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 fol-
lowing 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 consider-
ation 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Bundling and Coordi-
nating Post-Acute Care Act of 2014’’ and as the 
‘‘BACPAC Act of 2014’’. 
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SEC. 2. PURPOSES. 
The purposes of this Act are to— 
(1) foster the delivery of high-quality post-acute 
care services in the most cost-effective manner pos-
sible; 
(2) preserve the ability of patients, with the 
guidance of their physicians, to select their preferred 
providers of post-acute care services; 
(3) promote competition among post-acute care 
providers on the basis of quality, cost, account-
ability, and customer service; 
(4) achieve long-term sustainability by ensuring 
operational stability through regional breadth and 
the engagement of experienced care PAC coordina-
tors; 
(5) advance innovation in fields including tele-
health, care coordination, medication management, 
and hospitalization avoidance; and 
(6) provide for the financial security of the 
Medicare program by achieving substantial program 
savings through maximized efficiencies, cost avoid-
ance, and outcomes improvement. 
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SEC. 3. PROVIDING BUNDLED PAYMENTS FOR POST-ACUTE 
CARE SERVICES UNDER PARTS A AND B OF 
MEDICARE. 
Title XVIII of the Social Security Act is amended by 
inserting after section 1866E (42 U.S.C. 1395cc–5) the 
following new section: 
‘‘PROVIDING BUNDLED PAYMENTS FOR POST-ACUTE CARE 
SERVICES 
‘‘SEC. 1866F. (a) IN GENERAL.—For a PAC bundle 
with respect to qualifying discharges occurring on or after 
January 1, 2016, instead of the payment otherwise pro-
vided under parts A and B, there shall be paid a single 
payment amount (determined under subsection (d) and as 
limited under paragraph (4) of such subsection) to be paid 
to a PAC coordinator (as described in subsection (c)) se-
lected by an individual under such subsection. 
‘‘(b) PAC-RELATED DEFINITIONS.—In this section: 
‘‘(1) PAC BUNDLE.—The term ‘PAC bundle’ 
means PAC services furnished to an individual dur-
ing a PAC period in a PAC area. 
‘‘(2) PAC SERVICES.— 
‘‘(A) IN GENERAL.—The term ‘PAC serv-
ices’ includes— 
‘‘(i) post-hospital extended care serv-
ices, subject to subparagraph (C)(i); 
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‘‘(viii) the items and services de-
scribed in section 1861(s)(9). 
‘‘(C) NONAPPLICATION OF CERTAIN COV-
ERAGE LIMITATIONS.— 
‘‘(i) WAIVER
OF
SKILLED
NURSING 
FACILITY
THREE-DAY
STAY
REQUIRE-
MENT.—In applying subparagraph (A)(i), 
the 3-day stay requirement described in 
section 1861(i) (requiring that an individ-
ual’s inpatient stay in a discharging hos-
pital be for a duration of not less than 3 
consecutive days) shall not apply. 
‘‘(ii) WAIVER
OF
HOMEBOUND
RE-
QUIREMENT
FOR
HOME
HEALTH
SERV-
ICES.—In applying subparagraph (A)(ii), 
the 
requirements 
cited 
in 
sections 
1814(a)(2)(C) and 1835(a)(2)(A) that 
home health services are or were required 
because the individual is or was confined to 
the home of the individual shall not apply. 
‘‘(iii) NONAPPLICATION OF REHABILI-
TATION FACILITY PERCENTAGE REQUIRE-
MENT.—In applying subparagraph (A)(iii), 
any requirement that a specified percent-
age of the inpatient population served by 
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the facility require intensive rehabilitation 
services for treatment of one or more of 
the 
conditions 
specified 
in 
section 
412.29(b)(2) of title 42, Code of Federal 
Regulations, as of December 19, 2013, 
shall not apply. 
‘‘(iv) NONAPPLICATION
OF
LONG- 
TERM
CARE
HOSPITAL
PERCENTAGE
RE-
QUIREMENT.—In applying subparagraph 
(A)(iv), any requirement that a specified 
percentage of the discharged Medicare in-
patient population of the long-term care 
hospital or its satellite facility be admitted 
to the hospital or its satellite facility from 
its co-located hospital shall not apply. 
‘‘(3) PAC PERIOD.—The term ‘PAC period’ 
means the period beginning on the date of a quali-
fying discharge (as defined in paragraph (10)) and 
ending on the date that is the earlier of the fol-
lowing: 
‘‘(A) The date that is 90 days after the 
date of such discharge. 
‘‘(B) The date on which the individual is 
admitted to a hospital for purposes of receiving 
services for a condition that is not related to 
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the condition for which the individual received 
the acute care inpatient hospital services de-
scribed in paragraph (10)(A). 
‘‘(4) PAC AREA.—The term ‘PAC area’ means 
an area with respect to which a PAC coordinator 
has a PAC agreement in effect under subsection 
(c)(1)(B). 
‘‘(5) PAC PHYSICIAN.—The term ‘PAC physi-
cian’ means, with respect to an individual receiving 
a PAC bundle, the physician who has primary re-
sponsibility with respect to supervising the delivery 
of services during the course of a PAC period. 
‘‘(6) PAC PROVIDER.—The term ‘PAC pro-
vider’ means, with respect to PAC services, the pro-
vider of services or supplier furnishing such services. 
‘‘(7) PAC NETWORK AGREEMENT.—The term 
‘PAC network agreement’ means, in the case that an 
individual has selected a PAC coordinator under 
subsection (c)(4)(A) for the furnishing of PAC serv-
ices, an agreement of a PAC coordinator with one 
or more PAC providers to provide such services to 
such individual. 
‘‘(8) PAC READMISSION.—The term ‘PAC re-
admission’ means, with respect to an individual re-
ceiving a PAC bundle, the individual’s admission to 
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a hospital within 90 days of the date of the quali-
fying discharge of the individual, for purposes of re-
ceiving services for a condition that is related to the 
condition for which the individual received the acute 
care inpatient hospital services described in para-
graph (10)(A). 
‘‘(9) PAC ASSESSMENT TOOL.—The term ‘PAC 
assessment tool’ means the Continuity Assessment 
Record and Evaluation (CARE) tool (or such equiv-
alent assessment tool as the Secretary may specify). 
‘‘(10) QUALIFYING
DISCHARGE.—Subject to 
subsection (e), the term ‘qualifying discharge’ means 
a discharge after receiving acute care inpatient hos-
pital services (as defined by the Secretary) in a sub-
section 
(d) 
hospital 
(as 
defined 
in 
section 
1886(d)(1)(B)) for which the discharge plan in-
cludes the furnishing of PAC services. 
‘‘(11) CRG.—The term ‘CRG’ means a condi-
tion-related group established under subsection 
(d)(1). 
‘‘(c) PAC COORDINATORS.— 
‘‘(1) IN GENERAL.—In this section, the term 
‘PAC coordinator’ means an entity (such as a hos-
pital, health insurance issuer, third-party benefit 
manager, or PAC provider) that— 
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‘‘(A) is certified, under a process estab-
lished by the Secretary, as meeting appropriate 
requirements specified by the Secretary, includ-
ing the requirements specified in paragraph (2); 
and 
‘‘(B) has entered into and has in effect a 
PAC agreement with the Secretary described in 
paragraph (3). 
‘‘(2) REQUIREMENTS.—The requirements speci-
fied in this paragraph, with respect to an entity 
serving a PAC area, are the following: 
‘‘(A) FINANCIAL
SOLVENCY.—The entity 
has the capacity, and provides sufficient assur-
ances of solvency, to bear financial risk as a 
PAC coordinator under this section. 
‘‘(B) CAPACITY
TO
MANAGE
CARE
AND 
FUNDING.—The entity has the capability to 
manage the care and funding for PAC services 
in such area. 
‘‘(C) PAC NETWORK AGREEMENTS.— 
‘‘(i) NETWORK
CAPACITY
TO
SERVE 
PAC AREA.—The entity has entered into 
PAC network agreements with one or more 
PAC providers in a PAC area in a manner 
sufficient to ensure the availability of PAC 
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services for individuals residing in the area 
who select the entity for the furnishing of 
PAC services. 
‘‘(ii) LIMITATION ON BALANCE BILL-
ING.—Such a PAC network agreement 
shall provide that the PAC provider shall 
accept as payment in full for PAC services 
furnished by such PAC provider the appli-
cable amount described in paragraph 
(3)(C). 
‘‘(iii) QUALITY ASSURANCE.—Such a 
PAC network agreement shall provide that 
the PAC provider shall have in effect a 
written plan of quality assurance and im-
provement, and procedures implementing 
such plan, that meet such quality stand-
ards as the Secretary may specify. 
‘‘(D) CREDIT-WORTHINESS.—The entity 
has demonstrated credit-worthiness. 
‘‘(E) MEDICAL DIRECTOR.—The entity em-
ploys or contracts with a medical director who 
has an appropriate medical background. 
‘‘(3) TERMS OF PAC AGREEMENT.—The PAC 
agreement described in this paragraph between an 
entity and the Secretary shall, with respect to the 
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PAC area specified under subparagraph (B), have 
such terms and conditions as are specified by the 
Secretary consistent with this section and shall in-
clude the following: 
‘‘(A) CARE COORDINATION.—With respect 
to an individual who selects the entity under 
paragraph (4)(A)— 
‘‘(i) the entity shall select one or more 
PAC providers in such area to furnish, di-
rectly or indirectly, clinically appropriate 
PAC services (as determined through the 
use of the PAC assessment tool) to the in-
dividual; and 
‘‘(ii) the entity shall coordinate the 
furnishing of all such services for the indi-
vidual. 
‘‘(B) PAC AREA
COVERED.—The PAC 
agreement shall specify the PAC area under the 
PAC agreement. 
‘‘(C) PAYMENT AMOUNT FOR PAC SERV-
ICES.—For PAC services furnished by a PAC 
provider and furnished with respect to a quali-
fying discharge that occurs— 
‘‘(i) before January 1, 2019, the enti-
ty shall pay the PAC provider under the 
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PAC network agreement between the enti-
ty and the PAC provider— 
‘‘(I) with respect to such PAC 
services that are services for which 
the PAC provider would receive pay-
ment under this title without regard 
to this section, an amount that is not 
less than the amount that would oth-
erwise be paid to such PAC provider 
under this title for such services; and 
‘‘(II) with respect to such PAC 
services that are services for which 
the PAC provider would not receive 
payment under this title without re-
gard to this section, an amount speci-
fied under such PAC network agree-
ment; and 
‘‘(ii) on or after January 1, 2019, the 
entity shall pay the PAC provider under 
such PAC network agreement an amount 
specified under such agreement. 
‘‘(D) DISTRIBUTION OF SAVINGS.—Insofar 
as the payment amount to a PAC coordinator 
under subsection (d)(3) for a PAC bundle fur-
nished to an individual is greater than the ag-
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gregate amounts paid to PAC providers under 
subparagraph (C) for such bundle for such indi-
vidual, the entity shall not retain an amount 
greater than 70 percent of such savings and 
shall pay an amount equivalent to— 
‘‘(i) not less than 10 percent of such 
savings to such PAC providers; 
‘‘(ii) not less than 10 percent of such 
savings to the PAC physician of the indi-
vidual; and 
‘‘(iii) in the case that there is no PAC 
readmission of the individual, not less than 
10 percent of such savings to the hospital 
discharging the individual immediately 
prior to the furnishing of such services. 
Payments shall be made under each of clauses 
(i), (ii), and (iii) to individuals and entities 
independent of whether payment may be made 
to such an individual or entity under another 
such clause. 
‘‘(E) MAINTENANCE
OF
ADVISORY
COM-
MITTEE.—The entity shall maintain an advisory 
committee of PAC providers and of patient 
stakeholders to advise the entity regarding its 
activities under this section. 
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‘‘(4) SELECTION AND CHANGE OF SELECTION 
OF PAC COORDINATORS BY INDIVIDUAL.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish a process for the selection and change 
of selection of a PAC coordinator by an indi-
vidual who is receiving inpatient hospital serv-
ices and whose discharge has been or is likely 
to be classified as a qualifying discharge. 
‘‘(B) LIMITATION ON SELECTION DUE TO 
NETWORK ADEQUACY.—The process established 
under subparagraph (A) may not allow an indi-
vidual to select (or to change a selection to) a 
PAC coordinator in a PAC area unless the PAC 
coordinator has entered into PAC network 
agreements with such PAC providers in such 
PAC area such that the PAC coordinator has a 
sufficient number and range of health care pro-
fessionals and providers willing to provide serv-
ices under the terms of the PAC agreement. 
‘‘(5) CONSTRUCTION RELATING TO PAC COOR-
DINATORS OFFERING NON-PAC SERVICES.—Nothing 
in this section shall be construed as prohibiting PAC 
providers from offering, either directly or indirectly, 
services that contribute to patient care, safety, and 
readmission avoidance (such as medication manage-
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ment, telehealth technologies, home environment 
services, and transportation services) that are not 
PAC services. 
‘‘(6) CONSTRUCTION REGARDING FLEXIBILITY 
IN THE DELIVERY OF PAC SERVICES.—Nothing in 
this section shall be construed to prevent a PAC net-
work agreement from permitting a PAC provider to 
subcontract for the furnishing of PAC services that 
the PAC provider is otherwise obligated to provide 
under the agreement so long as the subcontractor 
meets the same terms and conditions in furnishing 
such services as would apply if the PAC provider 
were to provide such services. 
‘‘(d) PAYMENT AMOUNTS.— 
‘‘(1) CLASSIFICATION OF CONDITIONS BY CRGS; 
METHODOLOGY
FOR
CLASSIFICATION.—The Sec-
retary shall establish a classification of the condi-
tions of individuals receiving a PAC bundle by CRG 
and a methodology for classifying specific PAC bun-
dles within these groups. The methodology shall, to 
the extent feasible, classify such bundles through the 
use of the PAC assessment tool. 
‘‘(2) COMPUTATION OF BASE RATE.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
compute an average payment rate for PAC bun-
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dles classified in each CRG and furnished dur-
ing a PAC period ending in the base year se-
lected under subparagraph (B). 
‘‘(B) BASE YEAR SELECTION.—The Sec-
retary shall select as a base year the most re-
cent year ending before the date of the enact-
ment of this section for which data are available 
to carry out this section. 
‘‘(C) BUDGET-NEUTRAL
COMPUTATION.— 
The average payment rate for a PAC bundle 
classified in a CRG shall be computed in a 
manner so that, if it had been applied in the 
base year, the aggregate payments for PAC 
bundles classified in such CRG and furnished 
during a PAC period ending in such year would 
be equivalent to the aggregate payments under 
this title for such bundles. 
‘‘(3) CALCULATION
OF
PAYMENT
AMOUNT 
BASED ON BASE RATE.—Subject to the succeeding 
provisions of this subsection, the amount of the sin-
gle payment described in this paragraph, with re-
spect to a PAC bundle classified within a CRG and 
furnished to an individual during a PAC period end-
ing— 
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‘‘(6) ADJUSTMENT FOR GEOGRAPHIC AND RISK 
FACTORS.—The Secretary shall adjust the amount 
of payment described in paragraph (3) with respect 
to services furnished to an individual in a PAC area 
in a budget-neutral manner for a year— 
‘‘(A) by an appropriate factor that reflects 
variations in costs for the furnishing of PAC 
bundles among different geographic areas; 
‘‘(B) by an appropriate factor that ac-
counts for variations in costs for the furnishing 
of such PAC services to the individual based 
upon the health status of the individual; and 
‘‘(C) by an amount that accounts for his-
torical local (hospital referral cluster) pricing. 
‘‘(7) ADJUSTMENT IN CASE OF CHANGE OF SE-
LECTION BY INDIVIDUAL.—In the case of a change 
of selection of PAC coordinator by the individual 
under subsection (c)(4) during a PAC period, the 
Secretary shall adjust the amount of payment de-
scribed in paragraph (3) in order to provide appro-
priate partial payments to be paid to the PAC coor-
dinator selected initially by the individual and to the 
PAC coordinator selected under the change of selec-
tion by the individual. The method of calculating the 
respective amounts of such appropriate partial pay-
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ments shall be based on the method used for the 
Home Health Partial Episode Payment adjustment. 
‘‘(8) USE OF PAC ASSESSMENT TOOL FOR PUR-
POSES OF ADJUSTMENT FOR RISK FACTORS.—In de-
termining an appropriate factor under paragraph 
(6)(B) with respect to an individual, the Secretary 
shall take into account an assessment of the indi-
vidual conducted using the PAC assessment tool. 
‘‘(e) PHASE-IN.— 
‘‘(1) DETERMINATION OF PAC EXPENDITURES 
BY CRG.—Based on the most recent data available, 
the Secretary shall determine the aggregate amount 
of expenditures under this title for PAC services fur-
nished during the PAC period for each CRG (as de-
fined in paragraph (b)(11)). 
‘‘(2) RANKING OF CRGS BY VOLUME OF EX-
PENDITURE.—The Secretary shall rank the CRGs in 
order based on the aggregate amount of expendi-
tures for PAC services described in clause (i) for 
each CRG. 
‘‘(3) GROUPING OF CRGS.—The Secretary shall 
group CRGs into four groups as follows: 
‘‘(A) FIRST GROUP.—The first group con-
sists of the CRGs that have the highest rank 
under clause (ii) and that collectively account 
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for 25 percent of the aggregate amount of ex-
penditures for PAC services described in clause 
(i). 
‘‘(B) SECOND GROUP.—The second group 
consists of the CRGs that have the next highest 
rank under clause (ii) after the first group in 
subclause (I) and that collectively account for 
25 percent of the aggregate amount of expendi-
tures for PAC services described in clause (i). 
‘‘(C) THIRD GROUP.—The third group con-
sists of the CRGs that have the next highest 
rank under clause (ii) after the second group in 
subclause (II) and that collectively account for 
25 percent of the aggregate amount of expendi-
tures for PAC services described in clause (i). 
‘‘(D) FOURTH GROUP.—The fourth group 
consists of the CRGs that are not included in 
the first, second, or third group under this 
clause. 
‘‘(4) PHASE-IN BY CRG GROUPING.—In apply-
ing this section for discharges in— 
‘‘(A) 2016, only discharges that are classi-
fied within the first group under subclause (I) 
of clause (iii) shall be included; 
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‘‘(B) 2017, only discharges that are classi-
fied within the first or second group under sub-
clause (I) or (II) of clause (iii) shall be in-
cluded; 
‘‘(C) 2018, only discharges that are classi-
fied within the first, second, or third group 
under subclause (I), (II), or (III) of clause (iii) 
shall be included; and 
‘‘(D) 2019 and subsequent years, dis-
charges that are classified within any group of 
CRGs shall be included.’’. 
SEC. 4. TRANSITIONAL CARE MANAGEMENT PAYMENTS 
FOR PHYSICIANS. 
For purposes of encouraging transitional care man-
agement by PAC physicians (as defined in section 
1866F(b)(5) of the Social Security Act), in carrying out 
section 1848(e) of the Social Security Act (42 U.S.C. 
1395w–4(e)), the Secretary of Health and Human Serv-
ices shall establish a new Transitional Care Management 
(TCM) code to pay for care management by such a PAC 
physician or revise and expand the use of existing TCM 
codes 99495 and 99494. 
Æ 
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