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 Social 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 hospitals from providers of such services.

[2] BUNDLING POST ACUTE SERVICES- The plan described in paragraph [1] shall include detailed 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.

[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 appropriate 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 activities 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 consolidated with the payment under the inpatient prospective system under section 1886 of the Social Security 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, 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 services [including critical access hospitals] and post acute care services or whether it should be limited to certain categories of providers, services, or discharges, 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 payment, 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 individuals under a system of bundled payments to ensure that individuals receive quality care, are furnished the level and amount of services needed as determined by an appropriate assessment instrument, are offered choice of provider, and the extent to which transitional care services would improve quality of care for individuals and the functioning of a bundled post-acute system.

[6] The nature of relationships that may be required between hospitals and providers of post acute care services to facilitate bundled payments, including the application of gainsharing, anti-referral, anti-kickback, and anti-trust laws.

[7] Quality measures that would be appropriate for reporting by hospitals and post acute providers [such as measures that assess changes in functional status and quality measures appropriate for each type of post acute services provider including how the reporting of such quality measures could be coordinated with other reporting of such quality measures by such providers otherwise required].

[8] How cost-sharing for a post acute care bundle should be treated relative to current rules for cost-sharing for inpatient hospital, home health, skilled nursing facility, and other services.

[9] How other programmatic issues should be treated in a post acute care bundle, including rules specific to various types of post-acute providers such as the post-acute transfer policy, three-day hospital stay to qualify for services furnished by skilled nursing facilities, and the coordination of payments and care under the Medicare program and the Medicaid program.

[10] Such other issues as the Secretary deems appropriate.

[c] Consultations and Analysis-

[1] CONSULTATION WITH STAKEHOLDERS- In developing the plan under subsection [a][1], the Secretary shall consult with relevant stakeholders and shall consider experience with such research studies and demonstrations that the Secretary determines appropriate.

[2] ANALYSIS AND DATA COLLECTION- In developing such plan, the Secretary shall--

[A] analyze the issues described in subsection [b] and other issues that the Secretary determines appropriate;

[B] analyze the impacts [including geographic impacts] of post acute service reform approaches, including bundling of such services on individuals, hospitals, post acute care providers, and physicians;

[C] use existing data [such as data submitted on claims] and collect such data as the Secretary determines are appropriate to develop such plan required in this section; and

[D] if patient functional status measures are appropriate for the analysis, to the extent practical, build upon the CARE tool being developed pursuant to section 5008 of the Deficit Reduction Act of 2005.

[d] Administration-

[1] FUNDING- For purposes of carrying out the provisions of this section, in addition to funds otherwise available, out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary for the Center for Medicare & Medicaid Services Program Management Account $15,000,000 for each of the fiscal years 2010 through 2012. Amounts appropriated under this paragraph for a fiscal year shall be available until expended.

[2] EXPEDITED DATA COLLECTION- Chapter 35 of title 44, United States Code shall not apply to this section.

[e] Public Reports-

[1] INTERIM REPORTS- The Secretary shall issue interim public reports on a periodic basis on the plan described in subsection [a][1], the issues described in subsection [b], and impact analyses as the Secretary determines appropriate.

[2] FINAL REPORT- Not later than the date that is 3 years after the date of the enactment of this Act, the Secretary shall issue a final public report on such plan, including analysis of issues described in subsection

[b] and impact analyses.

[f] Conversion of Acute Care Episode Demonstration to Pilot Program and Expansion To Include Post Acute Services-

[1] IN GENERAL- Part E of title XVIII of the Social Security Act is amended by inserting after section 1866C the following new section:

'SEC. 1866D. CONVERSION OF ACUTE CARE EPISODE DEMONSTRATION TO PILOT PROGRAM AND EXPANSION TO INCLUDE POST ACUTE SERVICES.

'[a] In General- By not later than January 1, 2011, the Secretary shall, for the purpose of promoting the use of bundled payments to promote efficient and high quality delivery of care--

'[1] convert the acute care episode demonstration program conducted under section 1866C to a pilot program; and

'[2] subject to subsection [c], expand such program as so converted to include post acute services and such other services the Secretary determines to be appropriate, which may include transitional services.

'[b] Scope- The pilot program under subsection [a] may include additional geographic areas and additional conditions which account for significant program spending, as defined by the Secretary. Nothing in this subsection shall be construed as limiting the number of hospital and physician groups or the number of hospital and post-acute provider groups that may participate in the pilot program.

'[c] Limitation- The Secretary shall only expand the pilot program under subsection [a][2] if the Secretary finds that--

'[1] the demonstration program under section 1866C and pilot program under this section maintain or increase the quality of care received by individuals enrolled under this title; and

'[2] such demonstration program and pilot program reduce program expenditures and, based on the certification under subsection [d], that the expansion of such pilot program would result in estimated spending that would be less than what spending would otherwise be in the absence of this section.

'[d] Certification- For purposes of subsection [c], the Chief Actuary of the Centers for Medicare & Medicaid Services shall certify whether expansion of the pilot program under this section would result in estimated spending that would be less than what spending would otherwise be in the absence of this section.

'[e] Voluntary Participation- Nothing in this paragraph shall be construed as requiring the participation of an entity in the pilot program under this section.'.

[2] CONFORMING AMENDMENT- Section- 1866C[b] of the Social Security Act [42 U.S.C. 1395cc-3[b]] is amended by striking 'The Secretary' and inserting 'Subject to section 1866D, the Secretary'.