A draft health reform bill released late last week by three House
committee leaders includes significant measures to develop a bundled payment
policy for post-acute care services under Medicare. The
bill, drafted by House Education and Labor Committee Chair George Miller
(D-California), House Energy and Commerce Committee Chair Henry Waxman
(D-California) and House Ways and Means Committee Chair Charles Rangel (D-New
York) would require the Secretary of Health and Human Services (the “Secretary”)
to develop a detailed plan to reform payment for post-acute care services.
The stated goals of the plan to reform payment are to improve the
coordination, quality, and efficiency of post-acute care services and to improve
outcomes for individuals, including reducing hospital re-admissions. The bill
would require the Secretary’s plan to include detailed specifications for a
bundled payment for post-acute care services. Post-acute care services to be
included in the post-acute care bundle are services for which payment may be
made under Medicare for services furnished by skilled nursing facilities (SNFs), inpatient
rehabilitation facilities (IRFs), long term care hospitals (LTACHs),
hospital-based outpatient rehabilitation facilities, and home health agencies.
In developing the plan, the Secretary would be required to consider several
- The nature of bundled payments, including the type of
provider or entity to whom payment should be made, the scope of activities
and services to be included in the post-acute care bundle, whether payment
for physician services should be included in the post-acute care bundle, and
the period covered by the post-acute care bundle (e.g., 30 days).
- Whether the bundled payment should be consolidated with
the payment under the inpatient prospective payment system (i.e., the
Medicare Severity Diagnosis Related Group (MS-DRG) payments) or whether a
separate payment should be established for the post-acute care bundle.
- Whether the bundled payment should be applied across all
categories of providers of inpatient services 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.
- The extent to which bundled payment rates can be
established to achieve offsets or efficiencies and whether such payment
rates should be established nationally or geographically, and whether they
should vary according to discharge, case mix, outliers, wage rates, or other
- The nature of protections needed for beneficiaries under a post-acute
care bundle to ensure quality of care, an adequate level and amount of
services, and beneficiary choice of provider.
- The nature of relationships that may be required between hospitals and
providers of post-acute care services to facilitate the post-acute care
bundle including gain sharing, anti-referral, anti-kickback, and anti-trust
- Quality reporting measures appropriate for hospitals and post-acute care
- Cost-sharing rules for the post-acute care bundle.
- Application of various rules pertaining to post-acute care providers
such as the post-acute transfer policy, three-day hospital stay to qualify
for services furnished by SNFs, and coordination of payments and care
under Medicare and Medicaid.
In addition to framing the issues for consideration by the Secretary, the
bill would require the Secretary to expand the Acute Care Episode (ACE)
Demonstration for Medicare to include post-acute care services no later than six
months after enactment of the bill. The ACE Demonstration is being conducted
to test the effect of bundling Part A and Part B payments for select
cardiovascular and orthopedic episodes of care to improve the coordination,
quality, and efficiency of that care. Five sites located in Texas, Oklahoma, New
Mexico, and Colorado were selected to participate in the Demonstration.
It is too early in the health reform debate to determine with any certainty
the specifics of a proposal to develop post-acute care bundled payments;
however, the prevalence of proposals for post-acute care bundled payments from
the President, lawmakers, and government agencies strongly suggest that some
plan for post-acute care bundled payments would be included in final versions of national health reform
bills. The content of this draft bill highlights the many issues that the
Secretary would need to consider in implementing the post-acute care bundle and also the many
open questions that bundled payments would raise for acute care and post-acute
care providers. For a larger discussion of some of the issues involved in
post-acute care bundled payments, contact one of the authors for a copy or our
white paper To Bundle or Not to Bundle: Lawmakers Explore the Question.