SubtitleI — Health Hippo

SubtitleI

Note: this is a hand enrollment pursuant to Public Law 105-32.
H.R.2015
One Hundred Fifth Congress
of the
United States of America
AT THE FIRST SESSION

Begun and held at the City of Washington on Tuesday, the
seventh day of January, one thousand nine hundred and ninety-seven

An Act

Subtitle I–Programs of All-Inclusive
Care for the Elderly (PACE)

Sec. 4801. Coverage of PACE under the
medicare program.
Sec. 4802. Establishment of PACE program as
medicaid State option.
Sec. 4803. Effective date; transition.
Sec. 4804. Study and reports.

SEC. 4801. COVERAGE OF PACE UNDER THE MEDICARE PROGRAM.

Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is
amended by adding at the end the following new section:

~ payments to, and coverage of benefits under, programs
of all- inclusive care for the elderly (pace) ~

Sec. 1894. (a) Receipt of Benefits Through Enrollment in PACE
Program; Definitions for PACE Program Related Terms.– (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.

(10) Regulations.–For purposes of this section, the term
‘regulations’ refers to interim final or final regulations
promulgated under subsection (f) to carry out this section and
section 1934.

(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.

(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.

(e) PACE Program Agreement.– (1) Requirement.– (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–

(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.

(4) Oversight.– (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 provider has failed to
comply substantially with conditions for a program or provider under
this section or section 1934; and

(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 C (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.

(f) Regulations.– (1) In general.–The Secretary shall issue
interim final or final regulations to carry out this section and
section 1934.

(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.

(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 C
(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
C (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– (i) take into account the differences between populations
served and benefits provided under this section and under part C (or,
for periods before January 1, 1999, section 1876) and section
1903(m); (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: (1) Section 1812, insofar as it limits coverage of
institutional services.

(2) Sections 1813, 1814, 1833, and 1886, insofar as such sections
relate to rules for payment for benefits.

(3) Sections 1814(a)(2)(B), 1814(a)(2)(C), and 1835(a)(2)(A),
insofar as they limit coverage of extended care services or home
health services.

(4) Section 1861(i), insofar as it imposes a 3-day prior
hospitalization requirement for coverage of extended care services.

(5) Paragraphs (1) and (9) of section 1862(a), insofar as they may
prevent payment for PACE program services to individuals enrolled
under PACE programs.

(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).

(i) 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.”.

SEC. 4802. ESTABLISHMENT OF PACE PROGRAM AS MEDICAID STATE OPTION.

(a) In General.–Title XIX is amended– (1) in section 1905(a) (42
U.S.C. 1396d(a)), as amended by section 4702(a)(1)– (A) by striking
“and” at the end of paragraph (25); (B) by redesignating paragraph
(26) as paragraph (27); and (C) by inserting after paragraph (25) the
following new paragraph: (26) services furnished under a PACE program
under section 1934 to PACE program eligible individuals enrolled
under the program under such section; and”; (2) by redesignating
section 1934, as redesignated by section 4732, as section 1935; and
(3) by inserting after section 1933, as added by such section, the
following new section:

~ program of all-inclusive care for the elderly (pace)
~

Sec. 1934. (a) State Option.– (1) In general.–A State may elect
to provide medical assistance under this section with respect to PACE
program services to PACE program eligible individuals who are
eligible for medical assistance under the State plan and who are
enrolled in a PACE program under a PACE program agreement. Such
individuals need not be eligible for benefits under part A, or
enrolled under part B, of title XVIII to be eligible to enroll under
this section. In the case of an individual enrolled with a PACE
program pursuant to such an election– (A) the individual shall
receive benefits under the plan solely through such program, and (B)
the PACE provider shall receive payment in accordance with the PACE
program agreement for provision of such benefits.

A State may establish a numerical limit on the number of
individuals who may be enrolled in a PACE program under a PACE
program agreement.

(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.

(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 1894
(if applicable), and regulations promulgated to carry out such
sections, among the PACE provider, the Secretary, and a State
administering agency for the operation of a PACE program by the
provider under such sections.

(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 this title in the State) responsible for
administering PACE program agreements under this section and section
1894 in the State.

(10) Regulations.–For purposes of this section, the term
‘regulations’ refers to interim final or final regulations
promulgated under subsection (f) to carry out this section and
section 1894.

(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, regardless of source of
payment and directly or under contracts with other entities, at a
minimum– (i) all items and services covered under title XVIII (for
individuals enrolled under section 1894) and all items and services
covered under this title, 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 such title or this 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 designed for the
protection of patients.

(c) Eligibility Determinations.– (1) In general.–The
determination of– (A) whether an individual is a PACE program
eligible individual shall be made under and in accordance with the
PACE program agreement, and (B) who is entitled to medical assistance
under this title shall be made (or who is not so entitled, may be
made) by the State administering agency.

(B) Exception.–The requirement of annual reevaluation under
subparagraph (A) may be waived during a period in accordance with
regulations in those cases in which 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.

(B) Limitations on disenrollment.– (i) In general.–Regulations
promulgated by the Secretary under this section and section 1894, and
the PACE program agreement, shall provide that the PACE program may
not disenroll a PACE program eligible individual except–

(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 an amount, specified under the PACE
agreement, which is less than the amount that would otherwise have
been made under the State plan if the individuals were not so
enrolled 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. The payment under this section shall be
in addition to any payment made under section 1894 for individuals
who are enrolled in a PACE program under such section.

(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.

(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) submit to the Secretary and the State
administering agency such reports as the Secretary finds (in
consultation with State administering agencies) necessary to monitor
the operation, cost, and effectiveness of the PACE program.

(4) Oversight.– (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 onsite 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
the State administering agency considers necessary or appropriate.

(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 such an agreement after
appropriate notice to the Secretary, the State administering agency,
and enrollees.

(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).

(ii) Withhold some or all further payments under the PACE program
agreement under this section or section 1894 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 1876(i)(6)(A) for such periods) or 1903(m)(5)(A),
respectively (in relation to agreements, enrollees, and requirements
under section 1894 or this section, 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 C of title XVIII (or for such periods an
eligible organization under section 1876).

(f) Regulations.– (1) In general.–The Secretary shall issue
interim final or final regulations to carry out this section and
section 1894.

(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
1894, 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.

(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 C
of title XVIII (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 such part C (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– (i) take into account the differences between populations
served and benefits provided under this section and under part C of
title XVIII (or, for periods before January 1, 1999, section 1876)
and section 1903(m); (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 XVIII.

(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) shall not apply: (1)
Section 1902(a)(1), relating to any requirement that PACE programs or
PACE program services be provided in all areas of a State.

(2) Section 1902(a)(10), insofar as such section relates to
comparability of services among different population groups.

(3) Sections 1902(a)(23) and 1915(b)(4), relating to freedom of
choice of providers under a PACE program.

(4) Section 1903(m)(2)(A), insofar as it restricts a PACE provider
from receiving prepaid capitation payments.

(5) Such other provisions of this title that, as added or amended
by the Balanced Budget Act of 1997, the Secretary determines are
inapplicable to carrying out a PACE program under this section.

(i) Post-Eligibility Treatment of Income.–A State may provide for
post-eligibility treatment of income for individuals enrolled in PACE
programs under this section in the same manner as a State treats
post-eligibility income for individuals receiving services under a
waiver under section 1915(c).

(j) Miscellaneous Provisions.–Nothing in this section or section
1894 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, of title XVIII
or eligible for medical assistance under this title.”.

(b) Conforming Amendments.– (1) Section 1924(a)(5) (42 U.S.C.
1396r-5(a)(5)) is amended– (A) in the heading, by striking “from
organizations receiving certain waivers” and inserting “under pace
programs”; and (B) by striking “from any organization” and all that
follows and inserting “under a PACE demonstration waiver program (as
defined in section 1934(a)(7)) or under a PACE program under section
1934 or 1894.”.

(2) Section 1903(f)(4)(C) (42 U.S.C. 1396b(f)(4)(C)) is amended by
inserting “or who is a PACE program eligible individual enrolled in a
PACE program under section 1934,” after “section 1902(a)(10)(A),”.

SEC. 4803. EFFECTIVE DATE; TRANSITION.

(a) Timely Issuance of Regulations; Effective Date.–The Secretary
of Health and Human Services shall promulgate regulations to carry
out this subtitle in a timely manner. Such regulations shall be
designed so that entities may establish and operate PACE programs
under sections 1894 and 1934 of the Social Security Act (as added by
sections 4801 and 4802 of this subtitle) for periods beginning not
later than 1 year after the date of the enactment of this Act.

(b) Expansion and Transition for PACE Demonstration Project
Waivers.– (1) Expansion in current number and extension of
demonstration projects.–Section 9412(b) of the Omnibus Budget
Reconciliation Act of 1986, as amended by section 4118(g) of the
Omnibus Budget Reconciliation Act of 1987, is amended– (A) in
paragraph (1), by inserting before the period at the end the
following: , except that the Secretary shall grant waivers of such
requirements to up to the applicable numerical limitation specified
in sections 1894(e)(1)(B) and 1934(e)(1)(B) of the Social Security
Act”; and (B) in paragraph (2)– (i) in subparagraph (A), by striking
“, including permitting the organization to assume progressively
(over the initial 3-year period of the waiver) the full financial
risk”; and (ii) in subparagraph (C), by adding at the end the
following: In granting further extensions, an organization shall not
be required to provide for reporting of information which is only
required because of the demonstration nature of the project.”

(2) Elimination of replication requirement.–Section 9412(b)(2)(B)
of such Act, as so amended, shall not apply to waivers granted under
such section after the date of the enactment of this Act.

(3) Timely consideration of applications.–In considering an
application for waivers under such section before the effective date
of the repeals under subsection (d), subject to the numerical
limitation under the amendment made by paragraph (1), the application
shall be deemed approved unless the Secretary of Health and Human
Services, within 90 days after the date of its submission to the
Secretary, either denies such request in writing or informs the
applicant in writing with respect to any additional information which
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.

(c) Priority and Special Consideration in Application.–During the
3-year period beginning on the date of the enactment of this Act: (1)
Provider status.–The Secretary of Health and Human Services shall
give priority in processing applications of entities to qualify as
PACE programs under section 1894 or 1934 of the Social Security Act–
(A) first, to entities that are operating a PACE demonstration waiver
program (as defined in sections 1894(a)(7) and 1934(a)(7) of such
Act); and (B) then to entities that have applied to operate such a
program as of May 1, 1997.

(2) New waivers.–The Secretary shall give priority, in the
awarding of additional waivers under section 9412(b) of the Omnibus
Budget Reconciliation Act of 1986– (A) to any entities that have
applied for such waivers under such section as of May 1, 1997; and
(B) to any entity that, as of May 1, 1997, has formally contracted
with a State to provide services for which payment is made on a
capitated basis with an understanding that the entity was seeking to
become a PACE provider.

(3) Special consideration.–The Secretary shall give special
consideration, in the processing of applications described in
paragraph (1) and the awarding of waivers described in paragraph (2),
to an entity which as of May 1, 1997, through formal activities (such
as entering into contracts for feasibility studies) has indicated a
specific intent to become a PACE provider.

(d) Repeal of Current PACE Demonstration Project Waiver
Authority.– (1) In general.–Subject to paragraph (2), the following
provisions of law are repealed: (A) Section 603(c) of the Social
Security Amendments of 1983 (Public Law 98-21).

(B) Section 9220 of the Consolidated Omnibus Budget Reconciliation
Act of 1985 (Public Law 99-272).

(2) Delay in application to current waivers.– (A) In
general.–Subject to subparagraph (B), in the case of waivers granted
with respect to a PACE program before the initial effective date of
regulations described in subsection (a), the repeals made by
paragraph (1) shall not apply until the end of a transition period
(of up to 24 months) that begins on the initial effective date of
such regulations, and that allows sufficient time for an orderly
transition from demonstration project authority to general authority
provided under the amendments made by this subtitle.

(B) State option to seek extension of current period.–A State may
elect to maintain the PACE programs which (as of the date of the
enactment of this Act) were operating in the State under the
authority described in paragraph (1) until a date (specified by the
State) that is not later than 3 years after the initial effective
date of regulations described in subsection (a). If a State makes
such an election, the repeals made by paragraph (1) shall not apply
to the programs until the date so specified, but only so long as such
programs continue to operate under the same terms and conditions as
apply to such programs as of the date of the enactment of this Act,
and subparagraph (A) shall not apply to such programs.

SEC. 4804. STUDY AND REPORTS.

(a) Study.– (1) In general.–The Secretary of Health and Human
Services (in close consultation with State administering agencies, as
defined in sections 1894(a)(8) and 1934(a)(8) of the Social Security
Act) shall conduct a study of the quality and cost of providing PACE
program services under the medicare and medicaid programs under the
amendments made by this subtitle.

(2) Study of private, for-profit providers.–Such study shall
specifically compare the costs, quality, and access to services by
entities that are private, for-profit entities operating under
demonstration projects waivers granted under sections 1894(h) and
1934(h) of the Social Security Act with the costs, quality, and
access to services of other PACE providers.

(b) Report.– (1) In general.–Not later than 4 years after the
date of the enactment of this Act, the Secretary shall provide for a
report to Congress on the impact of such amendments on quality and
cost of services. The Secretary shall include in such report such
recommendations for changes in the operation of such amendments as
the Secretary deems appropriate.

(2) Treatment of private, for-profit providers.–The report shall
include specific findings on whether any of the following findings is
true: (A) The number of covered lives enrolled with entities
operating under demonstration project waivers under sections 1894(h)
and 1934(h) of the Social Security Act is fewer than 800 (or such
lesser number as the Secretary may find statistically sufficient to
make determinations respecting findings described in the succeeding
subparagraphs).

(B) The population enrolled with such entities is less frail than
the population enrolled with other PACE providers.

(C) Access to or quality of care for individuals enrolled with
such entities is lower than such access or quality for individuals
enrolled with other PACE providers.

(D) The application of such section has resulted in an increase in
expenditures under the medicare or medicaid programs above the
expenditures that would have been made if such section did not apply.

(c) Information Included in Annual Recommendations.–The Medicare
Payment Advisory Commission shall include in its annual report under
section 1805(b)(1)(B) of the Social Security Act recommendations on
the methodology and level of payments made to PACE providers under
sections 1894(d) and 1934(d) of such Act and on the treatment of
private, for- profit entities as PACE providers.