300 
plication of the adjustment factor de-
scribed in paragraph (3) and applied pur-
suant to paragraph (1). 
‘‘(D) FORM OF PAYMENT.—The Secretary 
may make the additional payments under this 
paragraph on a lump sum basis, a periodic 
basis, a claim by claim basis, or otherwise. 
‘‘(E) USE
OF
ADDITIONAL
PAYMENT.— 
Funding under this paragraph shall be used by 
targeted hospitals for transitional care activities 
designed to address the patient noncompliance 
issues that result in higher than normal read-
mission rates, such as one or more of the fol-
lowing: 
‘‘(i) Providing care coordination serv-
ices to assist in transitions from the tar-
geted hospital to other settings. 
‘‘(ii) Hiring translators and inter-
preters. 
‘‘(iii) Increasing services offered by 
discharge planners. 
‘‘(iv) Ensuring that individuals receive 
a summary of care and medication orders 
upon discharge. 
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301 
‘‘(v) Developing a quality improve-
ment plan to assess and remedy prevent-
able readmission rates. 
‘‘(vi) Assigning discharged individuals 
to a medical home. 
‘‘(vii) Doing other activities as deter-
mined appropriate by the Secretary. 
‘‘(F) GAO REPORT ON USE OF FUNDS.— 
Not later than 3 years after the date on which 
funds are first made available under this para-
graph, the Comptroller General of the United 
States shall submit to Congress a report on the 
use of such funds. 
‘‘(G) DISPROPORTIONATE
SHARE
HOS-
PITAL PAYMENT.—In this paragraph, the term 
‘disproportionate 
share 
hospital 
payment’ 
means an additional payment amount under 
subsection (d)(5)(F).’’. 
(b) APPLICATION
TO
CRITICAL
ACCESS
HOS-
PITALS.—Section 1814(l) of the Social Security Act (42 
U.S.C. 1395f(l)) is amended— 
(1) in paragraph (5)— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (C); 
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302 
(B) by striking the period at the end of 
subparagraph (D) and inserting ‘‘; and’’; 
(C) by inserting at the end the following 
new subparagraph: 
‘‘(E) the methodology for determining the ad-
justment factor under paragraph (5), including the 
determination of aggregate payments for actual and 
expected readmissions, applicable periods, applicable 
conditions and measures of readmissions.’’; and 
(D) by redesignating such paragraph as 
paragraph (6); and 
(2) by inserting after paragraph (4) the fol-
lowing new paragraph: 
‘‘(5) The adjustment factor described in section 
1886(p)(3) shall apply to payments with respect to a crit-
ical access hospital with respect to a cost reporting period 
beginning in fiscal year 2012 and each subsequent fiscal 
year (after application of paragraph (4) of this subsection) 
in a manner similar to the manner in which such section 
applies with respect to a fiscal year to an applicable hos-
pital as described in section 1886(p)(2).’’. 
(c) POST ACUTE CARE PROVIDERS.— 
(1) INTERIM POLICY.— 
(A) IN GENERAL.—With respect to a read-
mission to an applicable hospital or a critical 
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access hospital (as described in section 1814(l) 
of the Social Security Act) from a post acute 
care provider (as defined in paragraph (3)) and 
such a readmission is not governed by section 
412.531 of title 42, Code of Federal Regula-
tions, if the claim submitted by such a post- 
acute care provider under title XVIII of the So-
cial Security Act indicates that the individual 
was readmitted to a hospital from such a post- 
acute care provider or admitted from home and 
under the care of a home health agency within 
30 days of an initial discharge from an applica-
ble hospital or critical access hospital, the pay-
ment under such title on such claim shall be the 
applicable percent specified in subparagraph 
(B) of the payment that would otherwise be 
made under the respective payment system 
under such title for such post-acute care pro-
vider if this subsection did not apply. 
(B) APPLICABLE PERCENT DEFINED.—For 
purposes of subparagraph (A), the applicable 
percent is— 
(i) for fiscal or rate year 2012 is 
0.996; 
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(ii) for fiscal or rate year 2013 is 
0.993; and 
(iii) for fiscal or rate year 2014 is 
0.99. 
(C) EFFECTIVE DATE.—Subparagraph (1) 
shall apply to discharges or services furnished 
(as the case may be with respect to the applica-
ble post acute care provider) on or after the 
first day of the fiscal year or rate year, begin-
ning on or after October 1, 2011, with respect 
to the applicable post acute care provider. 
(2) DEVELOPMENT AND APPLICATION OF PER-
FORMANCE MEASURES.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services shall develop ap-
propriate measures of readmission rates for 
post acute care providers. The Secretary shall 
seek endorsement of such measures by the enti-
ty with a contract under section 1890(a) of the 
Social Security Act but may adopt and apply 
such measures under this paragraph without 
such an endorsement. The Secretary shall ex-
pand such measures in a manner similar to the 
manner in which applicable conditions are ex-
panded under paragraph (5)(B) of section 
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305 
1886(p) of the Social Security Act, as added by 
subsection (a). 
(B) 
IMPLEMENTATION.—The 
Secretary 
shall apply, on or after October 1, 2014, with 
respect to post acute care providers, policies 
similar to the policies applied with respect to 
applicable hospitals and critical access hospitals 
under the amendments made by subsection (a). 
The provisions of paragraph (1) shall apply 
with respect to any period on or after October 
1, 2014, and before such application date de-
scribed in the previous sentence in the same 
manner as such provisions apply with respect to 
fiscal or rate year 2014. 
(C) MONITORING
AND
PENALTIES.—The 
provisions of paragraph (7) of such section 
1886(p) shall apply to providers under this 
paragraph in the same manner as they apply to 
hospitals under such section. 
(3) DEFINITIONS.—For purposes of this sub-
section: 
(A) POST
ACUTE
CARE
PROVIDER.—The 
term ‘‘post acute care provider’’ means— 
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(i) a skilled nursing facility (as de-
fined in section 1819(a) of the Social Secu-
rity Act); 
(ii) an inpatient rehabilitation facility 
(described in section 1886(h)(1)(A) of such 
Act); 
(iii) a home health agency (as defined 
in section 1861(o) of such Act); and 
(iv) a long term care hospital (as de-
fined in section 1861(ccc) of such Act). 
(B) OTHER TERMS .—The terms ‘‘applica-
ble condition’’, ‘‘applicable hospital’’, and ‘‘re-
admission’’ have the meanings given such terms 
in section 1886(p)(5) of the Social Security 
Act, as added by subsection (a)(1). 
(d) PHYSICIANS.— 
(1) STUDY.—The Secretary of Health and 
Human Services shall conduct a study to determine 
how the readmissions policy described in the pre-
vious subsections could be applied to physicians. 
(2) 
CONSIDERATIONS.—In 
conducting 
the 
study, the Secretary shall consider approaches such 
as— 
(A) creating a new code (or codes) and 
payment amount (or amounts) under the fee 
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schedule in section 1848 of the Social Security 
Act (in a budget neutral manner) for services 
furnished by an appropriate physician who sees 
an individual within the first week after dis-
charge from a hospital or critical access hos-
pital; 
(B) developing measures of rates of read-
mission for individuals treated by physicians; 
(C) applying a payment reduction for phy-
sicians who treat the patient during the initial 
admission that results in a readmission; and 
(D) methods for attributing payments or 
payment reductions to the appropriate physi-
cian or physicians. 
(3) REPORT.—The Secretary shall issue a pub-
lic report on such study not later than the date that 
is one year after the date of the enactment of this 
Act. 
(e) FUNDING.—For purposes of carrying out the pro-
visions of this section, in addition to funds otherwise avail-
able, out of any funds in the Treasury not otherwise ap-
propriated, there are appropriated to the Secretary of 
Health and Human Services for the Center for Medicare 
& Medicaid Services Program Management Account 
$25,000,000 for each fiscal year beginning with 2010. 
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Amounts appropriated under this subsection for a fiscal 
year shall be available until expended. 
SEC. 1152. POST ACUTE CARE SERVICES PAYMENT REFORM 
PLAN AND BUNDLING PILOT PROGRAM. 
(a) PLAN.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall develop a detailed plan to reform 
payment for post acute care (PAC) services under 
the Medicare program under title XVIII of the So-
cial Security Act (in this section referred to as the 
‘‘Medicare program)’’. The goals of such payment 
reform are to— 
(A) improve the coordination, quality, and 
efficiency of such services; and 
(B) improve outcomes for individuals such 
as reducing the need for readmission to hos-
pitals from providers of such services. 
(2) BUNDLING
POST
ACUTE
SERVICES.—The 
plan described in paragraph (1) shall include de-
tailed specifications for a bundled payment for post 
acute services (in this section referred to as the 
‘‘post acute care bundle’’), and may include other 
approaches determined appropriate by the Secretary. 
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309 
(3) POST ACUTE SERVICES.—For purposes of 
this section, the term ‘‘post acute services’’ means 
services for which payment may be made under the 
Medicare program that are furnished by skilled 
nursing facilities, inpatient rehabilitation facilities, 
long term care hospitals, hospital based outpatient 
rehabilitation facilities and home health agencies to 
an individual after discharge of such individual from 
a hospital, and such other services determined ap-
propriate by the Secretary. 
(b) DETAILS.—The plan described in subsection 
(a)(1) shall include consideration of the following issues: 
(1) The nature of payments under a post acute 
care bundle, including the type of provider or entity 
to whom payment should be made, the scope of ac-
tivities and services included in the bundle, whether 
payment for physicians’ services should be included 
in the bundle, and the period covered by the bundle. 
(2) Whether the payment should be consoli-
dated with the payment under the inpatient prospec-
tive system under section 1886 of the Social Secu-
rity Act (in this section referred to as MS–DRGs) 
or a separate payment should be established for such 
bundle, and if a separate payment is established, 
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whether it should be made only upon use of post 
acute care services or for every discharge. 
(3) Whether the bundle should be applied 
across all categories of providers of inpatient serv-
ices (including critical access hospitals) and post 
acute care services or whether it should be limited 
to certain categories of providers, services, or dis-
charges, such as high volume or high cost MS– 
DRGs. 
(4) The extent to which payment rates could be 
established to achieve offsets for efficiencies that 
could be expected to be achieved with a bundle pay-
ment, whether such rates should be established on a 
national basis or for different geographic areas, 
should vary according to discharge, case mix, 
outliers, and geographic differences in wages or 
other appropriate adjustments, and how to update 
such rates. 
(5) The nature of protections needed for indi-
viduals under a system of bundled payments to en-
sure that individuals receive quality care, are fur-
nished the level and amount of services needed as 
determined by an appropriate assessment instru-
ment, are offered choice of provider, and the extent 
to which transitional care services would improve 
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