42 U.S.C. § 1395eee — Payments to, and coverage of benefits under, programs of all-inclusive care for elderly (PACE)

(a) PACE enrollment and definitions. (1) Benefits through enrollment. A person entitled to Part A benefits or enrolled in Part B who is a PACE program eligible individual for a PACE program offered under a PACE program agreement may enroll. While enrolled, and subject to regulations, the person must receive benefits under this subchapter only through that program, and the PACE provider is entitled to payment under this section and the agreement for providing those benefits. (2) “PACE program.” A PACE program is an all-inclusive-care program for elderly people that meets these requirements: the operating entity is a PACE provider; the program gives comprehensive health care services to eligible individuals under its agreement and regulations; and if enrollment ends for any reason—including loss of eligibility, termination of the agreement, or another reason—the program helps the person obtain needed transitional care through suitable referrals and makes the person’s medical records available to new providers. (3) “PACE provider.” A PACE provider is an entity that, subject to subparagraph (B), is a public entity or a distinct part of one, or is a private nonprofit entity organized for charitable purposes under section 501(c)(3) of the Internal Revenue Code, and has a PACE program agreement for operating a PACE program. The public-or-nonprofit requirement does not apply to an entity covered by a demonstration waiver under subsection (h). After the report under section 4804(b) of the Balanced Budget Act of 1997 is submitted, it also does not apply unless the Secretary decides that a finding described in section 4804(b)(2)(A), (B), (C), or (D) is true. (4) “PACE program agreement.” This means an agreement, consistent with this section, section 1396u-4 when applicable, and regulations, between the provider and the Secretary, or between the provider and a State administering agency, to operate a PACE program. (5) “PACE program eligible individual.” For a particular PACE program, this means a person who is at least 55 years old; subject to subsection (c)(4), is determined under subsection (c) to need the level of care required by the State Medicaid plan for nursing-facility coverage; lives in the program’s service area; and meets any additional eligibility conditions in the agreement under subsection (e)(2)(A)(ii). (6) “PACE protocol.” This means the Protocol for the Program of All-inclusive Care for the Elderly (PACE) published by On Lok, Inc., as of April 14, 1995, or a successor protocol agreed to by the Secretary and On Lok, Inc. (7) “PACE demonstration waiver program.” This means a demonstration program under section 603(c) of the Social Security Amendments of 1983, as extended by section 9220 of the Consolidated Omnibus Budget Reconciliation Act of 1985, or under section 9412(b) of the Omnibus Budget Reconciliation Act of 1986, as those sections existed before repeal. (8) “State administering agency.” For a PACE program in a State, this is the State agency responsible for administering PACE agreements under this section and section 1396u-4. It may be the single agency responsible for the State’s plan under subchapter XIX. (9) “Trial period.” For a provider operating under a PACE agreement, this means the first 3 contract years under that agreement. Each contract year, including one before this section took effect, during which an entity operated a PACE demonstration waiver program counts as a contract year in which it operated a PACE program under an agreement. (10) “Regulations.” This means interim final or final regulations issued under subsection (f) to carry out this section and section 1396u-4. (b) Benefits and safeguards. (1) Under its agreement, a PACE provider must provide eligible enrollees, regardless of who pays and directly or through contracts, all items and services covered under this subchapter and subchapter XIX, without limits or conditions on amount, duration, or scope and without deductibles, copayments, coinsurance, or other cost sharing that would otherwise apply. It must also provide additional items and services required by regulations based on the PACE protocol. It must make necessary covered items and services available 24 hours a day every day of the year. It must deliver services through a complete, multidisciplinary health and social-services system that integrates acute and long-term care under regulations. It must identify covered items and services it will not provide directly and arrange for them through contracts meeting regulatory requirements. (2) The agreement must require a written quality-assurance and improvement plan and procedures implementing it, as regulations require. It must also require written safeguards for participants’ rights, including a patient bill of rights and grievance and appeal procedures, consistent with regulations and other patient-protection requirements of this subchapter and Federal and State law. (3)(A) The rule in section 1395w-22(k)(1) limiting balance billing by noncontract physicians and other entities for services covered under this subchapter applies in the same way to PACE providers, their enrolled eligible individuals, and physicians or entities without a payment contract with respect to those individuals. (B) Section 1395cc(a)(1)(O) contains the related rule limiting balance billing against PACE providers for covered services furnished by noncontract providers. (4) Section 1396a(a)(66) contains rules limiting payments to providers participating in a State Medicaid plan that have no payment agreement with a PACE provider for services covered by Medicaid but not by this subchapter when those services are given to that provider’s enrollees. (c) Eligibility determinations. (1) Eligibility must be decided under the PACE agreement. For a person entitled to Medicaid assistance under subchapter XIX, the State administering agency must make the decision; for a person not so entitled, it may make the decision. (2) For payment under this section, a person is not eligible unless the Secretary or State agency determines under regulations that the person’s health status is comparable to the health status of people who took part in PACE demonstration waiver programs. The decision must use health-status and related information, such as diagnoses and measures of daily activities, instrumental daily activities, and cognitive impairment, from a uniform minimum data set that PACE providers collect about potential enrollees. (3)(A) Subject to subparagraph (B), the nursing-facility level-of-care decision in subsection (a)(5)(B) must be reevaluated at least once a year. (B) Regulations may waive annual reevaluation for a period when the State agency decides there is no reasonable expectation of improvement or significant change during that period because of the person’s severe chronic condition or degree of impaired functional capacity. (4) A person may be treated as continuing to be eligible despite a finding that the person no longer meets the nursing-facility level-of-care requirement if regulations provide that, without continued PACE coverage, the person would reasonably be expected to meet it within the next 6 months. (5)(A) Enrollment and disenrollment must follow regulations and the agreement, and must allow an enrollee to leave voluntarily, without cause, at any time. (B)(i) Regulations and the agreement may allow the program to disenroll an eligible individual only for timely failure to pay premiums, if applicable, or for disruptive or threatening behavior as defined in regulations developed in close consultation with State agencies. (ii) Except as regulations allow for disruptive or threatening behavior, the program may not disenroll someone for noncompliant behavior related to a mental or physical condition. “Noncompliant behavior” includes repeatedly not following medical advice and repeatedly missing appointments. (iii) A proposed involuntary disenrollment must receive timely review and a final decision by the Secretary or State agency, as applicable, before it takes effect. (d) Capitated payments. (1) Except as this subsection or regulations provide, the Secretary must make prospective monthly capitation payments for each enrolled eligible individual to a provider with an agreement. The payments must come from the same sources and be made in the same way as payments to a Medicare+Choice organization under section 1395w-23, or, for periods before January 1, 1999, to an eligible organization under a risk-sharing contract under section 1395mm. The payments are adjusted as section 1395w-23(a)(2) or section 1395mm(a)(1)(E), as applicable, provides. (2) For each provider and contract year, the agreement must state the capitation amount. It must be based on payment rates under section 1395w-23, or before January 1, 1999, risk-sharing rates under section 1395mm, and adjusted for the relative frailty of PACE enrollees and other factors the Secretary finds appropriate. It must be calculated so total payments for all enrollees are less than projected payments under this subchapter for a comparable population not enrolled in PACE. (3) Capitation amounts must be set without applying section 1395w-23(k)(4), which concerns phasing out indirect medical-education costs from annual Medicare Advantage capitation rates. (e) PACE program agreements. (1)(A) The Secretary, working closely with the State agency, must establish procedures for entering into, extending, and ending agreements for entities that meet the provider requirements of this section, section 1396u-4, and regulations. (B)(i) The number of providers with agreements under this section or section 9412(b) of the 1986 Act may not exceed 40 on August 5, 1997. On each later anniversary, the limit is the prior year’s limit plus 20. The later limit applies regardless of how many agreements were actually in effect on an earlier anniversary. (ii) That limit does not apply to a provider operating under a subsection (h) demonstration waiver or to one that operated under such a waiver and later qualified as a provider under subsection (a)(3)(B)(ii). (2)(A) An agreement must identify the program’s service area; may add eligibility requirements; lasts for one contract year but may be extended unless a party gives notice of termination and may be terminated at any time for cause by the Secretary and State agency as the agreement provides; must require compliance with all applicable State and local laws; and may include other terms agreed by the parties if consistent with this section and regulations. (B) When designating a service area, the Secretary, consulting the State agency, may leave out an area already covered by another agreement to avoid unnecessary duplicate services and harm to an existing program’s financial or service viability. (3)(A) The provider must collect data; keep records about the program, including financial, medical, and personnel records, and give the Secretary and State agency access; and provide reports the Secretary finds necessary, in consultation with State agencies, to monitor operation, cost, and effectiveness under this section and section 1396u-4. (B) During the first 3 years of a program, whether operated under this section or a demonstration waiver, the provider must provide additional data required by regulations for the oversight in paragraph (4)(A). (B) The provider, Secretary, and State agency must cooperate in developing and using health-status and quality-of-life outcome measures for eligible individuals. (4)(A) During the trial period, the Secretary, working with the State agency, must conduct a comprehensive annual review to ensure compliance with this section and regulations. The review must include an on-site visit; a complete assessment of fiscal soundness; a complete assessment of the provider’s ability to provide all PACE services to all enrollees; detailed analysis of substantial compliance with all significant requirements; and any other elements the Secretary or State agency considers necessary or appropriate. (B) After the trial period, the Secretary and State agency must continue appropriate reviews, considering the provider’s performance and compliance with significant requirements. (C) Review results and recommendations for program changes must be promptly reported to the provider and made available to the public on request. (5)(A) Regulations may allow the Secretary or State agency to terminate an agreement for cause. They may allow a provider to terminate after appropriate notice to the Secretary, State agency, and enrollees. (B) Under termination procedures, the Secretary or State agency may terminate for reasons including a determination that care quality has significant deficiencies or that the provider has not substantially complied with provider or program conditions under this section or section 1396u-4, followed by the entity’s failure to develop and successfully begin a corrective plan within 30 days after written notice, or failure to keep implementing that plan. (C) A provider whose agreement ends must carry out the transition procedures required by subsection (a)(2)(C). (6)(A) If, after consulting the State agency, the Secretary finds substantial noncompliance, regulations may allow the Secretary and State agency to require timely execution of a corrective plan as a condition of continuing the agreement; withhold some or all further payments for services under this section or section 1396u-4 until deficiencies are fixed; terminate the agreement; or take all of these actions. (B) Regulations may apply to a provider the remedies described in section 1395w-27(g)(2) or, for earlier periods, section 1395mm(i)(6)(B), or section 1396b(m)(5)(B), when the provider violates the types of requirements described in the corresponding provisions of section 1395w-27(g)(1), section 1395mm(i)(6)(A), or section 1396b(m)(5)(A), in relation to this section or section 1396u-4. (7) Regulations must apply section 1395w-27(h), or for periods before January 1, 1999, section 1395mm(i)(9), to termination and sanctions involving PACE agreements and providers in the same way those provisions apply to Medicare+Choice contracts and organizations under Part C, or earlier eligible organizations under section 1395mm. (8) An application for PACE-provider status is treated as approved unless, within 90 days after submission, the Secretary denies it in writing or asks in writing for additional information. After receiving that information, the Secretary has another 90 days to deny the request; otherwise it is treated as approved. (f) Regulations. (1) The Secretary must issue interim final or final regulations to carry out this section and section 1396u-4. (2)(A) To the extent consistent with this section, the regulations must incorporate requirements used for demonstration waiver programs under the PACE protocol. (B) To allow reasonable flexibility for different organizations, including rural organizations and organizations using nonstaff physicians as State licensing law allows, the Secretary may, after close consultation with State agencies, modify or waive PACE-protocol provisions if doing so does not conflict with or impair this section’s essential elements, objectives, or requirements. The Secretary may not modify or waive the focus on frail elderly people who need nursing-facility-level care; comprehensive integrated acute and long-term services; the interdisciplinary team approach; capitated integrated financing that lets the provider pool payments from public and private programs and individuals; or the provider’s assumption of full financial risk. (C) If a demonstration-authorized program had contractual or other operating arrangements not otherwise recognized in regulations and in effect on July 1, 2000, the Secretary, with close consultation and the State agency’s agreement, must allow the program to continue them if the Secretary and State find them reasonably consistent with PACE objectives. (3)(A) Subject to subparagraph (B), regulations may apply to PACE programs, providers, and agreements beneficiary-protection and program-integrity requirements from Part C, earlier section 1395mm, section 1396b(m), and section 1396u-2 that would apply to Medicare+Choice organizations or Medicaid managed-care organizations under prepaid capitation agreements. (B) In doing so, the Secretary must consider differences in populations and benefits; may not include a requirement that conflicts with operating PACE; and may not restrict the proportion of enrollees eligible under this subchapter or subchapter XIX. (4) This subsection does not prevent regulations that add protections for the health and safety of PACE enrollees. (g) Waived requirements. For operating PACE, these requirements of this subchapter and related regulations do not apply: section 1395d to the extent it limits institutional-service coverage; sections 1395e, 1395f, 1395l, and 1395ww to the extent they concern payment rules; sections 1395f(a)(2)(B), 1395f(a)(2)(C), and 1395n(a)(2)(A) to the extent they limit extended-care or home-health coverage; section 1395x(i) to the extent it requires 3 days of prior hospitalization for extended-care coverage; and paragraphs (1) and (9) of section 1395y(a) to the extent they could prevent payment for PACE services to enrolled individuals. (h) Demonstration for for-profit entities. (1) To demonstrate a PACE program operated by a private for-profit entity, the Secretary, working closely with State agencies, must waive the subsection (a)(3) rule that a provider may not be private and for-profit. (2)(A) Except for paragraph (1) and the numerical rule in subparagraph (B), the terms for such a program must be the same as for private nonprofit providers. (B) No more than 10 programs may receive waivers under this subsection. Those programs do not count toward the limit in subsection (e)(1)(B). (i) Miscellaneous. Nothing in this section or section 1396u-4 prevents a PACE provider from contracting with other governmental or nongovernmental payers to care for eligible individuals who are not entitled to Part A, not enrolled in Part B, and not eligible for Medicaid assistance under subchapter XIX.