under this title without re15 gard to this section, an amount speci16 fied under such PAC network agree17 ment; and 

18 ‘‘(ii) on or after January 1, 2019, the 

19 entity shall pay the PAC provider under 

20 such PAC network agreement an amount 

21 specified under such agreement. 

22 ‘‘(D) DISTRIBUTION OF SAVINGS.—Insofar 

23 as the payment amount to a PAC coordinator 

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1 gregate amounts paid to PAC providers under 

2 subparagraph (C) for such bundle for such indi3 vidual, the entity shall not retain an amount 

4 greater than 70 percent of such savings and 

5 shall pay an amount equivalent to— 

6 ‘‘(i) not less than 10 percent of such 

7 savings to such PAC providers; 

8 ‘‘(ii) not less than 10 percent of such 

9 savings to the PAC physician of the indi10 vidual; and 

11 ‘‘(iii) in the case that there is no PAC 

12 readmission of the individual, not less than 

13 10 percent of such savings to the hospital 

14 discharging the individual immediately 

15 prior to the furnishing of such services. 

16 Payments shall be made under each of clauses 

17 (i), (ii), and (iii) to individuals and entities 

18 independent of whether payment may be made 

19 to such an individual or entity under another 

20 such clause. 

21 ‘‘(E) MAINTENANCE OF ADVISORY COM22 MITTEE.—The entity shall maintain an advisory 

23 committee of PAC providers and of patient 

24 stakeholders to advise the entity regarding its 

25 activities under this section. 


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1 ‘‘(4) SELECTION AND CHANGE OF SELECTION

2 OF PAC COORDINATORS BY INDIVIDUAL.— 

3 ‘‘(A) IN GENERAL.—The Secretary shall 

4 establish a process for the selection and change 

5 of selection of a PAC coordinator by an indi6 vidual who is receiving inpatient hospital serv7 ices and whose discharge has been or is likely 

8 to be classified as a qualifying discharge. 

9 ‘‘(B) LIMITATION ON SELECTION DUE TO

10 NETWORK ADEQUACY.—The process established 

11 under subparagraph (A) may not allow an indi12 vidual to select (or to change a selection to) a 

13 PAC coordinator in a PAC area unless the PAC 

14 coordinator has entered into PAC network 

15 agreements with such PAC providers in such 

16 PAC area such that the PAC coordinator has a 

17 sufficient number and range of health care pro18 fessionals and providers willing to provide serv19 ices under the terms of the PAC agreement. 

20 ‘‘(5) CONSTRUCTION RELATING TO PAC COOR21 DINATORS OFFERING NON-PAC SERVICES.—Nothing 

22 in this section shall be construed as prohibiting PAC 

23 providers from offering, either directly or indirectly, 

24 services that contribute to patient care, safety, and 

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1 ment, telehealth technologies, home environment 

2 services, and transportation services) that are not 

3 PAC services. 

4 ‘‘(6) CONSTRUCTION REGARDING FLEXIBILITY

5 IN THE DELIVERY OF PAC SERVICES.—Nothing in 

6 this section shall be construed to prevent a PAC net7 work agreement from permitting a PAC provider to 

8 subcontract for the furnishing of PAC services that 

9 the PAC provider is otherwise obligated to provide 

10 under the agreement so long as the subcontractor 

11 meets the same terms and conditions in furnishing 

12 such services as would apply if the PAC provider 

13 were to provide such services. 

14 ‘‘(d) PAYMENT AMOUNTS.— 

15 ‘‘(1) CLASSIFICATION OF CONDITIONS BY CRGS; 

16 METHODOLOGY FOR CLASSIFICATION.—The Sec17 retary shall establish a classification of the condi18 tions of individuals receiving a PAC bundle by CRG 

19 and a methodology for classifying specific PAC bun20 dles within these groups. The methodology shall, to 

21 the extent feasible, classify such bundles through the 

22 use of the PAC assessment tool. 

23 ‘‘(2) COMPUTATION OF BASE RATE.— 

24 ‘‘(A) IN GENERAL.—The Secretary shall 

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1 dles classified in each CRG and furnished dur2 ing a PAC period ending in the base year se3 lected under subparagraph (B). 

4 ‘‘(B) BASE YEAR SELECTION.—The Sec5 retary shall select as a base year the most re6 cent year ending before the date of the enact7 ment of this section for which data are available 

8 to carry out this section. 

9 ‘‘(C) BUDGET-NEUTRAL COMPUTATION.— 

10 The average payment rate for a PAC bundle 

11 classified in a CRG shall be computed in a 

12 manner so that, if it had been applied in the 

13 base year, the aggregate payments for PAC 

14 bundles classified in such CRG and furnished 

15 during a PAC period ending in such year would 

16 be equivalent to the aggregate payments under 

17 this title for such bundles. 

18 ‘‘(3) CALCULATION OF PAYMENT AMOUNT

19 BASED ON BASE RATE.—Subject to the succeeding 

20 provisions of this subsection, the amount of the sin21 gle payment described in this paragraph, with re22 spect to a PAC bundle classified within a CRG and 

23 furnished to an individual during a PAC period end24 ing— 


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1 ‘‘(A) in 2016, is the base average payment 

2 rate for such bundle computed under paragraph 

3 (2), increased by such percentage as the Sec4 retary estimates is the average rate of increase 

5 in payments under this title for such bundle be6 tween the base year and 2016; and 

7 ‘‘(B) in a subsequent year, is the amount 

8 of the single payment for such bundle computed 

9 under this paragraph for the previous year, in10 creased by a percentage specified by the Sec11 retary consistent with paragraph (4). 

12 ‘‘(4) CALCULATION OF ANNUAL PERCENTAGE

13 INCREASE.—In calculating the percentage increases 

14 applied under paragraph (3)(B), the Secretary shall 

15 ensure that total expenditures for all PAC bundles 

16 provided in accordance with this section do not ex17 ceed 96 percent of the applicable baseline over the 

18 8-fiscal-year period beginning with fiscal year 2016. 

19 ‘‘(5) ADJUSTMENT FOR READMISSIONS DURING

20 PAC PERIOD.—The amount paid to a PAC coordi21 nator under this subsection for a PAC bundle in a 

22 PAC period that includes a PAC readmission shall 

23 be reduced by an amount equal to the aggregate 

24 amount of payments made for such PAC readmis25 sion of such individual. 


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1 ‘‘(6) ADJUSTMENT FOR GEOGRAPHIC AND RISK

2 FACTORS.—The Secretary shall adjust the amount 

3 of payment described in paragraph (3) with respect 

4 to services furnished to an individual in a PAC area 

5 in a budget-neutral manner for a year— 

6 ‘‘(A) by an appropriate factor that reflects 

7 variations in costs for the furnishing of PAC 

8 bundles among different geographic areas; 

9 ‘‘(B) by an appropriate factor that ac10 counts for variations in costs for the furnishing 

11 of such PAC services to the individual based 

12 upon the health status of the individual; and 

13 ‘‘(C) by an amount that accounts for his14 torical local (hospital referral cluster) pricing. 

15 ‘‘(7) ADJUSTMENT IN CASE OF CHANGE OF SE16 LECTION BY INDIVIDUAL.—In the case of a change 

17 of selection of PAC coordinator by the individual 

18 under subsection (c)(4) during a PAC period, the 

19 Secretary shall adjust the amount of payment de20 scribed in paragraph (3) in order to provide appro21 priate partial payments to be paid to the PAC coor22 dinator selected initially by the individual and to the 

23 PAC coordinator selected under the change of selec24 tion by the individual. The method of calculating the 

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1 ments shall be based on the method used for the 

2 Home Health Partial Episode Payment adjustment. 

3 ‘‘(8) USE OF PAC ASSESSMENT TOOL FOR PUR4 POSES OF ADJUSTMENT FOR RISK FACTORS.—In de5 termining an appropriate factor under paragraph 

6 (6)(B) with respect to an individual, the Secretary 

7 shall take into account an assessment of the indi8 vidual conducted using the PAC assessment tool. 

9 ‘‘(e) PHASE-IN.— 

10 ‘‘(1) DETERMINATION OF PAC EXPENDITURES

11 BY CRG.—Based on the most recent data available, 

12 the Secretary shall determine the aggregate amount 

13 of expenditures under this title for PAC services fur14 nished during the PAC period for each CRG (as de15 fined in paragraph (b)(11)). 

16 ‘‘(2) RANKING OF CRGS BY VOLUME OF EX17 PENDITURE.—The Secretary shall rank the CRGs in 

18 order based on the aggregate amount of expendi19 tures for PAC services described in clause (i) for 

20 each CRG. 

21 ‘‘(3) GROUPING OF CRGS.—The Secretary shall 

22 group CRGs into four groups as follows: 

23 ‘‘(A) FIRST GROUP.—The first group con24 sists of the CRGs that have the highest rank 

25 under clause (ii) and that collectively account 


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1 for 25 percent of the aggregate amount of ex2 penditures for PAC services described in clause 

3 (i). 

4 ‘‘(B) SECOND GROUP.—The second group 

5 consists of the CRGs that have the next highest 

6 rank under clause (ii) after the first group in 

7 subclause (I) and that collectively account for 

8 25 percent of the aggregate amount of expendi9 tures for PAC services described in clause (i). 

10 ‘‘(C) THIRD GROUP.—The third group con11 sists of the CRGs that have the next highest 

12 rank under clause (ii) after the second group in 

13 subclause (II) and that collectively account for 

14 25 percent of the aggregate amount of expendi15 tures for PAC services described in clause (i). 

16 ‘‘(D) FOURTH GROUP.—The fourth group 

17 consists of the CRGs that are not included in 

18 the first, second, or third group under this 

19 clause. 

20 ‘‘(4) PHASE-IN BY CRG GROUPING.—In apply21 ing this section for discharges in— 

22 ‘‘(A) 2016, only discharges that are classi23 fied within the first group under subclause (I) 

24 of clause (iii) shall be included; 


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1 ‘‘(B) 2017, only discharges that are classi2 fied within the first or second group under sub3 clause (I) or (II) of clause (iii) shall be in4 cluded; 

5 ‘‘(C) 2018, only discharges that are classi6 fied within the first, second, or third group 

7 under subclause (I), (II), or (III) of clause (iii) 

8 shall be included; and 

9 ‘‘(D) 2019 and subsequent years, dis10 charges that are classified within any group of 

11 CRGs shall be included.’’. 

12 SEC. 4. TRANSITIONAL CARE MANAGEMENT PAYMENTS 

13 FOR PHYSICIANS. 

14 For purposes of encouraging transitional care man15 agement by PAC physicians (as defined in section 

16 1866F(b)(5) of the Social Security Act), in carrying out 

17 section 1848(e) of the Social Security Act (42 U.S.C. 

18 1395w–4(e)), the Secretary of Health and Human Serv19 ices shall establish a new Transitional Care Management 

20 (TCM) code to pay for care management by such a PAC 

21 physician or revise and expand the use of existing TCM 

22 codes 99495 and 99494. 

Æ 


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