[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greater operational flexibility, remove redundancies and outdated 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

[[Page 54667]]

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
------------------------------------------------------------------------
                                                        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.
------------------------------------------------------------------------

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.

[[Page 54669]]

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