[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1464 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1464

To amend titles XVIII and XIX of the Social Security Act to expand and 
make permanent the availability of cost-effective, comprehensive acute 
 and long-term care services to frail elderly persons through Programs 
  of All-inclusive Care for the Elderly (PACE) under the Medicare and 
                           Medicaid programs.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 28, 1997

  Mr. Thomas (for himself, Mr. Cardin, Mr. Bilirakis, and Mr. Stark) 
 introduced the following bill; which was referred to the Committee on 
  Ways and Means, and in addition to the Committee on Commerce, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend titles XVIII and XIX of the Social Security Act to expand and 
make permanent the availability of cost-effective, comprehensive acute 
 and long-term care services to frail elderly persons through Programs 
  of All-inclusive Care for the Elderly (PACE) under the Medicare and 
                           Medicaid programs.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Programs of All-inclusive Care for 
the Elderly (PACE) Coverage Act of 1997''.

SEC. 2, COVERAGE OF PACE UNDER THE MEDICARE PROGRAM.

    (a) In General.--Title XVIII of the Social Security Act 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 accordance with this section 
                        and such agreement for provision of such 
                        benefits.
            ``(2) PACE program defined.--For purposes of this section 
        and section 1833, 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 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 5(b) of the Programs of All-inclusive 
                        Care for the Elderly (PACE) Coverage Act of 
                        1997 is submitted, unless the Secretary 
                        determines that any of the findings described 
                        in subparagraph (A), (B), or (C) 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 1933, and regulations promulgated to carry out such 
        sections, between the PACE provider, the Secretary, 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.
            ``(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 1933 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 regulations promulgated under 
        subsection (f) to carry out this section and section 1933.
    ``(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 
                        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 
                        generally 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 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 health status has been 
        determined, 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 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 advanced age, severity 
                of the advanced age, 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.--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.
    ``(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 an eligible organization under a risk-
        sharing contract under section 1876. Such payments shall be 
        subject to adjustment in the manner described in section 
        1876(a)(1)(E).
            ``(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 under section 1876 for risk-sharing contracts 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 1933, 
                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 have such additional terms and 
                        conditions as the parties may agree to 
                        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.--
                    ``(A) 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 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 Act.
                    ``(B) Requirements during trial period.--During the 
                first three 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).
            ``(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 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 such 
                        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 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 1933; and
                            ``(ii) the entity has failed to develop and 
                        successfully initiate, within 30 days after the 
                        date of notice of such a determination, and 
                        continue implementation of a plan to correct 
                        the deficiencies.
                    ``(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 1933 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 1876(i)(6)(B) or 1903(m)(5)(B) in 
                the case of violations by the provider of the type 
                described in section 1876(i)(6)(A) or 1903(m)(5)(A), 
                respectively (in relation to agreements, enrollees, and 
                requirements under this section or section 1933, 
                respectively).
            ``(7) Procedures for termination or imposition of 
        sanctions.--Under regulations, the provisions of 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 an eligible 
        organization under section 1876.
    ``(f) Regulations.--
            ``(1) In general.--The Secretary shall issue regulations to 
        carry out this section and section 1933.
            ``(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.--The Secretary (in close 
                consultation with State administering agencies) may 
                modify or waive such provisions of the PACE protocol 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 non-
                staff physicians accordingly to State licensing law 
                requirements) under this section and section 1933 where 
                such flexibility is not inconsistent with and would not 
                impair the essential elements, objectives, and 
                requirements of the this section, including--
                            ``(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; and
                            ``(v) the assumption by the provider over 
                        time 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 sections 1876 and 
                1903(m) relating to protection of beneficiaries and 
                program integrity as would apply to eligible 
                organizations under risk-sharing contracts under 
                section 1876 and to health maintenance 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 sections 
                        1876 and 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
    ``(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) Sections 1862(a)(1) and 1862(a)(9), 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.--
            ``(1) Construction.--Nothing in this section or section 
        1933 shall be construed as preventing a PACE provider from 
        entering into contracts with 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. 3. ESTABLISHMENT OF PACE PROGRAM AS MEDICAID STATE OPTION.

    (a) In General.--Title XIX of the Social Security Act is amended--
            (1) in section 1905(a) (42 U.S.C. 1396d(a))--
                    (A) by striking ``and'' at the end of paragraph 
                (24);
                    (B) by redesignating paragraph (25) as paragraph 
                (26); and
                    (C) by inserting after paragraph (24) the following 
                new paragraph:
            ``(25) services furnished under a PACE program under 
        section 1933 to PACE program eligible individuals enrolled 
        under the program under such section; and'';
            (2) by redesignating section 1933 as section 1934, and
            (3) by inserting after section 1932 the following new 
        section:

``SEC. 1933. PROGRAM OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE).

    ``(a) 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 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.
            ``(2) Benefits through enrollment in pace program.--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.
            ``(3) Application of definitions.--The definitions of terms 
        under section 1894(a) shall apply under this section in the 
        same manner as they apply under section 1894.
    ``(b) Application of Medicare Terms and Conditions.--Except as 
provided in this section, the terms and conditions for the operation 
and participation of PACE program eligible individuals in PACE programs 
offered by PACE providers under PACE program agreements under section 
1894 shall apply for purposes of this section.
    ``(c) Adjustment in Payment Amounts.--
            ``(1) Capitation payment.--In the case of individuals 
        enrolled in a PACE program under this section, the amount of 
        payment under this section shall not be the amount calculated 
        under section 1894(d), but 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. 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.
            ``(2) Transition during trial period.--
                    ``(A) In general.--Consistent with regulations, a 
                PACE provider may elect to receive payment for a 
                portion of its allowable operating losses (as defined 
                in such regulation) during the trial period. Such 
                portion shall decrease over the duration of the trial 
                period.
                    ``(B) Payment under plan.--Payment under this 
                paragraph shall represent only the portion of such 
                losses attributable to State plans under this title.
                    ``(C) Use of payments.--Payments under this 
                paragraph may only be used in a manner specified in 
                regulations.
    ``(d) 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 receiving prepaid capitation payments.''.
    ``(e) 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).''.
    (b) Conforming Amendments.--
            (1) Section 1902(j) of such Act (42 U.S.C. 1396a(j)) is 
        amended by striking ``(25)'' and inserting ``(26)''.
            (2) Section 1924(a)(5) of such Act (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 subsection (a)(9) of 
                section 1933) or under a PACE program under such 
                section.''.
            (3) Section 1903(f)(4)(C) of such Act (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 1933'' after ``section 1902(a)(10)(A)''.

SEC. 4. EFFECTIVE DATE; TRANSITION.

    (a) Timely Issuance of Regulations; Effective Date.--The Secretary 
of Health and Human Services shall promulgate regulations to carry out 
this Act in a timely manner. Such regulations shall be designed so that 
entities may establish and operate PACE programs under sections 1894 
and 1933 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 of demonstration 
        projects.--Paragraph (1) of section 9412(b) of the Omnibus 
        Budget Reconciliation Act of 1986 is amended 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 section 
        1894(e)(1)(B) of the Social Security Act''.
            (2) Extension.--Paragraph (2)(C) of such section is amended 
        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.''.
            (3) Elimination of replication requirement.--Subparagraph 
        (B) of paragraph (2) of such section shall not apply to waivers 
        granted under such section after the date of the enactment of 
        this Act.
            (4) Timely consideration of applications.--In considering 
        completed an application for waivers under such section before 
        the effective date of repeals under subsection (c), subject to 
        the numerical limitation under the amendment made by paragraph 
        (1), the application shall be deemed granted 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 granted 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 1933 
        of the Social Security Act--
                    (A) first, to entities that are operating a PACE 
                demonstration waiver program (as defined in section 
                1894(a)(7) of such Act), and
                    (B) then 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, to any entities that 
        have applied for such waivers under such section as of May 1, 
        1997.
            (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 either, as of 
        May 1, 1997--
                    (A) has formally contracted with a State to provide 
                services for which payment is made on a capitated basis 
                with an understanding that entity was seeking to become 
                a PACE provider, or
                    (B) 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).
                    (C) Section 9412(b) of the Omnibus Budget 
                Reconciliation Act of 1986 (Public Law 99-509).
            (2) Delay in application.--
                    (A) In general.--Subject to subparagraph (B), the 
                repeals made by paragraph (1) shall not apply to 
                waivers granted before the initial effective date of 
                regulations described in subsection (a).
                    (B) Application to approved waivers.--Such repeals 
                shall apply to waivers granted before such date only 
                after allowing such organizations a transition period 
                (of up to 24 months) in order to permit sufficient time 
                for an orderly transition from demonstration project 
                authority to general authority provided under the 
                amendments made by this Act.

SEC. 5. 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 section 1894 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 Act
            (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 
        section 1894(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 section 1894(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 Physician 
Payment Review Commission shall include in its annual recommendations 
under section 1845(b) of the Social Security Act, and the Prospective 
Payment Review Commission shall include in its annual recommendations 
reported under section 1886(e)(3)(A) of such Act, recommendations on 
the methodology and level of payments made to PACE providers under 
section 1894(d) of such Act and on the treatment of private, for-profit 
entities as PACE providers.

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