,i #aadth ,,congress #b;d ,session ,h4 ,r4 #ehda ,,in ,,the ,,house ,,of ,,representatives ,july #ad1 #bjaf,mr4 ,kelly of ,pennsylvania 7for himself and ,mr4 ,neal7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committee on ,energy and ,commerce1 for a period to be subsequently determined by the ,speaker1 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 establish a population based payment demonstration project under which ,patient ,care ,networks are paid prospective monthly capitated payments for coordinated care furnished to ,medicare beneficiaries4 #a4 ,population ,based ,payment ,demonstration ,project ,title ,,xviii of the ,social ,security ,act 7#db ,u4,s4,c4 #aciex et seq47 is amended by adding at the end the following new section3 #ahii;,c4 ,population ,based ,payment ,demonstration ,project 7a7 ,in general ,beginning not later than ,january #a1 #bjag1 the ,secretary shall establish a #e-year ,population ,based ,payment ,demonstration ,project 7in this section referred to as the demonstration project7 to promote efficiency of care and improve health outcomes for ,medicare fee-for-service beneficiaries 7as defined in subsection 7m774 ,under the demonstration project1 providers of services and suppliers may1 in accordance with the subsequent subsections of this section1 form ,patient ,care ,networks 7in this section referred to as ,p,c,ns7-- 7#a7 through which providers of services and suppliers shall furnish items and services for which payment would otherwise be made under parts ,a and ,b to participating beneficiaries1 as defined in subsection 7m72 7#b7 which shall1 with respect to participating beneficiaries of such ,,pcn1 provide for payment1 in accordance with subsection 7b77#b77;,c71 for all items and services for which payment would otherwise be made under parts ,a and ,b furnished to such beneficiaries2 and 7#c7 to which the ,secretary shall prospectively make1 instead of any other payment that would otherwise be made under such parts for such items and services furnished to such participating beneficiaries1 capitated payments in accordance with subsection 7d71 for each month during a year for which the ,,pcn participates in the demonstration project for all such items and services furnished to such participating beneficiaries4 7b7 ,patient ,care ,networks 7#a7 ,eligible ,p,c,ns ,subject to the succeeding provisions of this subsection1 as determined appropriate by the ,secretary1 a group composed of at least the following providers of services and suppliers which has established a mechanism for shared governance is eligible to enter into agreement under paragraph 7#b7 to participate as a ,,pcn under the demonstration program under this section3 7,a7 ,physicians 7as defined in section #ahfa7r77#a77 and practitioners 7as described in section #ahdb7;b77#ah77;,c77i77 in group practice arrangements4 7,b7 ,at least one hospital4 7,c7 ,federally qualified health center 7as defined in section #ahfa7;aa77#d774 7,d7 ,such other providers of services and suppliers as the ,secretary determines appropriate4 7#b7 ,requirements ,a ,,pcn shall meet the following requirements to participate in the demonstration project3 7,a7 ,the ,,pcn shall be an integrated system of care which directly provides items and services under parts ,a and ,b4 7,b7 ,the ,,pcn shall employ and enter into appropriate contractual arrangements-- 7i7 with a sufficient number1 as determined by the ,secretary1 of primary care physicians to furnish items and services described in subparagraph 7,a7 to at least twenty thousand participating beneficiaries2 and 7ii7 agree to enter into appropriate contractual arrangements to establish a network of providers of services and suppliers to provide sufficient access for participating beneficiaries with respect to such ,,pcn to items and services for which payment may otherwise be made under parts ,a and ,b4 7,c7 ,the ,,pcn shall1 subject to paragraph 7#e71 be responsible for-- 7i7 payment to providers of services and suppliers participating in or otherwise entering into agreements with the ,,pcn for items and services furnished to participating beneficiaries with respect to such ,,pcn1 in such amounts as specified by the ,,pcn for such items and services2 and 7ii7 payment to providers of services and suppliers not described in clause 7i7 for items and services furnished to participating beneficiaries with respect to such ,,pcn1 in such amounts as specified by the ,,pcn for such items and services furnished by a provider of services or supplier that is described in such clause4 7,d7 ,the ,,pcn shall be willing to become accountable for the quality1 cost1 and overall care of participating beneficiaries with respect to such ,,pcn4 7,e7 ,the ,,pcn shall enter into an agreement with the ,secretary under paragraph 7#c74 7,f7 ,the ,,pcn shall have a formal legal structure that would allow the organization to receive and distribute payments made to the ,,pcn under subsection 7d7 to participating providers of services and suppliers4 7,g7 ,the ,,pcn shall provide the ,secretary with such information regarding providers of services and suppliers participating in the ,,pcn as the ,secretary determines necessary to support the assignment of ,medicare fee-for-service beneficiaries to a ,,pcn1 the implementation of quality requirements under subsection 7f71 other reporting requirements1 and the determination of payments to the ,,pcn under subsection 7d74 7,h7 ,the ,,pcn shall have in place a leadership and management structure that includes clinical and administrative systems4 7,i7 ,the ,,pcn shall provide for beneficiary protections for ,medicare fee-for-service beneficiaries participating in such ,,pcn under the demonstration1 including with respect to network adequacy1 appeals rights1 and out-of-pocket costs4 7#c7 ,participation agreement 7,a7 ,in general ,each ,,pcn that applies for participation in the demonstration project and is approved for such participation by the ,secretary shall enter into an agreement with the ,secretary to participate in the demonstration project for at least #c years4 ,under such agreement1 the ,secretary may require a ,,pcn to demonstrate1 through financial instruments including surety bonds1 lines of credit1 or other means1 sufficient financial resources in order to meet reasonably anticipated obligations that would arise as a result of participation in the demonstration project4 7,b7 ,renewal ,an agreement under subparagraph 7,a7 may be renewed or extended by mutual agreement of the ,,pcn and the ,secretary for up to a total of #e years4 7,c7 ,termination ,the ,secretary may terminate an agreement under this paragraph with a ,,pcn before the end of the term of the agreement if the ,,pcn fails to meet minimum quality standards established by the ,secretary pursuant to subsection 7f7 or for any other reason specified by the ,secretary4 7#d7 ,treatment of entities in existing agreements ,an organization of providers of services and suppliers that would otherwise be a ,,pcn eligible to participate in the demonstration project1 but that has entered into another agreement with the ,secretary that involves shared savings under this title and includes downside risk may elect to apply under paragraph 7#c7 to transition from such other agreement into an agreement with the ,secretary under paragraph 7#c7 to participate in the demonstration project under this section4 ,any such organization that transitions under this paragraph to the demonstration project under this section shall do so in a manner that is consistent with any transition provisions as the ,secretary may specify4 7#e7 ,cost-sharing 7,a7 ,in general ,under the demonstration project1 cost-sharing that would otherwise apply with respect to an item or service under this title shall apply with respect to such item or service furnished through a ,,pcn1 except to the extent such ,,pcn may modify such cost-sharing pursuant to a waiver under subsection 7h7 and subparagraph 7,b74 7,b7 ,secretarial approval ,the ,secretary shall establish a process under which a ,,pcn participating under the demonstration program may apply to the ,secretary for a waiver under subsection 7h7 in order to modify cost-sharing for items and services furnished through such ,,pcn under the demonstration program4 7c7 ,beneficiary assignment 7#a7 ,assignment to ,,pcn 7,a7 ,in general ,upon entering in a contract with a ,,pcn under subsection 7b77#c71 the ,secretary shall establish a process to1 with respect to each year during the demonstration project1 prospectively assign ,medicare fee-for-service beneficiaries to such ,,pcn for such year4 ,such assignment shall be based on utilization of primary care services furnished under this title by a provider of services or supplier participating in the ,,pcn involved4 7,b7 ,selection ,the ,secretary shall allow ,p,c,ns to establish a pilot program under which such ,p,c,ns have a process through which ,medicare fee-for-service beneficiaries may select a ,,pcn4 ,such selection by the beneficiary shall be treated for purposes of this section as the assignment of the beneficiary to the ,,pcn and shall supercede any other assignment by the ,secretary under subparagraph 7,a7 with respect to such beneficiary4 7,c7 ,opt out ,the process under paragraph 7#a7 shall allow for ,medicare fee-for-service beneficiaries to opt out of this section4 7#b7 ,primary care physician assignment ,upon assignment under paragraph 7#a7 of a ,medicare fee-for-service beneficiary to a ,,pcn1 the ,secretary shall allow the ,,pcn to contact the beneficiary to designate a primary care physician participating in the ,,pcn who shall be accountable for the coordination of the medical care of the beneficiary4 ,the ,secretary shall also allow the ,,pcn to communicate with other individuals entitled to benefits under part ,a or enrolled under part ,b in the region served by the ,,pcn regarding the opportunity to participate in th ,,pcn4 ,the ,secretary shall promulgate regulations to govern the assignment of an individual to a primary care physician participating in the ,,pcn in the absence of such designation by the individual in a manner that promotes patient engagement and stability in assignment and that takes into account primary care visits by physicians1 nurse practitioners1 and physician assistants4 7#c7 ,payments with respect to population ,except in circumstances specified by the ,secretary1 during the period for which a ,medicare fee-for-service beneficiary is a participating beneficiary with respect to a ,,pcn under this section1 payment may not be made under part ,a or ,b with respect to such beneficiary other than under this section4 7#d7 ,services from out-of-,,pcn providers 7,a7 ,in general ,in the case of an item or service covered under the demonstration project which is furnished to a participating beneficiary1 with respect to a ,,pcn1 during the period in which the beneficiary is participating in such ,,pcn under the demonstration project from a provider of services or supplier not participating in or otherwise entering into an agreement with the ,,pcn with respect to such item or service 7in this paragraph referred to as an out-of-network provider1 with respect to such ,,pcn71 in addition to any cost-sharing responsibility specified by the ,,pcn1 the beneficiary shall be responsible for any amount by which-- 7i7 the amount payable under part ,a or ,b for such item or service2 exceeds 7ii7 the payment amount that would be paid by the ,,pcn for such item or service if such item or service were furnished by a provider of services or supplier who is participating in1 or otherwise has an agreement with1 the ,,pcn with respect to such item or service4 7,b7 ,reimbursement by ,,pcn 7i7 ,in general ,in applying this paragraph1 the ,secretary shall ensure that an out-of-network provider1 with respect to a ,,pcn that furnishes an item or service to a participating beneficiary1 with respect to such ,,pcn1 is reimbursed by the ,,pcn in such a manner that avoids fraud and duplication of payment4 ,for purposes of the previous sentence1 the ,secretary shall establish a process by which such a provider may establish a contractual relationship with a ,,pcn for reimbursement1 subject to clause 7ii71 for items and services furnished to participating beneficiaries1 with respect to such ,,pcn4 7ii7 ,limitation ,any out-of-network provider1 with respect to a ,,pcn1 may not be reimbursed by the ,,pcn for an item or service by an amount that is more than #ij percent of the amount that would otherwise be payable for such item or service under part ,a or part ,b1 as applicable4 7d7 ,calculation of population health budgets and payments to ,p,c,ns 7#a7 ,calculation of ,population ,health ,budgets ,under the demonstration project1 the ,secretary shall calculate ,,pcn specific monthly prospective population health budgets to ,p,c,ns as follows3 7,a7 ,base annual population health budget ,subject to subparagraph 7,c71 the ,secretary shall calculate a base annual prospective population health budget for each ,,pcn1 which shall be the actual annual per capita total costs payable under parts ,a and ,b during the year prior to the first year of the demonstration project attributable to all individuals enrolled under ,medicare fee-for-service4 7,b7 ,,pcn specific population health budget ,subject to subparagraphs 7,c7 and 7,d71 for each year for which a ,,pcn participates under the demonstration project1 the ,secretary shall calculate the ,,pcn specific prospective population health budget for the ,,pcn by-- 7i7 adjusting the base annual prospective population health budget under subparagraph 7,a7 for such year for beneficiary characteristics 7including age1 gender1 and health status7 of the participating beneficiaries with respect to such ,,pcn and the geographic factors with respect to such ,,pcn2 7ii7 updating such budget annually to account for changes in population2 7iii7 updating such budget by the projected growth in parts ,a and ,b services under the original ,medicare fee-for-service program1 as estimated by the ,secretary2 and 7iv7 multiplying such budget by the number of participating beneficiaries accounted for in the previous payment year in the ,,pcn service area4 7,c7 ,non-application of certain provisions ,in calculating the base annual population health budget under subparagraph 7,a7 and the ,,pcn specific population health budgets under subparagraph 7,b71 subsections 7p7 and 7q7 of section #ahhf shall not be taken into account4 7,d7 ,limitations 7i7 ,initial #c years ,the ,,pcn specific prospective population health budgets under subparagraph 7,b7 for all ,p,c,ns shall be established in a manner that will result in total expenditures under this section being-- 7,i7 for the first year of the demonstration project1 not more than #ii percent of the total expenditures under parts ,a and ,b that otherwise would have been expended for such participating beneficiaries for such year1 as prospectively estimated by the ,secretary2 and 7,,ii7 for the second and third years of the demonstration project1 not less than #ig percent of the total expenditures under parts ,a and ,b that otherwise would have been expended for such participating beneficiaries for the year1 as prospectively estimated by the ,secretary4 7ii7 ,subsequent years ,the ,secretary may establish a generally applicable savings benchmark for all ,p,c,ns in the demonstration project for any year subsequent to the third year of the demonstration project1 provided that in establishing such benchmark the ,secretary shall not recapture the savings retained by ,p,c,ns in prior years in any manner4 7#b7 ,payments to ,p,c,ns 7,a7 ,in general ,for each month of each year a ,,pcn participates in the demonstration project1 the ,secretary shall pay each ,,pcn a prospective1 monthly payment equal to one-twelfth of the ,,pcn specific population health budget under paragraph 7#a77;,b7 calculated for such ,,pcn for such year4 ,in carrying out the previous sentence1 any payment so made shall be made to the ,,pcn and not to a provider of services or supplier participating in such ,,pcn4 7,b7 ,special circumstances ,the ,secretary shall identify special circumstances in which payment may be made under parts ,a and ,b with respect to a participating beneficiary other than under this section4 ,the ,secretary shall ensure that each ,,pcn establishes a mechanism for reimbursement and budget adjustment in the case of such special circumstances attributable to participating beneficiaries and a method for adjusting the ,,pcn specific prospective population health budgets to the ,p,c,ns involved in such cases to account for payments made under parts ,a and ,b in such circumstances for such participating beneficiaries to providers of services and suppliers that are not participating in 7or contracting with7 the ,,pcn involved4 7e7 ,data sharing ,the ,secretary shall promptly provide necessary data on a regular basis to a ,,pcn1 including each claim for items and services for which payment may be made under parts ,a1 ,b1 and ,d associated with participating beneficiaries of such ,,pcn1 to enable the coordination of care for participating beneficiaries with respect to such ,,pcn4 7f7 ,quality reports ,the ,secretary shall establish performance standards 7and a method to assess the performance of ,p,c,ns with respect to such quality standards7 to assess the quality of care furnished by ,p,c,ns4 ,such assessment shall initially be based on the quality measures used for organizations that have entered into shared savings agreements pursuant to sections #aaae;,a and #ahii4 ,the ,secretary shall seek to improve the quality of care furnished by ,p,c,ns over time by specifying higher standards1 new measures1 or both for purposes of assessing such quality of care4 7g7 ,coordination ,the ,secretary may1 in such manner and according to such methods as specified by the ,secretary1 coordinate the activities of ,p,c,ns with respect to covered part ,d drugs in order to increase the quality and availability of health care items or services to participating beneficiaries and may elect to contract with ,p,c,ns to provide prescription drug coverage4 7h7 ,waiver authority ,the ,secretary shall waive such requirements of sections #aabh;,a and #aabh;,b of this title as may be necessary to carry out the provisions of this section4 ,such waivers shall include1 without limitation1 a waiver of prohibition on beneficiary inducements in the form of co-pay waivers1 medical transportation1 provision of tele-health and medical monitoring equipment for home use1 contracts with providers of services and suppliers participating in the ,,pcn1 and waivers allowing the provision of other supplies and services that permit the efficient delivery of care in home1 post-acute1 and alternative settings4 ,any waivers established pursuant to section #ahii7;f7 shall also apply to the demonstration project4 7i7 ,administration ,chapter #ce of title #dd1 ,united ,states ,code1 shall not apply to the demonstration project4 7j7 ,state insurance laws2 preemption ,a ,,pcn shall not be required to be licensed as a health insurance company or health maintenance organization under the laws of any ,state4 ,any ,state law that would undermine the purpose of this section is preempted4 7k7 ,reports to congress ,the ,secretary shall for each year of the demonstration project submit to ,congress a report on the status and results of the demonstration project4 7l7 ,expansion of project ,the ,secretary may1 through rulemaking1 expand 7including implementation on a nationwide basis7 the duration and the scope of the demonstration project1 to the extent determined appropriate by the ,secretary1 if-- 7#a7 the ,secretary determines that such expansion is expected to-- 7,a7 reduce spending under this title without reducing the quality of care2 or 7,b7 improve the quality of patient care without increasing spending2 7#b7 the ,chief ,actuary of the ,centers for ,medicare ,medicaid ,services certifies that such expansion would reduce 7or would not result in any increase in7 net program spending under this title2 and 7#c7 the ,secretary determines that such expansion would not deny or limit the coverage or provision of benefits under the applicable title for applicable individuals4 7m7 ,definitions ,in this section3 7#a7 ,the term hospital means a subsection 7d7 hospital 7as defined in section #ahhf7;d77#a77;,b774 7#b7 ,the term ,medicare fee-for-service beneficiary has the meaning given such term in section #ahii7;h77#c74 7#c7 ,the term participating beneficiary means1 with respect to a ,,pcn1 a ,medicare fee-for-service beneficiary who has been assigned under subsection 7c7 to such ,,pcn4 4