PAYMENTS TO, AND COVERAGE OF BENEFITS UNDER, PROGRAMS OF ALL–INCLUSIVE CARE FOR THE ELDERLY (PACE)
(1) Benefits through enrollment in a pace program.—In accordance with this section, in the case of an individual who is entitled to benefits under part A or enrolled under part B and who is a PACE program eligible individual (as defined in paragraph (5)) with respect to a PACE program offered by a PACE provider under a PACE program agreement—
(A) the individual may enroll in the program under this section; and
(B) so long as the individual is so enrolled and in accordance with regulations—
(i) the individual shall receive benefits under this title solely through such program; and
(ii) the PACE provider is entitled to payment under and in accordance with this section and such agreement for provision of such benefits.
(2) Pace program defined.—For purposes of this section, the term PACE program means a program of all-inclusive care for the elderly that meets the following requirements:
(A) Operation.—The entity operating the program is a PACE provider (as defined in paragraph (3)).
(B) Comprehensive benefits.—The program provides comprehensive health care services to PACE program eligible individuals in accordance with the PACE program agreement and regulations under this section.
(C) Transition.—In the case of an individual who is enrolled under the program under this section and whose enrollment ceases for any reason (including that the individual no longer qualifies as a PACE program eligible individual, the termination of a PACE program agreement, or otherwise), the program provides assistance to the individual in obtaining necessary transitional care through appropriate referrals and making the individual’s medical records available to new providers.
(3) Pace provider defined.—
(A) In general.—For purposes of this section, the term PACE provider means an entity that—
(i) subject to subparagraph (B), is (or is a distinct part of) a public entity or a private, nonprofit entity organized for charitable purposes under section 501(c)(3) of the Internal Revenue Code of 1986; and
(ii) has entered into a PACE program agreement with respect to its operation of a PACE program.
(B) Treatment of private, for–profit providers.—Clause (i) of subparagraph (A) shall not apply—
(i) to entities subject to a demonstration project waiver under subsection (h); and
(ii) after the date the report under section 4804(b) of the Balanced Budget Act of 1997 is submitted, unless the Secretary determines that any of the findings described in subparagraph (A), (B), (C), or (D) of paragraph (2) of such section are true.
(4) Pace program agreement defined.—For purposes of this section, the term PACE program agreement means, with respect to a PACE provider, an agreement, consistent with this section, section 1934 (if applicable), and regulations promulgated to carry out such sections, between the PACE provider and the Secretary, or an agreement between the PACE provider and a State administering agency for the operation of a PACE program by the provider under such sections.
(5) Pace program eligible individual defined.—For purposes of this section, the term PACE program eligible individual means, with respect to a PACE program, an individual who—
(A) is 55 years of age or older;
(B) subject to subsection (c)(4), is determined under subsection (c) to require the level of care required under the State medicaid plan for coverage of nursing facility services;
(C) resides in the service area of the PACE program; and
(D) meets such other eligibility conditions as may be imposed under the PACE program agreement for the program under subsection (e)(2)(A)(ii).
(6) Pace protocol.—For purposes of this section, the term PACE protocol means the Protocol for the Program of All-inclusive Care for the Elderly (PACE), as published by On Lok, Inc., as of April 14, 1995, or any successor protocol that may be agreed upon between the Secretary and On Lok, Inc.
(7) Pace demonstration waiver program defined.—For purposes of this section, the term PACE demonstration waiver program means a demonstration program under either of the following sections (as in effect before the date of their repeal):
(A) Section 603(c) of the Social Security Amendments of 1983 (Public Law 98-21), as extended by section 9220 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Public Law 99-272).
(B) Section 9412(b) of the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509).
(8) State administering agency defined.—For purposes of this section, the term State administering agency means, with respect to the operation of a PACE program in a State, the agency of that State (which may be the single agency responsible for administration of the State plan under title XIX in the State) responsible for administering PACE program agreements under this section and section 1934 in the State.
(9) Trial period defined.—
(A) In general.—For purposes of this section, the term trial period means, with respect to a PACE program operated by a PACE provider under a PACE program agreement, the first 3 contract years under such agreement with respect to such program.
(B) Treatment of entities previously operating pace demonstration waiver programs.—Each contract year (including a year occurring before the effective date of this section) during which an entity has operated a PACE demonstration waiver program shall be counted under subparagraph (A) as a contract year during which the entity operated a PACE program as a PACE provider under a PACE program agreement.
(b) Scope of Benefits; Beneficiary Safeguards.—
(1) In general.—Under a PACE program agreement, a PACE provider shall—
(A) provide to PACE program eligible individuals enrolled with the provider, regardless of source of payment and directly or under contracts with other entities, at a minimum—
(i) all items and services covered under this title (for individuals enrolled under this section) and all items and services covered under title XIX, but without any limitation or condition as to amount, duration, or scope and without application of deductibles, copayments, coinsurance, or other cost-sharing that would otherwise apply under this title or such title, respectively; and
(ii) all additional items and services specified in regulations, based upon those required under the PACE protocol;
(B) provide such enrollees access to necessary covered items and services 24 hours per day, every day of the year;
(C) provide services to such enrollees through a comprehensive, multidisciplinary health and social services delivery system which integrates acute and long-term care services pursuant to regulations; and
(D) specify the covered items and services that will not be provided directly by the entity, and to arrange for delivery of those items and services through contracts meeting the requirements of regulations.
(2) Quality assurance; patient safeguards.—The PACE program agreement shall require the PACE provider to have in effect at a minimum—
(A) a written plan of quality assurance and improvement, and procedures implementing such plan, in accordance with regulations; and
(B) written safeguards of the rights of enrolled participants (including a patient bill of rights and procedures for grievances and appeals) in accordance with regulations and with other requirements of this title and Federal and State law that are designed for the protection of patients.
(3) Treatment of medicare services furnished by noncontract physicians and other entities.—
(A) Application of medicare advantage requirement with respect to medicare services furnished by noncontract physicians and other entities.—Section 1852(k)(1) (relating to limitations on balance billing against MA organizations for noncontract physicians and other entities with respect to services covered under this title) shall apply to PACE providers, PACE program eligible individuals enrolled with such PACE providers, and physicians and other entities that do not have a contract or other agreement establishing payment amounts for services furnished to such an individual in the same manner as such section applies to MA organizations, individuals enrolled with such organizations, and physicians and other entities referred to in such section.
(B) Reference to related provision for noncontract providers of services.—For the provision relating to limitations on balance billing against PACE providers for services covered under this title furnished by noncontract providers of services, see section 1866(a)(1)(O).
(4) Reference to related provision for services covered under title xix but not under this title.—For provisions relating to limitations on payments to providers participating under the State plan under title XIX that do not have a contract or other agreement with a PACE provider establishing payment amounts for services covered under such plan (but not under this title) when such services are furnished to enrollees of that PACE provider, see section 1902(a)(66).
(c) Eligibility Determinations.—
(1) In general.—The determination of whether an individual is a PACE program eligible individual—
(A) shall be made under and in accordance with the PACE program agreement; and
(B) who is entitled to medical assistance under title XIX, shall be made (or who is not so entitled, may be made) by the State administering agency.
(2) Condition.—An individual is not a PACE program eligible individual (with respect to payment under this section) unless the individual’s health status has been determined by the Secretary or the State administering agency, in accordance with regulations, to be comparable to the health status of individuals who have participated in the PACE demonstration waiver programs. Such determination shall be based upon information on health status and related indicators (such as medical diagnoses and measures of activities of daily living, instrumental activities of daily living, and cognitive impairment) that are part of a uniform minimum data set collected by PACE providers on potential PACE program eligible individuals.
(3) Annual eligibility recertifications.—
(A) In general.—Subject to subparagraph (B), the determination described in subsection (a)(5)(B) for an individual shall be reevaluated at least annually.
(B) Exception.—The requirement of annual reevaluation under subparagraph (A) may be waived during a period in accordance with regulations in those cases where the State administering agency determines that there is no reasonable expectation of improvement or significant change in an individual’s condition during the period because of the severity of chronic condition, or degree of impairment of functional capacity of the individual involved.
(4) Continuation of eligibility.—An individual who is a PACE program eligible individual may be deemed to continue to be such an individual notwithstanding a determination that the individual no longer meets the requirement of subsection (a)(5)(B) if, in accordance with regulations, in the absence of continued coverage under a PACE program the individual reasonably would be expected to meet such requirement within the succeeding 6-month period.
(5) Enrollment; disenrollment.—
(A) Voluntary disenrollment at any time.—The enrollment and disenrollment of PACE program eligible individuals in a PACE program shall be pursuant to regulations and the PACE program agreement and shall permit enrollees to voluntarily disenroll without cause at any time.
(B) Limitations on disenrollment.—
(i) In general.—Regulations promulgated by the Secretary under this section and section 1934, and the PACE program agreement, shall provide that the PACE program may not disenroll a PACE program eligible individual except—
(I) for nonpayment of premiums (if applicable) on a timely basis; or
(II) for engaging in disruptive or threatening behavior, as defined in such regulations (developed in close consultation with State administering agencies).
(ii) No disenrollment for noncompliant behavior.—Except as allowed under regulations promulgated to carry out clause (i)(II), a PACE program may not disenroll a PACE program eligible individual on the ground that the individual has engaged in noncompliant behavior if such behavior is related to a mental or physical condition of the individual. For purposes of the preceding sentence, the term noncompliant behavior includes repeated noncompliance with medical advice and repeated failure to appear for appointments.
(iii) Timely review of proposed nonvoluntary disenrollment.—A proposed disenrollment, other than a voluntary disenrollment, shall be subject to timely review and final determination by the Secretary or by the State administering agency (as applicable), prior to the proposed disenrollment becoming effective.
(d) Payments to Pace Providers on A Capitated Basis.—
(1) In general.—In the case of a PACE provider with a PACE program agreement under this section, except as provided in this subsection or by regulations, the Secretary shall make prospective monthly payments of a capitation amount for each PACE program eligible individual enrolled under the agreement under this section in the same manner and from the same sources as payments are made to a Medicare+Choice organization under section 1853 (or, for periods beginning before January 1, 1999, to an eligible organization under a risk-sharing contract under section 1876). Such payments shall be subject to adjustment in the manner described in section 1853(a)(2) or section 1876(a)(1)(E), as the case may be.
(2) Capitation amount.—The capitation amount to be applied under this subsection for a provider for a contract year shall be an amount specified in the PACE program agreement for the year. Such amount shall be based upon payment rates established for purposes of payment under section 1853 (or, for periods before January 1, 1999, for purposes of risk-sharing contracts under section 1876) and shall be adjusted to take into account the comparative frailty of PACE enrollees and such other factors as the Secretary determines to be appropriate. Such amount under such an agreement shall be computed in a manner so that the total payment level for all PACE program eligible individuals enrolled under a program is less than the projected payment under this title for a comparable population not enrolled under a PACE program.
(3) Capitation rates determined without regard to the phase-out of the indirect costs of medical education from the annual medicare advantage capitation rate.—Capitation amounts under this subsection shall be determined without regard to the application of section 1853(k)(4).
(e) Pace Program Agreement.—
(A) In general.—The Secretary, in close cooperation with the State administering agency, shall establish procedures for entering into, extending, and terminating PACE program agreements for the operation of PACE programs by entities that meet the requirements for a PACE provider under this section, section 1934, and regulations.
(B) Numerical limitation.—
(i) In general.—The Secretary shall not permit the number of PACE providers with which agreements are in effect under this section or under section 9412(b) of the Omnibus Budget Reconciliation Act of 1986 to exceed—Subclause (II) shall apply without regard to the actual number of agreements in effect as of a previous anniversary date.
(I) 40 as of the date of the enactment of this section; or
(II) as of each succeeding anniversary of such date, the numerical limitation under this subparagraph for the preceding year plus 20.
Subclause (II) shall apply without regard to the actual number of agreements in effect as of a previous anniversary date.
(ii) Treatment of certain private, for-profit providers.—The numerical limitation in clause (i) shall not apply to a PACE provider that—
(I) is operating under a demonstration project waiver under subsection (h); or
(II) was operating under such a waiver and subsequently qualifies for PACE provider status pursuant to subsection (a)(3)(B)(ii).
(2) Service area and eligibility.—
(A) In general.—A PACE program agreement for a PACE program—
(i) shall designate the service area of the program;
(ii) may provide additional requirements for individuals to qualify as PACE program eligible individuals with respect to the program;
(iii) shall be effective for a contract year, but may be extended for additional contract years in the absence of a notice by a party to terminate and is subject to termination by the Secretary and the State administering agency at any time for cause (as provided under the agreement);
(iv) shall require a PACE provider to meet all applicable State and local laws and requirements; and
(v) shall contain such additional terms and conditions as the parties may agree to, so long as such terms and conditions are consistent with this section and regulations.
(B) Service area overlap.—In designating a service area under a PACE program agreement under subparagraph (A)(i), the Secretary (in consultation with the State administering agency) may exclude from designation an area that is already covered under another PACE program agreement, in order to avoid unnecessary duplication of services and avoid impairing the financial and service viability of an existing program.
(3) Data collection; development of outcome measures.—
(A) Data collection.—
(i) In general.—Under a PACE program agreement, the PACE provider shall—
(I) collect data;
(II) maintain, and afford the Secretary and the State administering agency access to, the records relating to the program, including pertinent financial, medical, and personnel records; and
(III) make available to the Secretary and the State administering agency reports that the Secretary finds (in consultation with State administering agencies) necessary to monitor the operation, cost, and effectiveness of the PACE program under this section and section 1934.
(ii) Requirements during trial period.—During the first 3 years of operation of a PACE program (either under this section or under a PACE demonstration waiver program), the PACE provider shall provide such additional data as the Secretary specifies in regulations in order to perform the oversight required under paragraph (4)(A).
(B) Development of outcome measures.—Under a PACE program agreement, the PACE provider, the Secretary, and the State administering agency shall jointly cooperate in the development and implementation of health status and quality of life outcome measures with respect to PACE program eligible individuals.
(A) Annual, close oversight during trial period.—During the trial period (as defined in subsection(a)(9))with respect to a PACE program operated by a PACE provider, the Secretary (in cooperation with the State administering agency) shall conduct a comprehensive annual review of the operation of the PACE program by the provider in order to assure compliance with the requirements of this section and regulations. Such a review shall include—
(i) an on–site visit to the program site;
(ii) comprehensive assessment of a provider’s fiscal soundness;
(iii) comprehensive assessment of the provider’s capacity to provide all PACE services to all enrolled participants;
(iv) detailed analysis of the entity’s substantial compliance with all significant requirements of this section and regulations; and
(v) any other elements the Secretary or State administering agency considers necessary or appropriate.
(B) Continuing oversight.—After the trial period, the Secretary (in cooperation with the State administering agency) shall continue to conduct such review of the operation of PACE providers and PACE programs as may be appropriate, taking into account the performance level of a provider and compliance of a provider with all significant requirements of this section and regulations.
(C) Disclosure.—The results of reviews under this paragraph shall be reported promptly to the PACE provider, along with any recommendations for changes to the provider’s program, and shall be made available to the public upon request.
(5) Termination of pace provider agreements.—
(A) In general.—Under regulations—
(i) the Secretary or a State administering agency may terminate a PACE program agreement for cause; and
(ii) a PACE provider may terminate an agreement after appropriate notice to the Secretary, the State agency, and enrollees.
(B) Causes for termination.—In accordance with regulations establishing procedures for termination of PACE program agreements, the Secretary or a State administering agency may terminate a PACE program agreement with a PACE provider for, among other reasons, the fact that—
(i) the Secretary or State administering agency determines that—
(I) there are significant deficiencies in the quality of care provided to enrolled participants; or
(ii) the entity has failed to develop and successfully initiate, within 30 days of the date of the receipt of written notice of such a determination, a plan to correct the deficiencies, or has failed to continue implementation of such a plan.
(C) Termination and transition procedures.—An entity whose PACE provider agreement is terminated under this paragraph shall implement the transition procedures required under subsection (a)(2)(C).
(6) Secretary’s oversight; enforcement authority.—
(A) In general.—Under regulations, if the Secretary determines (after consultation with the State administering agency) that a PACE provider is failing substantially to comply with the requirements of this section and regulations, the Secretary (and the State administering agency) may take any or all of the following actions:
(i) Condition the continuation of the PACE program agreement upon timely execution of a corrective action plan.
(ii) Withhold some or all further payments under the PACE program agreement under this section or section 1934 with respect to PACE program services furnished by such provider until the deficiencies have been corrected.
(iii) Terminate such agreement.
(B) Application of intermediate sanctions.—Under regulations, the Secretary may provide for the application against a PACE provider of remedies described in section 1857(g)(2) (or, for periods before January 1, 1999, section 1876(i)(6)(B)) or 1903(m)(5)(B) in the case of violations by the provider of the type described in section 1857(g)(1) (or section 1876(i)(6)(A) for such periods) or 1903(m)(5)(A), respectively (in relation to agreements, enrollees, and requirements under this section or section 1934, respectively).
(7) Procedures for termination or imposition of sanctions.—Under regulations, the provisions of section 1857(h) (or for periods before January 1, 1999, section 1876(i)(9)) shall apply to termination and sanctions respecting a PACE program agreement and PACE provider under this subsection in the same manner as they apply to a termination and sanctions with respect to a contract and a Medicare+Choice organization under part D (or for such periods an eligible organization under section 1876).
(8) Timely consideration of applications for pace program provider status.—In considering an application for PACE provider program status, the application shall be deemed approved unless the Secretary, within 90 days after the date of the submission of the application to the Secretary, either denies such request in writing or informs the applicant in writing with respect to any additional information that is needed in order to make a final determination with respect to the application. After the date the Secretary receives such additional information, the application shall be deemed approved unless the Secretary, within 90 days of such date, denies such request.
(2) Use of pace protocol.—
(A) In general.—In issuing such regulations, the Secretary shall, to the extent consistent with the provisions of this section, incorporate the requirements applied to PACE demonstration waiver programs under the PACE protocol.
(B) Flexibility.—In order to provide for reasonable flexibility in adapting the PACE service delivery model to the needs of particular organizations (such as those in rural areas or those that may determine it appropriate to use nonstaff physicians according to State licensing law requirements) under this section and section 1934, the Secretary (in close consultation with State administering agencies) may modify or waive provisions of the PACE protocol so long as any such modification or waiver is not inconsistent with and would not impair the essential elements, objectives, and requirements of this section, but may not modify or waive any of the following provisions:
(i) The focus on frail elderly qualifying individuals who require the level of care provided in a nursing facility.
(ii) The delivery of comprehensive, integrated acute and long-term care services.
(iii) The interdisciplinary team approach to care management and service delivery.
(iv) Capitated, integrated financing that allows the provider to pool payments received from public and private programs and individuals.
(v) The assumption by the provider of full financial risk.
(C) Continuation of modifications or waivers of operational requirements under demonstration status.—If a PACE program operating under demonstration authority has contractual or other operating arrangements which are not otherwise recognized in regulation and which were in effect on July 1, 2000, the Secretary (in close consultation with, and with the concurrence of, the State administering agency) shall permit any such program to continue such arrangements so long as such arrangements are found by the Secretary and the State to be reasonably consistent with the objectives of the PACE program.
(3) Application of certain additional beneficiary and program protections.—
(A) In general.—In issuing such regulations and subject to subparagraph (B), the Secretary may apply with respect to PACE programs, providers, and agreements such requirements of part D (or, for periods before January 1, 1999, section 1876) and sections 1903(m) and 1932 relating to protection of beneficiaries and program integrity as would apply to Medicare+Choice organizations under part D (or for such periods eligible organizations under risk-sharing contracts under section 1876) and to medicaid managed care organizations under prepaid capitation agreements under section 1903(m).
(B) Considerations.—In issuing such regulations, the Secretary shall—
(ii) not include any requirement that conflicts with carrying out PACE programs under this section; and
(iii) not include any requirement restricting the proportion of enrollees who are eligible for benefits under this title or title XIX.
(4) Construction.—Nothing in this subsection shall be construed as preventing the Secretary from including in regulations provisions to ensure the health and safety of individuals enrolled in a PACE program under this section that are in addition to those otherwise provided under paragraphs (2) and (3).
(g) Waivers of Requirements.—With respect to carrying out a PACE program under this section, the following requirements of this title (and regulations relating to such requirements) are waived and shall not apply:
(h) Demonstration Project for For–profit Entities.—
(1) In general.—In order to demonstrate the operation of a PACE program by a private, for-profit entity, the Secretary (in close consultation with State administering agencies) shall grant waivers from the requirement under subsection (a)(3) that a PACE provider may not be a for-profit, private entity.
(2) Similar terms and conditions.—
(A) In general.—Except as provided under subparagraph (B), and paragraph (1), the terms and conditions for operation of a PACE program by a provider under this subsection shall be the same as those for PACE providers that are nonprofit, private organizations.
(B) Numerical limitation.—The number of programs for which waivers are granted under this subsection shall not exceed 10. Programs with waivers granted under this subsection shall not be counted against the numerical limitation specified in subsection (e)(1)(B).
(j) Miscellaneous Provisions.—Nothing in this section or section 1934 shall be construed as preventing a PACE provider from entering into contracts with other governmental or nongovernmental payers for the care of PACE program eligible individuals who are not eligible for benefits under part A, or enrolled under part B, or eligible for medical assistance under title XIX.
 See Vol. II, P.L. 109-171, §5302, with respect to the Rural Provider PACE Grant Program.
 See Vol. II, P. L. 83-591, §501(c)(3).
 See Vol. II, P.L. 99-509, §9412(b).