I 114th CONGRESS 1st Session H. R. 2502 IN THE HOUSE OF REPRESENTATIVES May 21, 2015 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.

1. Short title This Act may be cited as the Comprehensive Care Payment Innovation Act of 2015 . 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: 1866F. National voluntary payment bundling (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, 2016. (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 (i) Availability for application 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. (ii) Availability during agreement period 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 relating to all providers of services and suppliers participating in the group under this title for such 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 (A) In general Subject to subparagraph (B), the term applicable services means the following items and services: (i) Acute care inpatient services. (ii) Physicians’ services delivered in and outside of an acute care hospital setting. (iii) Outpatient hospital services. (iv) 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. (v) Subject to subparagraph (B), other services the Secretary determines appropriate. (B) Exception Such term does not include items and services described in section 1861(s)(9), except for those off-the-shelf orthotic devices described in section 1847(a)(2)(C) that meet the following conditions: (i) The Secretary has included those devices in an actively operating competitive bidding program under section 1847. (ii) The devices require adjustment only by the patient and not by any other person, such as a caretaker or supplier. (iii) The Secretary has provided notification of the identity of those devices pursuant to notice and comment rulemaking. (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 2016) 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, 2019, 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, 2021, 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. .