Federal Register, Volume 81 Issue 158 (Tuesday, August 16, 2016)

[Federal Register Volume 81, Number 158 (Tuesday, August 16, 2016)]
[Proposed Rules]
[Pages 54666-54707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-19153]

[[Page 54665]]

Vol. 81

Tuesday,

No. 158

August 16, 2016

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 423 and 460

Medicare and Medicaid Programs; Programs of All-Inclusive Care for the
Elderly (PACE); Proposed Rule

Federal Register / Vol. 81 , No. 158 / Tuesday, August 16, 2016 /
Proposed Rules

[[Page 54666]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 423 and 460

[CMS-4168-P]
RIN 0938-AR60

Medicare and Medicaid Programs; Programs of All-Inclusive Care
for the Elderly (PACE)

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise and update the requirements
for the Programs of All-Inclusive Care for the Elderly (PACE) under the
Medicare and Medicaid programs. The proposed rule addresses application
and waiver procedures, sanctions, enforcement actions and termination,
administrative requirements, PACE services, participant rights, quality
assessment and performance improvement, participant enrollment and
disenrollment, payment, federal and state monitoring, data collection,
record maintenance, and reporting. The proposed changes would provide
greater operational flexibility, remove redundancies and outdated
information, and codify existing practice.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on October 17, 2016.

ADDRESSES: In commenting, please refer to file code CMS-4168-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. You may submit comments in one of four
ways (please choose only one of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions for
``submitting a comment.''
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-4168-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-4168-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments before the close of the comment period
to the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members. Comments erroneously mailed to
the addresses indicated as appropriate for hand or courier delivery may
be delayed and received after the close of the comment period.

FOR FURTHER INFORMATION CONTACT: Martha Hennessy, 410-786-0575.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Timely received comments will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.

Table of Contents

I. Executive Summary
A. Purpose
B. Summary of Key Economic Provisions
C. Summary of Costs and Benefits
II. Background
A. Program Description
B. Legislative and Regulatory History
C. PACE Regulatory Framework
III. Provisions of the Proposed Rule
A. Proposed Global Change Regarding Quality Assessment and
Performance Improvement
B. Subpart A--Basis, Scope, and Definitions
C. Subpart B--PACE Organization Application and Waiver Process
D. Subpart C--PACE Program Agreement
E. Subpart D--Sanctions, Enforcement Actions, and Termination
F. Subpart E--PACE Administrative Requirements
G. Subpart F--PACE Services
H. Subpart G--Participant Rights
I. Subpart H--Quality Assessment and Performance Improvement
J. Subpart I--Participant Enrollment and Disenrollment
K. Subpart J--Payment
L. Subpart K--Federal/State Monitoring
M. Subpart L--Data Collection, Record Maintenance, and Reporting
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Statement

Acronyms

Because of the many terms to which we refer by acronym in this
proposed rule, we are listing the acronym and its corresponding term
in alphabetical order below:
BBA Balanced Budget Act of 1997
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000
CMP Civil Money Penalty
CMS Centers for Medicare & Medicaid Services
COBRA Consolidated Omnibus Budget Reconciliation Act of 1985
GAO Government Accountability Office
HHS U.S. Department of Health and Human Services
HPMS Health Plan Management System
IDT Interdisciplinary Team
IFC Interim Final Rule with Comment Period
MA Medicare Advantage
MAO Medicare Advantage Organization
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
MSP Medicare Secondary Payer
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
PACE Programs of All-inclusive Care for the Elderly
PCA Personal Care Attendants
PDP Prescription Drug Plan
PO PACE Organization
SAA State Administering Agency
SSA Social Security Act

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I. Executive Summary

A. Purpose

The purpose of this proposed rule is to revise and update the
requirements for the Programs of All-Inclusive Care for the Elderly
(PACE) under the Medicare and Medicaid programs. The proposals address
application and waiver procedures, sanctions, enforcement actions and
termination, administrative requirements, PACE services, participant
rights, quality assessment and performance improvement, participant
enrollment and disenrollment, payment, federal and state monitoring,
data collection, record maintenance, and reporting. The proposed
changes would provide greater operational flexibility, remove
redundancies and outdated information, and codify existing practice.

B. Summary of Key Economic Provisions

1. Compliance Oversight Requirements
Compliance programs, as found in the Medicare Advantage (MA) and
Medicare Part D programs, have long been recognized as key to
protecting against fraud, waste, and abuse. The importance of these
programs has been highlighted by several of our oversight bodies. As is
authorized by sections 1934(f)(3) and 1894(f)(3) of the Social Security
Act (the Act), we are now proposing to adopt two key elements of the
Part D compliance program in the PACE regulations. Specifically, we
would require each PACE organization (PO) to develop compliance
oversight requirements that would be responsible for monitoring and
auditing their organization for compliance with our regulations.
Additionally, we would require POs to have measures that prevent,
detect and correct non-compliance with CMS's program requirements as
well as measures that prevent, detect, and correct fraud, waste, and
abuse. This mirrors what POs are currently required to do for their
Part D operations and would simply extend the requirement to all of the
PO's operations. We believe by creating a uniform requirement for all
of the PO's operations, we are balancing the duty of a PO to ensure
compliance with CMS requirements with the need for flexibility as a
provider of service.
2. Monitoring and Oversight of PACE Organizations
As a result of our experience with oversight and monitoring of the
PACE program, we are proposing flexibilities in connection with the
current requirement that POs be monitored for compliance with the PACE
program requirements during and after a 3-year trial period. We must
balance the responsibilities of ensuring that all of our beneficiaries
are receiving quality care with our duty to effectively manage our
resources and ensure proper oversight over all of the programs we
manage. We are proposing therefore to use technology to enhance
efficiencies in monitoring by remotely reviewing PO documents, which we
have to date reviewed primarily through site visits. We would reduce
the number of onsite visits after the 3-year trial period by utilizing
a risk assessment to select which POs will be audited each year. This
risk assessment would rely largely on an organization's past
performance and ongoing compliance with CMS and state requirements.
However, the risk assessment would also take into account other
information that could indicate a PO needs to be reviewed, such as
participant complaints or access to care concerns.

C. Summary of Costs and Benefits

Table 1--Summary of Costs and Benefits
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Total cost to
Provision description Total costs to POs Government (without
transfer)
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Proposed Compliance We estimate a one- ....................
Oversight Requirements. time cost of
$353,668 per year,
annualized for 3
years, for
developing the
written material
and documents
necessary for
internal auditing
and monitoring
programs (119 PO x
150 hours per PO x
59.44 (hourly rate)
divided by 3
(annualized over 3
years)). We further
estimate an annual
cost of $1,414,672
per year to update
materials and for
routine
identification of
risks (119 PO x 200
hours per PO x
59.44 hourly rate).
Thus total cost
would be $1.7
million in years 1
through 3 and $1.4
million afterwards.
Monitoring.................. We estimate that We estimate an
there will be an annual savings of
annual savings to $1,029,455 to the
POs based on our government. We
proposal of expect 72 PO audits
$707,617.60. We under current
expect 72 PO audits regulations. We
under the current expect only 35
regulations. We audits if the
expect only 35 proposed regulation
audits if the is finalized. The
proposed regulation savings to us would
is finalized. The be the effort saved
savings to PO would by not having to
be the effort saved perform 37 audits.
by not having to The cost per audit
produce is 2.5 FTE x $1,395
documentation and air-fare + 220
other hours for GS-13s x
administrative $44.15/hr GS-13
burdens that occur wage x 2 (Fringe
during an audit for benefit factor) +
37 audits. 40 hours for GS-15s
Consequently, we x $61.37/hr GS-15
are estimating the wage x 2 (Fringe
savings per audit benefit factor) =
for a PO to be $27,823. Hence the
approximately total savings is
$19,124.80 (2 $27,832 x 37 = 1
Health Service million.
Managers at $50.99/
hour x 2 (Factor
for fringe
benefits) x 80
hours per person
plus 1 executive
administrative
assistant at $17.55/
hour x 2 (Factor
for fringe
benefits) x 80
hours per person).
Therefore the total
savings to POs will
be $19,124.80 x 37
= $707,617.60.
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II. Background

A. Program Description

The Programs of All-Inclusive Care for the Elderly (PACE) program
is a unique model of managed care service delivery for the frail
elderly, most of whom are dually-eligible for Medicare and Medicaid
benefits, and all of whom are assessed as being eligible for nursing
home placement according to the Medicaid standards established by their
respective states.

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B. Legislative and Regulatory History

1. Demonstration Project
Section 603(c) of the Social Security Amendments of 1983 (Pub. L.
98-21), as extended by section 9220 of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA) (Pub. L. 99-272), authorized the
original demonstration PACE program for On Lok Senior Health Services
(On Lok) in San Francisco, California. Section 9412(b) of the Omnibus
Budget Reconciliation Act (OBRA) of 1986 (Pub. L. 99-509), authorized
CMS to conduct a PACE demonstration program to determine whether the
model of care developed by On Lok could be replicated across the
country. The number of sites was originally limited to 10, but the OBRA
of 1990 (Pub. L. 101-508) authorized an increase to 15 PACE
demonstration programs. The PACE demonstration program was operated
under a Protocol published by On Lok, Inc. as of April 14, 1995.
The PACE model of care includes, as core services, the provision of
adult day health care and interdisciplinary team (IDT) care management,
through which access to and allocation of all health services is
managed. Physician, therapeutic, ancillary, and social support services
are furnished in the participant's residence or onsite at a PACE
center. Hospital, nursing home, home health, and other specialized
services are generally furnished under contract. Financing of the PACE
demonstration model was accomplished through prospective capitation
payments under both Medicare and Medicaid. Under section 4118(g) of the
OBRA of 1987 (Pub. L. 100-203), PACE demonstration programs had to
assume full financial risk progressively over the initial 3 years. As
such authority was removed by section 4803(b)(1)(B) of the Balanced
Budget Act of 1997 (BBA) (Pub. L. 105-33), PACE demonstration programs
approved after August 5, 1997 had to assume full financial risk at
start-up.
2. Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33)
Section 4801 of the BBA authorized coverage of PACE under the
Medicare program by amending title XVIII of Act to add section 1894 of
the Act, which addresses Medicare payments and coverage of benefits
under PACE. Section 4802 of the BBA authorized the establishment of
PACE as a state option under Medicaid by amending title XIX of the Act
and adding section 1934 of the Act, which directly parallels the
provisions of section 1894 of the Act. Section 4803 of the BBA
addresses implementation of PACE under both Medicare and Medicaid, the
effective date, timely issuance of regulations, priority and special
consideration in processing applications, and extension and transition
for PACE demonstration project waivers.
As directed by section 4803 of the BBA, we published an interim
final rule with comment period (IFC) on November 24, 1999, establishing
requirements for PACE under sections 1894 and 1934 of the Act (64 FR
66234). The 1999 IFC was a comprehensive rule that addressed
eligibility, administrative requirements, application procedures,
services, payment, participant rights, and quality assurance under
PACE.
3. The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA) (Pub. L. 106-554)
The following three sections of BIPA modified the PACE program:
Section 901 extended the transition period for the PACE
demonstration programs to allow an additional year for these
organizations to transition to the permanent PACE program.
Section 902 gave the Secretary of Health and Human
Services (the Secretary) the authority to grandfather in the
modifications these programs had implemented as of July 1, 2000. This
provision allowed the PACE demonstration programs to continue program
modifications they had implemented and avoid disruptions in participant
care where these modifications were determined to be consistent with
the PACE model.
Section 903 specifically addressed flexibility in
exercising the waiver authority provided under sections 1894(f)(2)(B)
and 1934(f)(2)(B) of the Act. It authorized the Secretary to modify or
waive PACE regulatory provisions in a manner that responds promptly to
the needs of PACE organizations (POs) relating to the areas of
employment and the use of community-based primary care physicians.
Section 903 of BIPA also established a 90-day review period for waiver
requests. On October 1, 2002, we issued an IFC to implement section 903
of BIPA (67 FR 61496).
4. Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA) (Pub. L. 108-173)
On December 8, 2003, Congress enacted the MMA. Several sections of
the MMA affected POs. Most notably, section 101 of the MMA affected the
way in which POs are paid for providing certain outpatient prescription
drugs to any Part D eligible participant. The MMA altered the payment
structure for Part D drugs for POs by shifting the payer source for
PACE enrollees who are full-benefit dual-eligible individuals from
Medicaid to Medicare, and, in part, from the beneficiary to Medicare
for individuals that are not full-benefit dual-eligible beneficiaries
who elect to enroll in Part D. The MMA did not affect the manner in
which POs are paid for the provision of outpatient prescription drugs
to non-part D eligible PACE participants.
Section 101 of the MMA added section 1860D-21(f) of the Act, which
provides that POs may elect to provide qualified prescription drug
coverage to enrollees who are Part D eligible individuals. The MMA
allows CMS the flexibility to deem POs as MA-PD local plans and to
treat POs that elect to provide qualified drug coverage in a manner
similar to MA-PD local plans. Due to inconsistencies in the PACE and
MMA statutes, we chose to treat POs in a similar manner as MA-PD plans,
thereby avoiding conflicting requirements. The requirements that apply
to POs that elect to provide qualified prescription drug coverage to
Part D eligible enrollees are described in section II.T.3. of the
January 2005 Part D final rule (70 FR 4426 through 4434).
In addition, section 236 of the MMA amended the Act to extend to
POs the existing statutory Medicare and Medicaid balance billing
protections that had previously applied to POs under the PACE
demonstration program authority.
Section 301 of the MMA amended the Medicare Secondary Payer (MSP)
provisions in section 1862(b) of the Act. These amendments clarify the
obligations of primary plans and primary payers, the nature of the
insurance arrangements subject to the MSP rules, the circumstances
under which Medicare may make conditional payments, and the obligations
of primary payers to reimburse Medicare. To implement section 301 of
the MMA, we issued an IFC published in the February 24, 2006 Federal
Register (71 FR 9466). The provisions in the IFC were finalized in a
final rule published in the February 22, 2008 Federal Register (73 FR
9679). The IFC revised pertinent MSP regulations found at 42 CFR part
411. Our PACE regulations at Sec. 460.180(d) specify that Medicare
does not pay for PACE services to the extent that Medicare is not the
primary payer under part 411. The MSP regulations found at 42 CFR part
411 set forth our current policies regarding MSP obligations involving
other payers.

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5. 2006 PACE Final Rule
On December 8, 2006, we issued a final rule (71 FR 71244)
(hereinafter 2006 final rule) that finalized both the PACE IFC
published in the November 24, 1999 Federal Register (64 FR 66234) and
the PACE IFC published in the October 1, 2002 Federal Register (67 FR
61496).
For a complete history of the PACE program, please see the 2006
final rule (71 FR 71244 through 71248).

C. PACE Regulatory Framework

Sections 1894(f) and 1934(f) of the Act set forth the requirements
for issuing regulations to carry out sections 1894 and 1934 of the Act.
Sections 1894(f)(2) and 1934(f)(2) of the Act state that the Secretary
must incorporate the requirements applied to PACE demonstration waiver
programs under the PACE Protocol when issuing interim final or final
regulations, to the extent consistent with the provisions of sections
1894 and 1934 of the Act. However, the Secretary may modify or waive
these provisions under certain circumstances. Sections 1894(a)(6) and
1934(a)(6) of the Act define the PACE Protocol as the Protocol for 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.
We issued the 1999 and 2002 IFCs and the 2006 final rule under
authority of sections 1894(f) and 1934(f) of the Act.
We believe sections 1894(f) and 1934(f) of the Act primarily apply
to issuance of the initial interim and final PACE program regulations
because they refer to the PACE Protocol,\1\ which has now been replaced
by the PACE program agreement.\2\ Sections 1894(f)(2)(B) and
1934(f)(2)(B) of the Act permit the Secretary to modify or waive
provisions of the PACE Protocol as long as any such modification or
waiver is not inconsistent with and does not impair any of the
essential elements, objectives, and requirements of the PACE Protocol
and, in particular, does not modify or waive any of the following five
provisions:
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\1\ https://www.gpo.gov/fdsys/pkg/FR-1999-11-24/pdf/99-29706.pdf.
\2\ https://www.cms.gov/Medicare/Health-Plans/pace/downloads/programagreement.pdf.
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The focus on frail elderly qualifying individuals who
require the level of care provided in a nursing facility.
The delivery of comprehensive integrated acute and long-
term care services.
The interdisciplinary team approach to care management and
service delivery.
Capitated, integrated financing that allows the PO to pool
payments received from public and private programs and individuals.
The assumption by the PO of full financial risk.
While we believe sections 1894(f) and 1934(f) of the Act no longer
have direct application to the PACE program in many respects, we
believe the limitations on waivers and modifications continue to apply
to updates to the PACE program to the extent the updates concern
essential elements, objectives, and requirements of the PACE Protocol,
as replaced by the PACE program agreement, or any of the five listed
provisions.

III. Provisions of the Proposed Rule

In this proposed rule, we are proposing to revise and update the
policies finalized in the 2006 final rule to reflect subsequent changes
in the practice of caring for the frail and elderly and changes in
technology (for example, the use of electronic communications,
including email, and the automation of certain processes) based on our
experience implementing and overseeing the PACE program. PACE has
proven successful in keeping frail, older individuals, many of whom are
eligible for both Medicare and Medicaid benefits (dual eligibles), in
community settings.\3\ However, it is necessary to revise some
regulatory provisions to afford more flexibility to POs and state
administering agencies (SAAs) as a means to encourage the expansion of
the PACE program to more states, thus increasing access for
participants, and to further enhance the program's effectiveness at
providing care while reducing costs. Therefore, we are proposing a
number of flexibilities in this rule, including allowing non-physician
medical providers practicing within the scope of their state licensure
and clinical practice guidelines to serve in place of primary care
physicians in some capacities, and permitting POs to better tailor the
IDTs to improve efficiency, while continuing to meet the needs of their
participants.
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\3\ The Medicare Payment Advisory Commission's June 2012 Report
to the Congress, Medicare and the Health Care Delivery System, pp.
76-77, available at http://www.medpac.gov/documents/reports/jun12_entirereport.pdf.
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A. Proposed Global Change Regarding Quality Assessment and Performance
Improvement

Part 460 encompasses all of the regulatory provisions pertaining to
PACE. We are proposing to replace all references to ``quality
assessment and performance improvement'' in part 460 of the regulations
(including subpart and section headings) with ``quality improvement.''
We are proposing this change because, in practice, the term ``quality
improvement'' is used by the POs, SAAs, CMS, and the industry when
referring to quality assessment and performance improvement for POs.
Furthermore, the term ``quality improvement'' is used to mean the same
thing in other CMS programs, such as the CMS Quality Improvement
Organization Program and the Medicare Advantage Quality Improvement
Program, so this change would allow for consistency in use of language
across CMS programs. This would be a change in terminology only and
would not designate a change in the requirements for the PACE quality
program. While we are proposing to implement this change in every place
that contains the term ``quality assessment and performance
improvement'', we are only discussing our rationale for this proposed
change in this section of the preamble. This proposed change would
affect the following sections and headings in the current regulations:
Sec. Sec. 460.32(a)(9), 460.60(c), 460.62(a)(7), 460.70(b)(1)(iii),
460.120(f), 460.122(i), 460.130(a), 460.132(a) and (c)(3), 460.134(a),
460.136(a), (b), and (c), 460.138(b), and 460.172(c), and the headings
of subpart H and Sec. Sec. 460.132, 460.134, and 460.136. As discussed
in section III.I.3., we are proposing to remove Sec. 460.140 in its
entirety, so we would not need to change the reference in that section.

B. Subpart A--Basis, Scope, and Definitions

1. Proposed Part D Program Requirements (Sec. 460.3)
In the 2006 final rule (71 FR 71248), we indicated that MA-PD
requirements with respect to Part D prescription drug coverage would
apply to POs that elect to provide qualified Part D prescription drug
coverage. However, the PACE regulations make no mention of Part D
program requirements. To clarify this policy, we are proposing to add
Sec. 460.3, ``Part D Program Requirements,'' to state that the POs
offering qualified prescription drug coverage and meeting the
definition of a Part D plan sponsor (as defined at Sec. 423.4) must
abide by all applicable Part D program requirements in part 423. When
we issue Part D program guidance we often receive questions regarding
applicability to PACE and it has been our experience that POs are not
always aware they must comply with Part D requirements unless a
specific requirement has been waived. (For a list of the Part D
regulatory requirements that are waived for POs,

[[Page 54670]]

see section 2.5 of the Part D Application for new POs, available at
https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxContracting_ApplicationGuidance.html.) We
believe this proposed change is consistent with our current policy and
does not involve any change in the current treatment of POs offering
qualified Part D prescription drug coverage.

C. Subpart B--PACE Organization Application and Waiver Process

1. Purpose (Sec. 460.10)
In this section, we propose changes to part 460, subpart B. Section
460.10 describes the purpose of subpart B, which sets forth the
processes for an entity to apply to become a PO and to apply for a
waiver of certain regulatory requirements. We are proposing to revise
this section to add a new paragraph (a) to address the application
process and a new paragraph (b) in which we are proposing to move the
current language in this section regarding the waiver process.
As discussed in section III.C.2. of this proposed rule, we are
proposing to revise the regulations in subpart B to describe the
process for a PO to seek approval from CMS to expand a service area
and/or add a new PACE center site. Therefore, we are proposing to amend
Sec. 460.10 by adding language regarding the application procedures
for expanding an existing service area and/or adding a new PACE center
site. This section would still introduce the subpart that sets forth
the application procedures for applying to become a PO.
2. Application Requirements (Sec. 460.12)
Section 460.12 sets forth the application requirements for an
organization that wishes to participate in the PACE program. Section
460.12(a) currently requires an individual authorized to act for an
entity to submit a complete application to CMS that describes how the
entity meets all requirements in part 460 if the entity seeks approval
from CMS to become a PO. As set forth in our PACE manual, an
application must also be submitted for a PO that seeks to expand its
service area and/or add a new PACE center site (see PACE Manual, Ch.
17, Sections 20.4 through 20.7). There are three scenarios specified in
the PACE manual under which a PO may expand operations: (1) It may
expand its geographic service area without building additional sites;
(2) it may open another physical site in the existing geographic
service area; and (3) it may expand its geographic service area and
open another physical site in the expanded area. Currently, POs are
required to submit an application to CMS and the SAA to expand their
geographic service area and/or add a new PACE center to their PO. In
October 2004, we released the PACE Expansion Application, available at
http://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-services-and-supports/integrating-care/program-of-all-inclusive-care-for-the-elderly-pace/pace-4-states.html. This
application is for existing POs that wish to expand their geographic
service areas, and/or add a new PACE center to their PO.
As with initial applications, our guidance requires POs to submit
an expansion application to CMS through the SAA. However, current
regulations do not specify a process for POs to submit, and the SAA and
CMS to approve, an expansion application. Therefore, we are proposing
amending Sec. 460.12(a) to specify that it also applies to expansion
applications submitted by existing POs that seek to expand their
service area and/or to add a PACE center site. Specifically, we are
proposing to add language in Sec. 460.12(a) that an individual
authorized to act for a PO that seeks to expand its service area and/or
add a PACE center site must submit a complete application to CMS that
describes how the PO meets all requirements in this part. We believe
including this requirement in Sec. 460.12 will help ensure POs
understand our current practice of requiring an expansion application
for a PO that seeks to expand its service area and/or add a PACE center
site.
We also are proposing to add the phrase ``in the form and manner
specified by CMS'' to Sec. 460.12(a) when describing the submission to
CMS of a complete application to become a PO or to expand a service
area and/or add a PACE center, to allow for submission of applications
and supporting information in formats other than paper, which is
currently required. These applications are often hundreds of pages
long, expensive to reproduce and transmit, and administratively
inefficient, as staff reviewing different parts of the application are
located in different physical locations and must receive hard copies of
the material. To adapt to the increased use of electronic
communications, electronic health records, and electronic data storage
and exchange, we must continuously update the form and manner by which
we administer our programs. We have successfully transitioned the
Medicare Advantage application and Prescription Drug Plan (PDP)
application to a fully electronic submission process, enabling a more
organized and streamlined review, and would like to bring those same
efficiencies to the PACE application process. We will provide further
guidance on this process through HPMS or similar electronic system that
may replace HPMS. POs and applicants may also refer to the CMS online
tools for application submission at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Long-Term-Services-and-Supports/Integrating-Care/Program-of-All-Inclusive-Care-for-the-Elderly-PACE/Program-of-All-Inclusive-Care-for-the-Elderly-PACE.html.
Section 460.12(a)(2) provides that we would accept applications
from entities that seek approval as POs beginning on February 22, 2000,
except we would accept applications on earlier dates for certain
entities that qualify for priority processing or special consideration.
We established this provision and two other sections of the PACE
regulations, previously found at Sec. 460.14 and Sec. 460.16, to
implement section 4803(c) of the BBA of 1997. Section 4803(c) directed
us to give priority in processing applications, during the 3-year
period following enactment of the BBA of 1997, to PACE demonstration
programs and then to entities that had applied to operate a PACE
demonstration program as of May 1, 1997. In addition, section 4803(c)
of the BBA of 1997 required that we give special consideration in the
processing of applications during the 3 years following enactment to
any entity that as of May 1, 1997, had indicated specific intent to
become a PO through formal activities such as entering into contracts
for feasibility studies. In the 2006 final rule (71 FR 71253), we
deleted Sec. 460.14 (Priority Consideration) and Sec. 460.16 (Special
Consideration) because the authority to provide these considerations
expired on August 5, 2000. For the same reason, we are proposing to
delete paragraph (a)(2) of Sec. 460.12, as it is no longer applicable.
Section 460.12(b) provides that an entity's application must be
accompanied by an assurance from the SAA of the state in which the
program is located indicating that the state (1) considers the entity
to be qualified to be a PO and (2) is willing to enter into a PACE
program agreement with the entity. However, we have received
applications without the required SAA assurance. To help ensure that
our current policy is clear, we are proposing to revise the language to
require that the entity's application to become a PO include an
assurance from the SAA that the state considers the entity to be
qualified to be a PO and the state is

[[Page 54671]]

willing to enter into a PACE program agreement with the entity. We want
entities to understand that we would not consider an application to
become a PO to be complete without assurance from the SAA that the
state both considers the entity to be qualified be a PO and is willing
to enter into a PACE program agreement with the entity. We would not
review applications that do not include this assurance.
Similarly, we are also proposing to redesignate paragraphs (b)(1)
and (2) as Sec. 460.12(b)(1) and add a new paragraph (b)(2) to codify
the current requirement in the PACE expansion application that a PO's
application to expand its service area and/or add a new PACE center
site must include an assurance from the SAA that the state is willing
to amend the PACE program agreement to include the new PACE center
sites and/or expand the PO's service area. We also expect, as we stated
in the preamble to the 1999 IFC for initial applications (64 FR 66238),
that the SAA will verify that an applying entity has qualified
administrative and clinical staff employed or under contract prior to
furnishing services to participants in the expanded service area.
We also are proposing to move the language in Sec. 460.22, which
requires an entity to state in its application the service area it
proposes for its program, and provides that CMS (in consultation with
the SAA) may exclude an area already covered under another PACE program
agreement, to proposed paragraph Sec. 460.12(c) and remove Sec.
460.22. In proposed Sec. 460.12(c)(1), we would specify that both an
entity submitting an application to become a PO and a PO submitting an
application seeking to expand its service area must describe the
proposed service area in their application. We also propose to make a
corresponding change to the Medicare Part D definition of ``Service
area'' in Sec. 423.4 for PACE plans offering qualified prescription
drug coverage by removing the reference to ``Sec. 460.22 of this
chapter'' and adding in its place ``Sec. 460.12(c) of this chapter,''
as our proposed changes would move the language currently in Sec.
460.22 to Sec. 460.12(c).
Finally, to codify CMS's current practice regarding the
permissibility of POs to expand their service area and/or add a new
PACE center site (see PACE Manual, Ch. 17, Section 20.4), we are
proposing to add Sec. 460.12(d), which would provide that CMS and the
SAA will only approve an expansion application after the PO has
successfully completed its first trial period audit and, if applicable,
has implemented an acceptable corrective action plan.
We believe all of these changes to Sec. 460.12 would streamline
the regulations and make the requirements clear, consistent with the
PACE statutes. If we finalize these proposals, we will provide
subregulatory guidance on application submission requirements after
publication of the final rule.
3. CMS Evaluation of Applications (Sec. 460.18)
Section 460.18 describes the information that CMS uses to evaluate
an application under PACE; however, this does not take into account all
the potential sources of information that may be a part of the
evaluation process, including information used in the evaluation of
applications submitted for a PO that seeks to expand its service area
and/or new PACE center site. Currently, Sec. 460.18(b) specifies that
CMS will use information obtained through on-site visits conducted by
CMS or the SAA. Section 460.18(c) provides that CMS will use
information obtained by the SAA. As discussed earlier in this section,
we are proposing to revise our regulations to reflect that an
application also must be submitted for a PO that seeks to expand its
service area and/or add a new PACE center site. In evaluating expansion
applications, CMS may consider additional information beyond that
contained in the application itself, information obtained through on-
site visits, or information obtained through the SAA. For example, our
review of a service area expansion application might include
information obtained from financial reviews, as well as the results
from ongoing monitoring visits. Therefore, we propose to combine the
language currently in Sec. 460.18(b) and (c) in revised Sec.
460.18(b) and delete Sec. 460.18(c). The revised Sec. 460.18(b) would
state that CMS uses information obtained by CMS or the SAA through on-
site visits or any other means. This change would take into account the
additional information that we use to review any PACE application,
including applications to expand a PO's service area or add a new PACE
center site. We are also proposing to make a conforming change to the
introductory language in Sec. 460.18 to reflect the review of
expansion applications, by deleting ``for approval as a PACE
organization.''
4. Notice of CMS Determination (Sec. 460.20)
Section 460.20 describes requirements for CMS to notify PACE
applicants of the status of PACE applications. Currently, Sec. 460.20
only specifies the requirements for CMS determination of applications
submitted by entities seeking to become POs. As previously discussed in
this section, we are proposing to amend the regulations in subpart B to
include, in addition to requirements for applications from entities
seeking to become POs, requirements for applications submitted by
existing POs for service area and/or PACE center site expansions. In
conjunction with that proposal, we are proposing changes to Sec.
460.20 to also include specific language regarding the notification
requirements for CMS determination of applications to expand a PO's
service area and/or to add a new PACE center.
The current requirements in Sec. 460.20 implement sections
1894(e)(8) and 1934(e)(8) of the Act, which require that an application
for PO status 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.
The Act further states that, after the date of receipt of any
additional requested information from the applicant, the application
must be deemed approved unless the Secretary, within 90 days of such
date, denies such request.
While the Act requires that CMS provide notice to entities seeking
to become POs of its determination within 90 days, the Act does not set
out requirements for applications submitted by existing POs to expand
their service area and/or to add a new PACE center site. We have
published expansion application requirements in Chapter 17 of the PACE
manual, available at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS019036.html. Under
that guidance, a PO is required to submit an expansion application when
the PO is seeking to (1) expand its geographic service area; (2) add a
new PACE center; or (3) expand its geographic service area and add a
new PACE center.
The guidance provides that, when a PO submits an expansion
application to expand its geographical service area without building
additional sites, CMS has 45 days to request additional information
from the PO, approve the application, or deny the application.
Similarly, when a PO submits an expansion application to add a new PACE
center in the existing service area, CMS has 45 days to request
additional information from the PO, approve the application, or deny
the application. In these scenarios, if CMS requests

[[Page 54672]]

additional information and the applicant provides the requested
information, CMS has an additional 45 days to review and either approve
or deny the expansion application. The second 45-day review period in
this scenario only commences once CMS has received all of the
additional requested material. If the applicant submits additional
information per CMS's request, but CMS determines that there is still
outstanding information requested from the applicant, CMS notifies the
applicant and the additional 45-day review period does not begin until
all requested information is received. Once CMS has received all of the
requested information, CMS sends a letter to the applicant indicating
that the second 45-day review period has commenced.
In the third scenario, when a PO submits an expansion application
to expand its geographic service area and open a new PACE center site,
CMS has 90 days to request additional information from the PO, approve
the application, or deny the application. In this scenario, if CMS
requests additional information and the PO provides the requested
information, CMS has an additional 90 days to review and either approve
or deny the expansion application. The second 90-day review period in
this scenario only commences once CMS has received all of the
additional requested material. If the applicant submits additional
information per CMS's request, but CMS determines that there is still
outstanding information requested from the applicant, CMS notifies the
applicant and the additional 90-day review period does not begin until
all requested information is received. Once CMS has received all of the
requested information, CMS sends a letter to the applicant indicating
that the second 90-day review period has commenced.
We are proposing to codify CMS's current sub-regulatory
requirements for notifying POs of CMS's determination regarding service
area and PACE center site expansion applications so the regulations
include all of the relevant application timing requirements.
Specifically, we are proposing to amend Sec. 460.20(a) to make it
clear that the notice of CMS determination applies to all three types
of applications listed in proposed Sec. 460.10(a), and that the 90-day
time limit applies, except for applications to expand the service area
or add a new PACE center site.
First, we are proposing to delete Sec. 460.20(a)(3) and revise
Sec. 460.20(b). Currently, Sec. 460.20(a) states that CMS will
approve or deny, or request additional information on, a ``complete
application'' within 90 days after submission of the application. We
believe it is confusing to state that an application is complete if we
are requesting additional information. Therefore, we are proposing to
delete Sec. 460.20(a)(3), which is the provision that describes CMS
requesting additional information needed to make a final determination,
and to revise Sec. 460.20(b) to state that an application is only
considered complete when CMS receives all information necessary to make
a determination regarding approval or denial. Note that we would not
consider the application complete without the required state assurance.
We also propose to revise Sec. 460.20(a) to specify that the time
limit for CMS notification of determination is 45 days for expansion
applications where a PO seeks to expand its service area or add a new
PACE center.
Next, we are proposing that Sec. 460.20(b) through (d) be
redesignated as Sec. 460.20(c) through (e) and revised as follows. We
are proposing that new Sec. 460.20(c) describe the process if CMS
determines that the application is not complete because it does not
include sufficient information for CMS to make a determination.
Specifically, CMS would inform the entity that the application is not
complete and request the additional information, and within 90 days (or
45 days for a service area or new PACE center expansion application) of
CMS receiving all requested information from the entity, CMS would
approve the application or deny it and notify the entity in writing of
the basis of the denial and the process for requesting reconsideration
of the denial. We are proposing these changes because it is not
possible for CMS to make an informed decision to approve or deny an
application in situations where we do not have all of the pertinent
information. We would consider the State Readiness Review, which SAAs
conduct to determine the PO's readiness to administer the PACE program
and enroll participants, as information necessary to make our final
determination and would ask for its submission in all requests for
additional information if we did not already have this information.
Further, if more than 6 months elapse between the date of submission of
the application and the response to the CMS request for additional
information, the entity is required to update the application to
provide the most current information and materials related to the
application; otherwise, we would consider the application incomplete.
We propose to revise Sec. 460.20(c) accordingly.
Section 460.20(b), which we are proposing to redesignate as Sec.
460.20(c), currently outlines the requirements for POs when CMS
requests from an entity additional information needed to make an
application determination. As noted previously, we are proposing to
amend the language in this provision to address the different time
limits for expansion applications. We are also proposing to amend the
language to specify that the time limits in Sec. 460.20(a) do not
begin until CMS receives all requested information and the application
is complete. With the proposed changes to Sec. 460.20(a) and the
proposed addition of Sec. 460.20(b), it is no longer necessary to
describe CMS's review process after all requested information has been
received; thus we would remove Sec. 460.20(b)(1) and (2). Section
460.20(c), which we are proposing to redesignate as Sec. 460.20(d),
currently implements sections 1894(e)(8) and 1934(e)(8) of the Act and
provides that an application for PO status will be deemed approved if
CMS fails to act on it within 90 days of the date the application is
submitted or the date CMS receives all requested additional
information. We are proposing to amend this language to specify deemed
approval will occur if CMS fails to act after the later of those dates,
and that it only applies to entities submitting applications to become
a PO, not expansion applications from existing POs. We believe this
revision is necessary because, as described previously, we are
proposing to address expansion applications in the regulations, and we
want to make it clear that only initial applications will be deemed
approved if CMS fails to act on them within the required time period.
As previously noted, the PACE statutes do not set out requirements for
applications submitted by existing POs to expand their service area
and/or to add a new PACE center site. CMS does not currently employ
``deemed approval'' for expansion applications, and we do not believe
there is any reason to do so for these applications at this time. We
are further proposing to amend this language by specifying that the 90-
day period commences after CMS has received a ``complete'' application,
as this is consistent with the proposed amendments to Sec. 460.20(a)
and (b).
Finally, Sec. 460.20(d) currently states that for purposes of the
90-day time limit described in this section, the date that an
application is submitted to CMS is the date on which the application is
delivered to the address designated by CMS. We are proposing to
redesignate Sec. 460.20(d) as Sec. 460.20(e), and revise this
paragraph to refer to the time limits

[[Page 54673]]

described in this section to include applications for service area
expansions or new PACE center sites.
5. Service Area Designation (Sec. 460.22)
As discussed in section III.C.2. of this proposed rule, we are
proposing to move the content of Sec. 460.22, in its entirety but with
a few revisions, to Sec. 460.12(c). Therefore, we are proposing to
delete Sec. 460.22.
6. Submission and Evaluation of Waiver Requests (Sec. 460.26)
Section 460.26 sets forth the process for submitting and evaluating
waiver requests. We are proposing to revise current Sec. 460.26(a)(1)
and (2) so that Sec. 460.26(a)(1) would state that a PO, or an entity
submitting an application to become a PO, must submit its waiver
request through the SAA for initial review. Paragraph (a)(1) would also
specify that the SAA forwards waiver requests to CMS along with any
concerns or conditions regarding the waiver. Section 460.26(a)(2) would
state that entities submitting an application to become a PO may submit
a waiver request as a document separate from the application or in
conjunction with and at the same time as the application. While we are
not proposing any policy changes with these proposed revisions, we
believe these changes would make the requirements for submission of the
waiver request more concise and clear. We plan to provide additional
detail on this part of the process in subregulatory guidance.
Section 460.26(b) states that CMS evaluates a waiver request from a
PO on the basis of certain information. We are proposing to add ``or
PACE applicant'' after ``PACE organization'' because a waiver request
can be submitted by an existing PO or a PACE applicant (an entity that
has applied to be a PO but is not yet a PO, or a PO applying to expand
its service area and/or add a new PACE center site).
7. Notice of CMS Determination on Waiver Requests (Sec. 460.28)
Section 460.28 discusses the time frames for CMS determination and
notification regarding approval or denial of waiver requests. We
established this section to implement section 903 of BIPA, which
provides in relevant part that the Secretary ``shall approve or deny a
request for a modification or a waiver . . . not later than 90 days
after the date the Secretary receives the request.'' We are proposing
to retain most of the language in current Sec. 460.28(a), but to
specify that the 90-day time limit starts after CMS receives a complete
waiver request. We discuss the need for a complete waiver request in
subsequent paragraphs. In Sec. 460.28(a), we propose to revise the
heading to ``General,'' delete the reference to a denial being ``in
writing,'' and state that CMS will take action on the complete waiver
request in the form and manner specified by CMS. We are proposing these
changes to reflect how we provide notification, whether it be
electronically or in another format. It should be noted that CMS would
not only provide notification verbally. We propose to redesignate Sec.
460.28(a)(2) as new Sec. 460.28(a)(3).
We propose to add a new Sec. 460.28(a)(2) to address conditional
approval of a waiver request from a PACE applicant when the application
is still pending. Under CMS's current process, a PACE applicant may
request a waiver while its application is still pending and receive
either a denial of the waiver request or a conditional approval of the
waiver request. The approval of the waiver request is conditioned on
the approval of the application. CMS will only issue conditional
approvals to entities with pending applications. Issuing a conditional
approval enables CMS to adhere to the BIPA 90-day timeframe for making
a determination with respect to a waiver request in situations where an
application is still under review. Waiver requests that are not
associated with a pending application will either receive an approval
or denial.
In addition, we are proposing to remove the language in Sec.
460.28(b) regarding the date of receipt of the waiver, because our
proposed changes to Sec. 460.28(a) and (b) make it clear that the 90-
day clock will start on the day CMS receives a complete waiver request.
We are also proposing to change current paragraph (c)(1) regarding
deemed approval of a waiver request to refer to CMS failing to act
within 90 days of receipt of a complete waiver request, and redesignate
it as paragraph (c). CMS will notify POs to confirm receipt of
``complete'' waiver requests.
We are proposing new language in Sec. 460.28(b) regarding
additional information requests for waivers. Unlike sections 1894(e)(8)
and 1934(e)(8) of the Act, which give CMS 90 days to request additional
information from entities applying to become POs, section 903 of BIPA
does not explicitly impose a time limit for CMS to request additional
information that is necessary to make a determination on a waiver
request. In the 2006 final rule, we stated that there is ``no statutory
authority to stop the 90-day clock if additional information is
necessary to make a determination on a waiver request.'' (71 FR 71255).
Although we cannot stop the clock, we believe the statute can be read
to start the 90-day clock upon CMS's receipt of a complete waiver
request. We therefore are proposing in new paragraph (b) that a waiver
request is complete when CMS receives all information necessary for CMS
to make a determination regarding approval or denial. If CMS determines
that the waiver request is not complete, CMS would request additional
information needed to make a determination. The 90-day clock would
start when CMS receives the complete waiver request. We are proposing
these changes because it is not possible to make an informed decision
to approve or deny a request for a waiver in situations where we do not
have all of the pertinent information. Further, we believe this change
would reduce the administrative burden on CMS as well as the POs
because, currently, CMS denies incomplete waiver requests and POs must
resubmit new waiver requests that include the missing information.
Under the proposed process, CMS and the PO would work together to
ensure that the request includes all necessary information, which
should alleviate the need to resubmit a waiver request.
This is similar to the proposed treatment of PACE applications, and
we believe consistency in review procedures would be helpful to all
parties involved. We also note that approval of a waiver associated
with a PACE application is contingent upon the approval of that PACE
application because there is nothing to waive if there is no PACE
program. Accordingly, waivers that are submitted for review in
conjunction with a PACE application or while a PACE application is
being reviewed would only be approved if that application is approved.
As previously discussed, we propose to add a new Sec. 460.28(a)(2)
that provides for conditional approval for entities with a pending
application to become a PO.
Currently, Sec. 460.28(c)(2) allows CMS to withdraw its approval
of a waiver for good cause. We are proposing to redesignate this
provision as paragraph (d)(1) and amend it to provide that CMS ``in
consultation with the'' SAA may withdraw approval of a waiver request
for good cause. We are proposing to add this language because any
significant change to the PACE program agreement, which includes
waivers, should be made in consultation with the SAA because the SAA
also is a signatory of the agreement. We are proposing in Sec.
460.28(d)(2) that, if the waiver approval is withdrawn, CMS must notify
the PO or PACE applicant and the SAA that approval of a waiver has been

[[Page 54674]]

withdrawn and specify the reason for withdrawal and the effective date
of the withdrawal in the notice. Currently, while the regulation
enables CMS to withdraw an approval of a waiver request, it does not
require that we notify the PO or PACE applicant and the SAA of the
withdrawal, the reason for withdrawal, or the date when the withdrawal
would be effective. We believe this information is critical to the PO
or PACE applicant and the SAA because it likely would require a change
in operation of the PO or could change how an applicant would operate a
PO if its application is approved.

D. Subpart C--PACE Program Agreement

1. Content and Terms of PACE Program Agreement (Sec. 460.32)
Section 460.32 specifies the required and optional content of a
PACE program agreement. Under Sec. 460.32(a)(12), a PACE program
agreement must contain information about the Medicaid capitation rate
and the methodology used to calculate the Medicare capitation rate.
This requirement is based on sections 1934(d)(2) and 1894(d)(2) of the
Act, which provide that the Medicaid capitation amount and the Medicare
capitation amount, respectively, to be applied for a PO for a contract
year must be an amount specified in the PACE program agreement for the
year.
Section 460.32(a)(12) and Sec. 460.180(b) require the PACE program
agreement to specify the methodology used to calculate the Medicare
capitation rate, as opposed to the actual rate. The PACE Medicare rate
is based on Part A and B payment rates established for purposes of
payments to Medicare Advantage organizations and is subject to certain
other adjustments (see Sec. 460.180). For the Medicaid capitation
rate, however, our current regulations require the PACE program
agreement to specify the actual amount negotiated between the POs and
the SAA (see Sec. 460.32(a)(12) and Sec. 460.182(b)).
As states are moving toward more managed care delivery systems for
the long term care population, some states are redesigning their
methodologies for developing PACE Medicaid capitation rates to more
closely align with these other managed care delivery systems. Some of
the new methodologies result in Medicaid payment variations based on
factors such as frailty adjustments and performance incentive payments.
Additionally, because many states update their PACE Medicaid capitation
rates annually based on the state fiscal year, there are operational
challenges associated with updating the PACE program agreement
appendices to reflect changes to the Medicaid rates because they are
not necessarily updated consistent with a PACE program agreement's
contract year. As a result, we believe it is not always practical to
include the actual Medicaid capitation rates in the PACE program
agreement. Therefore, we are proposing to amend Sec. 460.32(a)(12) to
require that the program agreement include the Medicaid capitation
rates or Medicaid payment rate methodology, as well as the methodology
used to calculate the Medicare capitation rate. Medicaid capitation
rates are developed and updated by the states (in negotiation with the
POs) and approved by CMS. Operationally, states submit documentation to
CMS to support their proposed PACE Medicaid capitation rates. CMS
reviews the documentation to ensure the proposed rates are in
compliance with the requirements of Sec. 460.182, and provides the
state with written approval of the rates. The Medicaid capitation rates
are then communicated to the POs by the state in writing.
We are also interested in seeking, more generally, comments
regarding other modifications we might make to the required content of
the PACE program agreement, specifically, those cited at Sec.
460.32(a) and Sec. 460.182(d). We are particularly interested in
comments regarding the need for capturing the level of detail currently
required within the agreement itself, along with updated information as
may be necessary throughout the contract period. Much of the required
program agreement content relates to operational components of the PO's
program. Our expectation is that POs regularly review and update this
information, particularly as it relates to policies and procedures, to
ensure its business practices are current, in accordance with
regulation and guidance, and are consistently employed. We request
comment on whether specific policies and procedures, and other existing
requirements should continue to be part of the PACE program agreement.

E. Subpart D--Sanctions, Enforcement Actions, and Termination

1. Violations for Which CMS May Impose Sanctions (Sec. 460.40)
To support PACE program integrity and to protect PACE participants,
we are proposing to amend provisions related to enforcement actions we
may take when POs fail to comply with the PACE program agreement and/or
program requirements. Currently, Sec. 460.50 identifies some causes
for CMS or an SAA to terminate a PACE agreement. Provisions authorize
terminating for cause in circumstances including, but not limited to,
uncorrected failure to comply substantially with conditions of the PACE
program or with the terms of the PACE agreement, and inability to
ensure the health and safety of participants, such as the presence of
deficiencies that CMS or the SAA determines cannot be corrected. While
current regulations reflect CMS and the SAA's authority to terminate an
organization in these circumstances, we believe that we need to clarify
our authority with respect to alternative enforcement actions in the
form of sanctions or civil money penalties (CMPs).
We propose adding a new provision to Sec. 460.40, designated as
paragraph (b), to allow CMS the discretion to take alternative actions
in the form of sanctions or CMPs when we are authorized to terminate a
PO's PACE program agreement. Consistent with the authorizations in
sections 1894(e)(6)(B) and (f)(3) and sections 1934(e)(6)(B) and (f)(3)
of the Act, this new provision aligns the PACE enforcement structure
with the enforcement structure that applies to the Medicare+Choice
program, renamed, and hereinafter referred to, as the Medicare
Advantage program. The Medicare Advantage program enforcement
authorities in sections 1857(g)(3) and (4) of the Act allow CMS the
discretion to take enforcement actions in the form of sanctions or CMPs
when CMS is authorized to terminate the organization's contract. We
propose that this authority also be utilized in the PACE program,
consistent with our statutory authority identified in section
1894(c)(6)(B) and 1934(e)(6)(B) of the Act to promote consistency with
the enforcement structure of the Medicare Advantage program. This
change will give CMS the discretion to impose sanctions and CMPs on POs
for continued noncompliance, in addition to our current authority to
take the most extreme action of termination of the PACE program
agreement. To add paragraph (b), we are proposing to redesignate the
introductory language in Sec. 460.40 as paragraph (a) and redesignate
paragraphs (a) through (i) as paragraphs (a)(1) through (9).
2. Civil Money Penalties (Sec. 460.46)
Due to the redesignation of paragraphs in Sec. 460.40, we also are
proposing to make technical, non-substantive changes to the citations
in this section to reflect the substantive and technical changes
discussed above.

[[Page 54675]]

Specifically, we are amending Sec. 460.46(a)(1) by removing the
reference ``Sec. 460.40(c) or (d)'' and adding in its place the
reference ``Sec. 460.40(a)(3) or (4)''. We are proposing to amend
Sec. 460.46(a)(2) by removing the reference ``Sec. 460.40(e)'' and
adding in its place the reference ``Sec. 460.40(a)(5)''. We are also
proposing to amend Sec. 460.46(a)(3) by removing the reference ``Sec.
460.40(f)(1)'' and adding in its place the reference ``Sec.
460.40(a)(6)(i)''. These changes reflect the new numbering of Sec.
460.40 that was discussed previously in this proposed rule.
Additionally, we are adding a new note to Sec. 460.46(a), in
accordance with the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015 (the 2015 Act) (Sec. 701 of Pub. L. 114-74).
The 2015 Act requires agencies to adjust the civil money penalties
annually for inflation. The Department of Health and Human Services
will publish all of the Department's adjusted CMP amounts at 42 CFR
1003.102. To ensure transparency, we have added a note stating that the
penalty amounts are adjusted for inflation and citing to 42 CFR
1003.102.

F. Subpart E--PACE Administrative Requirements

1. PACE Organizational Structure (Sec. 460.60)
Sections 1894(a)(3)(A)(i) and 1934(a)(3)(A)(i) of the Act require a
PO to be (or be 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. We implemented these
provisions in Sec. 460.60(a), which provides that a PO must be, or be
a distinct part of, either (1) an entity of city, county, state, or
Tribal government or (2) a private, not-for-profit entity organized for
charitable purposes under section 501(c)(3) of the Internal Revenue
Code of 1986, and it may be a corporation, a subsidiary of a larger
corporation, or a department of a corporation. In this discussion, we
will refer to all entities that meet this standard as not-for-profit
entities.
Sections 1894(h) and 1934(h) of the Act direct the Secretary to
waive the requirement that a PO be a not-for-profit entity in order to
demonstrate the operation of a PO by private, for-profit entities.
Section 4804(b) of the BBA of 1997 requires the Secretary to provide a
report to Congress on the impact of the demonstration on quality and
cost of services, including certain findings regarding the frailty
level, access to care, and the quality of care of PACE participants
enrolled with for-profit POs, as compared to not-for-profit POs.
Section 4804(b)(2) of the BBA of 1997 requires the report to Congress
to include findings on whether any of the following four statements is
true with respect to the for-profit PACE demonstration:
1. The number of covered lives enrolled with entities operating
under demonstration project waivers under sections 1894(h) and 1934(h)
of the 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).
2. The population enrolled with such entities is less frail than
the population enrolled with other POs.
3. Access to or quality of care for individuals enrolled with such
entities is lower than such access or quality for individuals enrolled
with other POs.
4. 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.
(We refer to these statements collectively as the BBA statements.)
Under sections 1894(a)(3)(B)(ii) and 1934(a)(3)(B)(ii) of the Act,
after the date the report is submitted to Congress, the requirement
that a PO be a not-for-profit entity will not apply unless the
Secretary determines that any of the BBA statements are true.
In 2008, Mathematica Policy Research completed a study of the
permanent not-for-profit POs.\4\ An interim report to Congress based on
this study was submitted in January 2009. At the time of the 2008
Mathematica study, no for-profit entities had enrolled in the PACE
demonstration. Therefore, neither report assessed a for-profit PACE
population nor did the interim report address the BBA statements.
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\4\ A copy of the 2008 Mathematica study results can be found
here: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Downloads/Beauchamp_2008.pdf.
---------------------------------------------------------------------------

From 2012 to 2013, Mathematica, under contract with CMS, conducted
a study to address quality of and access to care for participants of
for-profit POs, specifically focusing on the third BBA statement. The
2013 Mathematica report also included material that provided insight
into the first and second BBA statements.\5\ Based on the two
Mathematica studies, HHS prepared and submitted the report to the
Congress on May 19, 2015. A copy of the report to Congress can be found
at https://innovation.cms.gov/Files/reports/RTC_For-Profit_PACE_Report_to_Congress_051915_Clean.pdf.
---------------------------------------------------------------------------

\5\ A copy of the 2013 Mathematica study results can be found
here: https://innovation.cms.gov/Files/reports/pace-access-qualityreport.pdf.
---------------------------------------------------------------------------

As detailed in the report, HHS could not conclude that any of the
four BBA statements were true. First, the number of covered lives
enrolled with for-profit POs was not fewer than 800, and the sample
size for the survey examining BBA statements two and three was large
enough to make statistically significant determinations of differences.
The report stated that HHS could not conclude that for-profit PACE
participants are less frail than not-for-profit PACE participants. It
also stated that HHS could not conclude that for-profit PACE
participants experienced systematic adverse differences in quality of
care or access to care as compared to not-for-profit PACE participants.
Finally, expenditures were equal between for-profit and not-for-profit
POs after controlling for beneficiary risk score, organization frailty
score, and county rates, so there would not have been an increase in
expenditures if participants in the for-profit POs had been enrolled
with a not-for-profit PO.
Based on the findings in the report to Congress, we determined that
under sections 1894(a)(3)(B) and 1934(a)(3)(B) of the Act, the
requirement that a PO be a not-for profit entity would no longer apply
after May 19, 2015 (the submission date of the report to Congress).
Because the statutory not-for-profit restriction no longer applies, we
are proposing to remove the corresponding restriction in Sec.
460.60(a) in its entirety. We propose to redesignate Sec. 460.60(b),
(c), and (d) as Sec. 460.60(a), (b), and (c).
In addition, we propose to revise current paragraph (d)(3)
(redesignated paragraph (c)(3)) regarding changes in the organizational
structure of a PO and add a new paragraph (d) to address PO changes of
ownership. Section 460.60(d)(3) currently provides that a PO planning a
change in organizational structure must notify CMS and the SAA, in
writing, at least 14 days before the change takes effect. We have
stated in guidance that a change in organizational structure is one
that may affect the philosophy, mission, and operations of the PO and
affect care delivery to participants, and would include any change in
ownership (see PACE Manual, Ch. 2, section 20.3).
In the 1999 IFC (64 FR 66241) we required POs to notify both CMS
and the SAA at least 60 days prior to any change in their
organizational structure and obtain advance approval for any change
that involved a change of ownership. In the 2006 final rule (71 FR
71264), we discussed the comments we

[[Page 54676]]

received on this provision and explained it was not our intent to
require POs to notify CMS and the SAA in writing every time there was a
change in personnel or a change in the line of reporting of direct
participant care staff. Based on comments that the 60-day timeframe was
unnecessary, we elected to change the requirement to the 14-day
requirement that is currently in place. We also deleted the requirement
that changes in organizational structure must be approved in advance by
CMS and the SAA, agreeing with commenters that POs have the ability to
make such business decisions based on their individual circumstances.
As CMS and the SAA are responsible for the health care provided to
participants, we retained the 14-day notification requirement in Sec.
460.60(d)(3) to allow CMS and the SAA sufficient time to monitor
whether the change is having a substantial impact on the participants
or their care. However, we reiterated that in the event of a change of
ownership, we would apply the general provisions described in the
Medicare Advantage regulations at Sec. 422.550.
Based on our experiences with PO changes of ownership since we
published the 2006 final rule, we no longer believe 14 days gives us
enough time to review and process a change of ownership. A change of
ownership is significantly different from other organizational changes
in that it results in the acquiring entity assuming the
responsibilities under the PACE program agreement. We need additional
time to determine whether the acquiring entity meets statutory and
regulatory requirements for entering into a PACE program agreement. Our
ultimate responsibility is to the PACE participants, and we need to
ensure that an entity is able to assume and fulfill the
responsibilities of a PO under the PACE program agreement.
Moreover, the process to effectuate a change of ownership
transaction in our systems requires more time than the 14-day timeframe
in the current regulation. For example, a minimum of 6 weeks is needed
to effectuate changes in our payment systems for the new owner. A 60-
day advance notification requirement is more consistent with that
timing. We also want our regulations to be clear that the requirements
in 42 CFR part 422, subpart L (Effect of Change of Ownership or Leasing
of Facilities During Term of Contract), which apply to MAOs under the
Medicare Advantage program, apply to POs in a change of ownership
scenario. Therefore, we propose to amend newly redesignated paragraph
(c)(3) to indicate that the 14-day timeframe does not apply to changes
of ownership, and to add new paragraph (d), which would specify that a
PO planning a change of ownership must comply with all requirements in
42 CFR part 422, subpart L, and must notify CMS and the SAA, in
writing, at least 60 days before the anticipated effective date of the
change. We believe this will provide the time we need to determine if
the entity acquiring the PO meets all PACE requirements and will be
able to continue providing quality care to the participants of the PO,
and to reflect the change in our systems. We also believe the amended
language would provide greater clarity to POs as to the requirements
that will apply in change of ownership scenarios. We believe the
Medicare Advantage requirements for changes of ownership in 42 CFR part
422, subpart L, are appropriate for the PACE program. We will only
enter into a PACE program agreement with an entity that is determined
to meet PACE program requirements.
For the purposes of this provision, any change of ownership as
defined in Sec. 422.550(a), such as an asset transfer, a merger, or
change in partnership, would require a novation agreement, where the
contract is substituted for the former contract. POs will need to
follow all change of ownership requirements in 42 CFR part 422, subpart
L, and must submit all of the necessary documents to CMS for review
within the allotted timeframes. Upon CMS's determination that the
conditions for CMS approval of a novation agreement are met, a new PACE
program agreement will be executed with the acquiring entity.
2. Governing Body (Sec. 460.62)
Section 460.62 focuses on the ability of the PO's governing body to
provide effective administration in an outcome-oriented environment. As
we have previously explained in the 1999 IFC (64 FR 66241) and the 2006
final rule (71 FR 71264), the governing body guides operations and
promotes and protects participant health and safety, and it is legally
and fiscally responsible for the administration of the PO.
Additionally, the governing body must create and foster an environment
that provides quality care that is consistent with participant needs
and the program mission. To that end, we are proposing to revise the
language in Sec. 460.62(a)(7) and to add new paragraph (a)(8).
Currently, Sec. 460.62(a)(7) references a ``quality assessment and
performance improvement'' program. In addition to replacing that term
with ``quality improvement,'' as discussed previously in section II.A.
of this proposed rule, we are also proposing to add a reference to the
quality improvement program requirements in Sec. 460.130, to make it
clear that the governing body is ultimately responsible for ensuring
the PO meets those requirements.
In addition, as discussed later in this section, we are proposing
in a new Sec. 460.63 to require that all POs adopt and implement
effective compliance oversight. Because the governing body is both
legally and fiscally responsible for administration of the PO, and is
responsible for ensuring that the organization provides quality care
(see Sec. 460.62(a)), we believe adoption and implementation of
compliance oversight requirements is the responsibility of the
governing body. Having legal responsibility over the governance of the
organization requires ensuring that the organization complies with
federal and state regulations, adheres to contract requirements, and
minimizes waste and abuse. To that end, we are proposing to add a new
Sec. 460.62(a)(8) that specifies the governing body of the PO must
have full legal authority and responsibility for adopting and
implementing effective compliance oversight as described in Sec.
460.63.
3. Proposed Compliance Oversight Requirements
Compliance programs, as found in the Medicare Advantage (MA) and
Medicare Part D programs, have long been recognized as key to
protecting against fraud, waste, and abuse. The importance of these
programs has been highlighted by several of our oversight bodies. As is
authorized by sections 1934(f)(3) and 1894(f)(3) of the Act, we are now
proposing to adopt compliance oversight requirements in the PACE
regulations. Specifically, we would require each PO to have a
compliance oversight program that is responsible for monitoring and
auditing their organization for compliance with our regulations.
Additionally, we would require POs to have measures that prevent,
detect and correct non-compliance with CMS's program requirements as
well as measures that prevent, detect, and correct fraud, waste, and
abuse. This is a proposed new section at Sec. 460.63, entitled
``Compliance Oversight Requirements.''
In determining what compliance oversight CMS should require of all
POs, we considered as potential models the compliance program
requirements for Medicare Part C organizations at Sec.
422.503(b)(4)(vi) and the compliance program requirements for Part D
sponsors at Sec. 423.504(b)(4)(vi). POs offering qualified
prescription drug coverage under Part D are already required to have a
compliance program

[[Page 54677]]

as a part of their Part D benefit, however, specific requirements of
the Part D compliance program were waived for all POs. The Part D
application took into account PACE as a direct care provider as well as
a payer, and it weighed the importance of maintaining compliance with
CMS regulations with the need for flexibility as a direct care
provider. All Part D compliance program elements were waived except the
two elements proposed in this regulation.
In Sec. 460.63, we propose to establish that the two elements of a
Part D compliance program required of POs participating in Part D will
become compliance oversight requirements for the PO as a whole.
Specifically, we propose to require each PO to adopt and implement
effective compliance oversight, which includes measures that prevent,
detect and correct non-compliance with CMS's program requirements as
well as measures that prevent, detect and correct fraud, waste and
abuse. We propose that the compliance oversight program in PACE
include, at a minimum: (1) The establishment and implementation of an
effective system for routine monitoring and identification of
compliance risks, which should include internal monitoring and audits
and, as appropriate, external audits, to evaluate the PO, including
contractors, compliance with CMS requirements and the overall
effectiveness of the compliance oversight program; and (2) the
establishment and implementation of procedures and a system for
promptly responding to compliance issues as they are raised,
investigating potential compliance problems as identified in the course
of self-evaluations and audits, correcting such problems promptly and
thoroughly to reduce the potential for recurrence, and ensuring ongoing
compliance with our requirements. Included in this proposal would be
the requirements that a PO: (1) Conduct a timely and reasonable inquiry
if evidence of misconduct relating to payment or delivery of items or
services is discovered, (2) conduct appropriate corrective action in
response to potential violations (for example, repayment of
overpayments or disciplinary actions against responsible employees),
and (3) have procedures to voluntarily self-report potential fraud or
misconduct to CMS and the SAA. The PO should already have these
elements implemented for their Part D benefit, but they would need to
expand these efforts to cover all of the services provided by the PO.
POs are not currently required to conduct internal organization
wide monitoring or auditing efforts. Through our experiences with MA
and Part D organizations, we believe that conducting monitoring and
auditing is key to identifying and correcting issues of non-compliance
with CMS requirements. We believe that by adding these two compliance
oversight provisions we are balancing the duty of a PO to ensure
compliance with CMS requirements with the need for flexibility as a
provider of service. POs will also benefit from improving their ability
to identify and correct compliance risks within their own organization.
Additionally, our proposal requires the PO to implement appropriate
corrective action in response to any identified issues of non-
compliance that POs may discover. These elements are important
safeguards to protect against fraud, waste, and abuse, and to ensure
POs are compliant with CMS requirements. We believe our proposal for
POs to adopt these compliance oversight requirements is a reasonable
approach and will ensure POs are identifying and correcting potential
non-compliance at the earliest possible stage.
If finalized, we intend to verify compliance with this new
requirement through monitoring or auditing of the PO.
4. Personnel Qualifications (Sec. 460.64)
Section 460.64 sets forth the personnel qualifications for staff
with direct participant contact. In the 2006 final rule (71 FR 71267),
we added a requirement at Sec. 460.64(a)(3) that all personnel that
have direct participant contact must have a minimum of 1 year of
experience with a frail or elderly population. Our rationale was that
the PACE population is comprised of frail or elderly individuals who
must be cared for by staff with the specific training and experience
necessary to understand the complexities and differences in geriatric
patients.
However, we are concerned that many POs, especially those in rural
settings, may have candidates for PO staff positions who meet all other
qualifications for a specific position under Sec. 460.64(a) but do not
have 1 year of experience working with the frail or elderly population.
We have approved several waivers of this requirement. For example, this
situation often arises for positions such as van driver or
transportation coordinator. We have received anecdotal reports that
some POs encounter van drivers who have many years of relevant
experience as school bus drivers but are unable to hire these drivers
based on the requirement that staff with direct participant contact
have 1 year of experience working with the frail or elderly population.
We also have approved this type of waiver request for registered nurses
(RNs), social workers, and other direct care providers.
We believe that POs should be able to hire individuals who meet all
other qualification requirements under Sec. 460.64(a) except for the 1
year of experience requirement under paragraph (a)(3), and provide
training to these individuals upon hiring. This required training may
be provided either through a training entity or directly by the PO.
This training must be based on industry standards in order to provide
these individuals with the skills necessary to work with the frail or
elderly population in PACE. For example, through training, an
individual would be taught about the complexities and differences in
geriatric patients, and that he or she needs to be gentler, more
patient and more observant than with a healthy, younger population.
Therefore, we are proposing to amend Sec. 460.64(a)(3) to state that a
member of the PO's staff (employee or contractor) who has direct
participant contact must have 1 year of experience working with a frail
or elderly population or, if the individual has less than 1 year of
experience but meets all other requirements under paragraph (a) of
Sec. 460.64, must receive appropriate training from the PACE
organization on working with a frail or elderly population upon hiring.
This proposal would afford POs the flexibility to hire an otherwise
qualified individual with less than 1 year of experience working with
the frail or elderly population and subsequently provide the requisite
training.
Current language in Sec. 460.64(a)(4) requires staff with direct
participant contact to meet a standardized set of competencies for a
specific position established by the PO and approved by CMS before
working independently. We continue to believe POs must establish a
competency evaluation program for direct participant care staff as
required by Sec. 460.71(a)(2) and discussed in the 2006 final rule (71
FR 71267) to ensure that staff have the skills, knowledge and abilities
needed to deliver safe care to participants. However, we do not believe
it is necessary for CMS to approve those competency evaluation programs
prior to their use. CMS expects the PO to use current industry
standards. Therefore, we propose to revise to this paragraph to remove
the reference to CMS approval. We also are proposing to make technical,
non-substantive changes to the language in

[[Page 54678]]

paragraph (a) by changing the order of the current language in order to
make the provision clearer and more concise.
5. Training (Sec. 460.66)
Section 460.66 requires the PO to provide training for staff
members and to develop a specific training program for personal care
attendants (PCAs). Paragraph (b) requires the PO to develop a training
program for each PCA in order to establish the individual's competency
in furnishing personal care services and specialized skills associated
with the specific care needs of individual participants. Paragraph (c)
states that PCAs must exhibit competency before performing personal
care services independently. We are proposing to redesignate Sec.
460.66(b) and (c) to Sec. 460.71, ``Oversight of Direct Participant
Care,'' as new paragraphs (c) and (d), respectively, because Sec.
460.71 already includes requirements regarding training of staff and
competency evaluations for employees and contracted staff furnishing
care directly to participants. We believe including all of the related
requirements in the same section would reduce confusion over applicable
requirements. We are not proposing any changes to the language in Sec.
460.66(a) but are proposing to remove the paragraph designation of
paragraph (a).
6. Program Integrity (Sec. 460.68)
Section 460.68 was established to guard against potential conflicts
of interest and certain other risks individuals and organizations could
present to the integrity of the PACE program. Section 460.68(a)
addresses risks presented by a PO employing or contracting with persons
with criminal convictions. Section 460.68(a)(1) addresses individuals
and organizations who have been excluded from participation in the
Medicare or Medicaid programs. Section 460.68(a)(2) addresses
individuals and organizations who have been convicted of offenses
related to their involvement in Medicaid, Medicare, other health
insurance or health care programs or social service programs under
title XX of the Act. Section 460.68(a)(3) currently states that a PO
must not employ individuals or contract with organizations or
individuals in any capacity where an individual's contact with
participants would pose a potential risk because the individual has
been convicted of physical, sexual, drug, or alcohol use.
We believe that the current language in Sec. 460.68(a) may not be
tailored to effectively mitigate the risks that employing or
contracting with certain individuals and organizations with prior
convictions may pose to the PACE program, while still allowing POs to
hire and contract with individuals who have had issues in their past
that do not pose a risk to the PACE program. Accordingly, we are
proposing to amend Sec. 460.68(a) by adding clarifying language to
current paragraph (a)(3) and by adding two new paragraphs (a)(4) and
(5).
The current language in Sec. 460.68(a)(3) may have, in some cases,
been overbroad so as to impair the PO's ability to hire or contract
with appropriate staff. For example, under the current regulation, a PO
is precluded from employing an individual with a conviction related to
underage drinking, who has not had a conviction in adulthood, who is an
otherwise appropriately qualified individual to work in a PO, and who
would pose no foreseeable threat to participants. In other instances,
however, it is possible that an individual's past criminal conviction
or convictions related to physical, sexual, drug, or alcohol abuse
could provide POs with reason to believe that the individual may pose a
threat of harm to participants. For example, there is a foreseeable
risk of harm to participants if a PO employs a transportation driver
who has a history of multiple DUI convictions. We believe that it is
important for POs to consider an individual's past criminal convictions
and the potential risk to participants; however, we do not want to
limit POs' ability to hire or contract with qualified individuals. This
reflects the direction we have taken for long-term care facilities
(see, for example, Sec. 483.13(c)(1)(ii)), where specific restrictions
are focused on individuals that are found guilty of abusing, neglecting
or mistreating nursing home residents.
As such we are proposing to amend the language at Sec.
460.68(a)(3) to enable POs to make a determination as to whether an
individual's contact with participants would pose a potential risk
because the individual has been convicted of one or more criminal
offenses related to physical, sexual, drug, or alcohol abuse or use. We
note that POs are still bound by state laws governing the hiring of
individuals that provide care and services to the frail elderly in
state programs. We also note that the current language in Sec.
460.68(a)(3), which refers to ``drug, or alcohol abuse'' does not
parallel the terminology used in criminal statutes, which often do not
use the term ``abuse'' to describe the misconduct at issue, and also
does not take into account criminal convictions that could be related
to drug, or alcohol use, such as DUIs, or drunken and disorderly
conduct. We are therefore proposing to amend the language to include
``drug, or alcohol abuse or use.''
Although we do not want to foreclose POs from employing or
contracting with qualified individuals or organizations that would pose
no harm to participants despite past convictions, we are proposing to
add language in paragraphs (a)(4) and (5), to impose additional
limitations on POs employing or contracting with individuals or
organizations that may pose a risk to participants. In new paragraph
(a)(4), we are proposing to add a restriction stating that a PO must
not employ individuals or contract with organizations or individuals
who have been found guilty of abusing, neglecting, or mistreating
individuals by a court of law or who have had a finding entered into
the state nurse aide registry concerning abuse, neglect, mistreatment
of residents, or misappropriation of their property. This language
parallels regulatory restrictions applicable to Long Term Care
facilities in Sec. 483.13(c)(1)(ii). We believe these safeguards
intended to protect residents in long term care facilities are equally
appropriate protections for participants in the PACE program. In
paragraph (a)(5), we are proposing to add a restriction stating that a
PO must not employ individuals or contract with organizations or
individuals who have been convicted of any of the crimes listed in
section 1128(a) of the Act. These offenses, which are bases for
mandatory exclusion from federal health care programs, are: (1)
Conviction of program-related crimes; (2) conviction relating to
patient abuse; (3) felony conviction relating to health care fraud; or
(4) felony conviction relating to controlled substance. Because we are
proposing to add two paragraphs to the current three paragraphs in
paragraph (a), we are proposing to remove the word ``or'' at the end of
paragraph (a)(2). We also invite public comment on whether we should
extend this provision to restrict hiring with respect to those with
certain criminal justice histories to also include those with current
restraining orders against them.
7. Contracted Services (Sec. 460.70)
Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act state that,
under a PACE program agreement, a PO must furnish items and services to
PACE participants directly or under contract with other entities.
Accordingly, we require in Sec. 460.70 that all administrative or
care-related services, except for emergency services as

[[Page 54679]]

described in Sec. 460.100, that are not furnished directly by a PO
must be obtained through contracts that meet the requirements specified
in regulations. We are seeking input on whether contracted services
authorized by the PO or services operated directly by the PO should
comply with the Home and Community-Based Settings (HCBS) regulation at
Sec. 441.301(c)(4) when non-institutional settings are used to house
and/or provide services to PACE participants, provided they do not
conflict with requirements under this section. The HCBS settings
requirements apply broadly to many different Medicaid authorities,
including state plan services and waivers, such as sections 1915(c),
1915(i), and 1915(k) of the Act. Because POs already support the
majority of participants in non-institutional settings, we are seeking
comments on whether or not CMS should apply the requirements to POs.
Although we are not proposing any changes in this proposed rule
requiring compliance with Sec. 441.301(c)(4) when non-institutional
settings used to house and/or provide services to PACE participants, we
are requesting comments on possible proposals to do so in future
rulemaking. Changes we are considering and on which we are soliciting
comments include:
Adding a new paragraph Sec. 460.70(b)(1)(iv) stating, a
contractor must comply with the Home and Community-Based Settings
(HCBS) regulation at Sec. 441.301(c)(4) when non-institutional
settings are used to house, provide services to, or house and provide
services to PACE participants, provided they do not conflict with
requirements under this section.
Adding a new paragraph Sec. 460.98(b)(4) stating, the PO
must comply with the Home and Community-Based Settings (HCBS)
regulation at Sec. 441.301(c)(4) when non-institutional settings are
used to house, provide services to, or house and provide services to
PACE participants, provided they do not conflict with requirements
under this section.
In this proposed rule, we are proposing several revisions
concerning contracts with entities that furnish administrative or care-
related services. Section 460.70(d)(5) specifies the required terms for
contracts with entities that furnish administrative or care-related
services. Sections 460.70(d)(5)(vi) through (ix) address additional
contract requirements where the PO chooses to contract with individuals
as IDT members or key administrative staff. Although the current
provisions do not explicitly reference those individuals, this was our
intent when we adopted the requirements in the 2002 IFC (see 67 FR
61498, 61505) and when we addressed these requirements in the 2006
final rule (see 71 FR 71270, 71335). This is also how we have
interpreted the regulation in practice, however, we understand it has
caused confusion for POs. To make the regulation clearer and reduce
confusion, we are proposing to add a new paragraph (d)(6) under which
we are proposing to redesignate Sec. 460.70(d)(5)(vi) through (ix) as
Sec. 460.70(d)(6)(i) through (iv) and state that these contract
requirements apply to individuals providing contracted services to the
IDT or performing the duties of the program director or medical
director. We are also proposing to make a technical change to the
language in former Sec. 460.70(d)(5)(vii), proposed Sec.
460.70(d)(6)(ii), to change ``meeting'' to ``meetings.''
We are proposing to make a technical change to Sec. 460.70(e)(2)
to change ``PACE Center'' to ``PACE center'' consistent with the
definition in Sec. 460.6, and other references throughout the
regulation. We are also proposing to revise Sec. 460.70(e)(2) to
correct the reference contained in that section by changing Sec.
460.98(d) to be Sec. 460.98(c).
8. Oversight of Direct Participant Care (Sec. 460.71)
Section 460.71 identifies PO oversight requirements for employees
and contracted staff with direct patient care responsibilities.
Paragraph (a) requires the PO to ensure that all employees and
contracted staff furnishing care directly to participants demonstrate
the skills necessary for performance of their position, and further
requires, under paragraph (a)(1), that the PO provide an orientation to
all employees and contracted staff. Paragraph (b) requires the PO to
develop a program to ensure that all staff furnishing direct
participant care services meet certain requirements, including, under
paragraph (b)(4) that they are free of communicable diseases and are up
to date with immunizations before performing direct patient care.
We are proposing to make some technical, non-substantive changes to
paragraph (a)(1) that would make the provision more concise. We are
also proposing to amend paragraph (b)(4). Our intent when we amended
Sec. 460.71 in the 2006 final rule was to reflect our current policy
described in Sec. 460.64(a)(5), which states that PACE staff
(employees or contractors) who have direct participant contact must be
medically cleared for communicable diseases and have all immunizations
up-to-date before engaging in direct participant contact (see 71 FR
71273). We note that Sec. 460.71(b)(4) was not amended in a consistent
manner, which we understand caused confusion among POs about whether to
attach the same meaning to ``medically cleared for communicable
diseases'' and ``free of communicable diseases.'' Therefore, we are
proposing to amend Sec. 460.71(b)(4) by referencing the language
previously added to Sec. 460.64(a)(5) so that both sections are
consistent and contain the same language.
As noted previously in our discussion of proposed changes to Sec.
460.66, we propose to move paragraphs (b) and (c) of Sec. 460.66
related to direct participant care to Sec. 460.71(c) and (d),
respectively.
9. Physical Environment (Sec. 460.72)
Section 460.72 addresses requirements for the physical environment
of the PACE center, including those pertaining to space and equipment,
fire safety, and emergency and disaster preparedness. CMS previously
issued a proposed rule under the Medicare and Medicaid programs that,
if finalized, would affect the PACE requirements at Sec. 460.72.
Specifically, in the December 27, 2013 Federal Register (78 FR 79802),
CMS published a proposed rule titled ``Medicare and Medicaid Programs;
Emergency Preparedness Requirements for Medicare and Medicaid
Participating Providers and Suppliers; Proposed Rule.'' The rule
proposed to establish national emergency preparedness requirements for
17 types of Medicare- and Medicaid-participating providers and
suppliers, including POs, to ensure that they adequately plan for both
natural and man-made disasters, and coordinate with federal, state,
tribal, regional, and local emergency preparedness systems. Regarding
PACE, the proposed rule generally would remove the current PO emergency
preparedness requirements at Sec. 460.72(c)(1) through (5) and
incorporate them into a new proposed Sec. 460.84, ``Emergency
preparedness.'' For a complete discussion of the PACE emergency
preparedness proposal, see 78 FR 79107 through 79108, 79185.
As with all rulemaking, the public was afforded an opportunity to
comment on these proposed revisions during the notice and comment
period. CMS intends to address the comments and any changes to the PACE
program through that rulemaking and not in this proposed rule.
10. Marketing (Sec. 460.82)
Section 460.82 addresses requirements governing the marketing

[[Page 54680]]

activities of POs. Section 460.82 provides special language
requirements, and paragraph (c)(1) states that a PO must furnish
printed marketing materials to prospective and current participants in
English and in any other principal languages of the community. We are
proposing to further clarify this requirement by defining what we mean
by ``principal languages of the community.'' As we stated in the 2006
final rule (71 FR 71279), we believe the determination of a principal
language of the community is a state determination. However, we
recognize that not all states have an established standard for when a
language is considered to be a principal language of the community (in
other words, a language threshold). Where a state has not established
such a standard, we are proposing the following standard would be
applied--a principal language of the community would be any language
spoken in the home by at least 5 percent of the individuals in the PO's
service area. We refer to any language spoken ``in the home'' because
U.S. Census data identifies the principal language as the primary
language spoken in the home. We established a similar 5 percent
language threshold for marketing materials in the Medicare Advantage
program (see Sec. 422.2264(e)), and we believe this threshold is also
appropriate for PACE. Moreover, we strive to create harmony across
program requirements when feasible. This reduces complexity for those
organizations that operate multiple CMS programs. Currently, in the
Medicare Advantage program, we determine which MA organizations must
provide translated marketing materials by using the U.S. Census
Bureau's American Community Survey (ACS) data, and we then communicate
that information to plans via HPMS. If we finalize this proposal, we
would use the same approach in PACE. We note that our proposal does not
aim to replace any state-based language thresholds; rather the goal is
to provide a standard in instances where a state standard does not
exist. Additionally, this proposal would not preclude POs from
producing materials in alternative languages when those languages are
spoken by less than 5 percent of the individuals in the PO's service
area, rather it aims to set a more clear standard for when furnishing
such materials is a requirement.
Paragraph (e) pertains to prohibited marketing practices and places
certain restrictions on PO employees and agents. Paragraph (e)(3)
states that gifts or payments to induce enrollment are prohibited. As
we stated in the 2006 final rule, this provision does not prevent a PO
from offering gifts of a nominal value (see 71 FR 71279). For example,
as we explained in the 2006 final rule, offering gifts to potential
enrollees that attend a marketing presentation is permitted as long as
these gifts are of a nominal amount and are provided whether or not the
individual enrolls in the PACE program. The gift cannot be a cash gift
or be readily converted into cash regardless of the amount. To ensure
that our regulations reflect this distinction, we are proposing to
amend paragraph (e)(3) to specify that gifts or payments to induce
enrollment are prohibited, unless the gifts are of nominal value as
defined in CMS guidance, are offered to all potential enrollees without
regard to whether they enroll in the PACE program, and are not in the
form of cash or other monetary rebates. CMS currently defines ``nominal
value'' in section 30.10 of the PACE Marketing Guidelines (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/pace111c03.pdf) to mean an item worth $15 or less, based on the retail
value of the item, which is consistent with the values in the marketing
guidelines under the Medicare Advantage and Medicare Part D programs.
We believe this revision to paragraph (e)(3) would preserve our goal of
ensuring that current and potential PACE participants and their
families or guardians elect PACE based on the merits of the program
versus the enticement of a gift, while clarifying that POs have the
ability to offer prospective participants a small gift such as a pen
with the organization's name and contact information without the
concern of violating the PACE marketing regulations. Similar
flexibility has been permitted under both the Medicare Advantage and
Part D programs for several years with no notable adverse impact to
participants. As such, the PACE program will continue to look to these
two programs to define the monetary value that constitutes a nominal
gift. In addition, and consistent with the Medicare Advantage and Part
D programs, the PACE regulatory definition of a nominal gift will
exclude any gifts in the form of cash or monetary rebates.
Section 460.82(e)(4) prohibits contracting outreach efforts to
individuals or organizations whose sole responsibility involves direct
contact with the elderly to solicit enrollment. Due to the particular
nature of the PACE program and the PACE population, we believe it is in
the best interest of the program to only permit POs to market their
programs through their own employees. Therefore, we are proposing
amendments to this section to specifically prohibit POs from using non-
employed agents/brokers, including contracted entities, to market PACE
programs.
The decision to enroll in a PACE program is significantly different
from the decision to enroll into other Medicare or Medicaid managed
care programs because PACE participants must agree to receive all
medical care (as well as other services) from the PO into which they
enroll. This may mean PACE participants must give up longstanding
relationships with health care providers as well as become liable for
the costs of any unauthorized services. This is an important
distinction that non-employed agents and brokers may overlook when they
market PACE programs to potential participants. Agents and brokers that
do not work for POs often sell other products, such as Medicare
Advantage and Medicare Prescription Drug Plan (PDP) products. These
products are significantly different from PACE in many respects,
including the services that are covered, the ways in which participants
receive the services, and the enrollment requirements for participants.
We are concerned that these substantial differences, combined with the
typical low enrollment numbers associated with the PACE program, make
it difficult for agents and brokers that are not employed by POs to
fully understand and explain the PACE program to potential
participants. It is important to emphasize that our concern is less
about false marketing (which connotes a malicious action) and more
about enrollment numbers not becoming the primary motivation when
marketing PACE. An independent third party would likely not have the
opportunity to develop the necessary expertise to act as agents
employed by a PO. We believe employees of the PO are the best equipped
to provide potential participants and their caregivers with accurate
information about the PO, the services it provides and the
ramifications of receiving services not approved by the PO's IDT. This
is especially important given the vulnerable nature of the PACE
population, which is elderly and frail and often has more complex
health care needs than Medicare or Medicaid managed care populations,
for which the use of non-employed agents and brokers for marketing may
be more appropriate.
We believe that only permitting POs to use employees for marketing
activities will help ensure potential

[[Page 54681]]

PACE participants fully understand the program, the rules, how to
access services, and the ramifications of not accessing services
through the PO. Accordingly, we are proposing to amend Sec. 460.82(e)
to remove the term ``agents'' and simplify the language. The revised
provision would state that a PACE organization must not use the
following marketing practices, which are prohibited. In conjunction
with that revision, we are also proposing to amend paragraph (e)(4) to
prohibit marketing by any individuals other than the employees of the
PACE organization. We realize that some POs have existing arrangements
with independent agents and brokers. We also recognize that, as with
other functions, POs may delegate such responsibilities to an outside
entity. Therefore, we are seeking comment as to whether CMS's proposed
prohibition on the use of independent agents and brokers is
appropriate. If commenters believe that this prohibition is not
appropriate, we ask for specific reasons for allowing their use,
descriptions of how POs contemplate using agents and brokers, and the
protections POs have in place to ensure accurate information is
provided to potential PACE participants.
Section 460.82(e)(5) prohibits unsolicited door-to-door marketing.
We are proposing to add language to Sec. 460.82(e)(5) specifying that
any other unsolicited means of direct contact, including calling or
emailing a potential or current participant without the individual
initiating contact, is a prohibited marketing practice under PACE.
Unsolicited contact, for example, through telephone (also known as
``cold calling'') or email, is similar to, and generally as prevalent
if not more prevalent, than door-to-door marketing, which is already
expressly prohibited under Sec. 460.82(e)(5). The purpose of this
addition is to clarify that unsolicited means of direct contact through
telephone and email are not allowed under PACE. Although we declined in
the 2006 final rule to expand this prohibition beyond door-to-door
solicitation, we stated we would continue to monitor marketing
practices by POs and would propose additional safeguards as appropriate
(see 71 FR 71279). Based on the vulnerability of the population served
by the PACE program and the increase in health care fraud that we have
seen since 2006, we believe a prohibition on other unsolicited means of
direct contact is appropriate for PACE. Moreover, such a prohibition is
consistent with our marketing requirements for MA organizations (see
Sec. 422.2268(d)) and PDP sponsors (see Sec. 423.2268(d)).
We are also proposing to remove Sec. 460.82(f), which requires
that POs establish, implement, and maintain a documented marketing plan
with measurable enrollment objectives and a system for tracking its
effectiveness. Based on the insight we have gained through years of
oversight responsibility for the PACE program, we believe the
requirement for a marketing plan is redundant. We believe that the
pertinent information captured in the plan is attainable through other
account management activities. For example, POs convey marketing
strategy in regularly scheduled meetings with their CMS Account
Managers. The CMS Account Manager is also made aware of marketing
materials and messages, as well as the intended audience for such
materials and messages, through the marketing submission and review
process. In addition, CMS has a separate method for tracking enrollment
data.

G. Subpart F--PACE Services

1. Service Delivery (Sec. 460.98)
Section 460.98 addresses service delivery under PACE. We propose to
make a technical change to the heading of Sec. 460.98(d) to replace
``PACE Center'' with ``PACE center'' for consistency with other
references in Sec. 460.98 and throughout part 460. Likewise, in
paragraph (d)(3) we would replace ``Pace center'' with ``PACE center''
for the same reason.
In addition, we are requesting public comment on potential changes
to our PACE center requirements, which originated from the PACE
Protocol. As defined in Sec. 460.6, a PACE center is a facility which
includes a primary care clinic, areas for therapeutic recreation,
restorative therapies, socialization, personal care, and dining, and
which serves as the focal point for coordination and provision of most
PACE services. Under Sec. 460.98(b)(2), PACE services must be
furnished in at least the PACE center, the home and inpatient
facilities, and under Sec. 460.98(b)(2), certain minimum services must
be furnished at each PACE center. Section 460.98(d) requires a PO to
operate at least one PACE center either in, or contiguous to, its
defined service area with sufficient capacity to allow routine
attendance by participants. A PO must ensure accessible and adequate
services to meet the needs of its participants and, if necessary, must
increase the number of PACE centers, staff, or other PACE services. If
a PO operates more than one center, each PACE center must offer the
full range of services and have sufficient staff to meet the needs of
participants.
As explained in the 2006 final rule (71 FR 71283), we believe the
success of the PACE delivery model has been predicated on the
combination of the IDT assessment, care planning, and the PACE center.
The PACE center requirement established in the original PACE Protocol
provides a point of service where the primary care clinic is located,
where services are provided, and socialization occurs with staff that
is consistent and familiar. The IDT not only works from the PACE
center, it also provides the majority of services to participants at
the PACE center, where most participants come on a regular basis to
receive the majority of their care. Attendance at the center has been
considered an important aspect of the PACE model, which helps to
differentiate it from home health care or institutional care. More
recently CMS has allowed participants to receive services at
alternative care settings. However, those services are meant to
supplement, not replace, the services that the PACE center must
furnish.
Over the years, we have received a number of requests to provide
greater flexibility with respect to the PACE center operation and
service requirements. We have heard concerns that the development costs
and the length of time required to establish a PACE center can be
significant and as well as inhibit expansion of existing programs. To
better understand the issues facing POs, we invite public comment on
ways to revise the current regulatory requirements to allow greater
flexibility with regard to the settings in which IDT members provide
PACE services, while still ensuring that PACE participants can receive
the full range of services and benefits that has made PACE such a
successful model for this population. We will use public comments to
inform future PACE rulemaking concerning how to allow greater
flexibility with regard to the settings in which IDT members provide
PACE services.
2. Emergency Care (Sec. 460.100)
Section 460.100 addresses emergency care under PACE. We are
proposing to make a technical revision to Sec. 460.100(e)(3)(i) by
replacing references to ``POs'' and ``PO'' with references to ``PACE
organizations'' and ``PACE organization,'' respectively, to make the
language consistent throughout Sec. 460.100 and with other references
in part 460.

[[Page 54682]]

3. Interdisciplinary Team (Sec. 460.102)
Section 460.102 sets forth the requirements for an IDT, which are
based on provisions in Part IV, section B of the PACE Protocol (see 64
FR 66248). As we have stated previously in preambles to rules and
subregulatory guidance (see http://cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/pace111c08.pdf), we believe a well-
functioning IDT is critical to the success of the PACE program because
the team is instrumental in controlling the delivery, quality, and
continuity of care. Further, members of the IDT should be knowledgeable
about the overall needs of the participants, not just the needs that
relate to their individual disciplines (64 FR 66248; 71 FR 71285).
Section 460.102(a)(1) requires that the PO establish an IDT at each
PACE center to comprehensively assess and meet the individual needs of
each participant. Section 460.102(b) specifies the composition of the
team and provides that it be comprised of at least the 11 members
listed in the section.
Under sections 1894(f)(2)(B)(iii) and 1934(f)(2)(B)(iii) of the
Act, the IDT approach to care management and service delivery is a
requirement that cannot be waived. However, we understand there may be
circumstances when it would be difficult for a PO to have a separate
individual fill each of the 11 IDT roles, which may be an obstacle for
the expansion of the PACE program, especially in rural areas. To
provide greater flexibility for POs, we are proposing that a PO be
permitted to have one individual fulfill a maximum of two separate
roles on an IDT when the individual meets applicable state licensure
requirements and is qualified to fill each role and able to provide
appropriate care to meet the participant's needs. For example, a
registered nurse cannot fill the role of a Master's level social worker
unless the registered nurse also has a Master's degree in social work.
Pursuant to Sec. Sec. 460.190 and 460.192, CMS and the SAA monitor POs
during the trial period and perform ongoing monitoring after the trial
period to ensure that POs are in compliance with all PACE requirements.
These monitoring activities will serve as a safeguard to help ensure
there is no negative impact to the quality of care being provided.
During these reviews, CMS and the SAA can confirm that when an IDT
member is serving in two IDT roles, participants' needs are still being
met. As such, we are proposing to revise paragraph (a)(1) to state that
the IDT must be composed of members that fill the roles described in
paragraph (b). We also are proposing to revise paragraph (b) to state
the IDT must be composed of members qualified to fill at a minimum the
following roles, in accordance with CMS guidelines. We will publish the
IDT guidelines in HPMS following publication of the final rule.
Paragraph (b) would also state that one individual may fill two
separate roles on the IDT where the individual meets applicable state
licensure requirements and is qualified to fill the two roles and able
to provide appropriate care to meet the needs of participants.
Section 460.102(b)(1) currently provides that the IDT must include
a primary care physician, and Sec. 460.102(c) requires that primary
medical care be furnished by a PACE primary care physician who is
responsible for managing a participant's medical situations and
overseeing a participant's use of medical specialists and inpatient
care. We are aware that changes in the practice of medicine and state
licensing laws have expanded the practice of non-physician
practitioners (for example, nurse practitioners), such that these
practitioners in many cases are able to fulfill the role served by the
primary care physician. Thus, including those individuals on the IDT in
the role of the primary care provider may prove to be more
operationally feasible and cost-effective, particularly in rural areas
or areas where labor costs may be high. We have approved requests by
POs to waive the requirement at Sec. 460.102(b)(1) and (c) so that
primary medical care can be furnished by someone other than a primary
care physician on the IDT, thus allowing POs to deliver care through a
non-physician primary care provider (such as a nurse practitioner or
physician assistant) or a community-based physician. We have typically
granted such waivers, and we have not encountered any issues or
concerns with the quality of care provided by non-physician primary
care providers or community-based physicians acting in this capacity on
behalf of and working collaboratively with the PACE primary care
physician or medical director.
As we explained in the 1999 IFC (64 FR 66248) and the 2006 final
rule (71 FR 71285), the role of primary care physician role on the IDT
was based on the PACE Protocol and codified in regulation. In the 2006
final rule, we explained that we considered expanding this role to
include nurse practitioners but decided to retain the PACE Protocol
requirement. We noted our view at the time that it would be acceptable
to include a nurse practitioner on the IDT, but it should be in
addition to rather than instead of a primary care physician. We stated
that such a change should be included in a proposed rule in order to
allow for public comment on this issue; and in the meantime we would
continue to assess the appropriateness of allowing nurse practitioners
to assume the rule of the primary care physician consistent with state
licensure requirements for nurse practitioners.
As discussed previously in this proposed rule, the PACE program
agreement has replaced the PACE Protocol. As with certain other
requirements that were based on the PACE Protocol, we believe the
composition of the IDT needs to change to reflect evolving medical
practices and technologies. We believe it is appropriate to expand the
primary care physician role on the IDT to include certain other primary
care providers. Accordingly, we are now proposing to revise Sec.
460.102(b)(1) to specify that a primary care provider, rather than a
primary care physician, must be part of the core IDT. Further, we are
proposing to revise Sec. 460.102(c)(1) to permit primary medical care
to be furnished by a primary care physician, a community-based
physician, a physician assistant (provided certain requirements are
met), or a nurse practitioner (provided certain requirements are met).
We are also proposing that Sec. 460.102(c)(2) refer to primary care
provider rather than primary care physician. These proposed changes
would allow all POs to furnish primary care through these other types
of providers, thereby reducing burden on the POs without compromising
care. For physician assistants and nurse practitioners, we are
proposing to add language in paragraphs (c)(1)(iii) and (iv) to require
that they be licensed in accordance with state law and practice within
their scope of practice as defined by state laws with regard to
oversight, practice authority, and prescriptive authority. With
increasing shortages of primary care providers across the country, we
believe affording POs the flexibility to involve other non-physician
practitioners practicing collaboratively with the PACE primary care
physicians would enable the POs to accommodate more participants and
expand their programs, without comprising quality of care. We propose
redesignating the current language in paragraph (e) as paragraph (f)
and, in a new paragraph (e), we propose to add language that references
the requirements in Sec. 460.71, which sets forth guidelines for the
oversight of employees and contracted staff that have direct patient
contact. Referencing Sec. 460.71 should make it clear to POs

[[Page 54683]]

that they must ensure that all members of the IDT demonstrate the
skills necessary for the performance of their positions as required
under Sec. 460.71. Additionally, this will require the PO to confirm
that all members of the IDT comply with state certification or
licensure requirements for direct patient care in their respective
settings. The PO and its medical director are responsible for the
oversight of all care provided to PACE participants.
Currently, Sec. 460.102(d)(3) states that the members of the IDT
must serve primarily PACE participants. The primarily served
requirement was part of the original PACE Protocol (64 FR 66249).
However, section 903 of BIPA authorized the Secretary to modify or
waive such provisions in a manner that responds promptly to the needs
of PACE programs relating to areas of employment and the use of
community-based primary care physicians. We are proposing to revise
Sec. 460.102(c)(1) to allow community-based physicians to fill the
role of primary care provider on the IDT. Community-based physicians
are different from the PACE primary care physician. The PACE primary
care physician works for the PO and is responsible for all PACE
participants within the PO. The community-based physician generally
works in a different practice, outside of the PO, but may also contract
with the PO in order to work with select PACE participants who prefer
to continue to receive their primary care services from their
community-based physician. Community-based physicians usually provide
care for the patients in community settings, such as outpatient
clinics, and many times patients in those community settings become
PACE participants. Newly enrolled PACE participants often request to
continue receiving care from their community-based physician. We want
to allow this flexibility for PACE participants because we believe it
supports the continuity of care for participants. We therefore are
proposing to amend Sec. 460.102(d)(3) to allow flexibility with
respect to community-based physicians by excluding them from the
requirement that they serve primarily PACE participants. Under this
proposal, community-based physicians would be able to continue working
in their community settings while contracting with the POs to provide
PACE services. This proposal, in combination with the proposed revision
to paragraph (b)(1), would effectively be a global waiver of the IDT
member and ``primarily served'' requirements for community-based
primary care physicians.
We also considered two alternative possibilities for revising parts
of Sec. 460.102 to provide greater flexibility to POs without
compromising quality of care. In the first alternative, we considered
deleting the requirements in Sec. 460.102(b) related to the
composition of the IDT. As noted previously, under sections
1894(f)(2)(B)(iii) and 1934(f)(2)(B)(iii) of the Act, the IDT approach
to care management and service delivery is a requirement that cannot be
waived. However, the PACE statutes do not specifically address the
composition of the IDT. We continue to believe that a well-functioning
IDT is critical to the success of the PACE program, as the team is
instrumental in controlling the delivery, quality, and continuity of
care. As we stated in the 1999 IFC (64 FR 66248), members of the IDT
should be knowledgeable about the overall needs of the patient, not
just the needs which relate to their individual disciplines. In order
to meet all of the health, psychosocial, and functional needs of the
participant, team members must view the participant in a holistic
manner and focus on a comprehensive care approach. We considered
whether to provide even greater flexibility to POs, while maintaining
our expectation of a well-functioning, knowledgeable IDT, by deleting
the IDT composition requirements in Sec. 460.102(b). Under this
alternative approach, we would expect the composition of the IDT could
be tailored based on each individual participant and the PO would
continue to assess the need for services and provide all necessary
services. Similar to our proposed revisions to Sec. 460.102(c)
discussed previously, we would require that primary care be furnished
by a PACE primary care provider. CMS and the SAA would continue to
monitor POs to ensure that participants are receiving all necessary
care. These monitoring activities would serve as a safeguard to help
ensure there is no negative impact to the quality of care being
provided.
We believe this alternative approach of deleting the IDT
composition requirements in Sec. 460.102(b) could provide greater
flexibility to POs without compromising the quality of care. We invite
public comment on this approach.
Similarly, in the second alternative, we considered deleting Sec.
460.102(d)(3), which requires that members of the IDT must serve
primarily PACE participants. Again, this requirement was based on the
PACE Protocol, which has now been replaced by the PACE program
agreement. As we stated in the both the 1999 IFC (64 FR 66249) and the
2006 final rule (71 FR 71286), for a frail elderly population, such as
is served by the PACE program, it is important to support and retain
measures that promote quality and continuity of care. If team members
serve primarily PACE participants, they are able to develop a rapport
with participants and are better able to plan for and provide their
care. Over the years, we have received and approved numerous requests
to waive the primarily served requirement for members of the IDT, such
as the primary care physician or the Master's-level social worker in
order to allow POs needed flexibility in staffing their IDTs. We have
not encountered any issues or concerns after granting such waivers.
Thus, we invite public comment on whether we should extend this
flexibility to all POs without the need to request a waiver.
4. Participant Assessment (Sec. 460.104)
Section 460.104 sets forth the requirements for PACE participant
assessments. As we explained in the 2006 final rule (71 FR 71288), the
information obtained through the participant assessment is the basis
for the plan of care developed by the IDT. As such, it is important
that the assessment be as comprehensive as possible to capture all of
the information necessary for the IDT to develop a plan of care that
will adequately address all of the participant's functional,
psychosocial, and health care needs.
Section 460.104(a) sets forth the requirements for the initial
comprehensive assessment, which must be completed promptly following
enrollment. Currently all members of the IDT must be present for the
initial assessment, representing each required clinical discipline to
appropriately assess the PACE participant's holistic needs and develop
a customized plan of care. With this proposal, to the extent an IDT
member serves multiple roles on the IDT, that member may represent the
clinical expertise for which s/he is qualified. Other team members may
be present as necessary. In Sec. 460.104(a)(2), we state that certain
members of the IDT must evaluate the participant in person as part of
the initial comprehensive assessment but, in paragraph (a)(1), we do
not specify that the initial comprehensive assessment must be an in-
person assessment. Therefore, we are proposing to add the phrase ``in-
person'' after ``initial'' in paragraph (a)(1). Our longstanding policy
has been that the initial assessment is an in-person assessment, so the
addition of this language should make this requirement clear but not
change the current practice. We also are proposing to change the
requirement that the initial

[[Page 54684]]

comprehensive assessment be completed ``promptly following enrollment''
to ``in a timely manner in order to meet the requirements in paragraph
(b) of this section.'' This would allow the PO to complete this
assessment at a time that works for the PO, but within a timely manner
so as to allow the IDT to complete the development of the plan of care
within 30 days of the date of enrollment, which is the timeframe that
we are proposing later in this discussion.
Currently, during the initial comprehensive assessment, a primary
care physician must evaluate the participant and develop a discipline-
specific assessment of the participant's health and social status. We
are proposing to change ``primary care physician'' to ``primary care
provider'' in paragraphs (a)(2)(i) and (c)(1) to be consistent with
proposed changes to the composition of the IDT in Sec. 460.102. As
discussed in section III.G.2. of this proposed rule, we are proposing
that the primary care physician role be changed to primary care
provider to allow other licensed primary care providers (for example,
nurse practitioners, physician assistants, and community-based
physicians) to be part of the core IDT.
In Sec. 460.104(a)(2), we are proposing to remove the reference to
IDT members initially evaluating participants ``at appropriate
intervals'' because the scheduling of the discipline-specific
assessments as part of the initial comprehensive assessment is up to
the POs, and we believe stating that they must occur ``at appropriate
intervals'' is unnecessary and superfluous language. We are proposing
to change the language in Sec. 460.104(a)(3) from ``individual team
members'' to ``the interdisciplinary team'' so that language is
consistent throughout these regulations and because it is the IDT's
decision whether to include other professionals in the initial
comprehensive assessment. Additionally, we are proposing to add the
word ``initial'' before ``comprehensive assessment'' so it is clear
that professionals may be included in the initial comprehensive
assessment, as opposed to a reassessment. We are proposing two changes
to Sec. 460.104(a)(4) to clarify that the initial comprehensive
assessment covers all aspects of the participant's physical, social,
and mental needs. Currently, the heading is titled ``Comprehensive
assessment criteria.'' We are proposing to revise the heading to
``Initial comprehensive assessment criteria.'' We also are proposing to
add ``in-person'' to this section to make it consistent with the
terminology in Sec. 460.104(a)(1) and (2). We believe that an initial
comprehensive assessment is a more valuable tool for identifying the
participant's need for services when performed in person.
Section 460.104(b) states that the IDT must ``promptly''
consolidate discipline-specific assessments into a single plan of care
for each participant through discussion ``in team meetings.'' The term
``promptly'' does not provide definitive direction for an IDT to know
when the discipline-specific assessment should be completed and
incorporated into a plan of care. We are proposing to change this
provision to specify that the plan of care must be completed ``within
30 days of the date of enrollment'' to remove the ambiguity of
``promptly.'' We believe that 30 days balances the need for time to
complete these activities with the need to complete these activities
within a reasonable amount of time.
Moreover, it is our understanding that some POs interpret the term
``team meeting'' as requiring members of the IDT to be physically
present in the meeting. We believe POs need the flexibility to
determine the format and location of IDT discussions to best meet the
needs of PACE participants while not burdening the IDT by requiring
these discussions to be held in face-to-face meetings. In paragraph
(b), we are proposing to change the words ``discussion in team
meetings'' to ``team discussions'' to indicate that there must be a
team discussion, but the format (for example, video conferencing,
conference call, or in-person meeting) and location of the discussion
would be at the discretion of the PO.
We also are proposing to create a new paragraph under Sec.
460.104(b). Under new paragraph (b)(1), we are proposing to state that
if the IDT determines from its assessment that any services associated
with the comprehensive assessment criteria listed in paragraph (a)(4)
do not need to be included in a participant's plan of care, the IDT
must document in the participant's plan of care the reasons such
services are not needed and are not being included. If the IDT does not
believe a PACE participant needs a certain service as it relates to the
IDT care plan assessment findings and therefore does not authorize that
service, the IDT must document the rationale for not including the
service in the plan of care. CMS expects the plan of care to reflect
that the participant was assessed for all services even where a
determination is made that certain services were unnecessary at that
time. We are proposing to move the current requirement in paragraph
(b)--that female participants must be informed that they are entitled
to choose a qualified specialist for women's health services from the
PACE organization's network to furnish routine or preventive women's
health services--to new paragraph (b)(2).
Currently, Sec. 460.104(c) sets forth the requirements for
periodic reassessments, including semiannual and annual reassessments.
Section 460.104(d) discusses the requirements for unscheduled
reassessments. Our experience has demonstrated that the requirement to
perform both semiannual and annual reassessments can be overly
burdensome and unnecessary in that participants are consistently being
monitored for changes and are already reassessed whenever there is a
change in their health status. Accordingly, we are proposing to delete
the requirement in paragraph (c)(2) requiring the annual reassessments
by the physical therapist, occupational therapist, dietician, and home
care coordinator. We are proposing to delete corresponding references
to annual reassessments in paragraph (d). We would keep the requirement
that PACE participants be reassessed semiannually, every 6 months. We
would change the list of IDT members that must conduct the semiannual
assessment to include the primary care provider, registered nurse,
Master's level social worker, and any other IDT members actively
involved in the development or implementation of the participant's plan
of care, as determined by the IDT members whose attendance is required.
We believe PACE participants should be reassessed at least every 6
months as this will better ensure that PACE participants, who are
generally frail, are receiving appropriate treatment. We are proposing
to remove ``recreational therapist or activity coordinator'' from the
list of IDT members that must participate in the semiannual
reassessment. We believe reducing the IDT members who are required to
participate in the semi-annual assessment will reduce the burden on POs
and allow the POs to allocate their resources more efficiently, while
still meeting the care needs of participants. POs have reported that
recreational therapists and activity coordinators are not needed at
every reassessment. POs further report that to require that
recreational therapists or activity coordinators be present at every
semiannual reassessment is unnecessary and can be overly burdensome.
However, recreational therapists or activity coordinators are part of
the IDT and can update the IDT on the participants' successes or needs
for

[[Page 54685]]

recreational therapy or involvement in activities. We believe that the
primary care provider, registered nurse, and Master's level social
worker can collectively determine, based on the participant's plan of
care and IDT discussions, which other IDT members should be present
during the semiannual assessment. As such, we do not believe we need to
require that the recreational therapist or activity coordinator be
present at the semiannual reassessment unless the primary care
provider, registered nurse, and Master's level social worker determine
that the recreational therapist or activity coordinator needs to be
present because that individual is actively involved in the development
or implementation of the participant's plan of care.
The requirements for semiannual reassessments are currently at
paragraphs (c)(1)(i) through (iii) and would be redesignated as
paragraphs (c)(1) through (3). In the redesignated paragraph (c)(1), we
would revise ``physician'' to ``provider'' for consistency with the
proposed revisions previously discussed in this section. We are
proposing to redesignate paragraph (c)(1)(v) as (c)(4) and revise the
provision to delete the example because we believe the example is
unnecessary.
Section 460.104(d) discusses unscheduled reassessments. As
discussed previously, we are proposing changes to paragraph (d) to
remove the reference to annual reassessments. We are proposing to
change the language in paragraph (d)(1) from ``listed in paragraph
(a)(2) of this section'' to ``listed in paragraph (c) of this
section.'' This proposal would change the requirement for unscheduled
reassessments in the case of a change in participant status so that
only the IDT members listed in paragraph (c) will have to conduct the
unscheduled reassessment. Specifically, the primary care provider,
registered nurse, Master's-level social worker, and other team members
actively involved in the development or implementation of the
participant's plan of care would conduct the participant's unscheduled
reassessment. Similarly, we are proposing to change paragraph (d)(2)
regarding unscheduled reassessments at the request of the participant
or the participant's designated representative. Instead of stating that
if a participant (or designated representative) believes that the
participant needs to initiate, eliminate, or continue a particular
service, the appropriate members of the IDT, as identified by the IDT,
must conduct an in-person reassessment, the provision would state that
if a participant (or designated representative) requests to initiate,
eliminate, or continue a particular service, the IDT members specified
in Sec. 460.104(c) must conduct an in-person reassessment. As with the
semiannual reassessments, we believe reducing the number of IDT members
that are required to conduct the unscheduled reassessments will reduce
the burden on POs and allow the POs to allocate their resources more
efficiently, while still meeting the care needs of participants.
Further, we believe that the primary care provider, registered nurse,
and Master's level social worker can collectively determine, based on
the participant's plan of care and IDT discussions, which team members
should conduct the unscheduled reassessment in this instance. We note
that, under Sec. 460.64, PO staff with direct participant contact must
only act within the scope of their authority to practice, so if the IDT
members listed in paragraph (c) believe a participant may need care
that is not within the scope of their respective practices, those
members would need to involve other IDT members as appropriate. For
these reasons, we do not believe we need to require all core members of
the IDT to conduct unscheduled reassessments.
5. Plan of Care (Sec. 460.106)
Section 460.106 requires that the IDT establish, implement,
coordinate, and monitor a comprehensive plan of care for each
participant. The purpose of the plan of care is to help support the
identification of potential or actual areas of improvement and monitor
progression and outcomes. The current regulatory language pertaining to
the basic requirement and the content of the plan of care in this
section has been described by POs as confusing and unclear. Therefore,
we are proposing to revise this section by adding requirements to
provide more clarity without changing the fundamental aspects of the
plan of care process.
First, we are proposing to change Sec. 460.106(a) from requiring
that a plan of care be developed promptly to state that the plan of
care must be developed ``within 30 days of the date of enrollment.''
The term ``promptly'' does not provide definitive direction for an IDT
to know when the discipline-specific assessments under Sec. 460.104(b)
should be completed and incorporated into a plan of care. Requiring
that the plan of care be developed within 30 days of the date of
enrollment balances the need for time to complete the assessments and
develop a plan of care with the need to complete the plan of care
within a reasonable time frame. This proposed change is consistent with
our proposed changes to Sec. 460.104(b), which we discussed previously
in this section.
Next we are proposing to add language to clarify which members of
the IDT are required to develop the plan of care within 30 days. The
proposed language states that the IDT members specified in Sec.
460.104(a)(2) must develop the plan of care for each participant based
on the initial comprehensive assessment findings. The added language
aims to clarify for POs which members of the IDT should develop the
plan of care. The IDT members in Sec. 460.104(a)(2) are members of the
IDT that are required to conduct the initial comprehensive assessment.
As under current guidance, the IDT remains responsible for developing
the plan of care based on the initial discipline-specific assessments.
Section 460.106(b) sets forth the content of the plan of care and
states that the plan of care must meet the following requirements:
Specify the care needed to meet the participant's medical,
physical, emotional and social needs, as identified in the initial
comprehensive assessment;
Identify measurable outcomes to be achieved.
We believe these requirements are appropriate, but may have, in the
past, led to confusion regarding the overall purpose, goal, creation,
implementation and follow-up process of the plan of care. Current
regulations do not explicitly require POs to follow industry standards
in developing and following care plan interventions. We believe that
adding new requirements will help POs to effectively and efficiently
identify and address each participant's care planning needs. Therefore,
we are proposing to add three new requirements to Sec. 460.106(b). In
paragraph (b)(3), we are proposing to require that the plan of care
utilize the most appropriate interventions (for example, care
improvement strategies) for each of the participant's care needs that
advances the participant toward a measurable goal and desired outcome.
In paragraph (b)(4), we are proposing to require that the plan of care
identify each intervention and how it will be implemented.
Interventions should be targeted, specific actions implemented to
improve a participant's health care outcome. And finally, in paragraph
(b)(5), we are proposing to require that the plan of care identify how
each intervention will be evaluated to determine progress in reaching
specified goals and desired outcomes.

[[Page 54686]]

H. Subpart G--Participant Rights

1. Specific Rights to Which a Participant is Entitled (Sec. 460.112)
Section 460.112 describes the specific rights of PACE participants,
including, in paragraph (b)(1), the right to be fully informed in
writing of services available from the PO:
Before enrollment;
At enrollment; and
At the time a participant's needs necessitate the
disclosure and delivery of such information to allow informed choice.
We are proposing to combine paragraphs (b)(1)(i) and (ii) into
proposed paragraph (b)(1)(i) to state that information about PACE
services will be provided ``prior to and upon enrollment'' in the PO,
and to redesignate current paragraph (b)(1)(iii) as paragraph
(b)(1)(ii), in an effort to simplify the language and regulatory
construction.
Section 460.112(b)(3) states that each participant has the right to
examine, or upon reasonable request, to be assisted in examining the
results of the most recent review of the PO conducted by CMS or the SAA
and any plan of correction in effect. We are proposing to make a
technical change to Sec. 460.112(b)(3) by deleting the language ``to
be assisted'' and replacing it with ``to be helped.'' This proposed
change is not a substantive change, but rather an effort to simplify
the language.
Sections 1894(c)(5)(A) and 1934(c)(5)(A) of the Act provide that
participants must be permitted to voluntarily disenroll from PACE
without cause at any time. Accordingly, Sec. 460.112(c)(3) states that
each PACE participant has the right to disenroll from the program at
any time. We have operationalized this requirement by allowing
participants to provide notice of voluntary disenrollment at any time
and making that disenrollment effective on the first day of the month
after the PO receives the notice. Consistent with our current practice,
we are proposing to revise paragraph (c)(3) to state that the
participant has the right to disenroll from the program at any time and
have such disenrollment be effective the first day of the month
following the date the PACE organization receives the participant's
notice of voluntarily disenrollment as set forth in Sec. 460.162(a).
As discussed in section III.J.5. of this proposed rule, we are
proposing a corresponding revision to Sec. 460.162 that would state,
in a new paragraph (a), that a voluntary disenrollment is effective on
the first day of the month following the date the PO receives the
participant's notice of voluntary disenrollment. Because POs receive a
monthly capitation payment from Medicare and/or Medicaid in advance, we
effectuate the disenrollment at the end of the capitated payment
period.
2. Explanation of Rights (Sec. 460.116)
Section 460.116 sets forth requirements for POs with respect to
explanation of rights, such as having written policies and procedures
on these rights, explaining the rights, and displaying the rights.
Section 460.116(c)(1) provides that the PO must write the participant
rights in English and in any other principal languages of the
community. Consistent with our proposal regarding marketing materials
under Sec. 460.82(c)(1), which we discuss in section III.F. of this
proposed rule, we are proposing to specify that if a state has not
established a standard for making the principal language determination,
a principal language of the community is any language spoken in the
home by at least 5 percent of the individuals in the PO's service area.
As noted previously, we established a similar 5 percent language
threshold for marketing materials in the Medicare Advantage program
(see Sec. 422.2264(e)), and we believe this threshold is also
appropriate for PACE because of the similarities in population make-up
between the Medicare Advantage program and PACE. Moreover, CMS strives
to create harmony across program requirements when feasible. This
reduces complexity for those organizations that operate multiple
programs.
Section 460.116(c)(2) states that the PO must display the
participant rights in a prominent place in the PACE center. We are
proposing to add the word ``PACE'' before the words ``participant
rights'' to specify that participant rights specific to PACE must be
displayed. During CMS audits of POs, we have observed that POs have
displayed rights pertaining to the adult day center or other rights,
and not those specific to the PACE program, in the PACE center. The
proposed language would explicitly state that the PACE participant
rights must be posted in the PACE center.
3. PACE Organization's Appeals Process (Sec. 460.122)
Section 460.122 sets forth the requirements for a PO's appeals
process. Section 460.122(c)(1) states that a PO's appeals process must
include written procedures for timely preparation and processing of a
written denial of coverage or payment as provided in Sec.
460.104(c)(3). In the 2006 final rule, we redesignated paragraph (c)(3)
as paragraph (d) in Sec. 460.104, but we inadvertently did not make
the corresponding change to the citation referenced in Sec.
460.122(c)(1) (see 71 FR 71292, 71336, and 71337). Therefore, we are
proposing to amend Sec. 460.122(c)(1) to provide the correct citation
reference to the standards for a written denial notice by changing it
from Sec. 460.104(c)(3) to Sec. 460.104(d)(2)(iv).

I. Subpart H--Quality Assessment and Performance Improvement

As discussed in section III.A. of this proposed rule, to update the
terminology to comport with that used in other CMS programs, we are
proposing to replace all references to ``quality assessment'' and
``performance improvement'' with ``quality improvement'' throughout
part 460, including the heading for subpart H and the titles of various
sections. In this section, we discuss the other changes we are
proposing to subpart H.
1. General Rule (Sec. 460.130)
Sections 1894(e)(3)(B) and 1934(e)(3)(B) of the Act require that,
under a PACE program agreement, the PO, CMS, and the SAA shall jointly
cooperate in the development and implementation of health status and
quality of life outcome measures with respect to PACE participants.
Section 460.130 requires a PO to develop, implement, maintain, and
evaluate a quality assessment and performance improvement program,
which reflects the full range of services furnished by the PO. Further,
a PO must take actions that result in improvement in its performance in
all types of care.
Section 460.140 refers to additional quality assessment activities
related to reporting requirements. We are proposing to move the
requirement in Sec. 460.140 to Sec. 460.130 as new paragraph (d), so
that all of the general rules for quality improvement would be part of
the first section in subpart H. This proposed change would leave no
requirements under Sec. 460.140, so we are also proposing to remove
Sec. 460.140.
2. Quality Assessment and Performance Improvement Plan (Sec. 460.132)
Section 460.132 sets forth our current requirements with respect to
a Quality Assessment and Performance Improvement (QAPI) plan. We are
proposing to revise the requirements for a QAPI plan in Sec. 460.132.
In addition to the terminology change that we discussed previously
(replacing all references to ``quality assessment performance
improvement'' with the term ``quality improvement''), we are

[[Page 54687]]

proposing to revise paragraph (a) to require a PO to have a written
quality improvement plan that is collaborative and interdisciplinary in
nature. The PACE program is unique in its structure in that it has a
collaborative and interdisciplinary approach in treatment of PACE
participants. We believe that a PO's quality improvement plan should
reflect this collaboration and interdisciplinary approach in its
improvement goals. That is, any time the PO's governing body develops a
plan of action to improve or maintain the quality of care, the plan
should focus on the collaborative and interdisciplinary nature of the
PACE program. For example, a PO may identify as a goal the need to
improve its organization's overall fall incident rate, and develops a
plan of action to address this need that involves soliciting
recommendations concerning this issue from its staff and contracted
resources (for example, pharmacists, physicians, social workers,
transportation providers, and physical therapists). This plan of action
is collaborative because it involves input from staff and IDT members
with experience and knowledge, and it is interdisciplinary because
those individuals have different skills, levels of education and
professional backgrounds and different perspectives on how to improve
the fall rate. We believe requiring a collaborative and
interdisciplinary quality improvement plan will help POs identify and
improve PACE quality issues more appropriately. Therefore, we are
proposing to revise paragraph (a) to require a PO to have a written
quality improvement plan that is collaborative and interdisciplinary in
nature.
3. Additional Quality Assessment Activities (Sec. 460.140)
For the reasons discussed in section III.I.1. of this proposed
rule, we are proposing to redesignate the content of Sec. 460.140 as
Sec. 460.130, and therefore we are proposing to remove Sec. 460.140.

J. Subpart I--Participant Enrollment and Disenrollment

1. Eligibility To Enroll in a PACE Program (Sec. 460.150)
In accordance with sections 1894(a)(5) and (c)(1) and 1934(a)(5)
and (c)(1) of the Act, we established Sec. 460.150 to specify the
requirements for eligibility to enroll in a PACE program. Section
460.150(c)(1) provides that, at the time of enrollment, an individual
must be able to live in a community setting without jeopardizing his or
her health or safety, and Sec. 460.150(c)(2) states that the
eligibility criteria used to determine whether an individual's health
or safety would be jeopardized by living in a community setting must be
specified in the program agreement. As we explained in the 2006 final
rule (71 FR 71309), determining whether an individual's health or
safety would be jeopardized by living in the community involves
assessing the individual's care support network as well as the
individual's health condition. This assessment is done by the PO based
upon criteria established by the state and specified in the PACE
program agreement. We are proposing to codify this longstanding policy
in our regulations by revising Sec. 460.150(c)(2) to include a
reference to the SAA criteria used to determine if an individual's
health or safety would be jeopardized by living in a community setting,
to indicate that these criteria are developed by the SAA.
2. Enrollment Process (Sec. 460.152)
Section 460.152 specifies the PO's responsibilities during the
intake process and actions required in the event a potential PACE
participant is denied enrollment because his or her health or safety
would be jeopardized by living in a community setting. Section
460.152(b)(4) states that the PO must notify CMS and the SAA if a
prospective participant is denied enrollment because his or her health
or safety would be jeopardized by living in a community setting and
make the documentation available for review. We are proposing to add
language to paragraph (b)(4) to require that such notification be in
the form and manner specified by CMS, as this would reflect our current
practice of requiring POs to provide these notifications to CMS and the
SAA electronically.
3. Enrollment Agreement (Sec. 460.154)
Section 460.154 specifies the general content requirements for the
enrollment agreement. Section 460.154(i) states that the enrollment
agreement must contain notification that enrollment in PACE results in
disenrollment from any other Medicare or Medicaid prepayment plan or
optional benefit. It further provides that electing enrollment in any
other Medicare or Medicaid prepayment plan or optional benefit after
enrolling as a PACE participant is considered a voluntary disenrollment
from PACE. We are concerned about possible misinterpretations of this
provision, and thus are proposing to add language to paragraph (i) to
state that if a Medicaid-only or private pay PACE participant becomes
eligible for Medicare after enrollment in PACE, he or she will be
disenrolled from PACE if he or she elects to obtain Medicare coverage
other than from his or her PO.
4. Other Enrollment Procedures (Sec. 460.156)
Section 460.156 specifies the documentation and information that a
PO must provide to a PACE participant who signs an enrollment
agreement, as well as to CMS and the SAA. Sections Sec. 460.156(a)(2)
and (4) state that, after the participant signs an enrollment
agreement, the PO must give the participant a PACE membership card and
stickers for his or her Medicare and Medicaid cards, as applicable,
which indicate that he or she is a PACE participant and include the
phone number of the PO, respectively. We are proposing to delete the
sticker requirement currently at Sec. 460.156(a)(4) and revise the
PACE membership card requirement at Sec. 460.156(a)(2) so the PO would
give the participant a PACE membership card that indicates that he or
she is a PACE participant and that includes the phone number of the PO.
This would not only ensure that the participant's Medicare and Medicaid
cards are not damaged if stickers are removed in the event the
participant disenrolls from PACE, but also would save participants from
having to carry their Medicare and Medicaid cards with them, a practice
we generally discourage based on the risk that a beneficiary's personal
information may be lost or exposed.
5. Voluntary Disenrollment (Sec. 460.162)
In accordance with sections 1894(c)(5)(A) and 1934(c)(5)(A) of the
Act, Sec. 460.162 states that a PACE participant may voluntarily
disenroll without cause from the program at any time. We are proposing
to retain this language in new paragraph (b) and add new paragraphs (a)
and (c). In paragraph (a), we are proposing to add language stating
that a participant's voluntary disenrollment is effective on the first
day of the month following the date the PO receives the participant's
notice of voluntary disenrollment. As described previously in our
discussion of proposed changes to Sec. 460.112(c)(3), we have
operationalized the statutory requirements regarding voluntary
disenrollment by allowing participants to provide notice of voluntary
disenrollment at any time and making that disenrollment effective on
the first day of the month after the PACE organization receives the
notice. Thus, the proposed requirement in Sec. 460.162(a) would be
consistent with our current practice.

[[Page 54688]]

Sections 1894(c)(5)(A) and 1934(c)(5)(A) of the Act state that
enrollment and disenrollment of PACE program eligible individuals in a
PACE program must be under regulations and the PACE program agreement
with certain statutory restrictions. Moreover, sections
1894(b)(1)(A)(i) and 1934(b)(1)(A)(i) of the Act state that, under the
PACE program agreement, a PO must provide all items and services
covered under titles XVIII (Medicare) and XIX (Medicaid). Through
record review during on-site audits and follow-up to family or
participant grievances and complaints, we have encountered some
instances in which a participant needed additional services and was
encouraged to voluntarily disenroll by either an employee or contractor
of the PO in an effort to reduce costs for the PO. To help prevent
this, we are proposing to affirmatively require at Sec. 460.162(c)
that POs ensure their employees or contractors do not engage in any
practice that would reasonably be expected to have the effect of
steering or encouraging disenrollment of PACE participants due to a
change in health status. We note that, under Sec. 460.40(c), a PO
would be subject to sanctions for engaging in this type of behavior--
that is, discriminating in disenrollment among Medicare or Medicaid
beneficiaries on the basis of an individual's health status or need for
health care services.
6. Involuntary Disenrollment (Sec. 460.164)
Section 460.164 specifies the conditions under which a PACE
participant can be involuntarily disenrolled from a PACE program. The
reasons for involuntary disenrollment are derived from sections
1894(c)(5)(B) and 1934(c)(5)(B) of the Act, additional statutory
requirements (for example, the PACE program agreement is not renewed,
or the participant no longer meets the state Medicaid nursing facility
level of care requirements), and the PACE Protocol. We are proposing to
redesignate paragraphs (a) through (e) as paragraphs (b) through (f)
and to add new paragraph (a) that specifies that a participant's
disenrollment occurs after the PO meets the requirements in this
section and is effective on the first day of the next month that begins
30 days after the day the PACE organization sends notice of the
disenrollment to the participant. For example, if a PACE organization
sends a disenrollment notice on April 5, the disenrollment would be
effective June 1--30 days after April 5 is May 5, and the first day of
the next month after May 5 is June 1. We are proposing to add this
requirement to make it clear when a participant's involuntary
disenrollment is effective. Additionally, we are proposing to add this
requirement to protect participants' due process, as our regulations
and guidance do not currently include an advance notice requirement. We
note that the PO must not send the disenrollment notice until the SAA
has reviewed the proposed involuntary disenrollment and determined that
the PO has adequately documented acceptable grounds for disenrollment,
as required by current paragraph (e) (proposed paragraph (f)). We
believe 30 days would provide sufficient time for an individual to
gather documentation, medical records, or other information in order to
respond to the PO's proposed disenrollment action, should he or she
disagree. Without the 30 days of advance notice, a PO could notify a
participant about an involuntary disenrollment late in the month and
make the effective date of the involuntary disenrollment the first day
of the following month, only a few days away. This would not allow
sufficient time for a participant to contest the disenrollment or to
effectively coordinate a transition to other care and services.
Section 460.164(a) currently states the reasons a participant may
be involuntarily disenrolled from PACE. Paragraph (a)(1) states that
the PO may involuntarily disenroll a participant for failing to pay, or
to make satisfactory arrangements to pay, any premium due the PO after
a 30-day grace period. As noted previously, we are proposing to
redesignate (a)(1) as paragraph (b)(1) and would restructure the
sentence to clarify that the 30-day grace period applies to both
failure to pay and failure to make satisfactory arrangements to pay any
premium due the PO. We are proposing the change because we believe the
current sentence structure creates confusion as to whether the grace
period applies to both payment of the premium ``and'' making
satisfactory arrangements to pay. The proposed revision would clarify
that an involuntary disenrollment cannot be initiated due to a
participant's failure to pay until after a 30-day grace period for the
participant to pay or to make satisfactory arrangements to pay.
Satisfactory arrangements could be, for example, a participant's
agreement to pay through installments, or agreement to pay within a
specific time period.
We also are proposing to redesignate paragraphs (a)(2) through (6)
as paragraphs (b)(4) through (8) and to add two additional reasons for
involuntary disenrollment in new paragraphs (b)(2) and (3). In
paragraph (b)(2), we are proposing new language that would permit
involuntary disenrollment if the participant, after a 30-day grace
period, fails to pay or make satisfactory arrangements to pay any
applicable Medicaid spenddown liability or any amount due under the
post-eligibility treatment of income processes as permitted under
Sec. Sec. 460.182 and 460.184. Section 1934(i) of the Act as well as
Sec. Sec. 460.182(c), 460.184, 460.152, and 460.154 pertain to these
payment amounts. Under section 1934(i) of the Act and Sec. 460.184(a),
a state may provide for post-eligibility treatment of income for
participants in the same manner as a state treats post-eligibility
income for individuals receiving services under a Medicaid waiver under
section 1915(c) of the Act. Section 460.182(c)(1) requires that the PO
accept the Medicaid capitation payment as payment in full ``except''
for payment with respect to spenddown liability and post-eligibility
treatment of income. Section 460.152(a)(1)(iv) and (v) requires that
PACE staff explain specific information to the potential participant
and his or her representative or caregiver, including any Medicaid
spenddown obligation and post-eligibility treatment of income. Section
460.154(g) requires that a participant that is Medicaid eligible or a
dual eligible be notified and required to acknowledge in writing that
he or she may be liable for any applicable spenddown liability and
amount due under the post-eligibility treatment of income process.
Operationally, a PO needs the ability to involuntarily disenroll
participants based on nonpayment of these amounts. Participants are
obligated to pay these amounts as part of the PO's overall
reimbursement for care and services provided through the program.
Moreover, we understand that a participant's failure to pay these
amounts can have a significant financial impact on the PO. Continued
insufficient reimbursement to the PO on an ongoing basis could affect
the PO's financial viability and its ability to continue operations.
CMS has previously addressed this issue for many POs through approval
of waivers, but we believe that addressing it through a regulatory
change is more efficient and is permitted under the PACE statutes.
Moreover, as with any involuntary disenrollment, an involuntary
disenrollment based on nonpayment of applicable Medicaid spenddown
liability or any amount due under the post-eligibility treatment of
income process must be reviewed by the SAA to determine that the PO has
adequately documented acceptable

[[Page 54689]]

grounds for disenrollment before it becomes effective.
In paragraph (b)(3), we are proposing to add language that would
permit involuntary disenrollment in situations where the participant's
caregiver engages in disruptive or threatening behavior. We also are
proposing to redesignate current paragraphs (b)(1) and (2) as
paragraphs (c)(1)(i) and (ii), respectively, and to add new paragraph
(c)(2) to describe what we consider to be disruptive or threatening
behavior of a participant's caregiver.
Specifically, we are proposing that a PACE participant may be
involuntarily disenrolled from the PO if a participant's caregiver
engages in disruptive or threatening behavior that jeopardizes the
participant's health or safety, or the safety of the caregiver or
others. This would include any family member involved in the
participant's care. We believe that sections 1894(c)(5)(B) and
1934(c)(5)(B) of the Act, which state that a PO may not disenroll a
participant except for engaging in disruptive or threatening behavior,
as defined in such regulations (developed in close consultation with
SAAs), could be read to include a caregiver. Further, the PACE Protocol
listed as a basis for involuntary disenrollment that the participant
``experiences a breakdown in the physician and/or team-participant
relationship such that the PO's ability to furnish services to either
the participant or other participants is seriously impaired,'' which we
believe could include disruptive or threatening behavior of a caregiver
(see 64 FR 66300).
Although we previously stated in the 2006 final rule (71 FR 71316)
that we would not include as a basis for disenrollment the disruptive
or threatening behavior of family members that are involved in the
participant's care, as we have gained more experience with PACE, we
realize that it is not always possible for a PO to establish
alternative arrangements that would not disrupt the PO's ability to
provide adequate services to the participant in situations where the
caregiver is engaging in threatening or disruptive behavior. Given the
variety of settings in which POs provide services, including the PACE
center and the participant's home, there may be situations where the
caregiver's disruptive or threatening behavior jeopardizes the health
or safety of the participant, other PACE participants, staff, or
visitors and it is not be feasible to establish alternative
arrangements. CMS has already approved waivers for involuntary
disenrollment, several of which address disruptive or threatening
caregiver behavior. The requests for waivers have come from POs that
have experienced situations where their ability to safely and
effectively care for participants is potentially compromised by the
behavior of the participant's caregiver that jeopardizes the health or
safety of others including other participants, staff, or visitors. The
proposed revision would obviate the need for those waivers, thereby
reducing the burden on POs, states, and CMS.
POs must only pursue involuntarily disenrollment of a participant
based on a caregiver's behavior after it has engaged in efforts to
resolve the situation and has documented all of those efforts. As set
forth in current paragraph (e) (proposed paragraph (f)), all
involuntary disenrollments require a review and final determination by
the SAA before they can become effective, so as to ensure that the PO
has adequately documented acceptable grounds for disenrollment. As
discussed in Sec. 460.168, when a PACE participant is disenrolled from
the PO, the PO must facilitate a participant's enrollment into other
Medicare or Medicaid program for which the participant is eligible and
must make sure medical records are available to the new providers. This
will help ensure that the participant receives needed care. Note that
we are not proposing a similar change to Sec. 460.164(b)(2) (proposed
paragraph (c)(2)), which refers to involuntary disenrollment of a
participant with decision-making capacity who consistently refuses to
comply with his or her individual plan of care or the terms of the PACE
enrollment agreement. A PO cannot involuntarily disenroll a participant
based on the caregiver's noncompliance with the participant's plan of
care or terms of the PACE enrollment agreement.
7. Effective Date of Disenrollment (Sec. 460.166)
Section 460.166 is currently titled ``Effective date of
disenrollment;'' however, it focuses on the PO's responsibilities when
disenrolling a participant. Therefore, we are proposing to change the
title to ``Disenrollment responsibilities'' to better describe the
subject of this section.
8. Reinstatement in Other Medicare and Medicaid Programs (Sec.
460.168)
Section 460.168 describes the PO's responsibility to facilitate a
participant's reinstatement in other Medicare and Medicaid programs
after disenrollment. Section 460.168(a) states that a PO must make
appropriate referrals and ensure that medical records are made
available to new providers in a ``timely manner.'' To ensure POs
interpret ``timely manner'' uniformly, we are proposing to change ``in
a timely manner'' to ``within 30 days,'' which would help ensure a
smooth transition for participants. We are proposing 30 days because we
believe this balances the need to give the PO adequate time to gather
the medical records, make copies, and deliver them to the new providers
with the need to ensure that new providers receive the medical records
as soon as possible to help ensure a smooth transition for the
participant and continued access to medications and other needed
ongoing care.

K. Subpart J--Payment

1. Medicaid Payment (Sec. 460.182)
Section 1934(d) of the Act requires a state to make prospective
monthly capitated payments for each PACE program participant eligible
for medical assistance under the state plan. The capitation payment
amount must be specified in the PACE program agreement and be less,
taking into account the frailty of PACE participants, than the amount
that would otherwise have been paid under the state plan if the
individuals were not enrolled in a PACE program. There is no national
Medicaid rate-setting methodology for PACE; rather, each state that
elects PACE as a Medicaid state plan option must develop a payment
amount based on the cost of comparable services for the state's nursing
facility-eligible population. Generally, the amounts are based on a
blend of the cost of nursing home and community-based care for the
frail elderly. The monthly capitation payment amount is negotiated
between the PO and the SAA and can be renegotiated on an annual basis.
We implemented the PACE statutory requirements for Medicaid payment
in Sec. 460.182. Section 460.182(b) states that the monthly Medicaid
capitation payment is negotiated between the PO and the SAA and
specified in the PACE program agreement, and the amount meets certain
criteria set forth in paragraphs (b)(1) through (4). Consistent with
our proposed revisions to Sec. 460.32(a)(12) of this proposed rule, we
are proposing to revise Sec. 460.182(b) to require that the PACE
program agreement contain the state's Medicaid capitation rate or the
``methodology'' for establishing the Medicaid capitation rates. As a
result of changes to the methods states are using to determine
capitation rates, which can result in varied payment based on frailty
of the population and performance incentive payments, we have found
that

[[Page 54690]]

specifying the capitation amount in the program agreement is sometimes
operationally impractical. Additionally, because many states update
their PACE Medicaid capitation rates annually based on the state fiscal
year, there are operational challenges associated with updating the
PACE program agreement appendices to reflect changes to the Medicaid
rates. We believe that providing the option of including the state's
methodology for calculating the Medicaid capitation payment amount is
consistent with the statutory requirement in section 1934(d)(2) of the
Act that the program agreement specify how the PO will be paid for each
Medicaid participant, and will result in less burden for POs, states
and CMS by eliminating the frequency of updates to the PACE program
agreement to reflect the routine changes to the PACE Medicaid
capitation rates.
We are also proposing to redesignate paragraphs (b)(3) and (4) as
paragraphs (b)(4) and (5) and add a new paragraph (b)(3), which would
require that the monthly capitation amount paid by the SAA be
sufficient and consistent with efficiency, economy, and quality of
care. Current paragraph (b)(1) requires that the Medicaid rate be less
than what otherwise would have been paid if the participants were not
enrolled in PACE, which in essence establishes an upper bound under
which the rate must fall. While current paragraph (b)(2) also requires
that the rate take into account the comparative frailty of PACE
participants, the regulation does not require that the rate be adequate
or sufficient to provide the services required under the PACE program
for the enrolled population. Since the rate is only required to be less
than what would have otherwise been paid by Medicaid outside of PACE,
there is no lower bound for the rate. We are proposing the new language
to ensure that the Medicaid rate paid under the PACE program agreement
is not only less than what would otherwise have been paid outside of
PACE for a comparable population, but is also sufficient for the
population served under the PACE program, which we believe means not
lower than an amount that would be reasonable and appropriate to enable
the PO to cover the anticipated service utilization of the frail
elderly participants enrolled in the program and adequate to meet PACE
program requirements. We are also proposing that the monthly capitation
amount be consistent with efficiency, economy, and quality of care. By
efficiency and economy, we mean that the payment amount must reflect
that POs bring more efficiencies to the administration, management and
oversight of participant care because they are singularly responsible
for all of a participant's care (including acute and long term care
services), which in many cases outside of PACE are managed by multiple
provider entities. While the efficiencies of providing and coordinating
all of a participant's care can result in lower expenditures as
compared to a more fragmented payment system with multiple providers
and entities providing different aspects of an individual's care, the
Medicaid monthly capitation amount must also enable the PO to ensure
participant access to quality care and services to meet the
participant's needs. Failure to provide adequate reimbursement to POs
could negatively affect participant care through reduced care and
service authorizations, as well as limit resources for the PO to
promote program goals such as quality of care, improved health,
community integration of participants, and cost containment, where
feasible.
Additionally, we would like to solicit comments about other rate
methodologies we may consider requiring for Medicaid capitation payment
amounts for PACE. We are seeking input to determine whether or not
there could be other rate setting methodologies for PACE that are more
consistent and competitive with rate setting methodologies used for
other programs that provide similar services to similar populations on
a capitated basis. For example, Medicaid rates for many of the state
financial alignment demonstrations require actuarially sound rates. We
note, however, that any change to the PACE rate setting requirements
would need to ensure that the rates are still less than the amount that
would otherwise have been made under the state plan if individuals were
not enrolled in PACE and be adjusted to take into account the
comparative frailty of PACE enrollees, which is required under section
1934(d)(2) of the Act. We are not proposing changes to the rate
methodology for Medicaid capitation payments in this proposed rule;
however, we will use public comment to inform possible future PACE
rulemaking concerning Medicaid capitation payments.

L. Subpart K--Federal/State Monitoring

1. Monitoring During Trial Period (Sec. 460.190) and Ongoing
Monitoring After Trial Period (Sec. 460.192)
Sections 1894(e)(4)(A) and 1934(e)(4)(A) of the Act require the
Secretary, in cooperation with the SAA, to conduct a comprehensive
annual review of the operation of a PO during its trial period in order
to assure compliance with the requirements of sections 1894 and 1934 of
the Act and PACE regulations. The trial period is defined as the first
3 years of the PO's contract with CMS and the SAA. Sections
1894(e)(4)(A) and 1934(e)(4)(A) of the Act further provide that the
review must include: An onsite visit; a comprehensive assessment of the
PO's fiscal soundness; a comprehensive assessment of the PO's capacity
to provide PACE services to all enrolled participants; a detailed
analysis of the PO's substantial compliance with all significant
requirements of sections 1894 and 1934 of the Act and PACE regulations;
and any other elements the Secretary or the SAA considers necessary or
appropriate. Sections 1894(e)(4)(B) and 1934(e)(4)(B) of the Act
provide that the Secretary, in cooperation with the SAA, must continue
to conduct reviews of the operation of the PO after the trial period as
may be appropriate, taking into account the performance level of a PO
and compliance of a PO with all significant requirements of sections
1894 and 1934 of the Act and PACE regulations. Sections 1894(e)(4)(C)
and 1934(e)(4)(C) of the Act provide that the results of the reviews
must be reported promptly to the PO, along with any recommendations for
changes to the PO's program, and made available to the public upon
request.
Sections 460.190 and 460.192 set forth the requirements for
monitoring during and after the trial period, respectively. These
regulations currently incorporate requirements from the PACE Protocol
that exceeded statutory requirements in that Sec. 460.190(b)(1)
details specific activities that must occur onsite during the trial
period reviews, and Sec. 460.192(b) requires that, after a PO's trial
period ends, ongoing reviews be conducted onsite at least every 2
years. We are proposing to revise these provisions of the existing
regulations.
In the 15 years since the initial PACE regulations were
established, the PACE program has flourished and we have gained
significant program experience with respect to oversight and monitoring
of POs. We no longer believe that the activities listed in Sec.
460.190(b)(1)(i) through (v) must be performed while onsite at the PACE
location; technology affords us the opportunity to complete these tasks
remotely. For example, we have implemented the use of webinar
technology in the performance of similar program audits of Medicare

[[Page 54691]]

Advantage organizations and Part D sponsors. This technology allows the
entity being reviewed to provide CMS access to information on its
computer systems in real time, in a secure manner. It also allows
reviewers to interact with the entity being reviewed and its staff,
while not being physically present in the building with them. The use
of this technology has saved significant resources in travel dollars
and staff downtime (experienced while they are traveling). Therefore,
we are proposing to delete the list of specific activities that may be
performed as part of an onsite visit as currently set forth in the
paragraphs located in Sec. 460.190(b)(1)(i) through (v). We are also
proposing revisions to the language at Sec. 460.190(b)(1) and a new
Sec. 460.190(b)(2) to more closely mirror the text of statute. The
proposed revised language retains the obligation that CMS conduct an
onsite visit to observe the PO's operations. However, it affords
reviewers the flexibility to conduct other portions of the review
remotely. Greater flexibility to conduct portions of the review
remotely would allow our reviews of POs to gain some of the same
efficiencies that CMS currently achieves through the use of web-based
technologies in other programs. Specifically, we are proposing in the
revised Sec. 460.190(b)(1) that the trial period review include an
onsite visit to the PO, which may include, but is not limited to,
observation of program operations, and proposing a separate requirement
in the new Sec. 460.190(b)(2) that the trial period review include a
detailed analysis of the entity's substantial compliance with all
significant requirements of sections 1894 and 1934 of the Act and the
PACE regulations, which may include review of marketing, participant
services, enrollment and disenrollment, and grievances and appeals. We
are retaining the language found in current paragraphs (b)(2), (3), and
(4), but propose to redesignate these as paragraphs (b)(3), (4), and
(5).
Section 460.192(b) of the current regulations establishes the
obligation for continued oversight after the trial period, including
the requirement for an onsite review of every PO every 2 years. As the
PACE program has grown, and with it the number of POs, the amount of
resources spent conducting both trial period and on-going audits of POs
has significantly increased. We must balance the responsibilities of
ensuring that all of our beneficiaries are receiving quality care with
our duty to effectively manage our resources and ensure proper
oversight over all of the programs we manage. Sections 1893 and 1894 of
the Act do not require the current level of monitoring.
Consequently, we believe that the frequency of ongoing reviews of
POs beyond their trial period should occur based on a risk assessment
that takes into account the PO's performance level and compliance with
the significant requirements of sections 1834 and 1934 of the Act and
the PACE regulations. Therefore, we are proposing to delete the
language in Sec. 460.192(b) that requires onsite review every 2 years
and replace it with that requirement that CMS, in cooperation with the
state administering agency, will conduct reviews of the operations of
POs as appropriate, by utilizing a risk assessment as the means of
selecting which POs will be audited each year. This risk assessment
will rely largely on the organization's past performance and ongoing
compliance with CMS and state requirements. However, the risk
assessment will take into account other information that could indicate
a PO needs to be reviewed, such as participant complaints or access to
care concerns. This would mirror our approach in selecting
organizations for audit in other programs such as the MA and Part D
programs, which is a data driven, risk-based approach. This risk
assessment would utilize important measures specific to PACE, as
determined by us including, but not limited to, length of time between
audits, past performance, and other data measures, such as grievances
or level 2 reporting data complaints, as necessary. We believe using MA
and Part D is an appropriate model to mirror PACE audits on, because
like in MA and Part D, a PO is responsible for providing a
beneficiary's benefits in accordance with our regulations. We have
discovered through the MA and Part D programs that sponsors have
varying degrees of compliance and that auditing organizations based on
risk allows CMS to focus on those organizations that require closer
scrutiny. Similarly, program experience has shown that POs also have
varying degrees of compliance, therefore we believe this will be a
useful tool in selecting organizations for audit. This proposal, if
finalized, would allow continued oversight and monitoring in the PACE
program, with better targeting of resources based on the relative risk
each organization presents.
2. Corrective Action (Sec. 460.194)
Section 460.194(a) requires a PO to take action ``to correct
deficiencies identified during reviews.'' However, there has been some
uncertainty as to which circumstances trigger the requirement that a PO
take action to correct deficiencies. We are proposing to revise this
regulation to clarify for POs the range of circumstances under which
CMS or the SAAs may identify deficiencies that would require action by
the POs to correct those deficiencies. We are proposing to change Sec.
460.194(a) to state that a PO must take action to correct deficiencies
identified by CMS or the SAA as a result of the following:
Ongoing monitoring of the PO;
Reviews and audits of the PO;
Complaints from PACE participants or caregivers; and
Any other instance CMS or the SAA identifies programmatic
deficiencies requiring correction.
We are proposing this change to specify that corrective actions
will be required to address deficiencies identified by CMS or the SAA
through any of these mechanisms.
3. Disclosure of Review Results (Sec. 460.196)
PACE participants are some of the frailest and most vulnerable
members of the Medicare and Medicaid programs, and we recognize that in
some cases they may be unable to fully grasp the nature of our review
results and use them to make decisions about their healthcare. Our
reviews measure the PO's compliance with a variety of CMS requirements,
such as the ability of the PO to deliver medically necessary healthcare
and medications to their participants. Currently, the regulations
require that POs make their review results available in a location that
is readily accessible to their participants, without mention of
accessibility to other parties. We believe that not only participants
but also their family members, caregivers, or authorized
representatives should have access to that information in order to
better inform their decisions about the participants' healthcare.
Therefore, we are proposing to amend Sec. 460.196(d) to ensure that
POs make review results available for examination not just by PACE
participants, but by those individuals who may be making decisions
about PACE participants' care, such as family members, caregivers and
authorized representatives, because we believe they should be fully
aware of the PO's performance and level of compliance with statutory
and regulatory requirements. We also encourage POs to make review
results available to other potential participants and the public, for
example, by releasing a summary of the reports online. Posting
comprehensive review results online would satisfy PO

[[Page 54692]]

requirements under the proposed Sec. 460.196(d).

M. Subpart L--Data Collection, Record Maintenance, and Reporting

1. Maintenance of Records and Reporting of Data (Sec. 460.200)
In accordance with sections 1894(e)(3)(A) and 1934(e)(3)(A) of the
Act, Sec. 460.200 requires POs to collect data, maintain records, and
submit reports, as required by CMS and the SAA. Section 460.200(f)(1)
states that a PO must retain records for the longest of the following
periods: (i) The period of time specified in state law; (ii) 6 years
from the last entry date; (iii) For medical records of disenrolled
participants, 6 years after the date of disenrollment. We are proposing
to change the requirements in paragraphs (f)(1)(ii) and (iii) from 6
years to 10 years for consistency with the statute of limitations under
the False Claims Act (31 U.S.C. 3731(b)(2)). For enrollee records,
under Sec. 460.200(f)(1)(ii) and (iii), the 10-year requirements would
apply only to records of new and existing enrollees in the PO. Medicare
Advantage requirements at Sec. 422.504(d), Medicare Part D
requirements at Sec. 423.505(d), and other CMS programs' record
retention requirements, all conform to the statute of limitations for
the discovery of violations under the False Claims Act. We also note
that POs that offer qualified prescription drug coverage currently must
comply with the Medicare Part D record retention requirement in Sec.
423.505(d). The 10-year record retention policy is also consistent with
recordkeeping requirements under the Medicaid Drug Rebate Program
(Sec. 447.510(f)). To ensure we have proper oversight for
investigating the complex payment and other relationships associated
with delivery of Medicare and Medicaid benefits under the PACE program,
our proposal would extend this requirement to all PACE records for
consistency with these programs.

IV. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA) we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. To
fairly evaluate whether an information collection should be approved by
OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment
on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
sections of this proposed rule that contain information collection
requirements.

A. Wage Estimates

To derive average costs, we used data from the U.S. Bureau of Labor
Statistics' May 2015 National Occupational Employment and Wage
Estimates for all salary estimates (www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 2 presents the mean hourly wage,
the cost of fringe benefits and support costs (calculated at 100
percent of salary), and the adjusted hourly wage for the occupation
code, 29-9000, ``Other Healthcare Practitioners and Technical
occupations,'' in the occupational category 29-0000, ``Healthcare
Practitioners and Technical Occupations.'' This code was selected since
it includes PO, CMS and State staff working in healthcare but who do
not have specialist or technical specialist titles.

Table 2--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe benefits
BLS Occupation title BLS Occupation BLS Mean hourly and support Adjusted hourly
code wage ($/hr) costs ($/hr) wage ($/hr)
----------------------------------------------------------------------------------------------------------------
Other Technical Occupations (hereinafter, 29-9000 29.72 29.72 59.44
technical staff)...........................
----------------------------------------------------------------------------------------------------------------

As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent for fringe benefits and support costs. This
is necessarily a rough adjustment, both because fringe benefits and
overhead costs vary significantly from employer to employer, and
because methods of estimating these costs vary widely from study to
study. Nonetheless, there is no practical alternative and we believe
that doubling the hourly wage to estimate total cost is a reasonably
accurate estimation method.
In performing estimations, one-time costs and savings are
annualized over 3 years.

B. Proposed Information Collection Requirements (ICRs)

1. ICRs Regarding Global Change for Quality Assessment and Performance
Improvement (Part 460)
We are proposing to replace all references to ``quality assessment
and performance improvement'' to read ``quality improvement'' in
Sec. Sec. 460.32(a)(9), 460.60(c), 460.62(a)(7), 460.70(b)(1)(iii),
460.120(f), 460.122(i), 460.130(a), 460.132(a) and (c)(3), 460.134(a),
460.136(a), (b), and (c), 460.138(b), and 460.172(c). The change would
also affect the heading for subpart H and the section headings for
Sec. Sec. 460.132, 460.134, and 460.136. For each PO, we estimate a
one-time burden of 1 hour at $59.44/hr for technical staff to replace
or amend existing written materials with the updated term. In
aggregate, when annualized over 3 years, we estimate a burden of
$2,357.79 in each of the 3 years (119 PO x 1 hour x 59.44/hour / 3) The
proposed requirements and revised burden will be submitted to OMB under
control number 0938-0790 (CMS-R-244).
2. ICRs Regarding Application Requirements (Sec. 460.12)
While Sec. 460.12 sets forth general application requirements for
an entity seeking to become a PO, current regulations do not specify
the process for an existing PO to submit an application to expand its
service area and/or add a new PACE center site. In this proposed rule,
Sec. 460.12(a) would be revised to specify that this section also
applies to expansion applications. This change would codify (in the
CFR) the current Programs of All-Inclusive Care

[[Page 54693]]

for the Elderly (PACE) Manual requirements pertaining to application
submissions.
Until recently, a PACE application was submitted in hard copy
format. Applications were often hundreds of pages long, expensive to
reproduce and transmit, and administratively inefficient. This proposed
rule would add the phrase ``in the form and manner specified by CMS''
under Sec. 460.12(a) when describing the submission of a complete
application to CMS. This change would provide flexibility in the
submission of applications, supporting documentation, and CMS
notifications. With this change CMS expects that PACE applications will
be submitted in a fully electronic submission process, thereby reducing
the expense of submitting a hard copy application. CMS has successfully
transitioned other programs to a fully electronic submission process,
thereby facilitating a more organized and streamlined review. Section
460.12(b) requires that a PO's application must be accompanied by an
assurance (from the SAA of the state in which the program is located)
indicating that the state considers the entity to be qualified as a PO
and is willing to enter into a program agreement with the entity. In
this proposed rule, Sec. 460.12(b)(2) would require that an expansion
application include the state's assurance that the state is willing to
amend the PACE program agreement to include new PACE center sites and/
or expand its service area. This change would codify the current PACE
manual provisions pertaining to the practice of application
submissions.
Section 460.12(c)(1) would require that an entity submitting an
application to become a PO or a PO submitting an application to expand
its service area must describe the proposed service area in its
application. As this is current practice, the proposed action would not
add any new burden to the applicants. To become a PO, the requirement
for an entity to submit an application that describes the proposed
service area is set out under Sec. 460.22. The application for a PO to
expand its service area also requires this information. The
requirements and burden are currently approved by OMB under control
number 0938-0790 (CMS-R-244).
3. ICRs Regarding the Submission and Evaluation of Waiver Requests
(Sec. 460.26)
Section 460.26 discusses the requirements to submit a waiver
seeking to modify a PACE program requirement. Although current
regulations require that a waiver request be submitted to the SAA for
review prior to submitting to CMS, this proposed rule would reorganize
the CFR text so it is clear that both current POs and applicants must
submit a waiver request to the SAA prior to submitting their request to
CMS. It also would clarify that a waiver request may be submitted with
the application or as a separate document. The requirements for
submitting a waiver request are being clarified and are not changing
our currently approved burden estimates for POs and applicants. The
preceding requirements and burden are approved by OMB under control
number 0938-0790 (CMS-R-244).
4. ICRs Regarding Notice of CMS Determination on Waiver Requests (Sec.
460.28)
Section 426.28(a) discusses the timeframes for CMS to make a
determination and to send notification about the approval or denial of
a waiver request. While current language requires that CMS approve or
deny a waiver request within 90 days of receipt of the request, this
rule proposes to revise the requirement so that CMS must approve or
deny a request after receiving a complete waiver request. Since CMS
will request additional information from the PO if a waiver request is
not complete, this change is needed since it is not possible to make an
informed decision for approval or denial when important information is
missing. The proposed change would help facilitate CMS' ability to work
with the PO or applicant to ensure that the request includes all
necessary information. The change is not expected to change the burden
on POs and applicants. Our current burden estimate approved by OMB
under control number 0938-0790 (CMS-R-244) accounts for receiving
incomplete requests and the submission of additional information.
5. ICRs Regarding the Program Agreement (Sec. 460.32)
Sections 460.32 and 460.180(b) require that PACE program agreements
specify the methodology used to calculate the Medicare capitation rate.
For the Medicaid capitation rates, however, the PACE program agreement
must specify the actual amount negotiated between the POs and the SAA
(see Sec. Sec. 460.32(a)(12) and 460.182(b)). We propose to amend
Sec. 460.32(a)(12) by requiring that the program agreement include the
Medicaid capitation rates or the Medicaid payment rate methodology.
This would be in addition to the current requirement to include the
methodology used to calculate the Medicare capitation rate.
Medicaid capitation rates are developed and updated by the states
(in negotiation with the POs) and approved by CMS. Operationally,
states submit documentation to CMS to support their proposed PACE
Medicaid capitation rates. CMS reviews the documentation to ensure the
proposed rates are in compliance with the requirements of Sec. 460.182
and provides the state with written approval of the rates. The Medicaid
capitation rates are then communicated to the POs by the state in
writing.
Since current regulations require that the PACE program agreement
include the Medicaid capitation rates, this also requires that the PACE
program agreement be updated to reflect the rates each time they
change, which for most PACE organizations is annually. We do not
believe it is always practical or efficient to include the actual
Medicaid capitation rates in the PACE program agreement. We also
believe this practice provides no value to the PO, the state, or to
CMS. In response, we propose to amend Sec. 460.32(a)(12) by requiring
that the program agreement include the Medicaid capitation rates or the
Medicaid payment rate methodology. We do not estimate any additional
burden to the PO or the state as a result of this change. During the
next regular rate update, the PACE program agreement may be revised to
include the state's Medicaid payment rate methodology instead of the
new rates. This would have been an update that would have already been
required under the current requirements at Sec. 460.32(a)(12).
By removing the requirement going forward that PACE program
agreements be updated to include the Medicaid capitation rates, we
estimate that each PO would save \1/2\ hour. We therefore estimate an
aggregate annual reduction of $3,536.68 (119 PO x 0.5 hour x 59.44 per
hour).
The revised requirement will be submitted to OMB for approval under
control number 0938-0790 (CMS-R-244).
6. ICRs Regarding a Governing Body (Sec. 460.62)
Section 460.62 focuses on the ability of the PO's governing body to
provide effective administration in an outcome-based environment. While
Sec. 460.62(a)(7) requires that a PO's governing body be able to
administer a quality improvement program, this proposed rule would
revise this section by requiring that the PO's governing body must be
able to administer a quality

[[Page 54694]]

improvement program as described in the general rule regarding quality
improvement programs found in Sec. 460.130.
Section 460.132 already requires that the PO implement a quality
improvement plan and that the governing body must review the quality
improvement plan on an annual basis. Revisions to Sec. 460.62(a)(7)
would simply clarify what quality improvement program the PO's
governing body must be able to administer. The burden associated with
the aforementioned requirements is captured in Sec. 460.132 which is
approved by OMB under control number 0938-0790 (CMS-R-244).
Section 460.62(a)(8) would be added to require that the PO's
governing body must have full legal authority and responsibility for
adopting and implementing effective compliance oversight requirements
as described in Sec. 460.63. While the requirement to adopt and
implement the compliance oversight requirements do not impose any new
reporting requirements, the burden associated with the compliance
oversight requirements are set out in the Regulatory Impact Analysis
section under Sec. 460.63.
7. ICRs Regarding Personnel Qualifications for Staff With Direct
Participant Contact (Sec. 460.64(a)(3))
Section 460.64(a)(3) requires that employees or contractors of the
PO who have direct participant contact must have 1 year of experience
working with a frail or elderly population. This proposed rule would
amend this requirement by allowing the PO to hire employees or
contractors with less than 1 year of experience working with a frail or
elderly population as long as they meet all other qualification
requirements under Sec. 460.64(a) and receive appropriate training on
working with a frail or elderly population upon hiring.
Section 460.71 already includes requirements regarding training of
staff and competency evaluations for employees and contracted staff
furnishing care directly to participants. In this regard the revisions
to Sec. 460.64(a)(3) would not have any effect on the burden that is
currently approved by OMB under control number 0938-0790 (CMS-R-244).
8. ICRs Regarding Program Integrity (Sec. 460.68(a))
Section 460.68 was established to guard against potential conflicts
of interest or certain other risks individuals and organizations could
present to the integrity of the PACE program. In this proposed rule,
the amendments to Sec. 460.68(a)(3) would enable POs to determine
whether an individual's contact with participants would pose a
potential risk because the individual has been convicted of criminal
offenses related to physical, sexual, drug, or alcohol abuse or use,
rather than entirely prohibiting the hiring of such individuals. To
provide POs with more safeguards against potential hires that may pose
a risk to participants, we are also adding language in Sec.
460.68(a)(4) and (5) similar to the requirements found in regulations
governing Long Term Care facilities.
In Sec. 460.68(a)(4), we propose to add a new restriction that
would prevent POs from employing individuals or contract with
organizations or individuals who have been found guilty of abusing,
neglecting, or mistreating individuals by a court of law or who have
had a finding entered into the state nurse aide registry concerning
abuse, neglect, mistreatment of residents, or misappropriation of their
property. Further, in Sec. 460.68(a)(5) we propose to add a new
restriction that would prevent POs from employing individuals or
contracting with organizations or individuals who have been convicted
of any of the crimes listed in section 1128(a) of the Act. We
anticipate that these changes may result in employers revising their
policies related to the hiring of individuals with criminal histories
and revising their employment applications. We estimate a one-time
burden of 10 hr at $59.44/hr for technical staff to make these
revisions. In aggregate, we estimate a burden annualized over 3 years
of $23,577.87 in each year (10 hours x 119 PO x 59.44 / 3). The
proposed requirements and revised burden will be submitted to OMB under
control number 0938-New (CMS-0938-0790 (CMS-R-244)).
9. ICRs Regarding Marketing (Sec. 460.82)
Section 460.82 sets out requirements governing the marketing
activities of POs. This proposed rule would prohibit POs from using
non-employed agents/brokers, including contracted entities to market
PACE programs. We are also proposing to expand the scope of prohibited
marketing practices to include additional means of marketing through
unsolicited contact. We are also proposing to remove Sec. 460.82(f)
which requires that POs establish, implement, and maintain a documented
marketing plan with measurable enrollment objectives and a system for
tracking its effectiveness. CMS no longer believes that the documented
marketing plan provides value as we already review all marketing
materials used by a PO and enrollments are already tracked by CMS. We
do not believe that a marketing plan is an integral piece of the PACE
program and does not provide value to the PO or to CMS. In response we
anticipate that these changes may result in POs needing to review
existing policies and procedures to make sure they incorporate the
changes as well as to update any current marketing materials that may
need to be changed as a result of the regulatory changes.
We estimate a one-time burden of 5 hr at $59.44/hr for technical
staff to revise the written marketing policies and materials. In
aggregate, when annualized over 3 years we estimate $11,788.93 in each
year (119 PO x 5 hours x 59.44 / 3).
At the same time, we estimate a burden reduction related to
removing the requirements for the marketing plan and the tracking
system. We estimate this will save each PO 10 hours per year. We
estimate an aggregate reduction of $70,733.60 in each year (119 PO x 10
hour x 59.44). The proposed requirements and revised burden will be
submitted to OMB under control number 0938-0790 (CMS-R-244).
10. ICRs Regarding [the] Interdisciplinary Team (Sec. 460.102)
Section 460.102 currently states that primary medical care must be
furnished to a participant by a PACE primary care physician. This
proposed rule would allow primary care to be furnished by a ``primary
care provider'' rather than a ``primary care physician.'' The PO must
revise or develop policies and procedures for the oversight of its
primary care providers.
We estimate a one-time burden of 1 hr at $59.44/hr for technical
staff to update their PO's policy and procedures. We estimate an
aggregate burden annualized over 3 years of $2357.79 in each year (119
PO x 1 hour x 59.44/hr / 3). The proposed requirements and revised
burden will be submitted to OMB under control number 0938-0790 (CMS-R-
244).
11. ICRs Regarding [the] Participant Assessment (Sec. 460.104)
Section 460.104 sets forth the requirements for PACE participant
assessments. The information obtained through the assessment is the
basis for the plan of care developed by the IDT. If the IDT determines
from its assessment that certain services do not need to be included in
the participant's care plan, revisions to Sec. 460.104(b) would
require that the IDT must document in the care plan the reasons

[[Page 54695]]

why such services are not needed and are not being included in the
plan.
As both the development of and updates to the care plan are a
typical responsibility for the IDT we believe that any burden
associated with this would be incurred by persons in their normal
course of business. We believe that the burden associated with the
development of and updates to the care plan are exempt from the PRA in
accordance with 5 CFR 1320.3(b)(2) because the time, effort, and
financial resources necessary to comply with these requirements would
be incurred by persons in the normal course of their activities and is
a usual and customary business practice.
Currently, Sec. 460.104(c) sets forth the requirements for
periodic reassessments, including semiannual and annual reassessments.
In this rulemaking, we are proposing to remove the requirement in Sec.
460.104(c)(2) requiring annual reassessments by the physical therapist,
occupational therapist, dietician, and home care coordinator.
While this requirement was subject to the PRA, we believed that the
burden associated with this requirement is exempt from the PRA in
accordance with 5 CFR 1320.3(b)(2). We believe that the time, effort,
and financial resources necessary to comply with these requirements
would be incurred by persons in the normal course of their activities.
12. ICRs Regarding [the] Plan of Care (Sec. 460.106)
Section 460.106(a) requires that a participant's plan of care be
developed by the IDT promptly. This proposed rule would amend this
requirement by specifying that the IDT must develop the plan of care
within 30 days of the participant's date of enrollment. Section
460.106(b) proposes the following three new requirements pertaining to
the content of the plan of care: (1) The plan must utilize the most
appropriate interventions for each of the participant's care needs that
advances the participant toward the measurable goals and desired
outcomes; (2) the plan must identify each intervention and how it will
be implemented; and (3) the plan must identify how each intervention
will be evaluated to determine progress in reaching specified goals and
desired outcomes.
We believe these changes add clarification to the current
requirements in Sec. 460.106 on how to develop and implement a plan of
care, and document any changes made to the plan of care in the
participant's medical record. CMS expects POs to keep up-to-date with
current practice standards related to plans of care and believes that
most POs already implement these requirements. As we stated in the 1999
IFC (64 FR 66276) the development of the plan of care is subject to the
PRA, however, we believed that the burden associated with this revision
is exempt from the PRA in accordance with 5 CFR 1320.3(b)(2) because
the time, effort, and financial resources necessary to comply with
these requirements would be incurred by persons in the normal course of
their activities.
13. ICRs Regarding Explanation of Rights (Sec. 460.116)
Section 460.116 sets forth requirements for POs with respect to
explanation of rights, such as having written policies and procedures
on these rights, explaining the rights, and displaying the rights.
Section 460.116(c)(1) provides that the PO must write the participant
rights in English and in any other principal languages of the
community. The proposed rule requires that if a state has not
established a standard for making the principal language determination,
a principal language of the community is any language spoken regularly
at home by at least 5 percent of the individuals in the PO's service
area.
We anticipate that these changes may result in technical staff
revising documents. We estimate a one-time burden of 5 hr at $59.44/hr
for technical staff to revise the written material about participant
rights. In aggregate, when annualized over 3 years we estimate
$11,788.93 in each year (119 PO x 5 hours x 59.44/hr. / 3).
Section 460.116(c)(2) states that the PO must display the
participant rights in a prominent place in the PACE center. The
proposed rule would require to add the word ``PACE'' before the words
``participant rights'' to specify that participant rights specific to
PACE must be displayed. We anticipate that these changes may result in
technical staff revising documents. Since the only change is the
addition of the word ``PACE'' and redisplay of notices, we estimate a
one-time burden of \1/2\ hr at $59.44/hr for technical staff to revise
the notices. In aggregate, when annualized over 3 years we estimate
$1,178.89 in each year (119 PO x \1/2\ hours x 59.44/hr. / 3). The
proposed requirements and revised burden will be submitted to OMB under
control number 0938-0790 (CMS-R-244).
14. ICRs Regarding Quality Improvement General Rule (Sec. 460.130)
Section 460.130 requires a PO to develop, implement, maintain, and
evaluate a quality assessment and performance improvement program which
reflects the full range of their services. Section 460.140 refers to
additional quality assessment activities related to reporting
requirements. This proposed rule would combine Sec. 460.140 with Sec.
460.130 in an effort to combine all the general rules for quality
improvement under the first section in subpart H. It would also remove
in Sec. 460.140 its entirety. This regulatory reorganization has no
impact on any requirements or burden estimates.
15. ICRs Regarding Quality Performance Reporting (Sec. 460.132)
Section 460.132 sets forth requirements with respect to a Quality
Assessment and Performance Improvement (QAPI) plan. This proposed rule
would revise Sec. 460.132(a) and (c)(3) by referring to quality
improvement (QI) plan. Revisions would also require that POs have a
written quality improvement plan that is collaborative and
interdisciplinary in nature. Because POs are already required to have a
written QAPI plan, we anticipate added burden to update the plan by
making it more collaborative and interdisciplinary in nature.
We estimate a one-time burden of 1 hour at $59.44/hr to update
material. We estimate it would take in aggregate, when annualized over
3 years, $2357.79 in each year to update QI plans (119 PO x 1 hour x
$59.44/hr / 3). The proposed requirements and revised burden will be
submitted to OMB under control number 0938-0790 (CMS-R-244).
16. ICRs Regarding the Enrollment Process (Sec. 460.152)
Section 460.152(b)(4) states that the PO must notify CMS and the
SAA if a prospective participant is denied enrollment. Since this
proposed rule would add the phrase, `in the form and manner specified
by CMS'' and would simply codify current practice in which such
notifications are submitted to CMS and SAA electronically, this action
would not revise any requirements or burden estimates. The requirements
and burden are approved by OMB under control number 0938-0790 (CMS-R-
244).
17. ICRs Regarding the Enrollment Agreement (Sec. 460.154)
Section 460.154 specifies the general content requirements for the
enrollment agreement. Specifically, Sec. 460.154(i) states that the
enrollment agreement must provide notification that enrollment in PACE
results in disenrollment from any other Medicare or Medicaid prepayment
plan or

[[Page 54696]]

optional benefit. This proposed rule would require additional
enrollment agreement language stating that if a Medicaid-only or
private pay PACE participant becomes eligible for Medicare after
enrollment in PACE, he or she will be disenrolled from PACE if he or
she elects to obtain Medicare coverage other than from his or her PO.
We estimate a one-time burden of 1 hour at $59.44/hr to update
enrollment materials. We estimate an aggregate cost, annualized over 3
years, of 2357.79, in each year (119 PO x 1 hour x 59.44/hr). The
proposed requirements and burden will be submitted to OMB under control
number 0938-0790 (CMS-R-244).
18. ICRs Regarding the Enrollment Procedures (Sec. 460.156)
While Sec. 460.156(a) currently requires that POs provide
participants with, among other items, stickers for the participant's
Medicare and Medicaid cards, we propose to revise this requirement such
that POs would no longer be required to provide participants with
stickers for their Medicare and Medicaid cards. Instead, POs would be
required to include the PO's phone number on the participant's PO
membership card.
Since we would no longer require that POs provide stickers for
participants' Medicare and Medicaid cards, we estimate a decrease of 1
minute for each organization. The aggregate savings would be $117.89
(119 PO x 1 minute x 59.44/hr). The revised requirements and burden
will be submitted to OMB under control number 0938-0790 (CMS-R-244).
Additionally, we believe that the burden associated with including
the phone number of the PO on the PACE membership card is exempt from
the PRA in accordance with 5 CFR 1320.3(b)(2) because the time, effort,
and financial resources necessary to comply with these requirements
would be incurred by persons in the normal course of their activities
and is a customary business practice.
19. ICRs Regarding Involuntary Disenrollment (Sec. 460.164)
Section 460.164 specifies the conditions under which a PACE
participant can be involuntarily disenrolled from a PACE program,
including when a participant engages in disruptive or threatening
behavior. We have approved several waivers which allow a PO to
involuntarily disenroll a participant in situations where the
participant's caregiver engages in disruptive or threatening behavior.
This rule proposes to permit involuntary disenrollment in situations
where the participant's caregiver engages in disruptive or threatening
behavior, which is defined as exhibiting behavior that jeopardizes the
participant's health or safety, or the safety of the caregiver or
others.
The proposed revision would obviate the need for such waivers,
thereby reducing the burden on POs, states, and CMS. Since we continue
to estimate that fewer than 10 POs would submit this type of waiver
request each year, we believe the requirement is not subject to the PRA
in accordance with 5 CFR 1320.3(c)(4).
20. ICRs Regarding the Disclosure of Review Results (Sec. 460.196)
Section 460.196 requires that POs make their review results
available in a location that is readily accessible to their
participants. The proposed rule would amend Sec. 460.196(d) to ensure
that POs make review results available for examination not just by PACE
participants, but by those individuals who may be making decisions
about PACE participants' care, such as family members, caregivers and
authorized representatives, because we believe they should be fully
aware of the PO's performance and level of compliance with statutory
and regulatory requirements.
We anticipate that these changes may result in technical staff
redisplaying documents. We estimate a one-time burden of \1/2\ hr at
$59.44/hr for technical staff to redisplay the review results. In
aggregate, when annualized over 3 years we estimate $1,178.89 in each
year (119 PO x 1/2 hours x 59.44/hr. / 3) in each year.
21. ICRs Regarding the Maintenance of Records and Reporting of Data
(Sec. 460.200)
In accordance with Sec. 460.200(f)(1), POs must retain records for
the longest of the following periods: The period of time specified in
state law; 6 years from the last entry date; or for medical records of
disenrolled participants, 6 years after the date of disenrollment. This
rule proposes to change this requirement from 6 to 10 years.
The current requirements and burden for storing records for 6 years
are approved by OMB under control number 0938-0790 (CMS-R-244). We
believe that the burden to store for 6 years is sufficient to cover the
storage for 4 more years, especially as data are increasingly likely to
be stored electronically. As for the storage of electronic records, a
server is not needed since a terabyte hard drive costs under $200 and
can store a terabyte of data securely. Furthermore, most servers have
additional capacity which could be used before more expenses are
needed. Thus the expense to go from 6 years to 10 years is minimal.

C. Summary of Annual Burden Estimates for Proposed Requirements

Table 3--Proposed Information Collection Requirements and Burden *
--------------------------------------------------------------------------------------------------------------------------------------------------------
For one-time
costs: total
For annual annualized cost
costs: total in each of 3
Section(s) in title 42 of the CFR OMB Control Respondents Burden per Cost (+1) or Cost per hour annual cost years (product of
No. response (hr) savings (-1) (hourly wage) (product of 4 4 columns to
columns on right of previous
right) column divided
by 3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
part 460 (global term change)........ 0938-0790 119 1 1 $59.44 .............. $2,357.79
460.32 (program agreement)........... 0938-0790 119 0.5 -1 59.44 (3,536.68) .................
460.68(a)............................ 0938-0790 119 10 1 59.44 .............. 23,577.87
460.82 (revise policies and written 0938-0790 119 5 1 59.44 .............. 11,788.93
materials)..........................
460.82 (remove requirements)......... 0938-0790 119 10 -1 59.44 (70,733.60) .................

[[Page 54697]]

460.102 (update policies and 0938-0790 119 1 1 59.44 .............. 2,357.79
procedures).........................
460.116 (Revise explanations of 0938-0790 119 5 1 59.44 .............. 11,788.93
rights).............................
460.116 (Redisplay `participant 0938-0790 119 0.5 1 59.44 .............. 1,178.89
rights' as `PACE participant
rights')............................
460.132 (update QI plan)............. 0938-0790 119 1 1 59.44 .............. 2,357.79
460.154 (revise enrollment agreement) 0938-0790 119 1 1 59.44 .............. 2,357.79
460.156 (removing sticker 0938-0790 119 0.017 -1 59.44 (117.89) .................
requirement)........................
460.196 (Disclosure of review 0938-0790 119 0.5 1 59.44 .............. 1,178.89
results)............................
------------------------------------------------------------------------------------------------------------------
Total............................ .............. .............. .............. 6 .............. (74,388.17) 58,944.67
------------------------------------------------------------------------------------------------------------------
Total Cost In each of First 3 .............. .............. .............. .............. .............. .............. (15,443.50)
years...........................
------------------------------------------------------------------------------------------------------------------
Total Cost in Remaining Years.... .............. .............. .............. .............. .............. .............. (74,388.17)
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection and recordkeeping
requirements. These requirements are not effective until they have been
approved by OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed above, please visit CMS' Web
site at http://www.cms.hhs.gov/PaperworkReductionActof1995, or call the
Reports Clearance Office at 410-786-1326.
We invite public comments on these potential information collection
requirements. If you wish to comment, please submit your comments
electronically as specified in the ADDRESSES section of this proposed
rule and identify the rule (CMS-4168-P) the ICR's CFR citation, CMS ID
number, and OMB control number.
PRA-related comments are due October 17, 2016.

V. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the ``DATES'' section of the preamble
to this proposed rule, and, when we proceed with a subsequent document,
we will respond to the comments in the preamble to that document.

VI. Regulatory Impact Statement

We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
To analyze the impact of this rule we reviewed its 46 provisions.
We determined that 21 of the provisions have no cost or savings so we
are not discussing them in this statement. Twenty two other provisions
are scored in the information collection requirements section and total
less than $800,000 in savings or costs. Of the remaining provisions we
believe only 3 of them require scoring in the regulatory impact
statement. The provision discussed in section III.K.1. of this proposed
rule, proposing modification

[[Page 54698]]

of Sec. 460.182 regarding Medicaid payment, has no savings or cost
while the provision discussed in section III.F.3. of this proposed
rule, proposing Sec. 460.63 regarding the PACE compliance oversight
program, has a burden of about 1.7 million dollars to POs. The
provision discussed in section III.L.1. of this proposed rule,
proposing modification of Sec. 460.190 regarding monitoring, has a
savings of about $700,000 to POs and a savings of about 1 million to
the government without any transfer to POs. Additionally, as detailed
in, CMS-R-244, there is a $3 million burden associated with the
collection of information requirements. Thus the net effect of these
provisions is minimal (under $2 million). It follows that the net cost
or savings of this proposed rule is under $3 million dollars. The total
cost by itself is under $5 million and the total savings by itself is
under $2 million.
We discuss these provisions in more detail below.
Compliance Oversight Requirements (Sec. 460.63 (Discussed in Section
III.F.3. of This Proposed Rule))
While current regulations do not require POs to implement
compliance programs similar to those required in the regulations
governing the MA and Part D programs, this rule proposes to adopt
certain compliance oversight requirements through the addition of Sec.
460.63.
Currently, POs participating in the Part D program are required to
have a compliance plan with measures that prevent, detect, and correct
fraud, waste and abuse as specified in Sec. 423.504(b)(4)(vi)
governing the Part D program. This PACE proposal would expand the
already existing Part D compliance program for POs offering qualified
prescription drug coverage under the Part D program to the totality of
the PO's operations and would require them to establish and implement
compliance efforts geared toward: (1) Routine monitoring and
identification of compliance risks and (2) promptly responding to
compliance issues as they are raised, investigating potential
compliance problems as identified in the course of self-evaluations and
audits, correcting such problems promptly and thoroughly to reduce the
potential for recurrence; and ensuring ongoing compliance with CMS
requirements.
The burden associated with the requirements under Sec. 460.63
would be the time and effort for each of the 119 POs to develop, adopt,
and implement procedures for conducting internal auditing and
monitoring to ensure compliance with CMS program requirements. POs
would also be required to develop measures to detect, correct, and
prevent fraud, waste, and abuse. POs will be required to devote
technical staff to developing and implementing these procedures.
We estimate a one-time burden of 150 hours at $59.44 per hour for
technical staff to develop the aforementioned procedures and measures
at an annualized cost of $353,668 (119 POs x 59.44/hour x 150/3) for
each of the first 3 years. We estimated this burden based on our
combined experience with compliance programs in MA and Part D. Since we
are proposing to utilize two of the same compliance requirements in
PACE as are used in MA and Part D, we believe this comparison will be
accurate. We then used that experience and modified it to account for
POs size and staffing. We believe that given the size of most POs, a
one-time burden of 150 hours would be a reasonable estimate on how long
it would take to ensure new program materials and measures were
developed.
Additionally, once the program has been developed and is running,
the PO will have to spend some time going forward monitoring their own
compliance, and reporting and responding to any suspected fraud, waste
and abuse. We therefore estimate a burden of 200 hours at $59.44 per
hour for technical staff to complete these activities including, when
warranted, revision of the aforementioned program materials and
monitoring measures. Our estimate also includes the routine monitoring
and identification of compliance risks as identified in the course of
self-evaluations and audits. We estimate total aggregate annual cost at
$1,414,672 (119 organizations x 200 hour x $59.44 per hour). Again,
given the size of POs and the limited number of participants, we
believe this burden to be small, and we believe that 200 hours would
cover the ongoing responsibilities of a PO. Included in this 200 hours
is PO monitoring of its own compliance; corrective action as a result
of that monitoring; and updating PO monitoring measures and procedures.
We are soliciting comments from POs regarding this burden estimate.
Medicaid Payment (Sec. 460.182 (Discussed in Section III.K.1. of This
Proposed Rule))
The proposed provision aims to ensure that the Medicaid rate paid
under the PACE program agreement is not only less than what would
otherwise have been paid outside of PACE for a comparable population,
but is also sufficient for the population served under the PACE
program. The proposed regulatory language was introduced to reflect a
requirement that has always been met in practice. In other words, the
language reflects existing practices. We therefore do not believe this
provision will affect spending at all.
Monitoring (Sec. 460.190 (Discussed in Section III.L.1. of This
Proposed Rule))
This provision would result in savings to both the POs and the
government without any transfers to the POs. We estimate separately the
savings for POs and the government below. To estimate the savings from
the monitoring provision we use the following assumptions about audits.
These assumptions are based on our experience with audits.
If this provision is not finalized, we assume 72 audits
per year, 34 during PO trial periods, and 38 post trial period
(routine) audits.
If this provision is finalized, we estimate 35 audits per
year, 20 during PO trial periods and 15 post trial period (routine)
audits.
There are several factors involved in these assumptions. For
example, if the regulation is not finalized, an audit must be conducted
every 2 years post trial period. If the regulation is finalized,
routine audits will be conducted based on a risk assessment. We are
soliciting comments on our assumptions about audits.
The following further assumptions are used in estimating costs of
an audit for a PO.
Personnel: We estimate:
[cir] 2 Nurse managers with an hourly average wage of $50.99
[cir] 1 Executive assistant with an hourly average wage of $17.55
Hours:
[cir] We estimate 80 hours uniformly per person. 40 hours the week
before the audit and 40 hours the week of the audit.
Fringe benefits: We estimate 100 percent (of hourly wage)
for Fringe Benefits.
Based on these assumptions, we can compute the difference between
72 and 35 audits per year. The resulting savings per year to POs is
$707,617.60. The calculations are exhibited in Table 4.

[[Page 54699]]

Table 4--Estimates of Savings to POs if the Provision in Section III.L.1. is Finalized
--------------------------------------------------------------------------------------------------------------------------------------------------------
If regulation
not finalized If regulation
(72 audits/ finalized (35
Justification for per year--34 audits/year,
Item Per audit audit during trial Justification 20 during Justification
period and 38 trial period,
post trial 15 post trial
period) period)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly wages, Nurse manager--$50.99 $16,316.80 80 hours per audit $1,174,809.60 $16,316/audit x 72 $571,088.00 $16,316.80/audit x 35
(40, week before, audits. audits.
40, week of) x 2
Nurse managers x
$50.99, Hourly wage
x 2 (Fringe Benefit
factor).
Hourly wages, Executive assistant-- 2,808.00 80 hours per audit 202,176.00 2,808/audit x 72..... 98,280.00 2,808/audit x 35
$17.55. (40, week before, audits.
40, week of) x 2
Nurse managers x
$17.55, Hourly wage
x 2 (Fringe Benefit
factor).
--------------------------------------------------------------------------------------------------------------------
Total Costs.................... 19,124.80 ..................... 1,376,985.60 ..................... 669,368.00 .....................
--------------------------------------------------------------------------------------------------------------------
Savings.................... .............. ..................... .............. ..................... 707,617.60 .....................
--------------------------------------------------------------------------------------------------------------------------------------------------------

The following further assumptions are used to estimate the cost of
an audit for CMS.
2.5 FTE (Between 2 and 3 per audit). This number is based
on CMS experience across different geographic regions some of which use
2 FTE and some of which use 3 FTE.
Hours spent:
[cir] 220 hours at the GS-13 level with an hourly average wage of
$44.15
[cir] 40 hours at the GS-15 level with an hourly average wage of
$61.37
Fringe Benefits: We estimate 100 percent (of hourly wage)
for fringe benefits
Travel costs: The average cost per trip is $1,395. This is
based on our experience across several geographic regions.
Based on these assumptions, we can compute the difference between
72 and 35 audits per year. The resulting savings per year to CMS is
$1,029,454.70. The calculations are exhibited in Table 5.

Table 5--Estimates of Savings to Government (CMS) Without Transfer to POS, if Provision in Section III.L.1. is Finalized
--------------------------------------------------------------------------------------------------------------------------------------------------------
If regulation
not finalized If regulation
(72 audits/ finalized (35
Justification for per year--34 audits/year,
Item Cost per audit audit cost during trial Justification 20 during Justification
period and 38 trial period,
post trial 15 post trial
period) period)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly wage GS 13 ($44.15/hr)...... $19,426.00 220 hours/audit x $1,398,672.00 $19,426/audit x 72 $679,910.00 $19,426/audit x 35
$44.15/hr x 2 audits. audits.
(Fringe Benefit
factor).
Hourly wage GS 15 ($61.37/hr)...... 4,909.60 40 hours/audit x 353,491.20 4,909.60/audit x 72 171,836.00 4,909.60/audit x 35
$61.37/hr x 2 audits. audits.
(Fringe Benefit
factor).
Travel............................. 3,487.50 2.5 FTE x $1,395 251,100.00 3,487.50 x 72 audits. 122,062.50 3,487.50 x 35 audits.
average cost per
trip.
--------------------------------------------------------------------------------------------------------------------
Total Costs.................... 27,823.10 ..................... 2,003,263.20 ..................... 973,808.50 .....................
--------------------------------------------------------------------------------------------------------------------
Savings.................... .............. ..................... .............. ..................... 1,029,454.70 .....................
--------------------------------------------------------------------------------------------------------------------------------------------------------

Based on the above analysis, we have determined that this proposed
rule does not reach the economic threshold and thus it is neither an
``economically significant rule'' under E.O. 12866, nor a ``major
rule'' under the Congressional Review Act.
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has significant impact on a substantial
number of entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by meeting the SBA
definition of a small business (having revenues of less than $7.5
million to $38.5 million in any 1 year). Individuals and states are not
included in the definition of a small entity. For purposes of the RFA,
we estimate 95 percent of POs are nonprofit organizations, and
therefore almost all POs are small entities as that term is used in the
RFA. However, the proposed requirements would impose negligible cost
increases on POs. In addition, the proposed increased flexibility
regarding permissible health professionals is likely to be a source of
some savings for POs because current regulation that requires some PACE
services to be furnished by physicians would be changed to allow those
services to be

[[Page 54700]]

furnished by non-physician practitioners. The same is true for the
provisions which allow IDT members to serve multiple roles as part of
the IDT and the additional hiring flexibilities. Therefore, we are not
preparing an analysis for the RFA because we have determined, and the
Secretary certifies, that our proposed changes to this regulation would
not have a significant economic impact on a substantial number of small
entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area for Medicare payment regulations and has fewer than
100 beds. As previously explained, this rule will allow for increased
staffing flexibility among POs; therefore, we are not preparing an
analysis for section 1102(b) of the Act because we have determined, and
the Secretary certifies, that this proposed rule would not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2016, that
threshold is approximately $146 million. This rule will not mandate any
requirements for state, local, or tribal governments nor would it
result in expenditures by the private sector meeting that threshold in
any 1 year.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has federalism
implications. Under Executive Order 13132, this regulation will not
significantly affect the states beyond what is required and provided
for under sections 1894 and 1934 of the Act. It follows the intent and
letter of the law and does not usurp state authority beyond what the
Act requires. This proposed regulation describes the processes that
must be undertaken by CMS, the states, and POs in order to implement
and administer the PACE program.
As noted previously, sections 1894 and 1934 of the Act describe a
cooperative relationship between the Secretary and the states in the
development, implementation, and administration of the PACE program.
The following are some examples of areas in which we collaborated with
states to establish policy and procedures for PACE, with references to
the relevant sections of the Act: (1) Establishing procedures for
entering into, extending, and terminating PACE program agreements--
sections 1894(e)(1)(A) and 1934(e)(1)(A) of the Act; (2) Establishing
procedures for excluding service areas already covered under other PACE
program agreements in order to avoid unnecessary duplication of
services and impairing the financial and service viability of existing
programs--sections 1894(e)(2)(B) and 1934(e)(2)(B) of the Act; (3)
Establishing procedures for POs to make available PACE program data--
sections 1894(e)(3)(A)(i)(III) and 1934(e)(2)(A)(i)(III) of the Act;
(4) In conjunction with the PO, developing and implementing health
status and quality of life outcome measures for PACE participants--
sections 1894(e)(3)(B) and 1934 (e)(3)(B) of the Act; (5) Conducting
comprehensive annual reviews of POs during the trial period--sections
1894(e)(4)(A) and 1934(e)(4)(A) of the Act; 6) Establishing the
frequency of ongoing monitoring--sections 1894(e)(4)(B) and
1934(e)(4)(B) of the Act; (7) Establishing a mechanism for exercising
enforcement authority--sections 1894(e)(6)(A) and 1934(e)(6)(A) of the
Act. For this reason, prior to publishing the 2006 final rule, we
obtained state input in the early stages of policy development through
conference calls with state Medicaid agency representatives. The Act
requires the states to designate the agency of the state responsible
for the administration of the PACE program. Although the state may
designate the state Medicaid agency to administer the PACE program,
another agency may be named. The eight agencies that volunteered to
participate in these discussions represented a balanced view of states;
some with PACE demonstration site experience and some who were not yet
involved with PACE, but were interested in providing input to establish
a new long term care optional benefit. The calls were very productive
in understanding the variety of state concerns inherent in implementing
a new program. In addition, in order to formulate processes to
operationalize the PACE program, we have maintained ties with state
representatives through monthly conference calls to obtain information
on a variety of topics including the applications review and approval
process, data collection needs, and enrollment/disenrollment issues. We
are committed to continuing this dialogue with states to ensure this
cooperative atmosphere continues as we administer the PACE program. In
accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 423

Administrative practice and procedure, Emergency medical services,
Health facilities. Health maintenance organizations (HMO), Medicare,
Penalties, Privacy, Reporting and recordkeeping requirements.

42 CFR Part 460

Aged, Health care, Health records, Medicaid, Medicare, Reporting
and recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
1. The authority citation for part 423 continues to read as follows:

Authority: Sections 1102, 1106, 1860D-1 through 1860D-42, and
1871 of the Social Security Act (42 U.S.C. 1302, 1306, 1395w-101
through 1395w-152, and 1395hh).

Sec. 423.4 [Amended]

0
2. In Sec. 423.4, amend paragraph (4) in the definition of ``Service
area (Service area does not include facilities in which individuals are
incarcerated.)'' by removing the reference ``Sec. 460.22 of this
chapter'' and adding in its place the reference ``Sec. 460.12(c) of
this chapter''.

PART 460--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)

0
3. The authority citation for part 460 continues to read as follows:

Authority: Secs. 1102, 1871, 1894(f), and 1934(f) of the Social
Security Act (42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f)).

0
4. Section 460.3 is added to read as follows:

Sec. 460.3 Part D program requirements.

PACE organizations offering qualified prescription drug coverage
and meeting the definition of a Part D plan sponsor, as defined at
Sec. 423.4 of this chapter, must abide by all applicable Part D

[[Page 54701]]

program requirements in part 423 of this chapter.
0
5. Section 460.10 is revised to read as follows:

Sec. 460.10 Purpose.

(a) Applications. This subpart sets forth the application
procedures for the following:
(1) An entity that seeks approval from CMS as a PACE organization.
(2) A PACE organization that seeks to expand its service area or to
add a new PACE center.
(3) A PACE organization that seeks to expand its service area and
to add a new PACE center.
(b) Waiver. This subpart sets forth the process by which a PACE
organization may request waiver of certain regulatory requirements. The
purpose of the waivers is to provide for reasonable flexibility in
adapting the PACE model to the needs of particular organizations (such
as those in rural areas).
0
6. Section 460.12 is revised to read as follows:

Sec. 460.12 Application requirements.

(a) Submission of application. An individual authorized to act for
an entity that seeks to become a PACE organization or a PACE
organization that seeks to expand its service area and/or add a PACE
center site must submit to CMS a complete application in the form and
manner specified by CMS that describes how the entity or PACE
organization meets all requirements in this part.
(b) State assurance. (1) An entity's application to become a PACE
organization must include an assurance from the State administering
agency of the State in which the program is located indicating that the
State considers the entity to be qualified to be a PACE organization
and is willing to enter into a PACE program agreement with the entity.
(2) A PACE organization's application to expand its service area
and/or add a PACE center site must include an assurance from the State
administering agency of the State in which the program is located
indicating that the State is willing to amend the PACE program
agreement to include the new site and/or expand the PACE organization's
service area.
(c) Service area designation. (1) An entity submitting an
application to become a PACE organization or a PACE organization
submitting an application seeking to expand its service area must
describe the proposed service area in its application.
(2) CMS, in consultation with the State administering agency, may
exclude from designation an area that is already covered under another
PACE program agreement to avoid unnecessary duplication of services and
avoid impairing the financial and service viability of an existing
program.
(d) Service area and/or PACE center site expansion. CMS and the
State administering agency will only approve a service area expansion
or PACE center site expansion after the PACE organization has
successfully completed its first trial period audit and, if applicable,
has implemented an acceptable corrective action plan.
0
7. Section 460.18 is amended by:
0
a. Revising the introductory text of the section.
0
b. Revising paragraph (b).
0
c. Removing paragraph (c).
The revisions read as follows:

Sec. 460.18 CMS evaluation of applications.

CMS evaluates an application on the basis of the following
information:
* * * * *
(b) Information obtained by CMS or the State administering agency
through on-site visits or any other means.
0
8. Section 460.20 is amended by:
0
a. Revising paragraph (a) introductory text and removing paragraph
(a)(3).
0
b. Redesignating paragraphs (b) through (d) as paragraphs (c) through
(e).
0
c. Adding a new paragraph (b).
0
d. Revising newly redesignated paragraphs (c) through (e).
The revisions and addition read as follows:

Sec. 460.20 Notice of CMS determination.

(a) Time limit for notification of determination. Within 90 days,
or 45 days for applications set forth in Sec. 460.10(a)(2), after an
entity submits a complete application to CMS, CMS takes one of the
following actions in the form and manner specified by CMS:
* * * * *
(b) Complete application. An application is only considered
complete when CMS receives all information necessary to make a
determination regarding approval or denial.
(c) Additional information requested. If CMS determines that an
application is not complete because it does not include sufficient
information to make a determination, CMS will request additional
information within 90 days, or 45 days for applications set forth in
Sec. 460.10(a)(2), after the date of submission of the application.
(1) The time limits in paragraph (a) of this section do not begin
until CMS receives all requested information and the application is
complete.
(2) If more than 6 months elapse between the date of initial
submission of the application and the entity's response to the CMS
request for additional information, the entity must update the
application to provide the most current information and materials
related to the application.
(d) Deemed approval. An entity's application to become a PACE
organization is deemed approved if CMS fails to act on the complete
application within 90 days, after the later of the following dates:
(1) The date the application is submitted by the organization.
(2) The date CMS receives all requested additional information.
(e) Date of submission. For purposes of the time limits described
in this section, the date that an application is submitted to CMS is
the date on which the application is delivered to the address
designated by CMS.

Sec. 460.22 [Removed]

0
9. Section 460.22 is removed.
0
10. Section 460.26 is amended by revising paragraphs (a) and (b)
introductory text to read as follows:

Sec. 460.26 Submission and evaluation of waiver requests.

(a)(1) A PACE organization, or an entity submitting an application
to become a PACE organization, must submit its waiver request through
the State administering agency for initial review. The State
administering agency forwards waiver requests to CMS along with any
concerns or conditions regarding the waiver.
(2) Entities submitting an application to become a PACE
organization may submit a waiver request as a document separate from
the application or in conjunction with and at the same time as the
application.
(b) CMS evaluates a waiver request from a PACE organization or PACE
applicant on the basis of the following information:
* * * * *
0
11. Section 460.28 is revised to read as follows:

Sec. 460.28 Notice of CMS determination on waiver requests.

(a) General. Within 90 days after receipt of a complete waiver
request, CMS takes one of the following actions, in the form and manner
specified by CMS:
(1) Approves the waiver request.
(2) Conditionally approves the waiver request and notifies the PACE
applicant.
(3) Denies the waiver request and notifies the PACE organization or
PACE applicant of the basis for the denial.
(b) Additional information requested. A waiver request is only
considered

[[Page 54702]]

complete when CMS receives all information necessary to make a
determination regarding approval or denial. If CMS determines that the
waiver request is not complete because it does not include sufficient
information to make a determination, CMS will request additional
information from the PACE organization or PACE applicant. The 90-day
time limit in paragraph (a) of this section will start when CMS
receives the complete waiver request.
(c) Waiver approval. A waiver request is deemed approved if CMS
fails to act on the request within 90 days after CMS receives a
complete waiver request.
(d) Withdrawal of CMS approval for good cause. (1) CMS in
consultation with the State administering agency may withdraw approval
of a waiver for good cause.
(2) If the waiver approval is withdrawn, CMS must notify the PACE
organization or PACE applicant and the State administering agency that
approval of a waiver has been withdrawn and the reason for doing so and
must specify the effective date of the withdrawal in the notice.
0
12. Section 460.32 is amended by revising paragraphs (a)(9) and (12) to
read as follows:

Sec. 460.32 Content and terms of PACE program agreement.

(a) * * *
(9) A description of the organization's quality improvement
program.
* * * * *
(12) The state's Medicaid capitation rate or Medicaid payment rate
methodology, and the methodology used to calculate the Medicare
capitation rate.
* * * * *
0
13. Section 460.40 is revised to read as follows:

Sec. 460.40 Violations for which CMS may impose sanctions.

(a) In addition to other remedies authorized by law, CMS may impose
any of the sanctions specified in Sec. Sec. 460.42 and 460.46, if CMS
determines that a PACE organization commits any of the following
violations:
(1) Fails substantially to provide to a participant medically
necessary items and services that are covered PACE services, if the
failure has adversely affected (or has a substantial likelihood of
adversely affecting) the participant.
(2) Involuntarily disenrolls a participant in violation of Sec.
460.164.
(3) Discriminates in enrollment or disenrollment among Medicare
beneficiaries or Medicaid beneficiaries, or both, who are eligible to
enroll in a PACE program, on the basis of an individual's health,
functional, cognitive or psychosocial status or need for health care
services.
(4) Engages in any practice that would reasonably be expected to
have the effect of denying or discouraging enrollment, except as
permitted by Sec. 460.150, by Medicare beneficiaries or Medicaid
beneficiaries whose medical condition or history indicates a need for
substantial future medical services or long term services and supports.
(5) Imposes charges on participants enrolled under Medicare or
Medicaid for premiums in excess of the premiums permitted.
(6) Misrepresents or falsifies information that is furnished to--
(i) CMS or the State under this part; or
(ii) An individual or any other entity under this part.
(7) Prohibits or otherwise restricts a covered health care
professional from advising a participant who is a patient of the
professional about the participant's health and functional status,
medical care, or treatment for the participant's condition or disease,
regardless of whether the PACE program provides benefits for that care
or treatment, if the professional is acting within his or her lawful
scope of practice.
(8) Operates a physician incentive plan that does not meet the
requirements of section 1876(i)(8) of the Act.
(9) Employs or contracts with any individual who is excluded from
participation in Medicare or Medicaid under section 1128 or section
1128A of the Act (or with any entity that employs or contracts with
that individual) for the provision of health care, utilization review,
medical social work, or administrative services.
(b) If CMS or the State administering agency makes a determination
that could lead to termination of a PACE program agreement under Sec.
460.50, CMS may impose any of the sanctions specified at Sec. Sec.
460.42 and 460.46.
0
14. Section 460.46 is amended by:
0
a. Adding a note to paragraph (a).
0
b. Removing the reference ``Sec. 460.40 (c) or (d)'' in paragraph
(a)(1) and adding in its place the reference ``Sec. 460.40(a)(3) or
(4)''.
0
c. Removing the reference ``Sec. 460.40(e)'' in paragraph (a)(2) and
adding in its place the reference ``Sec. 460.40(a)(5)''.
0
d. Removing the reference ``Sec. 460.40(f)(1)'' in paragraph (a)(3)
and adding in its place the reference ``Sec. 460.40(a)(6)(i)''.
The addition reads as follows:

Sec. 460.46 Civil money penalties.

(a) * * *
Note to paragraph (a). These amounts will be adjusted in accordance
with the Federal Civil Penalties Inflation Adjustment Act Improvements
Act of 2015 (the 2015 Act) (Sec. 701 of Public Law 114-74) and updated
amounts will be published in accordance with any amendments to 42 CFR
1003.102.
* * * * *
0
15. Section 460.60 is amended by:
0
a. Removing paragraph (a).
0
b. Redesignating paragraphs (b), (c), and (d) as paragraphs (a), (b),
and (c).
0
c. Revising newly redesignated paragraphs (b) and (c)(3).
0
d. Adding a new paragraph (d).
The revisions and addition read as follows:

Sec. 460.60 PACE organizational structure.

* * * * *
(b) Medical director. The organization must employ, or contract
with a physician in accordance with Sec. 460.70, to serve as its
medical director responsible for the delivery of participant care, for
clinical outcomes, and for the implementation, as well as oversight, of
the quality improvement program.
(c) * * *
(3) Except as provided in paragraph (d) of this section, a PACE
organization planning a change in organizational structure must notify
CMS and the State administering agency, in writing, at least 14 days
before the change takes effect.
(d) Change of ownership. A PACE organization planning a change of
ownership must comply with all requirements in 42 CFR part 422, subpart
L, and must notify CMS and the State administering agency, in writing,
at least 60 days before the anticipated effective date of the change.
0
16. Section 460.62 is amended by revising paragraph (a)(7) and adding
paragraph (a)(8) to read as follows:

Sec. 460.62 Governing body.

(a) * * *
(7) A quality improvement program as described in Sec. 460.130.
(8) Adopt and implement effective compliance oversight as described
in Sec. 460.63.
* * * * *
0
17. Section 460.63 is added to read as follows:

Sec. 460.63 Compliance oversight requirements.

A PACE organization must adopt and implement effective compliance
oversight requirements, which must include measures that prevent,
detect,

[[Page 54703]]

and correct non-compliance with CMS's program requirements as well as
measures that prevent, detect, and correct fraud, waste, and abuse. The
compliance oversight program must, at a minimum, include the following
core requirements:
(a) Establishment and implementation of an effective system for
routine monitoring and identification of compliance risks. The system
should include internal monitoring and audits and, as appropriate,
external audits, to evaluate the PACE organization, including
contractors, compliance with CMS requirements and the overall
effectiveness of the compliance oversight program.
(b) Establishment and implementation of procedures and a system for
promptly responding to compliance issues as they are raised,
investigating potential compliance problems as identified in the course
of self-evaluations and audits, correcting such problems promptly and
thoroughly to reduce the potential for recurrence, and ensure ongoing
compliance with CMS requirements.
(1) If the PACE organization discovers evidence of misconduct
related to payment or delivery of items or services, it must conduct a
timely, reasonable inquiry into that conduct.
(2) The PACE organization must conduct appropriate corrective
actions (for example, repayment of overpayments, disciplinary actions
against responsible employees) in response to the potential violation.
(3) The PACE organization should have procedures to voluntarily
self-report potential fraud or misconduct related to the PACE program
to CMS and the State administering agency.
0
18. Section 460.64 is amended by revising paragraphs (a) introductory
text and (a)(3) and (4) to read as follows:

Sec. 460.64 Personnel qualifications for staff with direct
participant contact.

(a) General qualification requirements. Each member of the PACE
organization's staff (employee or contractor) that has direct contact
with participants must meet the following conditions:
* * * * *
(3) Have 1 year of experience working with a frail or elderly
population or, if the individual has less than 1 year of experience but
meets all other requirements under paragraph (a) of this section, must
receive appropriate training from the PACE organization on working with
a frail or elderly population upon hiring.
(4) Meet a standardized set of competencies for the specific
position description established by the PACE organization before
working independently.
* * * * *

Sec. Sec. 460.66 and 460.71 [Amended]

0
19. Section 460.66 is amended by:
0
a. Redesignating paragraphs (b) and (c) as Sec. 460.71(c) and (d),
respectively.
0
b. Removing the paragraph (a) designation from Sec. 460.66.
0
20. Section 460.68 is amended by:
0
a. In paragraph (a)(2), removing the word ``or'' after the semicolon.
0
b. Revising paragraph (a)(3).
0
c. Adding paragraphs (a)(4) and (5).
The revision and additions read as follows:

Sec. 460.68 Program integrity.

(a) * * *
(3) If the PACE organization determines that an individual's
contact with participants would pose a potential risk because the
individual has been convicted of one or more criminal offenses related
to physical, sexual, drug, or alcohol abuse or use;
(4) Who have been found guilty of abusing, neglecting, or
mistreating individuals by a court of law or who have had a finding
entered into the State nurse aide registry concerning abuse, neglect,
mistreatment of residents, or misappropriation of their property; or
(5) Who have been convicted of specific crimes for any offense
described in section 1128(a) of the Social Security Act.
* * * * *
0
21. Section 460.70 is amended by:
0
a. Revising paragraph (b)(1)(iii).
0
b. Adding paragraph (d)(6) introductory text.
0
c. Redesignating paragraphs (d)(5)(vi) through (ix) as paragraphs
(d)(6)(i) through (iv).
0
d. Revising newly redesignated paragraphs (d)(6)(i), (ii), and (iii).
0
e. In paragraph (e), removing the term ``PACE Center services'' and
adding in its place everywhere it appears the term ``PACE center
services''.
0
f. In paragraph (e)(2), removing the reference ``Sec. 460.98(d)'' and
adding in its place the reference ``Sec. 460.98(c)''.
The revisions and additions read as follows:

Sec. 460.70 Contracted services.

* * * * *
(b) * * *
(1) * * *
(iii) A contractor must comply with the requirements of this part
with respect to service delivery, participant rights, and quality
improvement activities.
* * * * *
(d) * * *
(6) With respect to an individual who is contracting as a program
director or medical director or to be part of the interdisciplinary
team as set forth at Sec. Sec. 460.60(a) and (b) and 460.102(b), the
contract must specify that the individual agrees to:
(i) Perform all the duties related to its position as specified in
this part.
(ii) Participate in interdisciplinary team meetings as required.
(iii) Be accountable to the PACE organization.
* * * * *
0
22. Section 460.71 is amended by revising paragraphs (a)(1) and (b)(4)
to read as follows:

Sec. 460.71 Oversight of direct participant care.

(a) * * *
(1) The PACE organization must provide each employee and all
contracted staff with an orientation that includes, at a minimum, the
organization's mission, philosophy, policies on participant rights,
emergency plan, ethics, the PACE benefit, and any policies related to
the job duties of specific staff.
* * * * *
(b) * * *
(4) Be medically cleared for communicable diseases and have all
immunizations up-to-date before engaging in direct participant contact
as required under Sec. 460.64(a)(5).
* * * * *
0
23. Section 460.82 is amended by revising paragraphs (c)(1), (e)
introductory text, (e)(3), (e)(4), and (e)(5) and removing paragraph
(f) to read as follows:

Sec. 460.82 Marketing.

* * * * *
(c) * * *
(1) In English and in any other principal languages of the
community, as determined by the State in which the PACE organization is
located. In the absence of a State standard, a principal language of
the community is any language that is spoken in the home by at least 5
percent of the individuals in the PACE organization's service area.
* * * * *
(e) Prohibited marketing practices. A PACE organization must not
use the following marketing practices, which are prohibited:
* * * * *
(3) Gifts or payments to induce enrollment, unless the gifts are of
nominal value as defined in CMS guidance, are offered to all potential
enrollees without regard to whether

[[Page 54704]]

they enroll in the PACE program, and are not in the form of cash or
other monetary rebates.
(4) Marketing by any individuals other than the employees of the
PACE organization.
(5) Unsolicited door-to-door marketing or other unsolicited means
of direct contact, including calling or emailing a potential or current
participant without the individual initiating the contact.

Sec. 460.98 [Amended]

0
24. Section 460.98 is amended by:
0
a. In the heading for paragraph (d), removing the term ``PACE Center''
and adding in its place the term ``PACE center''.
0
b. In paragraph (d)(3), removing the term ``Pace center'' and adding in
its place the term ``PACE center''.

Sec. 460.100 [Amended]

0
25. In Sec. 460.100, amend paragraph (e)(3)(i) by removing the term
``POs'' and adding in its place the term ``PACE organizations'' and
removing the term ``PO'' and adding in its place the term ``PACE
organization''.
0
26. Section 460.102 is amended by:
0
a. Revising paragraphs (a)(1), (b) introductory text, (b)(1), (c)
introductory text, (c)(1), (c)(2) introductory text, and (d)(3).
0
b. Redesignating paragraph (e) as paragraph (f).
0
c. Adding a new paragraph (e).
The revisions and addition read as follows:

Sec. 460.102 Interdisciplinary team.

(a) * * *
(1) Establish an interdisciplinary team, composed of members that
fill the roles described in paragraph (b) of this section, at each PACE
center to comprehensively assess and meet the individual needs of each
participant.
* * * * *
(b) Composition of interdisciplinary team. The interdisciplinary
team must be composed of members qualified to fill, at minimum, the
following roles, in accordance with CMS guidelines. One individual may
fill two separate roles on the interdisciplinary team where the
individual meets applicable state licensure requirements and is
qualified to fill the two roles and able to provide appropriate care to
meet the needs of participants.
(1) Primary care provider.
* * * * *
(c) Primary care provider. (1) Primary medical care must be
furnished to a participant by any of the following:
(i) A primary care physician.
(ii) A community-based physician.
(iii) A physician assistant who is licensed in the State and
practices within his or her scope of practice as defined by State laws
with regard to oversight, practice authority and prescriptive
authority.
(iv) A nurse practitioner who is licensed in the State and
practices within his or her scope of practice as defined by State laws
with regard to oversight, practice authority and prescriptive
authority.
(2) Each primary care provider is responsible for the following:
* * * * *
(d) * * *
(3) The members of the interdisciplinary team, with the exception
of the community-based physician in paragraph (c)(1)(ii) of this
section, must serve primarily PACE participants.
(e) Team member qualifications. The PACE organization must ensure
that all members of the interdisciplinary team have appropriate
licenses or certifications under State law, act within the scope of
practice as defined by State laws, and meet the requirements set forth
in Sec. 460.71.
* * * * *
0
27. Section 460.104 is amended by revising paragraphs (a)(1), (a)(2)
introductory text, (a)(2)(i), (a)(3), (a)(4) introductory text, (b),
(c), (d) introductory text, (d)(1), and (d)(2) introductory text to
read as follows:

Sec. 460.104 Participant assessment.

(a) * * *
(1) Basic requirement. The interdisciplinary team must conduct an
initial in-person comprehensive assessment on each participant. The
assessment must be completed in a timely manner in order to meet the
requirements in paragraph (b) of this section.
(2) Members present. As part of the initial comprehensive
assessment, each of the following members of the interdisciplinary team
must evaluate the participant in person and develop a discipline-
specific assessment of the participant's health and social status:
(i) Primary care provider.
* * * * *
(3) Additional professional disciplines. At the recommendation of
the interdisciplinary team, other professional disciplines (for
example, speech-language pathology, dentistry, or audiology) may be
included in the initial comprehensive assessment process.
(4) Initial comprehensive assessment criteria. The initial in-
person comprehensive assessment must at a minimum include the
evaluation of:
* * * * *
(b) Development of plan of care. Within 30 days of the date of
enrollment, the interdisciplinary team must consolidate discipline-
specific assessments into a single plan of care for each participant
through team discussions and consensus of the entire interdisciplinary
team. In developing the plan of care:
(1) If the interdisciplinary team determines that certain services
are not necessary to the care of a participant, the reasoning behind
this determination must be documented in the plan of care.
(2) Female participants must be informed that they are entitled to
choose a qualified specialist for women's health services from the PACE
organization's network to furnish routine or preventive women's health
services.
(c) Semi-annual reassessment. On at least a semi-annual basis, or
more often if a participant's condition dictates, the following members
of the interdisciplinary team must conduct an in-person reassessment:
(1) Primary care provider.
(2) Registered nurse.
(3) Master's-level social worker.
(4) Other team members that the primary care provider, registered
nurse and Master's-level social worker determine are actively involved
in the development or implementation of the participant's plan of care.
(d) Unscheduled reassessments. In addition to semi-annual
reassessments, unscheduled reassessments may be required based on the
following:
(1) A change in participant status. If the health or psychosocial
status of a participant changes, the members of the interdisciplinary
team listed in paragraph (c) of this section must conduct an in-person
reassessment.
(2) At the request of the participant or designated representative.
If a participant (or his or her designated representative) believes
that the participant needs to initiate, eliminate, or continue a
particular service, the members of the interdisciplinary team listed in
paragraph (c) of this section must conduct an in-person reassessment.
* * * * *
0
28. Section 460.106 is amended by revising paragraph (a) and adding
paragraphs (b)(3), (4), and (5) to read as follows:

Sec. 460.106 Plan of care.

(a) Basic requirement. Within 30 days of the date of enrollment,
the interdisciplinary team members

[[Page 54705]]

specified in Sec. 460.104(a)(2) must develop a comprehensive plan of
care for each participant based on the initial comprehensive assessment
findings.
(b) * * *
(3) Utilize the most appropriate interventions for each care need
that advances the participant toward a measurable goal and outcome.
(4) Identify each intervention and how it will be implemented.
(5) Identify how each intervention will be evaluated to determine
progress in reaching specified goals and desired outcomes.
* * * * *
0
29. Section 460.112 is amended by:
0
a. Revising paragraph (b)(1)(i).
0
b. Removing paragraph (b)(1)(ii).
0
c. Redesignating paragraph (b)(1)(iii) as paragraph (b)(1)(ii).
0
d. Revising paragraphs (b)(3) and (c)(3).
The revisions read as follows:

Sec. 460.112 Specific rights to which a participant is entitled.

* * * * *
(b) * * *
(1) * * *
(i) Prior to and upon enrollment in the PACE organization.
* * * * *
(3) To examine, or upon reasonable request, to be helped to examine
the results of the most recent review of the PACE organization
conducted by CMS or the State administering agency and any plan of
correction in effect.
(c) * * *
(3) To disenroll from the program at any time and have such
disenrollment be effective the first day of the month following the
date the PACE organization receives the participant's notice of
voluntary disenrollment as set forth in Sec. 460.162(a).
* * * * *
0
30. Section 460.116 is amended by revising paragraphs (c)(1) and (2) to
read as follows:

Sec. 460.116 Explanation of rights.

* * * * *
(c) * * *
(1) Write the participant rights in English and in any other
principal languages of the community, as determined by the State in
which the PACE organization is located. In the absence of a State
standard, a principal language of the community is any language that is
spoken by at least 5 percent of the individuals in the PACE
organization's service area.
(2) Display the PACE participant rights in a prominent place in the
PACE center.

Sec. 460.120 [Amended]

0
31. In Sec. 460.120, amend paragraph (f) by removing the term
``quality assessment and performance improvement'' and adding in its
place the term ``quality improvement''.
0
32. Section 460.122 is amended by revising paragraphs (c)(1) and (i) to
read as follows:

Sec. 460.122 PACE organization's appeals process.

* * * * *
(c) * * *
(1) Timely preparation and processing of a written denial of
coverage or payment as provided in Sec. 460.104(d)(2)(iv).
* * * * *
(i) Analyzing appeals information. A PACE organization must
maintain, aggregate, and analyze information on appeal proceedings and
use this information in the organization's internal quality improvement
program.
0
33. Subpart H is amended by revising the heading to read as follows:

Subpart H--Quality Improvement

0
34. Section 460.130 is amended by revising paragraph (a) and adding
paragraph (d) to read as follows:

Sec. 460.130 General rule.

(a) A PACE organization must develop, implement, maintain, and
evaluate an effective, data-driven quality improvement program.
* * * * *
(d) A PACE organization must meet external quality assessment and
reporting requirements, as specified by CMS or the State administering
agency, in accordance with Sec. 460.202.
0
35. Section 460.132 is amended by revising the section heading and
paragraphs (a) and (c)(3) to read as follows:

Sec. 460.132 Quality improvement plan.

(a) Basic rule. A PACE organization must have a written quality
improvement plan that is collaborative and interdisciplinary in nature.
* * * * *
(c) * * *
(3) Document and disseminate to PACE staff and contractors the
results from the quality improvement activities.

Sec. 460.134 [Amended]

0
36. In Sec. 460.134, amend the section heading and paragraph (a)
introductory text by removing the term ``quality assessment and
performance improvement'' and adding in its place the term ``quality
improvement''.

Sec. 460.136 [Amended]

0
37. Section 460.136 is amended by:
0
a. Removing the term ``quality assessment and performance improvement''
and adding in its place everywhere it appears the term ``quality
improvement''.
0
b. Removing the term ``Quality assessment and performance improvement''
and adding in its place everywhere it appears the term ``Quality
improvement''.

Sec. 460.138 [Amended]

0
38. In Sec. 460.138, amend paragraph (b) by removing the term
``quality assessment and performance improvement'' and adding in its
place the term ``quality improvement''.

Sec. 460.140 [Removed]

0
39. Section 460.140 is removed.
0
40. Section 460.150 is amended by revising paragraph (c)(2) to read as
follows:

Sec. 460.150 Eligibility to enroll in a PACE program.

* * * * *
(c) * * *
(2) The State administering agency criteria used to determine if an
individual's health or safety would be jeopardized by living in a
community setting must be specified in the program agreement.
* * * * *
0
41. Section 460.152 is amended by revising paragraph (b)(4) to read as
follows:

Sec. 460.152 Enrollment process.

* * * * *
(b) * * *
(4) Notify CMS and the State administering agency in the form and
manner specified by CMS and make the documentation available for
review.
0
42. Section 460.154 is amended by revising paragraph (i) to read as
follows:

Sec. 460.154 Enrollment agreement.

* * * * *
(i) Notification that enrollment in PACE results in disenrollment
from any other Medicare or Medicaid prepayment plan or optional
benefit. Electing enrollment in any other Medicare or Medicaid
prepayment plan or optional benefit, including the hospice benefit,
after enrolling as a PACE participant is considered a voluntary
disenrollment from PACE. If a Medicaid-only or private pay participant
becomes eligible for Medicare after enrollment in PACE, the participant
will be disenrolled from PACE if he or she elects to obtain Medicare
coverage other than from the participant's PACE organization.
* * * * *

[[Page 54706]]

0
43. Section 460.156 is amended by:
0
a. Revising paragraph (a)(2).
0
b. Removing paragraph (a)(4).
The revision reads as follows:

Sec. 460.156 Other enrollment procedures.

(a) * * *
(2) A PACE membership card that indicates that he or she is a PACE
participant and that includes the phone number of the PACE
organization.
* * * * *
0
44. Section 460.162 is revised to read as follows:

Sec. 460.162 Voluntary disenrollment.

(a) Effective date. A participant's voluntary disenrollment is
effective on the first day of the month following the date the PACE
organization receives the participant's notice of voluntary
disenrollment.
(b) Reasons for voluntary disenrollment. A PACE participant may
voluntarily disenroll from the program without cause at any time.
(c) Responsibilities of PACE organization. A PACE organization must
ensure that its employees or contractors do not engage in any practice
that would reasonably be expected to have the effect of steering or
encouraging disenrollment of participants due to a change in health
status.
0
45. Section 460.164 is amended by:
0
a. Redesignating paragraphs (a) through (e) as paragraphs (b) through
(f), respectively.
0
b. Adding a new paragraph (a).
0
c. Revising newly redesignated paragraph (b)(1).
0
d. Further redesignating newly redesignated paragraphs (b)(2) through
(6) as paragraphs (b)(4) through (8), respectively.
0
e. Adding new paragraphs (b)(2) and (3).
0
f. In newly designated paragraph (b)(4), removing the reference
``paragraph (b)'' and adding in its place the reference ``paragraph
(c)''.
0
g. Revising newly redesignated paragraphs (c) and (d).
The revisions and additions read as follows:

Sec. 460.164 Involuntary disenrollment.

(a) Effective date. A participant's involuntary disenrollment
occurs after the PACE organization meets the requirements set forth in
this section and is effective on the first day of the next month that
begins 30 days after the day the PACE organization sends notice of the
disenrollment to the participant.
(b) * * *
(1) The participant, after a 30-day grace period, fails to pay or
make satisfactory arrangements to pay any premium due the PACE
organization.
(2) The participant, after a 30-day grace period, fails to pay or
make satisfactory arrangements to pay any applicable Medicaid spenddown
liability or any amount due under the post-eligibility treatment of
income process, as permitted under Sec. Sec. 460.182 and 460.184.
(3) The participant or the participant's caregiver engages in
disruptive or threatening behavior, as described in paragraph (c) of
this section.
* * * * *
(c) Disruptive or threatening behavior. (1) For purposes of this
section, a participant who engages in disruptive or threatening
behavior refers to a participant who exhibits either of the following:
(i) A participant whose behavior jeopardizes his or her health or
safety, or the safety of others; or
(ii) A participant with decision-making capacity who consistently
refuses to comply with his or her individual plan of care or the terms
of the PACE enrollment agreement.
(2) For purposes of this section, a participant's caregiver who
engages in disruptive or threatening behavior exhibits behavior that
jeopardizes the participant's health or safety, or the safety of the
caregiver or others.
(d) Documentation of disruptive or threatening behavior. If a PACE
organization proposes to disenroll a participant based on the
disruptive or threatening behavior of the participant or the
participant's caregiver, the organization must document the following
information in the participant's medical record:
(1) The reasons for proposing to disenroll the participant.
(2) All efforts to remedy the situation.
* * * * *
0
46. Section 460.166 is amended by revising the section heading to read
as follows:

Sec. 460.166 Disenrollment responsibilities.

* * * * *
0
47. Section 460.168 is amended by revising paragraph (a) to read as
follows:

Sec. 460.168 Reinstatement in other Medicare and Medicaid programs.

* * * * *
(a) Make appropriate referrals and ensure medical records are made
available to new providers within 30 days.
* * * * *

Sec. 460.172 [Amended]

0
48. In Sec. 460.172, amend paragraph (c) by removing the reference
``quality assessment and performance improvement'' and adding in its
place the reference ``quality improvement''.
0
49. Section 460.182 is amended by:
0
a. Revising paragraph (b) introductory text.
0
b. Redesignating paragraphs (b)(3) and (4) as paragraphs (b)(4) and
(5).
0
c. Adding a new paragraph (b)(3).
The revision and addition read as follows:

Sec. 460.182 Medicaid payment.

* * * * *
(b) The monthly capitation amount is negotiated between the PACE
organization and the State administering agency, and the amount, or the
methodology used to calculate the amount, is specified in the PACE
program agreement. The amount represents the following:
* * *
(3) Is sufficient and consistent with efficiency, economy and
quality of care.
* * * * *
0
50. Section 460.190 is amended by:
0
a. Revising paragraph (b)(1).
0
b. Redesignating paragraphs (b)(2) through (4) as paragraphs (b)(3)
through (5).
0
c. Adding a new paragraph (b)(2).
The revisions and addition read as follows:

Sec. 460.190 Monitoring during trial period.

* * * * *
(b) * * *
(1) An onsite visit to the PACE organization, which may include,
but is not limited to, observation of program operations;
(2) Detailed analysis of the entity's substantial compliance with
all significant requirements of sections 1894 and 1934 of the Act and
this part, which may include review of marketing, participant services,
enrollment and disenrollment, and grievances and appeals.
* * * * *
0
51. Section 460.192 is amended by revising paragraph (b) to read as
follows:

Sec. 460.192 Ongoing monitoring after trial period.

* * * * *
(b) CMS in cooperation with the State administering agency will
conduct reviews of the operations of PACE organizations as appropriate,
as determined by a risk assessment of each PACE organization which
takes into account the PACE organization's performance level and
compliance with the significant requirements of sections 1834 and 1934
of the Social Security Act and this part.
0
52. Section 460.194 is amended by revising paragraph (a) to read as
follows:

[[Page 54707]]

Sec. 460.194 Corrective action.

(a) A PACE organization must take action to correct deficiencies
identified by CMS or the State administering agency through the
following:
(1) Ongoing monitoring of the PACE organization.
(2) Reviews and audits of the PACE organization.
(3) Complaints from PACE participants or caregivers.
(4) Any other instance CMS or the SAA identifies programmatic
deficiencies requiring correction.
* * * * *
0
53. Section 460.196 is amended by revising paragraph (d) to read as
follows:

Sec. 460.196 Disclosure of review results.

* * * * *
(d) The PACE organization must make the review results available
for examination in a place readily accessible to participants, their
families, their caregivers, and their authorized representatives.
0
54. Section 460.200 is amended by revising paragraphs (f)(1)(ii) and
(iii) to read as follows:

Sec. 460.200 Maintenance of records and reporting of data.

* * * * *
(f) * * *
(1) * * *
(ii) Ten years from the last entry date.
(iii) For medical records of disenrolled participants, 10 years
after the date of disenrollment.
* * * * *

Dated: July 15, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: July 19, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-19153 Filed 8-11-16; 4:15 pm]
BILLING CODE 4120-01-P