[Federal Register Volume 84, Number 106 (Monday, June 3, 2019)]
[Rules and Regulations]
[Pages 25610-25677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11087]



[[Page 25609]]

Vol. 84

Monday,

No. 106

June 3, 2019

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); Final Rule

  Federal Register / Vol. 84 , No. 106 / Monday, June 3, 2019 / Rules 
and Regulations  

[[Page 25610]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 423 and 460

[CMS-4168-F]
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: Final rule.

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SUMMARY: This final rule updates the requirements for the Programs of 
All-Inclusive Care for the Elderly (PACE) under the Medicare and 
Medicaid programs. The 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 changes will provide greater 
operational flexibility, remove redundancies and outdated information, 
and codify existing practice.

DATES: Effective Date: These regulations are effective on August 2, 
2019.

FOR FURTHER INFORMATION CONTACT: Brandy Alston, 410-786-1218.

SUPPLEMENTARY INFORMATION:

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. Summary of the Provisions of the Proposed Rule, and Analysis of 
and Responses to Public Comments
    A. 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. Provisions of the Final Rule
V. Collection of Information Requirements
VI. Regulatory Impact Statement

Regulation Text

I. Executive Summary

A. Purpose

    The purpose of this final 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 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 changes will 
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. In 
the August 16, 2016 Federal Register (81 FR 54666), we published the 
proposed rule, entitled ``Medicare and Medicaid Programs; Programs of 
All-Inclusive Care for the Elderly (PACE).'' In that rule, as 
authorized by sections 1934(f)(3) and 1894(f)(3) of the Social Security 
Act (the Act), we proposed to adopt two key elements of the Part D 
compliance program in the PACE regulations. Specifically, we proposed 
to require each PACE organization (PO) to develop a compliance 
oversight program that will be responsible for monitoring and auditing 
its organization for compliance with our regulations. Additionally, we 
proposed to require POs to have measures that prevent, detect and 
correct non-compliance with CMS' program requirements, as well as 
measures that prevent, detect, and correct fraud, waste, and abuse. We 
received comments that indicated these requirements would potentially 
present a significant burden to POs and possibly take key staff away 
from providing participant care. After careful consideration of these 
concerns, and after re-analyzing the burden estimates, we are 
finalizing this provision in part.
2. Monitoring and Oversight of PACE Organizations
    As a result of our experience with oversight and monitoring of the 
PACE program, we proposed 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 stated in the 
proposed rule that 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 proposed to use technology to enhance 
efficiencies in monitoring by remotely reviewing PO documents, which we 
have to date reviewed primarily through site visits. We also proposed 
to reduce the number of on-site visits after the 3-year trial period by 
utilizing a risk assessment to select which POs will be audited each 
year. We stated in the proposed rule that this risk assessment would 
rely primarily 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. We are finalizing the provisions related to 
federal and state monitoring as proposed.
3. Additional Flexibility for Interdisciplinary Team
    This final rule makes several changes intended to expand the 
flexibilities of the interdisciplinary team (IDT) that comprehensively 
assesses and provides for the individual needs of each PACE 
participant. Key provisions in this final rule include permitting one 
individual to fill two separate roles on the IDT if the individual has 
the appropriate licenses and qualifications for both roles, and 
permitting the primary care provider that is required for each IDT to 
include nurse practitioners, physician assistants and community-based 
physicians, in addition to physicians. Another flexibility we are 
finalizing in this rule is removal of the requirement that members of 
the IDT must serve primarily PACE participants.

C. Summary of Costs and Benefits

[[Page 25611]]



                 Table 1--Summary of Costs and Benefits
------------------------------------------------------------------------
                                                          Total cost to
                                                           government
     Provision description        Total costs to POs        (without
                                                            transfer)
------------------------------------------------------------------------
Compliance Oversight            This provision          The creation of
 Requirements.                   requires POs to         this program
                                 create a compliance     does not have
                                 oversight program to    cost or savings
                                 allow prompt            to the
                                 identification of non-  government
                                 compliance and report   since it is the
                                 of fraud, waste and     POs who are
                                 abuse. We estimate a    creating and
                                 one-time burden of      using the
                                 $116,026.8 in the       compliance
                                 first year for          oversight
                                 developing the          program.
                                 written materials and
                                 training necessary
                                 for the prompt
                                 identification and
                                 reporting of fraud,
                                 waste and abuse (124
                                 PO x 15 hours per PO
                                 x 62.38 (hourly
                                 rate)). This cost
                                 when annualized over
                                 3 years is $38,675.6.
                                 We further estimate
                                 an annual cost of
                                 $154,702 per year for
                                 POs reporting and
                                 responding to any
                                 suspected fraud,
                                 waste and abuse (124
                                 PO x 20 hours per PO
                                 x $62.38 hourly
                                 rate). Thus, the
                                 total cost would be
                                 $38,675.6 initially
                                 and $154,702
                                 afterwards.
Monitoring....................  This provision reduces  We estimate an
                                 the required            annual savings
                                 monitoring by CMS of    of $2,638,144
                                 POs. We estimate that   to the
                                 there will be an        government. We
                                 annual savings to POs   expect 72 PO
                                 based on our proposal   audits under
                                 of $1,523,253. We       current
                                 expect 72 PO audits     regulations. We
                                 under the current       expect only 35
                                 regulations but only    audits under
                                 35 audits as a result   this final
                                 of this final rule.     rule. The
                                 Consequently, the       savings to the
                                 savings to PO would     government
                                 be the effort saved     would be the
                                 by not having to        effort saved by
                                 produce documentation   not having to
                                 and other               perform 37
                                 administrative          audits.
                                 burdens that occur     The cost per
                                 during an audit for     audit is 2 GS-
                                 37 audits.              13 x $1,980
                                 Consequently, we are    travel + 200
                                 estimating the          hours for GS-
                                 savings per audit for   13s x $46.46/hr
                                 a PO to be              GS-13 wage x 2
                                 approximately $41,169   (Fringe benefit
                                 (1 Nurse Manager at     factor) + 60
                                 $53.69/hour x 2         hours for GS-
                                 (Factor for fringe      15s x $64.59/hr
                                 benefits) x 150 hours   GS-15 wage x 2
                                 per person plus 1       (Fringe benefit
                                 Executive Assistant     factor) + 20
                                 at $28.56/hour x 2      hours for 1 GS-
                                 (Factor for fringe      13 x 46.46/hr
                                 benefits) x 150 hours   GS-13 wage x 2
                                 per person) plus 1      (Fringe benefit
                                 Medical Record          factor) =
                                 Technician at 20.59/    $71,301.20.
                                 hour x 2 (Factor for    Hence, the
                                 Fringe benefits) x      total savings
                                 150 hours per person    is $71,301.20 x
                                 plus 1 Compliance       37 = 2,638,144.
                                 Officer at 34.39/hour  The audit work
                                 x 2 (Factor for         includes all of
                                 Fringe benefits) x      the pre-audit
                                 150 hours per           work, including
                                 person). Therefore,     (i) compiling
                                 the total savings to    and (ii)
                                 POs will be $41,169 x   submitting
                                 37 = $1,523,253.        audit
                                                         documentation;
                                                         (iii) 2 weeks
                                                         of audit
                                                         fieldwork; the
                                                         post-audit work
                                                         of (iv)
                                                         collecting and
                                                         (v) submitting
                                                         impact
                                                         analyses, (vi)
                                                         reviewing and
                                                         (vii)
                                                         commenting on
                                                         the draft audit
                                                         report, and
                                                         (viii)
                                                         submitting and
                                                         (ix)
                                                         implementing
                                                         corrective
                                                         action plans
                                                         for conditions
                                                         of non-
                                                         compliance.
Additional Flexibility for the  This provision          This provision
 Inter-disciplinary Team (IDT).  provides                has neither
                                 administrative          cost nor
                                 flexibility for POs     savings to the
                                 without compromising    government due
                                 care by: (i)            to the fact
                                 Permitting one          that many POs
                                 individual to fill      are currently
                                 two separate roles on   exercising
                                 the IDT if the          these
                                 individual has the      flexibilities
                                 appropriate licenses    through PACE
                                 and qualifications      waivers.
                                 for both roles; (ii)
                                 permitting the
                                 primary care provider
                                 (required for each
                                 IDT) to include nurse
                                 practitioners,
                                 physician assistants
                                 and community-based
                                 physicians, in
                                 addition to
                                 physicians; and (iii)
                                 removing the
                                 requirement that
                                 members of the IDT
                                 must serve primarily
                                 PACE participants.
                                 While this provision
                                 provides greater
                                 flexibility in
                                 creating the IDT, it
                                 does not create cost
                                 or savings.
Participant Assessments.......  The provision provides  These provisions
                                 clarity on initial      will not result
                                 assessments, removes    in additional
                                 duplicative             costs or
                                 requirements for        savings to the
                                 periodic                government.
                                 reassessments, and
                                 provides greater
                                 flexibility for
                                 unscheduled
                                 reassessments. More
                                 specifically: The
                                 provision clarifies
                                 that: (i) Initial
                                 assessments must be
                                 done in-person and
                                 prior to completion
                                 of the plan of care
                                 (within 30 days);
                                 (ii) reassessments
                                 must be done semi-
                                 annually and requires
                                 a minimum of three
                                 IDT members; (iii)
                                 ``change in
                                 participant status''
                                 reassessments require
                                 a minimum of three
                                 (instead of eight)
                                 IDT members; and (iv)
                                 remote technology may
                                 be used to conduct
                                 certain reassessments
                                 for participant
                                 requests that will
                                 likely be deemed
                                 necessary to improve
                                 or maintain the
                                 participants overall
                                 health status. The
                                 use of remote
                                 technologies to
                                 conduct these
                                 reassessments for
                                 participant requests
                                 under Sec.
                                 460.104(d)(2) results
                                 in savings from
                                 reduced travel costs
                                 for PO staff and PACE
                                 participants. We are
                                 scoring this as a
                                 qualitative savings
                                 since there are
                                 challenges with
                                 quantifying it.
                                 Similarly, the other
                                 provisions are
                                 qualitative savings
                                 to POs.

[[Page 25612]]

 
PACE Program Agreement--        This provision          Since this is an
 Include Medicaid Rate           provides states and     option on the
 Methodology.                    POs the ability to      part of states,
                                 adapt to potential      and some states
                                 payment rate changes    may continue to
                                 and variations by       elect to
                                 allowing the            include the
                                 inclusion of the        actual Medicaid
                                 Medicaid payment rate   rates in the
                                 methodology in the      program
                                 PACE program            agreement, and
                                 agreement instead of    because CMS
                                 the actual rates.       will continue
                                 Although this           to review and
                                 provision may reduce    approve state
                                 the burden of POs       Medicaid PACE
                                 having to update        capitation
                                 agreements to include   rates, there is
                                 the actual Medicaid     neither cost
                                 payment rates, this     nor savings to
                                 is not a mandatory      the government.
                                 requirement and we
                                 are not scoring this
                                 change since some
                                 states may elect to
                                 continue to include
                                 the Medicaid rates.
Enforcement Actions...........  This provision allows   Because the
                                 CMS the discretion to   provision
                                 take less punitive      authorizes
                                 action, such as         lesser
                                 sanctions or CMPs,      sanctions under
                                 when authorized to      the existing
                                 terminate a PO.         disciplinary
                                 Because the provision   process, the
                                 authorizes lesser       provision has
                                 sanctions under the     neither cost
                                 existing disciplinary   nor savings to
                                 process, the            the government.
                                 provision has neither
                                 cost nor savings to
                                 POs.
Application Process...........  This provision allows   This provision
                                 an electronic and       codifies
                                 automated PACE          existing
                                 application and         practice, and
                                 waiver process. Since   therefore, has
                                 this provision          neither cost
                                 codifies existing       nor savings to
                                 practice it results     the government.
                                 in neither costs nor
                                 savings.
PACE Marketing................  The provision           This provision
                                 strengthens             has neither
                                 beneficiary             cost nor
                                 protections by          savings to the
                                 prohibiting POs from:   government.
                                 (i) Using agents/
                                 brokers that are not
                                 directly employed by
                                 the PO to market PACE
                                 programs, unless
                                 appropriately
                                 trained; (ii)
                                 unsolicited marketing
                                 by direct contact,
                                 including phone calls
                                 and emails. Since the
                                 purpose of
                                 prohibiting these
                                 marketing practices
                                 is to strengthen
                                 existing beneficiary
                                 protections, this
                                 provision is not
                                 considered a cost or
                                 savings.
------------------------------------------------------------------------

II. Background

A. Program Description

    The 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.

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 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 on-site 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 the 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

[[Page 25613]]

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 plans with prescription 
drug coverage (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.
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:
---------------------------------------------------------------------------

    \1\ https://www.gpo.gov/fdsys/pkg/FR-1999-11-24/pdf/99-29706.pdf 
(Addendum A).
    \2\ https://www.cms.gov/Medicare/Health-Plans/pace/downloads/programagreement.pdf.
---------------------------------------------------------------------------

     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 IDT 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. Summary of the Provisions of the Proposed Rule, and Analysis of 
Responses to Public Comments

    In the August 16, 2016 proposed rule, we proposed 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. We explained in the proposed rule that PACE has proven 
successful in keeping frail, older individuals, many of whom are 
eligible for both Medicare and

[[Page 25614]]

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 proposed a number of flexibilities, 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.
---------------------------------------------------------------------------

    \3\ See 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/docs/default-source/reports/june-2016-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf.
---------------------------------------------------------------------------

    We received approximately 110 public comments on the proposed rule 
from POs, individuals, health care providers, advocacy groups, and 
states. In the sections that follow, we describe each proposed 
provision, summarize any public comments received on each provision, 
and provide our responses to the comments.

A. Global Change Regarding Quality Assessment and Performance 
Improvement

    Part 460 encompasses the regulatory provisions pertaining to PACE. 
We proposed 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 noted in 
the proposed rule that we proposed 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 MA Quality Improvement 
Program, so this change would allow for consistency in use of language 
across CMS programs. We stated that this would be a change in 
terminology only and would not designate a change in the requirements 
for the PACE quality program. As proposed, the 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), (c), (c)(1) and (2), 460.138(b), and 460.172(c), and the headings 
of subpart H and Sec. Sec.  460.132, 460.134, and 460.136. We noted in 
the proposed rule that, because we were proposing to remove Sec.  
460.140 in its entirety, we would not need to change the reference in 
that section.
    As we received no comments on this global change, we are finalizing 
it as proposed.

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

1. 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 proposed 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 42 CFR part 423. We explained 
in the proposed rule that 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, 
see section 2.4 of the Part D application for new POs, available at 
https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxContracting_ApplicationGuidance.html.) We 
stated that we believed the 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.
    The following is a summary of the public comments we received on 
the proposed provision regarding Part D program requirements and our 
responses to comments.
    Comment: Several commenters generally supported the proposal to 
include in the PACE regulations the requirement that POs offering Part 
D qualified prescription drug coverage comply with Part D program 
requirements in 42 CFR part 423. However, one commenter requested that 
the regulatory text include a list of Part D requirements that are 
waived for PACE and suggested that CMS issue Health Plan Management 
System (HPMS) guidance specifying which Part D requirements are 
applicable to PACE. The same commenter requested that CMS audits take 
into account differences between PACE and MA-PDs and Medicare 
prescription drug plans (PDPs). The commenter also requested that CMS 
help in reducing Part D premiums and other costs for PACE participants.
    Response: Regarding the suggestion to list in the PACE regulations 
the specific Part D requirements that are waived for PACE, we prefer to 
maintain our current approach of listing the waived regulations in the 
Part D application for new POs, as well as the PACE program agreement. 
We believe our approach provides greater administrative flexibility 
(for example, to remove or add waived requirements) than if we codified 
the list in regulation. Further, we believe listing the waived 
regulations in the Part D PACE application is appropriate so that this 
information is readily available to all entities submitting an 
application. However, we agree that when we need to change how a waiver 
of Part D requirements is applied in PACE, or revoke a waiver based on 
new information or legal requirements, we should issue guidance to 
address those changes. For example, we will be issuing an HPMS memo to 
clarify the requirements for drug management programs in PACE to 
reflect the regulatory changes made in the final rule to implement the 
Comprehensive Addiction and Recovery Act (CARA) (83 FR 16440). Because 
the other comments concerning audits and assistance with reducing 
premiums and other costs address topics that were not covered in our 
proposal, we consider those comments to be outside the scope of this 
rule. We are finalizing the new Sec.  460.3 as proposed, with one 
technical change to refer to the definition of a Part D sponsor ``in'' 
Sec.  423.4 instead of ``at'' Sec.  423.4.

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

1. Purpose (Sec.  460.10)
    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 proposed to revise this 
section to add a new paragraph (a) to address the

[[Page 25615]]

application process and a new paragraph (b) in which we proposed to 
move the current language in this section regarding the waiver process 
by which a PO may request a waiver of certain regulatory requirements. 
We also proposed to add Sec.  460.10(a)(2) and (3) to describe the 
process for a PO to seek approval from CMS to expand an existing 
service area or add a new PACE center. We did not receive any comments 
on this proposal, and therefore, we are finalizing it as proposed.
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, which was 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 proposed to 
amend 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 
proposed 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 stated in 
the proposed rule that we believed 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 proposed 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 was the 
required format at the time the proposed rule was issued. As we 
explained in the proposed rule, paper applications were 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. We noted that 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 stated that 
we had successfully transitioned the MA application and PDP application 
to a fully electronic submission process, enabling a more organized and 
streamlined review, and wanted to bring those same efficiencies to the 
PACE application process. We also noted that we will provide further 
guidance on this process through HPMS or similar electronic system that 
may replace HPMS. Effective March 31, 2017, the first quarterly 
application submission date, we required POs to submit all applications 
electronically via HPMS, including initial applications, and 
applications for existing POs to expand their service area and/or add a 
PACE center site. POs and applicants may also refer to the CMS online 
tools for application submission at https://www.cms.gov/Medicare/Health-Plans/PACE/Overview.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, in the proposed rule, 
we proposed 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 proposed 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 willing to enter into a PACE 
program agreement with the entity. We explained in the proposed rule 
that we want entities to understand 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 to be a PO 
and is willing to enter into a PACE program agreement with the entity. 
We noted that we would not review applications that do not include this 
assurance.
    Similarly, we proposed 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 noted that 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

[[Page 25616]]

staff employed or under contract prior to furnishing services to 
participants in the expanded service area.
    In addition, we proposed 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. As proposed, Sec.  460.12(c)(1) 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 proposed 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' 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 proposed 
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.\4\
---------------------------------------------------------------------------

    \4\ The PACE manual is available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs-Items/CMS019036.html.
---------------------------------------------------------------------------

    We stated in the proposed rule that we believed all of these 
changes to Sec.  460.12 would streamline the regulations and make the 
requirements clear and consistent with the PACE statutes. We noted that 
we will provide subregulatory guidance on application submission 
requirements after publication of the final rule.
    A discussion of the comments we received on the proposed changes to 
the application requirements, and our responses to those comments, 
appears below.
    Comment: One commenter questioned how the state will ensure that 
the required state assurance that is to accompany an initial or 
expansion application is accurate without additional monitoring. The 
commenter also questioned if the state will be required to perform 
additional monitoring (with supporting documentation) to prove that an 
expanding PO is indeed qualified to expand its service area or add an 
additional PACE center.
    Response: The PACE regulations currently require that an entity's 
application to become a new PO be accompanied by an assurance from the 
SAA that the state considers the entity to be qualified to be a PO and 
is willing to enter into a PACE program agreement with the entity. In 
proposing to revise Sec.  460.12(b), we sought to clarify in the 
regulations that, similar to the requirement for an initial 
application, the SAA must provide an assurance to us that the state is 
willing to expand the existing PACE program agreement to add to an 
existing service area and/or add a new PACE center. Given that we, in 
cooperation with the SAA, already conducts ongoing monitoring of a PO, 
we expect the state will determine what if any additional information 
is needed from a PO before providing the required assurance. As 
required by Chapter 17 of the PACE manual (Sections 10, 20.6, 20.7 and 
30.2), if the PO is seeking to expand by adding a new PACE center, the 
SAA is responsible for conducting the state readiness review (SRR) of 
the PACE center to ensure that it meets the regulatory requirements for 
environment and staffing, and must provide the results to us before the 
expansion application can be approved.
    Comment: Some commenters expressed support for CMS' proposal to 
modernize the application process for entities that seek to become new 
POs or to expand existing service areas or add new PACE center sites, 
acknowledging that the electronic exchange of information will expedite 
the processing of applications and be less burdensome for both POs and 
CMS.
    Response: We thank the commenters for their support.
    Comment: A variety of commenters, including PACE associations, 
supported the proposed requirements related to the submission of 
initial applications by entities seeking to become POs, as well as 
applications submitted by POs to expand their geographic service areas. 
Commenters recommended that CMS not require a PO to submit a formal 
expansion application in order to add a new PACE center within an 
existing service area. Commenters suggested that instead of requiring 
an expansion application for a new PACE center, CMS only require a PO 
to provide advance notification (a minimum of 60 days in advance) at 
any time (not limited to the quarterly application submission cycle), 
and report specific information (for example, location of the new PACE 
center, SAA assurance of support, willingness to amend the PACE program 
agreement, attestation of financial solvency with supporting 
documentation as evidence of the program's financial capacity, etc.), 
along with a completed SRR prior to the opening of the new PACE center. 
Commenters suggested that subsequently, but still prior to the new PACE 
center's opening, the PO would submit any revised marketing materials 
to CMS for review. Some commenters also suggested that a similar 
process, with no expansion application requirement, would be sufficient 
for circumstances in which a PO is simply moving a PACE center to a new 
location and relocating the IDT. Other commenters noted that removing 
the current requirement to submit applications on a quarterly cycle 
would enable POs to open a new PACE center more quickly to build 
capacity in response to increasing enrollment.
    Response: We do not agree with the suggestion to remove the 
expansion application requirement for existing POs seeking to add a new 
PACE center within an existing service area for a number of reasons. 
First, the submission of an expansion application in which the PO seeks 
to add a new PACE center in an existing service area ensures that a 
structured, formalized process is employed consistently, regardless of 
expansion type, and ensures that the PO is providing proper assurances 
that PACE requirements are being met and that appropriate documentation 
is provided and included as part of the PACE program agreement. 
Furthermore, an expansion application requirement benefits both CMS and 
the PO, as both parties are held accountable and are required to adhere 
to established timeframes and deadlines. Perhaps most importantly, the 
submission of a formal expansion application, regardless of type, 
enables us to make a determination based on a standardized mechanism 
and affords the PO the opportunity to request reconsideration of 
denials by us. Regarding commenters' suggestion that a similar 
alternative process, with no expansion application requirement, could 
also be employed when a PO is simply moving a PACE center to a new 
location and relocating the IDT, we would point to our guidance that 
addresses expectations of POs under these circumstances. (See the 
October 21, 2016 HPMS memorandum, PACE Replacement Center Transition 
Guidance.) POs that seek to relocate an existing PACE center should 
follow this subregulatory guidance.
    Comment: A commenter suggested that the SRR be appropriately 
tailored to situations in which a PO is applying to

[[Page 25617]]

either expand its service area or add a new PACE center site, stating 
that the SRR in these instances should not be the equivalent to an SRR 
conducted for and included in an initial application.
    Response: We note that an SRR is not required for service area 
expansion (SAE) applications that do not include the addition of a new 
PACE center. We recognize that the SRR is typically the primary driver 
of delay in final approval when a PO applies for an expansion that 
includes the addition of a new PACE center site. However, the SRR is 
also a critical component of an expansion application that includes a 
new PACE center, as it assures that all state-based licensure 
requirements are met and building and safety codes are satisfied. The 
SRR primarily consists of reviewing requirements specific to the PACE 
center itself, such as construction, equipment and maintenance to 
assure physical safety of participants and personnel. While there are 
some SRR requirements that may remain the same as the existing PACE 
center(s), such as transportation, contracts and policies and 
procedures, that may not be the case if the new PACE center is 
geographically distant from the existing PACE center. For example, 
there may be a different transportation provider or other new 
contractors that are more accessible to the new PACE center location. 
Because of those variables, we believe it would be difficult to tailor 
the current SRR for an expansion application that includes addition of 
a new PACE center.
    Comment: Some commenters requested that CMS specify in Sec.  460.12 
that an expansion application will not have to include information 
previously submitted to CMS as part of the initial application. Another 
commenter noted that streamlining the administrative process removes a 
burden for both POs and CMS in processing these applications.
    Response: While SAE applicants were previously required to submit a 
smaller subset of documents than initial PACE applicants, in March 
2018, as part of the first quarterly application submission cycle, CMS 
began requiring SAE applicants to respond to the same attestations and 
upload the same documentation as initial PACE applicants. The PACE 
program agreement is the binding document between the PO, CMS and the 
SAA. We have found that program agreements, particularly for POs that 
have been active for some time, may not fully represent current 
operational policies and procedures and other information that is 
required content of the program agreement under Sec.  460.32. We 
understand commenters' concerns regarding the potential burden 
associated with SAE applicants having to upload documents previously 
submitted as part of an initial application. However, in addition to 
providing added assurance and evidence that an active PO is qualified 
to expand its PACE program, we believe the application process is an 
appropriate, efficient and effective vehicle for capturing 
documentation that is required as part of the PO's PACE program 
agreement, including changes to operational policies and procedures, 
and eliminates the need to require the PO to submit additional 
information separately. While not explicitly addressed in this rule, we 
note that comments received from the PACE industry in response to an 
information collection request (CMS-10631, OMB 0938-1326) regarding 
this approach for SAE applications have generally indicated support for 
requesting information as part of the SAE application itself in order 
to facilitate efforts to update the PACE program agreement. This 
information collection request is subject to renewal and expires on 
December 31, 2021.
    We believe this approach results in a more streamlined process and 
reduced burden for all parties to the PACE program agreement.
    Comment: Commenters expressed support for the proposed provision in 
Sec.  460.12(d), which would require a PO to have completed its first 
trial period audit and, if applicable, implemented an acceptable 
corrective action plan before CMS and the SAA will approve a service 
area expansion or PACE center expansion, with two specific 
modifications. Commenters requested an exception to this requirement 
when the PO is relocating its PACE center to a new location due to 
unforeseen circumstances or to assure adequate access if program growth 
exceeds enrollment projections. In addition, because the timing of the 
first trial period audit affects the ability of a PO to grow, 
commenters requested that CMS and the SAA commit to conducting trial 
period audits in a timely manner, with an expectation that the first 
year audit be completed no later than 15 months after the opening of 
the PACE program.
    Response: We appreciate the support for the proposed provision in 
Sec.  460.12(d) and acknowledge that unforeseen or otherwise 
exceptional circumstances, such as storm damage from a hurricane, may 
require a PO to immediately relocate its PACE center prior to 
completion of the first trial period audit. In situations that 
constitute emergency events, we would expect the PO to implement its 
emergency preparedness plan under Sec.  460.84, which should include 
established plans and procedures for continued care of all 
participants, including those who had previously required regular PACE 
center attendance, as well as those who predominantly or exclusively 
receive care at home or in alternative care settings, as applicable. In 
the event such emergency circumstances require the relocation of a PACE 
center, either on a temporary or permanent basis, we would work with 
the PO and the SAA to ensure that the PO's emergency preparedness plan 
is implemented effectively and in a manner that maintains the health 
and safety of participants and staff. Such circumstances vary widely 
and present unique challenges; and we will expect the PO, to the extent 
possible, to address the items identified in the transition plan 
included as part of the October 21, 2016 HPMS memorandum, PACE 
Replacement Center Transition Plan guidance, while recognizing that the 
guidance may need to be tailored in response to the emergency situation 
presented. The priority under such circumstances will be to ensure that 
participants continue to receive necessary medical care and IDT members 
are able to continue to function and serve the needs of participants in 
a safe environment, regardless of setting. We would not require 
submission of an expansion application in this type of emergency 
situation, and do not believe it is necessary to amend Sec.  460.12(d) 
to address unforeseen or otherwise exceptional circumstances.
    We also do not agree that an exception should be made to allow 
relocation of a PACE center prior to completion of the first trial 
period audit in order to assure adequate access if program growth 
exceeds enrollment projections. A PO that intends to relocate its PACE 
center in order to satisfy increased enrollment demands would be 
required to wait until the first trial period audit is successfully 
completed. We believe this is reasonable because it enables us to 
ensure the PO is satisfying all requirements of the PACE program within 
the initial enrollment capacity constraints prior to accommodating 
increased enrollment. We also appreciate the comment regarding the 
timing of the first review during the trial period. We are committed to 
conducting timely annual reviews during each contract year of the PO's 
trial period. We will continue to

[[Page 25618]]

schedule reviews as expeditiously as possible consistent with statutory 
and regulatory requirements for the PACE program.
    After considering the comments, we are finalizing the changes to 
Sec.  460.12 as proposed.
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 add a 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 proposed 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. We explained in the proposed rule 
that 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 SAE application might 
include information obtained from financial reviews, as well as the 
results from ongoing monitoring visits. Therefore, we proposed 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. We noted that 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 also proposed 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.''
    A discussion of the comments we received on the proposed changes to 
the application evaluation requirements, and our responses to those 
comments, appears below.
    Comment: One commenter noted the proposed modification would enable 
CMS to use information obtained by CMS or the SAA through on-site 
visits or any other means in order to evaluate a PACE application, and 
requested clarification regarding what encompasses ``any other means.''
    Response: As we stated in the proposed rule (81 FR 54671), it is 
our intent to capture all the potential sources of information that may 
be part of the application evaluation process. Information obtained by 
``any other means'' may include, but is not limited to, information 
obtained through the SAA, from financial reviews, or from ongoing 
monitoring visits.
    We are finalizing the modifications to Sec.  460.18 as proposed.
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 proposed 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 proposed 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.
    As we explained in the proposed rule, 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 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' 
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 we have 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' 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

[[Page 25619]]

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 proposed to codify our current subregulatory requirements for 
notifying POs of CMS determinations regarding service area and PACE 
center site expansion applications so the regulations include all of 
the relevant application timing requirements. Specifically, we proposed 
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 proposed 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 explained in the 
proposed rule that we believe it is confusing to state that an 
application is complete if we are requesting additional information. 
Therefore, we proposed to delete Sec.  460.20(a)(3), which is the 
provision that describes CMS requesting additional information needed 
to make a final determination, and we proposed 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. We noted that we would not consider the 
application complete without the required state assurance. We also 
proposed 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 proposed that Sec.  460.20(b) through (d) be redesignated 
as Sec.  460.20(c) through (e) and revised as follows. We proposed to 
revise redesignated Sec.  460.20(c) to 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 explained in the proposed rule that we proposed 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 stated we would consider the SRR, 
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 request that the SRR be submitted in 
all applicable requests for additional information if we did not 
already have this information. We further noted that, if more than 6 
months elapse between the date of submission of the application and the 
response to 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 proposed to revise Sec.  
460.20(c) accordingly.
    Section 460.20(b), which we proposed 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 proposed to amend 
the language in this provision to address the different time limits for 
expansion applications. We also proposed 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. As 
we explained in the proposed rule, with the changes to Sec.  460.20(a) 
and the addition of Sec.  460.20(b), it would no longer be necessary to 
describe CMS' review process after all requested information has been 
received; thus, we proposed to remove Sec.  460.20(b)(1) and (2).
    Section 460.20(c), which we proposed 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 proposed to amend this language to specify 
deemed approval will occur if CMS fails to act after the later of those 
dates, and that the provisions relating to deemed approval only apply 
to applications to become a PO, not expansion applications from 
existing POs. We stated in the proposed rule that this revision is 
necessary because, as described previously, we proposed to address 
expansion applications in the regulations, and we wanted 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. We explained in the proposed rule that CMS does 
not currently employ ``deemed approval'' for expansion applications, 
and we noted we do not believe there is any reason to do so for these 
applications at this time. We further proposed 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 amendments to 
Sec.  460.20(a) and Sec.  460.20(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 proposed to redesignate 
Sec.  460.20(d) as Sec.  460.20(e), and revise this paragraph to refer 
to the time limits described in this section to include applications 
for service area expansions or new PACE center sites.
    A discussion of the comments we received on the proposed changes to 
the CMS notice of determination requirements, and our responses to 
those comments, appears below.
    Comment: Commenters questioned the necessity of the proposed 
provision that would require PACE applicants to update their 
applications 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. Commenters also questioned whether 
CMS was proposing to require the applicant to withdraw its application 
and resubmit an entirely new application, or if CMS would permit less 
burdensome and timelier ways to update the existing application through 
submission of additional information. Commenters recommended the latter 
approach, and suggested allowing 12 months, as opposed to 6 months, to 
elapse between the date of application submission and the entity's 
response to the request for additional information before the entity is 
required to update its application. Commenters also recommended that 
the submission of additional information not be subject to CMS' 
quarterly submission timeframes for applications.
    Response: After careful consideration of the comments, we have 
reconsidered

[[Page 25620]]

the timeframe that would require an update to the application. We agree 
with commenters that there may be valid reasons for delay in responding 
to our request for additional information (for example, unexpected 
delays in construction or licensing of the PACE center, or timing of 
the SRR); therefore, we accept the recommendation made by commenters 
and will specify that if more than 12 months, instead of 6 months, 
elapse between the date of initial submission of the application and 
the entity's response to our request for additional information, the 
entity must update the application with the most current information 
and materials related to the application. This means that, in addition 
to addressing the additional information requested by us, the applicant 
must submit all other application-specific documentation that may have 
changed during the interim 12-month period. We note that, depending on 
the nature of those changes and updates, there may be circumstances in 
which the applicant will be required to submit a completely new 
application; for example, if there is a change in the legal entity that 
is applying to become a PO.
    With respect to commenters' recommendation that the submission of 
additional information not be subject to quarterly submission 
timeframes, we note that responses to a request for additional 
information are not limited to a quarterly submission cycle. While the 
application itself (initial or expansion) must be submitted on the 
established quarterly dates, information in response to a request for 
additional information may be submitted at any time.
    Comment: We received comments in response to the proposed provision 
regarding deemed approval of initial applications. One commenter did 
not believe that an application should be deemed approved due to CMS' 
inability to review and act on an application within the required 
timeframes. This commenter believed that all documentation submitted to 
fulfill an application as complete must be reviewed and approved by CMS 
without any deemed approval. Other commenters noted that CMS, in the 
preamble to the proposed rule, stated that it does not believe it is 
necessary to allow deemed approval for expansion applications, as it 
has not done so in the past. Commenters requested that CMS reconsider 
this position and allow deemed approval of applications from POs 
seeking to expand a service area, with or without adding a new PACE 
center. While recognizing that CMS has always acted on expansion 
applications within the timeframes required for initial applications, 
the commenters stated there is no reason to preclude deemed approval if 
CMS is unable to act on an expansion application in a timely manner for 
some reason.
    One commenter stated that, in cases in which the deemed approval 
requirement is triggered, it is still necessary for CMS to issue 
confirmation that deemed approval took place in order to effectively 
track the status of the review process.
    Response: Sections 1894(e)(8) and 1934(e)(8) of the Act require an 
application for PO status to be deemed approved unless the Secretary, 
within 90 days after the date of the submission of the application to 
the Secretary, either denies the request in writing or informs the 
applicant in writing with respect to any additional information that is 
needed to make a final determination. 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. As we 
noted in the proposed rule, the PACE statutes do not specifically 
address expansion applications. As such, we proposed to specify in 
redesignated Sec.  460.20(d) that the deemed approval requirement only 
applies to entities that submit an initial application. As stated in 
the proposed rule, we do not currently employ deemed approval for 
expansion applications and we do not believe there is valid reason to 
employ deemed approval for expansion applications at this time. We 
appreciate the recognition from commenters that we have, to date, 
rendered decisions regarding expansion applications within the 
timeframes required for initial applications; however, we do not want 
to be in a position in which a deeming process supersedes our ability 
to make thoughtful, proactive decisions regarding these expansion 
applications. Therefore, we are finalizing our proposal that the deemed 
approval requirement will not apply to expansion applications.
    Regarding the comment that we must issue confirmation that an 
application has been deemed approved, we note that the automated PACE 
application system sends communications to applicants regarding the 
status of their application, and applicants would receive formal 
notification of any deemed approval in the approval letter that 
accompanies the applicant's executed PACE program agreement. In light 
of these communications, we do not believe separate CMS confirmation of 
deemed approval is necessary. However, based on the input received, we 
will consider modifications to our auto-generated communications to 
include additional information regarding timeframes for review.
    Comment: One commenter explained the process one specific SAA must 
undergo in order to effectuate service area expansions and expansions 
involving new PACE centers, and suggested that CMS and the SAA consider 
ways to better coordinate and shorten the timeframes for approval of 
expansion applications. The commenter noted that CMS has 90 days after 
submission of the SRR to make a determination with regard to the 
application and questioned whether it would be possible to allow a PACE 
center to open immediately upon receipt of the completed SRR.
    Response: We note that our review timeframe may be 45 or 90 days 
depending on the type of expansion application. While we seek to review 
expansion applications as expeditiously as possible, adequate time must 
be afforded to us to review all aspects of an application, including 
responses to any requests for additional information, as well as the 
SRR. As a party to the PACE program agreement, we must carefully review 
all elements of the application, including the SRR, and therefore, 
would not consider allowing a PACE center to begin operations 
immediately upon our receipt of the SRR. We note that, even after we 
receive the SRR and any information submitted in response to a request 
for additional information and we determine the application is 
approvable, we require additional time to amend and execute the PACE 
program agreement and ensure that proper steps have been taken to 
accommodate enrollment of participants and payment to the PO. Within 
the past year, we have significantly expedited the effective date for 
approvals of expansion applications, often making them effective upon 
the date of approval of the expansion application.
    After carefully considering all comments, we are finalizing Sec.  
460.20 as proposed, with one modification. Under Sec.  460.20(c)(2), an 
entity will be required to update its application if more than 12 
months, as opposed to 6 months, elapse between the date of initial 
application submission and the entity's response to the CMS request for 
additional information.
5. Service Area Designation (Sec.  460.22)
    As discussed in section III.C.2. of this final rule, we proposed to 
move the content of Sec.  460.22, in its entirety but with a few 
revisions, to Sec.  460.12(c).

[[Page 25621]]

Therefore, we proposed to delete Sec.  460.22.
    A discussion of the comments we received on this proposed change, 
and our responses to those comments, appears below.
    Comment: One commenter questioned whether the proposed removal of 
Sec.  460.22 means that zip code expansions will no longer be required, 
and if so, whether expansion information will be documented as part of 
PACE program agreement updates.
    Response: We assume the commenter is questioning whether expansion 
applications from POs that seek to expand their approved geographic 
service area will no longer be required. We address application 
requirements specific to service area expansions in section III.C.2. of 
this final rule. However, we wish to clarify that we proposed to move 
the current content of Sec.  460.22 to Sec.  460.12(c), which is why we 
proposed to delete Sec.  460.22. We note that a description of the 
service area will still be required as part of the application, in 
accordance with existing requirements and documented as part of 
Appendix C of the PACE program agreement.
    Comment: A few commenters addressed the provision that states CMS, 
in consultation with the SAA, 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. One commenter expressed 
support for this provision. Another commenter expressed appreciation of 
CMS' goal and emphasized the word ``may'' in this provision, as some 
degree of competition between PACE programs in the same geographic area 
may be useful to ensure adherence to minimum quality standards and 
encourage the provision of quality services.
    Response: We note that this provision is based on sections 
1894(e)(2)(B) and 1934(e)(2)(B) of the Act, and it is not a new 
provision or revision to an existing provision. Rather, we are simply 
moving the provision, in its current form, from Sec.  460.22(b) to 
Sec.  460.12(c)(2). As a result, we proposed to delete Sec.  460.22(b). 
After considering the comments, we are finalizing this change as 
proposed.
    Comment: One commenter expressed support for current provisions 
that require clearly-defined geographic service areas for both initial 
and expansion applications. The commenter also expressed the need to 
ensure flexibility regarding the designation of service areas. The 
commenter noted that traditional reliance on boundaries defined by 
county lines or Core Based Statistical Areas (CBSA) may prove arbitrary 
in terms of reflecting the actual distribution of a population in need 
of services. The commenter also noted innovations such as telehealth 
are redefining traditional concepts of a service area, in both rural 
and urban settings. The commenter stated that flexibility in defining 
service areas enhances the ability to target PACE services to 
populations that could support and benefit from coverage by more than 
one PO; for example, there could be situations in which a new PO 
seeking to enter a market is willing to introduce innovation or serve a 
specialized population that an existing PO is unable or unwilling to 
match.
    Response: We note that Sec.  460.32(a)(1) allows the service area 
of a PO to be identified by county, zip code and other means. 
Therefore, applicants are not necessarily bound by traditional 
geographic designations. With respect to the comment regarding 
innovative service delivery approaches that could be considered when 
defining service areas, we appreciate this input and may consider it as 
part of subregulatory guidance or rulemaking in the future.
    Comment: One commenter acknowledged that both the current and 
proposed regulations require an applicant entity to identify the 
service area the PACE program wishes to serve, noting, specifically, 
that CMS, in consultation with SAAs, may exclude an area that is 
already being served by another PACE program agreement. One commenter 
noted that Tribal Health Programs (THPs) have a unique relationship 
with the American Indian/Alaska Native (AI/AN) beneficiaries they are 
contracted to serve. Specifically, AI/AN beneficiaries have the ability 
under Medicaid to receive services from a THP, even when the AI/AN is 
enrolled in a managed care product, and the THP has the right to 
receive reimbursement for services provided. Therefore, the commenter 
requested that CMS specify an exception to the service area designation 
requirement to allow THPs to identify the Indian Health Service (IHS) 
Service Area in their application, even if a non-Indian PACE program 
already exists in all or part of that IHS Service Area.
    Response: We interpret the comment to be specific to a THP that may 
apply to offer a PACE program. We note that, under Sec.  460.32(a)(1), 
a service area may be defined by county, zip code and certain other 
means including tribal jurisdictional area, as applicable, and this is 
explicitly stated in the PACE application. We further note that the 
regulatory language currently in Sec.  460.22(b) states that CMS, in 
consultation with the SAA, may exclude from designation an area that is 
already covered under another PACE program agreement to avoid any 
unnecessary duplication of services and avoid impairing the financial 
and service viability of an existing program. Whether another PO is 
currently serving a designated service area is therefore a 
consideration in the potential exclusion of that area, not an absolute 
requirement for exclusion.
    After considering the comments, we are finalizing the changes to 
Sec.  460.22 as proposed.
6. Submission and Evaluation of Waiver Requests (Sec.  460.26)
    Section 460.26 sets forth the process for submitting and evaluating 
waiver requests. We proposed 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. We proposed that 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 did not propose any policy changes in the 
proposed rule, we stated that we believed these changes would make the 
requirements for submission of the waiver request more concise and 
clear. We noted that 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 proposed 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).
    A discussion of the comments we received on the proposed changes to 
the waiver process requirements, and our responses to those comments, 
appears below.
    Comment: We received many comments in support of the proposed 
changes to the waiver submission process language. Commenters also 
requested clarification on whether waiver requests can be submitted as 
part of an entity's initial application or

[[Page 25622]]

whether the waiver requests have to be submitted to CMS by the SAA.
    Response: Under our current process, entities submitting an 
application to become a PO may submit a waiver request either as a 
separate document or in conjunction with their initial application. We 
are adding language to Sec.  460.26 to clarify that an applicant may 
submit a separate waiver request through the SAA or the applicant may 
submit a waiver request in conjunction with and at the same time as the 
initial application, now that the application submission process is 
automated. As previously required, a waiver request submitted with an 
initial application must include a letter from the SAA indicating the 
State's concurrence, concerns, or conditions related to the waiver 
request. We note that our review of any waiver requests submitted in 
conjunction with the initial application will be reviewed in accordance 
with the 90-day review period for waiver requests in Sec.  460.28. We 
are making one additional change to Sec.  460.26(a)(1) to refer to the 
SAA's concurrence, as well as any concerns or conditions, regarding the 
waiver, to align that provision with the proposed requirement in Sec.  
460.26(a)(2) for waiver requests submitted in conjunction with initial 
applications.
    Comment: One commenter expressed concern that we have not included 
provisions for broader waiver types that address a systematic issue and 
noted the example of hiring social workers with a bachelor's degree 
instead of a master's degree in areas where it is difficult to hire a 
Master's-level social worker. The commenter recommended that POs be 
afforded the ability to request a blanket waiver, meaning no limitation 
on the effective period of the waiver, to allow targeted flexibility 
for a specific, documented purpose, such as in the example cited. In 
the absence of additional flexibilities, the commenter stated that POs 
may have to submit multiple waiver requests over time to address the 
same type of flexibility, which is a time-consuming and costly process 
for POs.
    Response: With the exception of the requirements specified in Sec.  
460.26(c), POs have broad latitude to request waivers to address 
localized, systematic issues on a long-term basis, such as the example 
cited by the commenter, as long as all waiver requirements are met. In 
addition, we believe the revisions we are making to the regulations in 
this final rule will result in fewer waiver requests. Specifically, the 
additional flexibilities we are providing, such as the changes to the 
IDT requirements at Sec.  460.102, will permit POs to operate their 
programs with these flexibilities and no longer require POs to request 
waivers of those requirements. For example, we are finalizing changes 
to allow community-based physicians to serve as the primary care 
provider on the IDT. Prior to these regulatory changes, POs would have 
had to request a waiver of this requirement in order for a community-
based physician to function in the role of the primary care physician 
on the IDT.
    Comment: One commenter requested that when CMS is seeking to deny a 
waiver request that the SAA reviewed and supports, there should be 
provisions in place for consultation with the state before CMS makes a 
final determination. The commenter acknowledged this practice is 
already in place; however, the commenter would like it to be codified 
in the regulations to ensure consistency.
    Response: We consult with the SAA on all waiver requests and do not 
believe it is necessary to codify this practice in our regulations. We 
intend to clarify this practice in future guidance.
    After considering the comments, we are finalizing the proposed 
changes to Sec.  460.26 in part, with modifications to clarify that an 
applicant may submit a separate waiver request through the SAA, per the 
quarterly deadlines, or the applicant may submit a waiver request in 
conjunction with and at the same time as the initial application, and a 
change to Sec.  460.26(a)(1) to refer to the SAA's concurrence, as well 
as any concerns or conditions, regarding the waiver.
7. Notice of CMS Determination on Waiver Requests (Sec.  460.28)
    Section 460.28 discusses the timeframes for CMS determination and 
notification regarding approval or denial of waiver requests. As we 
explained in the proposed rule, 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 proposed 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 
proposed 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 
proposed these changes to reflect how we provide notification, whether 
electronically or in another format. We noted in the proposed rule that 
CMS would not only provide notification verbally. We proposed to 
redesignate Sec.  460.28(a)(2) as new Sec.  460.28(a)(3).
    We proposed 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. We explained in the proposed rule that under CMS' 
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. We noted that 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 either receive an approval or 
denial.
    In addition, we proposed to remove the language in Sec.  460.28(b) 
regarding the date of receipt of the waiver, because we believed the 
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 also proposed 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). We stated that CMS will notify POs to confirm receipt of 
``complete'' waiver requests.
    We proposed new language in Sec.  460.28(b) regarding additional 
information requests for waivers. We explained in the proposed rule 
that 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). We noted in the proposed rule that although 
we cannot stop the clock, we believe the statute can be read to start 
the 90-day clock upon CMS' receipt of a complete waiver request. 
Therefore, we proposed

[[Page 25623]]

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. We stated that if CMS determines 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 noted that we 
proposed 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. We further stated that 
we believed 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 process we proposed, 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.
    We explained in the proposed rule that this is similar to the 
treatment of PACE applications, and we believed consistency in review 
procedures would be helpful to all parties involved. We also noted 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 proposed 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 proposed to redesignate this provision 
as (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 
proposed 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 proposed 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 withdrawn and specify the reason 
for withdrawal and the effective date of the withdrawal in the notice. 
We noted that 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 
stated that 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.
    A discussion of the comments we received on the waiver 
determination and notification process, and our responses to those 
comments, appears below.
    Comment: Some commenters requested that we implement a 30-day 
timeframe to determine if a waiver request is complete and then reduce 
the 90-day timeframe for review to 60 days. Commenters also expressed 
that as CMS adds additional flexibilities to the PACE regulations, 
there may be fewer waiver requests, and some of the commenters 
requested that CMS reduce the 90-day review period to 60 days.
    Response: We appreciate the commenters' suggestions. We note that 
if we consider the waiver request we receive to be complete, the 90-day 
review timeframe would have started upon receipt of that request. 
Consequently, it is in our interest, as well as the PO's interest, for 
us to make this completeness determination promptly, and we do not 
believe it is necessary to implement a shorter timeframe for making 
this determination. While we agree with commenters that we anticipate 
receiving fewer waiver requests in the future due to the additional 
flexibilities provided in this final rule, we note that the length of 
time we need to review a waiver request will not be affected by the 
number of requests received.
    Comment: One commenter described the process one specific SAA must 
undergo in order to effectuate service area expansions and expansions 
involving new PACE centers and suggested that CMS and the SAA consider 
ways to better coordinate and shorten the timeframes for approval of PO 
waivers. The commenter noted that CMS has 90 days after submission to 
complete the review.
    Response: Section 903 of BIPA provides that the Secretary must 
approve or deny a waiver request not later than 90 days after receiving 
the request, and that is the timeframe we established in Sec.  460.28. 
At this time, we are not in a position to commit to a shorter review 
period than the established 90-day review period. While we seek to 
review waivers as expeditiously as possible, adequate time must be 
afforded to review all aspects of the waiver, including responses to 
any requests for additional information.
    After careful consideration of the comments received, we are 
finalizing this proposal without modification.

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 stated in the proposed rule that we

[[Page 25624]]

believed it is not always practical to include the actual Medicaid 
capitation rates in the PACE program agreement. Therefore, we proposed 
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 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 also solicited 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 
specifically requested 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. We explained that 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, compliant with regulation and guidance, 
and consistently employed. We solicited comments on whether specific 
policies and procedures, and other existing requirements, should 
continue to be part of the PACE program agreement.
    A discussion of the comments we received on the PACE program 
agreement requirements, and our responses to those comments, appears 
below.
    Comment: A commenter requested that CMS modify the PACE regulations 
to allow a PO to enter into a two-way agreement with CMS to provide 
services to Medicare beneficiaries in states that do not establish PACE 
as a State option under Medicaid. In these situations, the commenter 
recommended that CMS require the potential PO to submit the application 
with a statement by the state regarding which, if any, of the state 
functions the state is willing to perform; for example, the SRR, 
nursing home level of care determination, etc.
    Response: We did not propose any changes to the current PACE 
program agreement between a PO, CMS and the SAA for the operation of a 
PACE program. Therefore, we consider this comment to be outside the 
scope of this rule. However, we note that in the 1999 IFC and the 2006 
final rule, we articulated, in great detail, requirements an entity 
must meet in order to be approved as a PO and the basis for those 
requirements, including the requirement for a tripartite agreement and 
rationale for requiring that POs participate in both Medicare and 
Medicaid (64 FR 66237; 71 FR 71251). As we stated in those rules, the 
authorizing PACE statutes (sections 1894 and 1934 of the Act) envision 
active collaboration between federal and state governments in the 
administration of the PACE program. As described in the 1999 IFC and 
2006 final rule, the SAA is responsible for a wide array of functions 
related to the operations of a PACE program, including: (1) The SRR 
conducted as part of activities to approve an entity as a PO; (2) 
assessment of potential participants to ensure nursing facility level 
of care requirements are satisfied; and (3) cooperation with CMS in the 
oversight of the PACE program (which includes authority to terminate a 
PACE program agreement for cause, as a party to the tripartite 
agreement), among other key activities. As we stated in those rules, it 
is our belief that a state which has not elected PACE as an optional 
service would likely be ill-prepared or even unable to perform these 
critical activities. We concluded in those rules that a Medicare-only 
program could not meet the fundamental concept of an all-inclusive, 
integrated, capitated, full-risk program. Our position today has not 
changed; we continue to believe that the rationale for structuring the 
PACE program as we have is valid and appropriate.
    Comment: A number of commenters expressed support for CMS' proposal 
to modify the current requirement in Sec.  460.32(a)(12) that the 
Medicaid capitation rate be included in the PACE program agreement. 
Commenters noted that the proposed change would allow for either the 
Medicaid capitation rate(s) or the Medicaid payment rate methodology to 
be included in the PACE program agreement. These commenters stated that 
the proposed approach effectively streamlines updates to the PACE 
program agreements and provides states the flexibility to adapt to 
potential payment rate changes and variations.
    Response: We thank the commenters for their support.
    Comment: One commenter recommended that the final rule provide 
clarity on the level of detail expected in the PACE program agreement 
for states that opt to include the Medicaid rate methodology. The 
commenter noted that states already undergo a comprehensive review of 
their PACE Medicaid rate methodology by CMS annually. Therefore, 
commenters requested that CMS allow a more general methodology 
description to be allowed in the PACE program agreement to further the 
flexibility discussed in the proposed rule and recognize the extensive 
methodology review process already taking place. The commenter further 
noted this would avoid the burden of frequent updates to the PACE 
program agreement while leveraging, rather than duplicating, the 
comprehensive Medicaid rate review process that CMS already undertakes. 
The commenter also requested that CMS clarify the timeframe in which a 
state must update the actual Medicaid capitation rate in the PACE 
program agreement if the state elects to include the Medicaid rate 
instead of the methodology.
    Another commenter noted that the PACE Medicaid capitation 
methodology is complex and often confusing and that this change removes 
any incentive for SAAs to timely ``negotiate'' the monthly capitation 
amount with POs and produce rate schedules. In addition, the commenter 
urged CMS to clarify the negotiation requirement to establish the 
monthly Medicaid capitation amounts. The commenter indicated that in 
one state, Medicaid rates are set using an actuarial formula, which 
takes into account regulatory requirements and the state's priorities, 
which effectively precludes POs from annually negotiating with the SAA. 
Instead of focusing on regulatory revisions to reflect the status quo, 
the commenter urged CMS to consider including language to affirmatively 
require timely Medicaid rate setting for the PACE program and buttress 
the ability of POs to negotiate rates.
    Response: We are not specifying the level of detail that the state 
must include in the PACE program agreement to describe the state's 
methodology for Medicaid capitation rates. The state must provide 
enough detail about the Medicaid payment rate methodology to ensure it 
is in compliance with requirements of Sec.  460.182, but the state will 
have flexibility in the level of detail that is provided. In December 
2015, we released guidance to states regarding the Medicaid rate 
setting process that outlines submission and timeframe expectations 
related to development and approval of Medicaid capitation rates under 
PACE. The PACE Medicaid

[[Page 25625]]

Capitation Rate Setting Guide was developed as a resource for states 
and it includes critical elements of rate setting that incorporate both 
the state development of the amount that would otherwise been paid if 
individuals were not enrolled in PACE, and development of the PACE 
rates. The guide can be found at https://www.medicaid.gov/medicaid/ltss/downloads/integrating-care/pace-medicaid-capitation-rate-setting-guide.pdf. We expect to update the guide in the future to provide more 
detail and clarification in certain areas as necessary.
    Additionally, while we do review the state Medicaid rate 
documentation to ensure that the PACE rates meet all requirements under 
Sec.  460.182, including that the monthly capitation amount is less 
than the amount that would otherwise have paid under the state plan if 
the participants were not enrolled under the PACE program, the state 
has flexibility in establishing the rate as long as it meets those 
requirements, which includes the flexibility of negotiating with POs. 
The process for negotiation of the monthly capitation payment amount 
between the PO and the SAA varies by state. We do not require a 
specific process for negotiation as long as the rates meet the 
requirements of Sec.  460.182(b).
    Comment: One commenter encouraged CMS to engage with SAAs to 
determine which components of the PACE program agreement are necessary 
from the states' perspective. The commenter expressed support for 
efforts to remove detailed information that changes with some 
frequency, for example, administrative contacts that are available in 
CMS' HPMS. It is the commenter's expectation that the PACE program 
agreement would generally include high-level requirements as opposed to 
specific program policies and procedures.
    Response: We appreciate the thoughtful comments and suggestions and 
will consider the feedback provided as part of possible future 
rulemaking.
    Comment: One commenter noted that Sec.  460.34 currently states: 
``An agreement is effective for a contract year, but may be extended 
for additional contract years in the absence of a notice by a party to 
terminate.'' The commenter recommended this language be modified as 
follows: ``An agreement is effective for a contract year, but shall be 
extended for additional contract years in the absence of a notice by a 
party to terminate.''
    Response: We did not propose any changes to the regulatory 
provision at Sec.  460.34 regarding the duration of PACE program 
agreements. Therefore, we consider this recommendation to be beyond the 
scope of this regulation. However, we may consider this suggestion as 
part of possible future rulemaking. After considering the comments, we 
are finalizing the amendment to Sec.  460.32(a)(12) as proposed.

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 proposed 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. As we 
explained in the proposed rule, while current regulations reflect CMS 
and the SAA's authority to terminate an organization in these 
circumstances, we believed that we needed to clarify our authority with 
respect to alternative enforcement actions in the form of sanctions or 
civil money penalties (CMPs).
    We proposed 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. We noted in the proposed rule that, 
consistent with the authorities in sections 1894(e)(6)(B) and (f)(3) 
and sections 1934(e)(6)(B) and (f)(3) of the Act, this new provision 
would align the PACE enforcement structure with the enforcement 
structure that applies to the Medicare+Choice program, renamed, and 
hereinafter referred to, as the MA program. The MA 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 
proposed that this approach also be utilized in the PACE program, 
consistent with our statutory authority identified in sections 
1894(e)(6)(B) and 1934(e)(6)(B) of the Act, and to promote consistency 
with the enforcement structure of the MA program. We stated that the 
change would 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 proposed to redesignate the 
introductory language in Sec.  460.40 to paragraph (a) and redesignate 
paragraphs (a) through (i) to paragraphs (a)(1) through (a)(9).
2. Civil Money Penalties (Sec.  460.46)
    Due to the redesignation of paragraphs in Sec.  460.40, we also 
proposed to make technical, non-substantive changes to the citations in 
this section to reflect the substantive and technical changes discussed 
above. Specifically, we proposed to amend 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 proposed 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 also 
proposed 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.
    Additionally, we proposed to revise 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 45 CFR part 102. To ensure 
transparency, we proposed revising Sec.  460.46(a) to state that the 
penalty amounts are adjusted for inflation and citing to 42 CFR 
1003.102.
    The following is a summary of the public comments we received on 
the proposed provisions regarding sanctions, enforcement actions, and 
termination, and our responses to comments.
    Comment: Commenters were supportive of our proposed revisions. A 
few commenters mentioned that allowing sanctions or CMPs to be taken 
prior to termination would help POs have time to correct identified 
issues of noncompliance. Other commenters, while supportive, cautioned 
CMS to consider the size and financial stability of POs prior to 
implementing a sanction or CMP, stating that a large CMP or enforcement 
action could effectively

[[Page 25626]]

drive a PO out of business. One commenter recommended that CMS perform 
a risk benefit analysis prior to implementing a sanction or CMP to 
ensure the benefit outweighed the potential risk.
    Response: We agree with these commenters that revising the 
regulations to enable us to take enforcement actions other than 
termination will be beneficial to POs by allowing them time to correct 
deficiencies. We appreciate commenters concerns regarding the potential 
adverse impact of CMPs and sanctions on POs. We intend to use the new 
range of penalties in a manner that appropriately accounts for the size 
and structure of the PO subject to the enforcement action.
    Comment: A few commenters referenced SAAs. One commenter requested 
clarification on how the SAA and CMS would work cooperatively on 
enforcement actions, and if the SAA would be informed prior to a 
sanction being placed on a PO. Another commenter requested that CMS 
modify the regulatory language in Sec.  460.40(b) to say that either 
CMS or the SAA may take a sanction or CMP. The same commenter requested 
that any money collected from a CMP be split evenly between CMS and the 
state. Lastly, one commenter requested that we add a new paragraph (c) 
to the regulation that discusses a state's authority to take 
enforcement actions based on State laws and regulations.
    Response: We are committed to maintaining a close partnership with 
SAAs in overseeing POs. When taking enforcement actions, we will notify 
the SAA prior to taking the action, as appropriate. However, we are not 
modifying the regulatory language in the new Sec.  460.40(b) to address 
SAAs' ability to take sanctions or CMPs. This regulatory language is 
aligned with sections 1894(e)(6)(B) and 1934(e)(6)(B) of the Act, which 
do not address the state's ability to take an enforcement action or 
require consultation with the SAA before imposing sanctions or CMPs, 
and we believe that we should keep the language similar in this 
regulation. We are also not accepting the suggestion to add a new 
paragraph into the regulation to address a state's ability to use state 
laws and regulations to take its own enforcement actions. We do not 
believe this level of detail is needed, as nothing in this regulation 
would prevent a state from using its own legal authority to impose a 
state enforcement action on a PO. However, we encourage states to 
coordinate with us prior to taking any enforcement actions against POs 
based on state authority. Also, while we appreciate the commenter's 
request that we split CMP money between the states and CMS, we are not 
authorized to dictate where that money goes, and cannot make that 
change.
    Comment: A few commenters, while supportive of the proposed 
modification to our enforcement provisions, stressed the importance of 
consistency in audits, especially if audit findings are used in 
enforcement actions against POs. One commenter questioned what the 
reference to ``continued non-compliance'' meant, and whether that could 
mean repeat audit findings.
    Response: In the proposed rule, we discussed the regulations 
regarding termination of a PACE program agreement, and that one of the 
reasons for termination was ``continued non-compliance'' which is 
discussed in 42 CFR 460.50(b). In the proposed rule, we noted that our 
proposed expansion to our enforcement authority would allow us to take 
other enforcement actions, outside of termination, for continued non-
compliance. We define continued non-compliance as any instance in which 
a PO has been made aware it is not in compliance with a regulation or 
requirement, and the PO has failed to correct that issue within a 
reasonable period of time, or has repeated uncorrected deficiencies. 
What will constitute a reasonable period of time for correction may 
depend on the severity of non-compliance noted by CMS or the SAA. We 
want to clarify that while continued non-compliance may be identified 
through repeat audit findings, audits would not be the only source of 
information to inform an enforcement action. Although continued non-
compliance could be revealed through audits, it could also be 
discovered through routine account management monitoring, quality 
reporting, or any other avenue in which CMS or the SAA discovers these 
issues. However, audits are one of the ways we would measure continued 
non-compliance and we agree that audit consistency is very important. 
We continue to make process improvements to PACE audits, including 
utilizing a revised audit protocol, continuing to refine and update 
internal auditor tools, utilizing a national audit consistency team, 
and implementing intensive auditor training specific to PACE.
    After considering public comments, we are finalizing the changes to 
Sec. Sec.  460.40 and 460.46 as originally proposed with the following 
technical changes. First, in Sec.  460.46, we are making a technical 
change to the citation in the proposed note from 45 CFR 1003.102 to 45 
CFR part 102, and including the language regarding inflation in the 
regulatory text and not as a note as originally proposed. Second, in 
Sec.  460.40, we are redesignating paragraph (j) that was established 
in the November 15, 2016 Federal Register (81 FR 80561) as part of the 
final rule entitled, ``Medicare Program; Revisions to Payment Policies 
under the Physician Fee Schedule and Other Revisions to Part B for CY 
2017; Medicare Advantage Bid Pricing Data Release; Medicare Advantage 
and Part D Medical Loss Ratio Data Release; Medicare Advantage Provider 
Network Requirements; Expansion of Medicare Diabetes Prevention Program 
Model; Medicare Shared Savings Program Requirements'' and later 
modified in the April 16, 2018 final rule entitled ``Medicare Program; 
Contract Year 2019 Policy and Technical Changes to the Medicare 
Advantage, Medicare Cost Plan, Medicare Fee for Service, the Medicare 
Prescription Drug Benefit Programs and the PACE Program'' (83 FR 
16756), as paragraph (a)(10). Finally, we note that the proposed 
regulation text for Sec.  460.40(a)(3) included language concerning the 
criteria for sanctions even though our intention was solely to 
redesignate the paragraph. Therefore, we are modifying the final rule 
to remove the language regarding discrimination on the basis of an 
individual's functional, cognitive or psychosocial status, which was 
inadvertently included, redesignate the paragraph, and restore the 
language that refers to discrimination 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 status or need for health care services.

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

[[Page 25627]]

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:
     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).
     The population enrolled with such entities is less frail 
than the population enrolled with other POs.
     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.
     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.\5\ 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.
---------------------------------------------------------------------------

    \5\ 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 information that provided insight 
into the first and second BBA statements.\6\ 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 is available 
at https://innovation.cms.gov/Files/reports/RTC_For-Profit_PACE_Report_to_Congress_051915_Clean.pdf.
---------------------------------------------------------------------------

    \6\ 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, in 
the proposed rule, we proposed to remove the corresponding restriction 
in Sec.  460.60(a) in its entirety. We also proposed to redesignate 
Sec.  460.60(b), (c), and (d) as Sec.  460.60(a), (b), and (c), 
respectively.
    A discussion of the comments we received on the proposal to remove 
the not-for-profit restriction in Sec.  460.60(a), and our responses to 
those comments, appears below.
    Comment: Commenters expressed concerns about CMS allowing for-
profit entities to be POs. Many commenters believed that although the 
evaluation of the for-profit PACE demonstration found no significant 
reasons to restrict PACE to not-for-profit entities, CMS should 
continue its evaluation to identify and better understand any potential 
differences driven by ownership by a for-profit entity and to ensure 
that regulatory oversight is applied uniformly to all POs as it 
pertains to service utilization, participant frailty and outcomes and 
costs and experience. Other commenters recommended CMS consider 
requiring all for-profit POs to meet a ratio of services to revenues, 
similar to the medical loss ratio requirements set forth in the final 
rule published in the May 6, 2016 Federal Register (81 FR 27498) 
entitled, ``Medicaid and Children's Health Insurance Program (CHIP) 
Programs; Medicaid Managed Care, CHIP Delivered in Managed Care, and 
Revisions Related to Third Party Liability.'' One commenter recommended 
CMS consider continuing its evaluation for up to 3 years for the for-
profit POs. Another commenter supported the change to allow for-profit 
entities to be POs.
    Response: As a result of the findings in the May 19, 2015 report to 
Congress, sections 1894(a)(3)(B) and 1934(a)(3)(B) of the Act state 
that the requirement that a PO be a not-for-profit entity will no 
longer apply. The findings of the report did not suggest that we 
establish different requirements for POs based on their profit status, 
and we see no basis for applying a different set of requirements, such 
as medical loss ratio requirements, to for-profit POs. Consequently, 
the PACE regulations and requirements apply equally to all POs whether 
they are not-for-profit or for-profit. We have no reason to believe 
that the results of the evaluation would change if we added additional 
years to the study. We note that the majority of active POs are not-
for-profit entities and most new applicants represent not-for-profit 
entities.
    As a result of the comments, we are making no changes to our 
proposal and finalizing this provision as proposed.
    In addition, we proposed 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 change of 
ownership (CHOW). 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

[[Page 25628]]

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 CHOW (see PACE 
Manual, Ch. 2, Sec.  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 CHOW. In the 2006 final rule (71 FR 71264), we 
discussed the comments we 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 CHOW, we would apply the general provisions described 
in the Medicare Advantage regulations at Sec.  422.550.
    Based on our experiences with PO CHOW since we published the 2006 
final rule, we stated in the proposed rule that we no longer believed 
14 days gives us enough time to review and process a CHOW. A CHOW is 
significantly different from other organizational changes in that it 
results in the acquiring entity assuming the responsibilities under the 
PACE program agreement. We explained we need additional time to 
determine whether the acquiring entity meets statutory and regulatory 
requirements for entering into a PACE program agreement. We noted that 
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, we noted that the process to effectuate a CHOW 
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 stated that we wanted 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 
CHOW scenario. Therefore, we proposed to amend newly redesignated 
paragraph (c)(3) to indicate that the 14-day timeframe does not apply 
to a CHOW, and to add new paragraph (d), which would specify that a PO 
planning a CHOW 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 stated 
that we believed this proposed change would provide the time we need to 
determine if the entity acquiring the PO meets all PACE requirements 
and would be able to continue providing quality care to the 
participants of the PO, and to reflect the change in our systems. We 
also noted that we believed the amended language as proposed would 
provide greater clarity to POs as to the requirements that will apply 
in CHOW scenarios. We stated that we believed the Medicare Advantage 
requirements for a CHOW in 42 CFR part 422 subpart L, are appropriate 
for the PACE program, and we will only enter into a PACE program 
agreement with an entity that is determined to meet PACE program 
requirements.
    For purposes of the proposed provision, any CHOW 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. We explained that POs will need to 
follow all CHOW 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' 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.
    A discussion of the comments we received on the CHOW proposal, and 
our responses to those comments, appears below.
    Comment: A few commenters stated the definition of a CHOW may 
encompass situations where the PO's parent entity or supporting entity 
undergoes a restructuring which has no impact on the PO itself. They 
also questioned if the 60-day notice and related requirements would 
apply in a restructuring of the PO's parent entity. The commenter 
suggested that, in these types of situations, the PO should not have to 
submit advance notice and comply with the requirements of 42 CFR part 
422, subpart L.
    Response: POs may contact us if they have questions on the 
applicable requirements and whether a particular scenario is a CHOW or 
a different type of change in organizational structure. If a PO is 
planning a CHOW as described in Sec.  460.60(d) then the PO must follow 
the regulations at Sec.  460.60(d) and provide the required 
notification.
    Comment: A commenter requested that CMS clarify if the novation 
agreement is similar to the PACE program agreement.
    Response: The novation agreement and PACE program agreement are two 
separate and distinct documents. The novation agreement is an agreement 
between the current owner of the PO, the prospective new owner, and us 
under which we recognize the new owner as the successor in interest to 
the current owner's PACE program agreement. The PACE program agreement 
will be the successor's PACE program agreement with CMS and the SAA for 
the operation of a PACE program by the successor PO.
    Comment: Many commenters supported the proposal to expand the 
notification timeframe for a CHOW from 14 days to 60 days. One 
commenter requested that we consider the SAA's needs for advance 
notification for CHOW scenarios and add additional time to our 
requirement for notification.
    Response: We work closely with the SAA as the third party to the 
PACE program agreement. We expect that as POs are seeking to undergo 
CHOW transactions that they communicate with the SAA prior to or at the 
same time as they communicate with us. We will consider the 
recommendation to allow for additional time to notify the SAA as part 
of future rulemaking or guidance.
    Comment: A commenter requested that we limit the requirement for an 
entity to complete a PACE application for purposes of a CHOW as 
discussed in the HPMS PACE CHOW memo, Guidance on Notification 
Requirements for PACE Organization Change of Ownership, dated February 
18, 2016, to apply only to those entities that have no experience with 
PACE program operations. Another commenter suggested that the successor 
in interest to the PACE CHOW should not have to go through the PACE 
application

[[Page 25629]]

process, but did not suggest an alternative for the qualification 
process.
    Response: We want to reiterate our policy that in order for an 
acquiring entity to become qualified as a PO, the entity must follow 
both the CMS and the specific state's PACE application submission 
process. The application process provides a level of assurance to us, 
as well as the SAA, that the successor in interest to the PO has the 
ability to assume the obligation to provide care to the vulnerable 
population in PACE.
    Comment: One commenter expressed concern that if a PO is seeking a 
CHOW due to a financial hardship or experiencing other difficulties, 
requiring the acquiring entity to become qualified through the PACE 
application process may make it impossible to prevent actions such as a 
PACE termination.
    Response: We appreciate the comment and will continue to work with 
POs that are in these types of hardship situations to help ensure that 
their participants continue to receive proper care. Even though we have 
designated timeframes to complete the application approval process, 
when we are made aware of these types of extenuating circumstances, we 
work closely with the PO and the SAA to process the application as 
quickly as possible and prevent negative impact to the participants.
    We appreciate the commenters' recommendations and will consider 
them as we develop subregulatory guidance on PO CHOWs. We will continue 
to require all entities that are not currently approved POs, but would 
like to be the successor in interest to a PO, to become qualified as a 
PO through our PACE application process. The PACE application process 
is an administrative process with established requirements that all 
entities have to meet in order to qualify as a PO. This application 
process demonstrates to us and the SAA that the successor in interest 
to the PO is qualified to be a PO and will maintain arrangements to 
comply with the legal and regulatory requirements for PACE and other 
requirements imposed under the PACE program agreement. This allows us 
to maintain a consistent qualification process for all entities. We are 
finalizing the CHOW requirements as proposed.
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 proposed 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 in section II.A. of this 
final rule, we also proposed 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.
    As we did not receive any comments on these proposed changes, we 
are finalizing this provision as proposed.
    In addition, as discussed later in this section, we proposed 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 stated that we believed adoption and implementation of 
compliance oversight requirements is the responsibility of the 
governing body. We noted that 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 proposed 
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.
    As discussed in detail in the following section, we received 
several comments on our compliance oversight proposal and as a result 
of those comments, we have decided not to finalize certain aspects of 
that proposal at this time, in order to allow CMS additional time to 
evaluate the potential burden that implementing certain aspects of the 
compliance oversight provision might have on POs. Relatedly, based on 
these comments and to allow additional time to evaluate the potential 
burden, we are not finalizing the proposal to add a new Sec.  
460.62(a)(8) specifying that the governing body of the PO must have 
full legal authority and responsibility for adopting and implementing 
the compliance oversight program.
3. Compliance Oversight Requirements (Sec.  460.63)
    In the proposed rule, we discussed the compliance programs required 
under the Medicare Advantage (MA) and Medicare Part D programs, and 
noted that those 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 
proposed to adopt compliance oversight requirements in the PACE 
regulations. Specifically, at new Sec.  460.63, entitled ``Compliance 
Oversight Requirements,'' we proposed to 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 proposed to require POs to have measures that prevent, 
detect and correct non-compliance with CMS' program requirements, as 
well as measures that prevent, detect, and correct fraud, waste, and 
abuse.
    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 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 that we proposed.
    In Sec.  460.63, we proposed 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 proposed to require each PO to adopt and implement 
effective compliance oversight, which includes measures that prevent, 
detect and correct non-compliance with CMS' program requirements, as 
well as measures that prevent, detect and correct fraud, waste and 
abuse that would include, at a

[[Page 25630]]

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. As part of the system for promptly 
responding to compliance issues, we also proposed the requirements that 
a PO: (1) Conduct a timely, reasonable inquiry if it discovers evidence 
of misconduct related to payment or delivery of items or services, (2) 
conduct appropriate corrective actions in response to the potential 
violation (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. We noted that the PO should already have these elements 
implemented for their Part D benefit to comply with the Part D 
regulations, but they would need to expand these efforts to cover all 
of the services provided by the PO.
    As we explained in the proposed rule, POs are not currently 
required to conduct internal organization wide monitoring or auditing 
efforts. Through our experiences with MA and Part D organizations, we 
stated that we believed conducting monitoring and auditing is key to 
identifying and correcting issues of non-compliance with CMS 
requirements. We noted that we believed 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. We stated that POs will also benefit from 
improving their ability to identify and correct compliance risks within 
their own organization.
    Additionally, we proposed to require the PO to implement 
appropriate corrective action in response to any identified issues of 
non-compliance that POs may discover. We noted that, if finalized, we 
intended to verify compliance with this new requirement through 
monitoring or auditing of the PO.
    We received public comments from POs, states and advocacy groups 
which were supportive of the effort to ensure appropriate protections 
are in place, but cautioned CMS about the potential burden associated 
with implementing these provisions. We analyzed our proposal and 
believe that the majority of the burden on POs associated with the 
proposed compliance oversight requirements is due to the first proposed 
element, the requirement that a PO develop and implement a system for 
monitoring and auditing their PACE operations. While we consider it a 
best practice for a PO to adopt a compliance program that includes 
conducting internal monitoring and auditing, we are not finalizing our 
proposal to require the PO to adopt a system for routine monitoring and 
auditing of the PO and its contractors at this time in order to further 
evaluate the potential burden of this proposal on smaller 
organizations. As Part D plan sponsors, POs must still conduct 
monitoring and auditing of their Part D benefit as required under 42 
CFR 423.504(b)(4)(vi)(F). The second proposed element of the compliance 
oversight requirements, which requires promptly responding to non-
compliance and voluntary reporting of identified issues, does not pose 
a significant burden on a PO. Therefore, we are finalizing the second 
element of this provision which would require POs to correct identified 
non-compliance and voluntarily report fraud and/or potential misconduct 
to CMS and the SAA. In large part, POs may utilize their already 
established Part D system to comply with these new requirements for 
responding to, correcting and reporting non-compliance and potential 
fraud, and because we are not increasing the scope of a PO's monitoring 
responsibilities, we anticipate only a minimal burden on the 
organization by implementing this modified provision.
    The following is a summary of the public comments we received on 
the proposed compliance oversight requirements in new Sec.  460.63 and 
our responses to comments. As a result of these comments, we are 
finalizing this provision in part.
    Comment: A majority of commenters were supportive of our proposal 
to require POs to adopt a compliance oversight program. Commenters 
noted that adding compliance oversight requirements is an important 
step to ensuring POs are able to stop non-compliance and take 
appropriate corrective action. These commenters noted that this 
proposal would help ensure the safety of participants, and protect 
against fraud, waste and abuse.
    Response: We appreciate commenters' support and agree that 
implementing a compliance oversight program is a best practice for all 
organizations, big or small, in order to ensure compliance with federal 
and state regulations. We hope that POs will consider increasing the 
scope of their monitoring and auditing efforts as part of their effort 
to ensure they are compliant with our requirements. We are not, 
however, finalizing the first element of our proposal which would have 
required POs to expand the scope of their monitoring efforts. Instead, 
we are only finalizing the second element, which requires POs to 
respond, investigate and correct non-compliance as it is identified. 
While we further evaluate the implications of a required compliance 
oversight program on the unique PACE model of care, we will continue to 
assess potential risk to participant safety through auditing and 
account management oversight, and address any identified fraud, waste 
and abuse issues as needed.
    Comment: Multiple commenters raised concerns over the potential 
burden that implementing this provision would cause POs. Commenters 
stated that there are significant differences between MA/Part D 
organizations and POs; including the fact that MA/Part D organizations 
tend to have larger staffs and greater resources, as well as different 
program structures, which would make implementing this proposal more 
challenging for POs. Other commenters suggested that the burden on 
smaller organizations and rural organizations would be especially 
significant. Most commenters also requested that, if CMS finalizes this 
provision, that the implementation date be no earlier than 12 months 
following the regulation becoming final in order to allow organizations 
the appropriate time to determine how to appropriately implement a 
compliance oversight program and allocate resources. Several commenters 
suggested that CMS had underestimated the cost of implementing a 
compliance oversight program in PACE. One commenter requested that CMS 
work closely with stakeholders to determine technical assistance needs 
and practical implementation schedules before enacting this proposal.
    Response: We appreciate commenters' concerns regarding the 
potential burden this provision may cause for POs. We have a 
significant policy interest in further assessing how to integrate an 
effective compliance oversight program,

[[Page 25631]]

as well as the potential burden and benefits related to expanding this 
provision across the PACE program. In order to minimize the potential 
burden associated with this provision, we re-analyzed the burden 
estimates and believe that the majority of costs are associated with 
the first element of our proposal, the element that would require POs 
to expand their auditing and monitoring efforts to cover their entire 
operation. While we consider it a best practice to conduct internal 
auditing and monitoring to identify non-compliance with PACE 
requirements, we are not finalizing that element of this provision at 
this time while we further evaluate the implications of this proposal 
on the unique PACE model of care. We are, however, finalizing the 
second element which would largely allow organizations to use their 
already established system to respond to and correct any non-compliance 
discovered in the POs. We anticipate only a minimal burden in 
finalizing this element and believe such efforts can be implemented in 
the 60 days following publication of the final rule.
    Comment: Several commenters posed questions regarding the structure 
or administration of a compliance oversight program in PACE. Two 
commenters questioned if POs would be required to submit their 
compliance oversight program to CMS for approval. The same two 
commenters questioned if CMS would require the POs to implement 
specific structures, policies or procedures for the compliance 
oversight program. Another commenter questioned if CMS would offer 
technical assistance to POs.
    Response: We appreciate the opportunity to provide clarification on 
this proposal. We understand that POs are both payers, as well as 
direct care providers. We also understand that POs vary greatly in 
size, structure and resources. As such, we believe that a PO should 
continue to be free to develop a compliance oversight program that 
works best for their specific organization. POs are already required to 
have systems in place to correct identified non-compliance and 
voluntarily report fraud or potential misconduct to us for their Part D 
benefit, and we do not anticipate that substantial changes would need 
to be made to the structure of such systems based on this provision as 
finalized. Additionally, while we would be willing to provide technical 
guidance to POs, we do not expect to collect documentation regarding 
the structure of a PO's compliance oversight program or provide an 
approval process. Instead, POs will have flexibility in designing their 
own compliance oversight programs so long as they ensure they are 
satisfying the requirements in the new Sec.  460.63.
    Comment: A few commenters questioned how CMS would monitor these 
compliance oversight programs in PACE. One commenter suggested CMS 
conduct rigorous monitoring of the compliance oversight programs. 
Another commenter questioned if CMS would validate the monitoring that 
POs did under their compliance oversight programs. One commenter 
requested that CMS ensure that any monitoring of the compliance 
oversight program is done consistently across regions.
    Response: We may begin monitoring compliance with the requirements 
in Sec.  460.63 as finalized during audits or other communications with 
POs. We agree that CMS monitoring should be done consistently and we 
intend to develop specific guidance for auditors or other personnel in 
CMS.
    Comment: Several commenters expressed their support for our 
proposal to reduce the frequency of CMS audits and characterized it as 
being in exchange for requiring POs to develop their own compliance 
oversight requirements.
    Response: We thank the commenters for their support. While we 
proposed both to decrease the frequency of our audits and to increase 
POs' self-monitoring, these policies were each intended to stand on its 
own and were not intended to be an exchange. While we are not 
finalizing the element of the proposed compliance oversight 
requirements that would have required POs to monitor and audit all 
operations, we believe that this is a best practice and would encourage 
organizations to expand the scope of their current monitoring and 
auditing efforts. We are finalizing the second element within this 
provision in order to ensure POs are promptly responding to, 
investigating and correcting potential compliance problems as they are 
identified. Separately, we are also finalizing our proposal to reduce 
the frequency of reviews by us in cooperation with the SAA under Sec.  
460.192, as discussed in the final rule below in Subpart K--Federal/
State Monitoring.
    Comment: One commenter recommended that the compliance oversight 
requirements for POs include all seven elements of the MA and Part D 
compliance programs, rather than just the two we proposed.
    Response: We thank this commenter for the suggestion. While we 
believe that compliance programs are beneficial to all organizations, 
regardless of size, we decided at this time not to require POs to 
implement the seven compliance program elements required under MA and 
Part D. Under the Part D regulations, POs are required to have two of 
the seven elements of a compliance program implemented for their Part D 
benefit, but the other five elements are waived for POs. While we will 
continue to engage POs in discussions regarding the benefits of robust 
compliance programs, at this time we do not believe it is appropriate 
to require POs to implement the seven elements of the MA/Part D 
compliance program.
    Comment: Several commenters suggested modifications to our 
compliance oversight proposal. A few commenters expressed concern with 
the potential burden of a compliance oversight program in PACE, and 
recommended we consider modifying the PACE compliance oversight program 
to account for the small size of some POs. These commenters recommended 
we refer to the OIG guidance on compliance programs for individual and 
small physician practices (see 65 FR 59434 through 59452).
    Response: We appreciate these concerns and consistent with the OIG 
guidance cited by commenters, we took the size and structure of POs 
into account when proposing compliance requirements for PACE. As we 
mentioned in the proposed rule (81 FR 54677), we balanced the need for 
POs to maintain compliance with program requirements with the fact that 
they need flexibility as direct care providers. We initially proposed 
that of the seven compliance program elements in the MA and Part D 
programs, only two of these elements should be regulatory requirements 
for all POs. However, after reviewing the comments received, and 
because we have a significant policy interest in preventing undue 
burden, we are only finalizing one of the two proposed required 
elements. We believe there is a need for organizations to be able to 
identify non-compliance and fraud, waste and abuse, and to take 
corrective action when an issue is discovered. We also believe that 
since all POs already have a system in place to respond to identified 
compliance issues related to the Part D benefit, that finalizing this 
element will only create a minimal burden on POs.
    Comment: Two commenters requested clarification on whether the PO 
must operate the compliance oversight program, or whether a parent 
organization of the PO could comply with the compliance oversight 
requirements on behalf of the PO.
    Response: The regulation as finalized imposes compliance oversight

[[Page 25632]]

requirements on the PO, but we intended for these requirements to 
provide flexibilities for POs. Each PO must have procedures and an 
effective system for promptly responding to compliance issues and 
correcting problems, but we will not dictate what that system should 
look like or how it should be structured. Since POs are already 
required to have a system for responding to compliance concerns in 
their roles as Part D sponsors, we expect that many organizations will 
adapt their existing system to meet the PACE program requirements. 
However, the individual organization has discretion to choose to 
develop its compliance oversight program, including whether or not the 
compliance oversight program is run through the PO or another entity 
(such as a parent organization).
    As discussed previously, a majority of commenters were supportive 
of our proposal to implement a compliance oversight program in PACE, 
while some commenters raised concerns regarding implementation and the 
associated burden of a compliance oversight program on small, direct 
care organizations. We agree with these commenters that further 
evaluation should be done to determine the potential burden associated 
with implementing this provision as proposed, but we believe that 
finalizing the second element within this provision would not impose a 
significant burden on organizations as, in large part, they may be able 
to use the systems for respond, investigate and correct compliance 
issues they have in place to comply with the requirements for Part D 
plan sponsors. Based on these comments, we are finalizing our proposed 
provision in part to require POs to adopt a compliance oversight 
program that requires POs to promptly respond to, investigate and 
correct potential non-compliance and fraud, waste and abuse.
4. Personnel Qualifications for Staff With Direct Participant Contact 
(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, as we explained in the proposed rule, 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.
    As we stated in the proposed rule, we believe 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. We explained in the proposed rule that 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 proposed 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 PO on working 
with a frail or elderly population upon hiring. As we noted in the 
proposed rule, this 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. As we explained in the proposed rule, 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 stated in the proposed rule that we do not 
believe it is necessary for CMS to approve those competency evaluation 
programs prior to their use. We expect the PO to use current industry 
standards. Therefore, we proposed to revise to this paragraph to remove 
the reference to CMS approval. We also proposed to make technical, non-
substantive changes to the language in paragraph (a) by changing the 
order of the current language in order to make the provision clearer 
and more concise.
    A discussion of the comments we received on the proposed revisions 
to Sec.  460.64, and our responses to those comments, appears below.
    Comment: Commenters supported allowing POs to hire individuals with 
less than 1 year experience with the frail or elderly. Some commenters 
requested that CMS define ``appropriate training.'' One commenter 
requested that we require the training to be completed prior to the 
individual performing any direct care activities.
    Response: We appreciate the commenters' support and will consider 
the request to define ``appropriate training'' and when it must be 
completed in the development of future guidance.
    After considering the comments, we are making no changes to our 
proposal and are finalizing this provision as proposed.
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 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 proposed 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

[[Page 25633]]

training of staff and competency evaluations for employees and 
contracted staff furnishing care directly to participants. As we 
explained in the proposed rule, we believe including all of the related 
requirements in the same section would reduce confusion over applicable 
requirements. We did not propose any changes to the language in Sec.  
460.66(a) but proposed to remove the paragraph designation of paragraph 
(a).
    We did not receive any comments on these proposed changes, and 
therefore, are finalizing this provision as proposed.
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 that 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 criminal 
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 abuse.
    As we explained in the proposed rule, we believed 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 proposed to amend Sec.  460.68(a) by adding clarifying 
language to current paragraph (a)(3) and by adding two new paragraphs 
(a)(4) and (a)(5).
    We noted in the proposed rule that 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 such cases, persons who have previously 
misused alcohol and drugs and/or been diagnosed with alcohol use 
disorder or substance use disorder should not be categorically excluded 
from serving PACE 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 Driving Under the 
Influence (DUI) convictions. We explained that we believed 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 (for 
example, Sec.  483.12(a)(3)(i)), where specific restrictions are 
focused on individuals that are found guilty of abusing, neglecting or 
mistreating nursing home residents.
    As such, we proposed 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 noted 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 noted 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. Therefore, we proposed to 
amend the language to include ``drug, or alcohol abuse or use.''
    We stated that 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 
proposed to add language in paragraphs (a)(4) and (a)(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 proposed 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.  483.12(a)(3)(i). We noted in the proposed rule that 
we believed 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 proposed 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 were 
proposing to add two additional paragraphs to paragraph (a), we 
proposed to remove the word ``or'' at the end of paragraph (a)(2). We 
also invited public comment on whether we should extend this provision 
to restrict hiring those with certain criminal justice histories to 
also include those with current restraining orders against them.
    A discussion of the comments we received on this topic, and our 
responses to those comments, appears below.
    Comment: Commenters expressed support for our proposal to allow POs 
discretion in hiring individuals who have prior convictions but do not 
pose a current risk to PACE participants. One commenter agreed with our 
proposal, with the caveat that there must be a high level of training 
provided to these individuals. One commenter requested we clarify if a 
PO could consider a conviction from another state.
    Response: We welcome the commenters' support. We will consider the 
comments specific to training and convictions from other states in the 
development of future guidance and are finalizing the provisions as 
proposed.

[[Page 25634]]

    Comment: In response to our request for comment related to 
excluding individuals with current restraining orders against them, 
commenters expressed concern that this would impose a higher standard 
than what is required for nursing homes.
    Response: We thank the commenters for responding to our request for 
comments on a potential restriction for individuals with current 
restraining orders against them. Many commenters pointed out that this 
would result in inconsistency with regulatory requirements for long 
term care facilities. After considering the comments, we are not making 
any changes to the PACE rules at this time related to individuals 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 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. 
In the proposed rule, we solicited comments 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. We noted 
that 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), but currently do 
not apply to the delivery of services by a PO under sections 
1894(b)(1)(A) and 1934(b)(1)(A) of the Act. Because POs already support 
the majority of participants in non-institutional settings, we sought 
comments on whether or not CMS should apply the requirements to POs. 
Although we did not propose any changes requiring compliance with Sec.  
441.301(c)(4) when non-institutional settings are used to house and/or 
provide services to PACE participants, we solicited comments on 
possible proposals to do so in future rulemaking. Changes we considered 
and on which we solicited comments included:
     Adding a new paragraph Sec.  460.70(b)(1)(iv) stating, a 
contractor must comply with the 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 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.
    A discussion of the comments we received on this topic, and our 
responses to those comments, appears below.
    Comment: Most commenters on the topic expressed that the PACE model 
of care is consistent with the principles and objectives of the HCBS 
rule, in that care is person-centered and affords individuals choice in 
where, how and from whom care is given. They stated that under current 
PACE regulations, POs are already required to ensure an individual's 
right to privacy, dignity and respect, and freedom from coercion and 
restraint. A commenter noted that participation in PACE is voluntary, 
and PACE provides a setting that creates a safe community of 
individuals to gather for meals and social stimulation to prevent 
isolation. Commenters expressed concern that a strict application of 
the HCBS requirement at Sec.  441.301(c)(4) could prevent POs from 
providing care in the PACE center, where a large proportion of PACE 
participants access services, when it is often necessary for 
participants with dementia to attend the PACE center or alternative 
care setting to ensure their safety. In addition, commenters expressed 
concern that strict application of the HCBS regulation at Sec.  
441.301(c)(4) may impact POs' ability to provide care to PACE 
participants in ways that have been demonstrated to be successful at 
delaying or preventing nursing home placement. Commenters noted that it 
is just as important to allow individuals the right to choose to 
participate in activities at the PACE center or other congregate 
locations as it is to protect their right to participate in activities 
in other community settings. Commenters also expressed concern that 
application of the HCBS regulation at Sec.  441.301(c)(4) would impact 
PACE service delivery. Some commenters suggested that application of 
the HCBS regulation at Sec.  441.301(c)(4) has been inconsistent, and 
has caused confusion for some providers, and raises safety and access 
concerns for those caring for people with certain conditions, such as 
dementia.
    Response: Based on our review of these comments, we agree with the 
commenters that many of the existing PACE objectives and requirements 
are consistent with the requirements of the HCBS regulation at Sec.  
441.301(c)(4). We also recognize that some of the principles of the 
HCBS settings requirements could be adopted in PACE to increase 
community integration requirements for POs as they facilitate 
participants' ability to reside independently in the community. Because 
POs have unique requirements to provide care in both institutional and 
non-institutional settings, and the role of the PACE center is so 
fundamental to the provision of PACE services, we believe it is 
important to be thoughtful before adding or expanding HCBS setting 
requirements to PACE. We appreciate all of the comments received on 
this issue, and we plan to use the feedback for consideration in future 
rulemaking.
    Comment: While six commenters expressed support for applying the 
HCBS settings requirements to PACE, they also expressed some concerns 
that certain elements should or should not apply to PACE. For example, 
some commenters supported application of the HCBS regulation at Sec.  
441.301(c)(4) to all PACE settings except for the PACE center. One 
commenter suggested a delay in implementation of the HCBS regulation in 
PACE, or that CMS allow for flexibilities in applying HCBS settings 
requirements to PACE. Another commenter recommended that alignment of 
the HCBS regulation at Sec.  441.301(c)(4) to PACE be postponed to a 
later rulemaking in recognition of the already integrated delivery 
structure and person-centered approach in PACE. Another commenter that 
supported the application of the HCBS settings requirements for non-
intuitional settings in PACE stated that PACE participants living in 
settings such as assisted living and residential care facilities should 
be able to move into these types of setting. One commenter expressed 
concern that the eviction protection in the HCBS settings rules may 
conflict with the PACE involuntary disenrollment regulations. Some 
commenters supported application of the HCBS regulation at Sec.  
441.301(c)(4) to PACE, but stated that implementation should not have 
the unintended consequence of preventing POs or their contractors from 
providing housing or services that enable people to live independently 
in their homes and communities

[[Page 25635]]

(including supports for family caregivers).
    Response: We appreciate the detailed comments about how the HCBS 
regulation at Sec.  441.301(c)(4) should or should not apply in PACE, 
and will continue to evaluate the appropriateness of the application of 
the HCBS regulation in PACE and use this feedback for consideration in 
future rulemaking.
    Comment: Some commenters stated that the HCBS settings requirements 
should be expanded to cover existing PACE programs, and that any HCBS 
provider must be held to the same standards and requirements. They 
expressed that even though PACE services often are provided at a 
specific PACE center, the availability of services at the center should 
not have the effect of isolating participants from the broader 
community. Some commenters expressed there is no reason why the HCBS 
settings requirements should not apply to PACE, since PACE, like other 
HCBS options and waivers, is designed to provide a non-institutional 
alternative for persons with LTSS needs. Therefore, they stated that 
any HCBS provided by POs, either directly or through contractual 
arrangements, should be subject to the HCBS regulation at Sec.  
441.301(c)(4). Several of the commenters recommended that CMS, in 
addition to incorporating the HCBS settings requirements in Sec.  
441.301(c)(4), should incorporate paragraph (c)(5). Paragraph (c)(4) 
sets standards for HCBS settings, and paragraph (c)(5) describes 
settings that cannot be considered home and community-based. Those 
commenters stated that POs and their contractors should comply with 
both of these paragraphs.
    Response: While we believe that many of the existing PACE 
objectives and requirements are consistent with the requirements of the 
HCBS Settings final rule at 42 CFR part 441, we recognize that some of 
the principles of that rule could be adapted in PACE to increase 
community integration requirements for POs as they facilitate 
participants' ability to reside independently in the community. Because 
PACE differs from every other HCBS program in that POs are required to 
provide care in institutional and non-institutional settings and the 
PACE center is so fundamental to the provision of services, we believe 
it is important that we carefully and thoughtfully weigh many factors 
before adding or expanding HCBS setting requirements to PACE. As a 
result, we are not incorporating any HCBS settings requirements into 
PACE at this time. We appreciate all of the comments received on this 
issue, and plan to use the feedback for consideration in future 
rulemaking.
    In addition to soliciting comments on the HCBS settings 
requirements, we proposed 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. We explained in the proposed rule that, although 
the current provisions do not explicitly reference those individuals, 
this was our intent when we adopted the requirements in the 2002 IFC 
(67 FR 61498, 61505), and when we addressed these requirements in the 
2006 final rule (71 FR 71270, 71335). We noted that 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 proposed to add a new paragraph (d)(6) under which we 
proposed 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 
also proposed 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 proposed 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 proposed 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).
    A discussion of the comments we received on the proposed changes to 
Sec.  460.70, and our responses to those comments, appear below.
    Comment: Some commenters requested that we expand Sec.  460.70, the 
existing regulation that requires POs to provide services directly or 
under contract with other entities, to allow the use of non-contracted 
providers.
    Response: Under the scope of benefits described in sections 
1894(b)(1) and 1934(b)(1) of the Act, a PO may enter into written 
contracts with outside entities to furnish services to participants 
that are not provided directly by the PO. Consequently, we require in 
Sec.  460.70 that all services, except for emergency services as 
described in Sec.  460.100, not furnished directly by a PO must be 
obtained through contracts which meet the requirements specified in 
regulations.
    Comment: One commenter requested that we provide an exception to 
the contract requirements in Sec.  460.70 for administrative or care-
related services that are provided by a PO's parent organization.
    Response: We would not grant such an exception as we expect the PO 
to have contractual arrangements for accountability purposes with all 
entities that furnish services not directly furnished by the PO (except 
emergency services), including the PO's parent organization. As the 
PO's parent organization can change, for example, when a CHOW occurs, 
it is essential that a contract is in place to show any existing 
relationship and services provided by the parent organization.
    Because the statute requires POs to provide PACE services directly 
or through contracts with other entities, we do not believe we can 
expand Sec.  460.70 to allow the use of non-contracted providers in 
PACE as requested by the commenters. After considering the comments, we 
are finalizing the changes to Sec.  460.70 as proposed.
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 proposed to make some technical, non-substantive changes to 
paragraph (a)(1) that would make the provision more concise. We also 
proposed to amend paragraph (b)(4). As we explained in the proposed 
rule, 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

[[Page 25636]]

participant contact must be medically cleared for communicable diseases 
and have all immunizations up-to-date before engaging in direct 
participant contact (71 FR 71273). We noted that Sec.  460.71(b)(4) was 
not amended in a consistent manner, which we understood caused 
confusion among POs about whether to attach the same meaning to 
``medically cleared for communicable diseases'' and ``free of 
communicable diseases.'' Therefore, we proposed to amend Sec.  
460.71(b)(4) by referencing the language previously added to Sec.  
460.64(a)(5) so that both sections would be consistent and contain the 
same language.
    As noted previously in our discussion of proposed changes to Sec.  
460.66, we proposed to move paragraphs (b) and (c) of Sec.  460.66 
related to personal care services furnished by PCAs to Sec.  460.71(c) 
and (d), respectively.
    A discussion of the comment we received on this topic, and our 
response to that comment, appears below.
    Comment: One commenter stated that the proposed rule does not 
specify a minimum curriculum or minimum training standards for PCAs and 
suggested that the PACE manual define the minimal competencies that 
PCAs are expected to demonstrate before performing personal care tasks 
independently.
    Response: As we have previously stated in our discussion on 
personnel qualifications for staff with direct participant contact (see 
subpart E.4. (Personnel Qualifications for Staff with Direct 
Participant Contact (Sec.  460.64)), it is our expectation that POs 
follow industry standards with respect to the skills required for 
working with the frail or elderly population in PACE. Therefore, we do 
not believe it is necessary at this time to specify minimum training 
standards or competencies for PCAs.
9. Physical Environment (Sec.  460.72)
    Section 460.72 of the PACE regulations addresses requirements for 
the physical environment of the PACE center, including those pertaining 
to space and equipment, fire safety, and building safety. In the 
proposed rule, we noted that CMS had published in the December 27, 2013 
Federal Register a separate proposed rule that would affect the PACE 
requirements for emergency preparedness that, at the time, were 
included in Sec.  460.72 (see 78 FR 79802). This proposal has now been 
finalized. Specifically, on September 16, 2016, we published in the 
Federal Register a final rule titled ``Medicare and Medicaid Programs; 
Emergency Preparedness Requirements for Medicare and Medicaid 
Participating Providers and Suppliers,'' which revised the PACE 
requirements at Sec.  460.72 and added a new Sec.  460.84. The final 
rule (81 FR 63860) established 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. For a complete discussion of the PACE emergency preparedness 
revisions, see the September 16, 2016 final rule (81 FR 63904 through 
63906).
10. Marketing (Sec.  460.82)
    Section 460.82 addresses requirements governing the marketing 
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 
proposed to further clarify this requirement by defining what we mean 
by ``principal languages of the community.'' We noted in the proposed 
rule that, as we stated in the 2006 final rule (71 FR 71279), we 
believed the determination of a principal language of the community is 
a state determination. However, we recognized 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 
proposed 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.
    As we explained in the proposed rule, we referred 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 noted 
that we established a similar 5 percent language threshold for 
marketing materials in the Medicare Advantage program (Sec.  
422.2264(e)), and we believed this threshold is also appropriate for 
PACE. Moreover, we stated in the proposed rule, we strive to create 
harmony across program requirements when feasible. This reduces 
complexity for those organizations that operate multiple CMS programs. 
We explained that, currently, in the MA 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. We noted that we did 
not propose to replace any state-based language thresholds; rather the 
goal was to provide a standard in instances where a state standard does 
not exist. Additionally, we noted in the proposed rule, we 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 we aimed to set a more clear standard for 
when furnishing such materials is a requirement.
    We did not receive any comments on our proposal to use the same 
approach to the language threshold determination as we do in the MA 
program, and therefore, we are finalizing the provision as proposed.
    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 proposed rule (81 FR 54680) and the 2006 final rule 
(71 FR 71279), this provision does not prevent a PO from offering gifts 
of a nominal value. For example, as we explained in the proposed rule 
and 2006 final rule, offering gifts to potential enrollees who 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 proposed 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. We stated in the proposed rule that 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 noted in the proposed rule that we 
believed the revision to paragraph (e)(3) would preserve our goal of 
ensuring that current and potential PACE participants and their 
families or

[[Page 25637]]

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. We stated that similar 
flexibility has been permitted under both the MA and Part D programs 
for several years with no notable adverse impact to participants. As 
such, we explained in the proposed rule, 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 MA and 
Part D programs, we stated in the proposed rule that the PACE 
regulatory definition of a nominal gift would 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 stated in the 
proposed rule that we believed it is in the best interest of the 
program to only permit POs to market their programs through their own 
employees. Therefore, we proposed amendments to this section to 
specifically prohibit POs from using non-employed agents/brokers, 
including contracted entities, to market PACE programs.
    As we explained in the proposed rule, 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. We noted that 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 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.
    In the proposed rule, we expressed concern 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. We emphasized that our 
concern was 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 stated we believed employees of the PO 
would be 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. We noted 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.
    As we discussed in the proposed rule, we believed that only 
permitting POs to use employees for marketing activities would help 
ensure potential PACE participants fully understand the program, the 
rules, how to access services, and the ramifications of not accessing 
services through the PO. Accordingly, we proposed to amend Sec.  
460.82(e) to remove the term ``agents'' and simplify the language. The 
revised provision would preclude POs from using certain prohibited 
marketing practices. In conjunction with that revision, we proposed to 
amend paragraph (e)(4) to prohibit marketing by any individuals other 
than the employees of the PO. We noted that some POs may have existing 
arrangements with independent agents and brokers and that, as with 
other functions, POs may delegate such responsibilities to an outside 
entity. We solicited comments as to whether CMS' proposed prohibition 
on the use of independent agents and brokers is appropriate. We stated 
that if commenters believed that this prohibition is not appropriate, 
they should provide 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. We describe the comments we 
received on this proposal and our responses at the end of this section.
    Section 460.82(e)(5) prohibits unsolicited door-to-door marketing. 
We proposed 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. We 
explained that 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). We stated 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 (71 FR 71279). We explained in the proposed 
rule that based on the vulnerability of the population served by the 
PACE program and the increase in health care fraud we have seen since 
2006, we believed a prohibition on other unsolicited means of direct 
contact is appropriate for PACE. Moreover, we noted, such a prohibition 
is consistent with our marketing requirements for MA organizations 
(Sec.  422.2268(d)) and PDP sponsors (Sec.  423.2268(d)).
    We also proposed 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. We explained that based on the insight we have gained 
through years of oversight responsibility for the PACE program, we 
believed the requirement for a marketing plan is redundant. We noted in 
the proposed rule that we believed 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. We explained that 
the CMS Account Managers are 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.

[[Page 25638]]

    A discussion of the public comments we received on our marketing 
proposals, and our responses to those comments, appears below.
    Comment: Commenters expressed concerns that the proposed simplified 
language under Sec.  460.82(e)(4) could be construed as also 
prohibiting states and advocates from educating potential participants 
about PACE. Several commenters expressed that POs should maintain the 
flexibility of using contracted entities to assist them with marketing 
activities. Two commenters expressed agreement with our proposal to 
restrict marketing to employees of the PO. One such commenter expressed 
concern with fraud, confusion, and abuse associated with marketing by 
non-employees, while the other commenter did not provide a reason for 
agreeing with the proposed restriction.
    Response: As a result of the comments, we note that the proposal to 
restrict marketing to employees of the PO was not intended to preclude 
states and advocacy groups from discussing PACE with potential 
participants. To clarify this position, we are revising Sec.  
460.82(e)(4) to prohibit marketing by any individual or entity that is 
directly or indirectly compensated by the PO based on activities or 
outcomes, as opposed to marketing by any individuals other than 
employees of the PO. We are also revising our proposal to differentiate 
between those entities which receive some level of compensation from 
the PO based on activities or outcomes in marketing PACE on behalf of 
the PO, and those who are educating potential participants on a host of 
potential healthcare choices, but are not compensated by the PO based 
on any activity or outcome, such as State Health Insurance Assistance 
Programs (SHIPs) and other advocates in the community.
    Additionally, based on the majority of comments received, we 
believe it is best to be less prescriptive with regard to who can and 
cannot engage in marketing activities under PACE and to instead revise 
our proposal to address the root concerns of non-PO staff marketing 
PACE, such as a lack of understanding of the nuances of the PACE 
program and/or PO that could lead to an enrollment decision that is 
contrary to the best interest of the potential participant. 
Specifically, we are revising Sec.  460.82(e)(4) to allow marketing by 
an individual or entity that is directly or indirectly compensated by 
the PO based on activities or outcomes if the individual or entity has 
been appropriately trained in PACE program requirements, including but 
not limited to 42 CFR part 460, subparts G and I of this part, 
addressing participant rights and participant enrollment and 
disenrollment, respectively. We are also adding provisions in Sec.  
460.82(e)(4)(i) and (ii) that state POs are responsible for the 
activities of contracted individuals or entities who market on their 
behalf, and that POs that choose to use contracted individuals or 
entities for marketing purposes must develop a method to document 
training has been provided, respectively.
    By outlining expectations for the appropriate training combined 
with reiterating that the PO is responsible for marketing activities 
conducted by others on its behalf, we believe we are providing 
additional flexibility to POs while still safeguarding potential and 
current PACE participants. Moreover, we believe that this change will 
address the concerns of fraud, confusion, and abuse expressed by the 
commenter who was in favor of the proposed agent marketing prohibition.
    We are finalizing the other proposed changes to the marketing 
requirements--Sec. Sec.  460.82(c)(1), 460.82(e) introductory text, 
460.82(e)(3), and 460.82(e)(5)--as outlined in the proposed rule.

G. Subpart F--PACE Services

1. Service Delivery (Sec.  460.98)
    Section 460.98 addresses service delivery under PACE. We proposed 
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 proposed to replace ``Pace center'' with ``PACE 
center'' for the same reason.
    We also solicited public comments 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(c), 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 we explained in the proposed rule (81 FR 54681) and 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 of care, which helps to differentiate it from home 
health care or institutional care. We noted that 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.
    We further explained in the proposed rule that, 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 inhibit 
expansion of existing programs. To better understand the issues facing 
POs, in the proposed rule, we solicited 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 of 
care for this population. We stated that 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.
    A discussion of the public comments we received on this topic, and 
our responses to those comments, appears below.
    Comment: Commenters generally supported potentially allowing POs

[[Page 25639]]

greater flexibility to utilize alternative care settings (for example, 
adult day care centers, senior centers, or activity areas in 
residential communities). One commenter recommended that CMS modify 
PACE requirements consistent with certain principles including, for 
example, that PACE participants must be assigned to a PACE IDT, but the 
IDT does not have to be assigned to a PACE center. Many commenters 
stated that the ability to deliver care in alternative care settings 
would provide POs more flexibility in responding to participants' needs 
and preferences, and promote PACE growth and expansion in ways that are 
not constrained by POs' ability to construct new PACE centers. However, 
other commenters expressed concern regarding the potential for 
significant movement away from delivering care at the PACE center, 
which is considered the essence of the PACE model of care, toward 
increased reliance on providing care in settings outside the PACE 
center. One commenter suggested that increased flexibility in service 
delivery settings for PACE may result in the program becoming more like 
network-based Medicare and Medicaid managed care programs. Another 
commenter suggested that providing more flexibility to POs with respect 
to service delivery settings could result in an ``unlevel playing 
field'' between POs and other health plans serving similar populations. 
Therefore, this commenter recommended that as CMS works to introduce 
flexibilities around the PACE program, it should align standards and 
requirements for POs with those for other Medicare and Medicaid managed 
care plans where appropriate.
    Commenters also suggested that CMS would need to consider and 
provide an opportunity for comment on the potential need for alignment 
across CMS programs of various operational and program requirements.
    Response: We appreciate the thoughtful comments and recommendations 
provided by commenters. The feedback will help inform future PACE 
rulemaking.
    Comment: Many commenters supported testing use of the PACE model of 
care for new populations under section 1115A of the Act, which was 
afforded by the PACE Innovation Act of 2015 (PIA), including testing 
the PACE model of care for individuals younger than 55 with 
disabilities, who are currently ineligible for PACE because of their 
age. Some commenters expressed concern regarding the opportunity to 
test expansion of PACE under this authority. For example, one commenter 
stated that any future model test under section 1115A of the Act, as 
amended by the PIA, to serve individuals with psychiatric disabilities 
should be governed by the January 16, 2014 Medicaid final rule \7\ that 
establishes the requirements and limits applicable to Medicaid HCBS in 
order to restrict the use of a PACE center as a location for the 
delivery of services to this population. Another commenter urged us to 
use the authority provided by the PIA to find affordable ways to extend 
the PACE model of care to older adults with Medicare who need LTSS but 
are not eligible for Medicaid. Finally, the Medicare Payment Advisory 
Commission (MedPAC) urged us to consider changes to the PACE rate 
setting and risk adjustment methodologies to increase the accuracy of 
payments under any model test.
---------------------------------------------------------------------------

    \7\ https://www.federalregister.gov/documents/2014/01/16/2014-00487/medicaid-program-state-plan-home-and-community-based-services-5-year-period-for-waivers-provider.
---------------------------------------------------------------------------

    Response: We appreciate the recommendations on potential tests of 
the PACE model of care under the authority of section 1115A of the Act, 
as amended by the PIA. We will continue to consider future 
opportunities to conduct model tests under this authority. However, our 
focus currently is on developing models through which we would directly 
contract with a range of Medicare providers and suppliers, and these 
providers and suppliers would agree to be accountable for cost and 
quality in providing care to a defined beneficiary population. We are 
working to ensure these potential models would provide opportunities to 
test innovative ways to serve people of all ages who have complex 
chronic conditions and/or functional impairments, building on what has 
worked well with the PACE clinical approach. Comments on the PIA are 
beyond the scope of this rule, as this rule pertains to the existing 
PACE program, and any potential waivers of existing PACE regulations, 
changes to payment methodology or modifications to eligibility criteria 
for a model test under section 1115A of the Act as amended by the PIA 
would be addressed as appropriate for each model. However, we will take 
the commenters' input, as well as the comments received in response to 
the PACE Innovation Act Request for Information \8\ issued December 23, 
2016, into account as we develop future model tests.
---------------------------------------------------------------------------

    \8\ See https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/PACE/PACE-Innovation-Act.html.
---------------------------------------------------------------------------

    Comment: In response to a proposed revision to the IDT role of the 
primary care provider, commenters suggested a corresponding revision to 
Sec.  460.98(c)(1) to state that primary care services furnished at the 
PACE center may be provided by a physician, nurse practitioner or 
physician assistant.
    Response: Section 460.98(c)(1) currently refers to primary care 
services as including physician and nursing services. However, as 
discussed in section III.G.3. of this final rule, we proposed and are 
finalizing changes to Sec.  460.102(b) and (c) to permit primary 
medical care to be furnished by a primary care provider, meaning 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 appreciate the 
suggested revision and agree that it would help ensure consistency 
between the two sections of the regulation. Therefore, we will revise 
Sec.  460.98(c)(1) to refer to the minimum services furnished at each 
PACE center as including ``primary care, including services furnished 
by a primary care provider as defined in Sec.  460.102(c) and nursing 
services.'' This change will recognize that primary care can be 
provided not only by physicians and nurses, but also by other types of 
primary care providers, as defined in Sec.  460.102(c).
    Comment: One commenter requested that we provide more detailed 
guidance with respect to alternative care settings in PACE.
    Response: We did not propose any changes regarding alternative care 
settings, so we consider this topic to be beyond the scope of this 
rule. We direct the commenter to the guidance we issued on alternative 
care settings in PACE. (See the June 30, 2016 HPMS memorandum, 
Clarification on the Requirements for Alternative Care Settings in the 
PACE Program.)
2. Emergency Care (Sec.  460.100)
    Section 460.100 addresses emergency care under PACE. We proposed 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.
    We did not receive any comments on this proposal, and therefore, we 
are finalizing the change as proposed.

[[Page 25640]]

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 (64 FR 
66248). As we have stated previously in preambles to rules and 
subregulatory guidance (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; 81 FR 
54682). 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 explained in the 
proposed rule that we understood 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 proposed that a PO be permitted to have one individual 
fulfill 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, we noted, 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. Under Sec.  460.190 and Sec.  
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. We explained in the 
proposed rule that 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 proposed 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 proposed to revise paragraph 
(b) to state the IDT must be composed of members qualified to fill, at 
minimum, the following roles, in accordance with CMS guidelines. We 
stated that we will publish the IDT guidelines in HPMS following 
publication of the final rule. We noted that 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.
    A discussion of the public comments we received on our proposal 
regarding IDT roles, and our response to those comments, appears below.
    Comment: Commenters supported the proposal to allow one individual 
to fill two separate roles on the IDT where the individual has the 
appropriate licenses and qualifications for both roles.
    Response: We appreciate the support for this proposal and will 
finalize the revisions as proposed. As noted previously, we will 
publish IDT guidelines in HPMS following the publication of the final 
rule.
    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. As we stated in the proposed rule, 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 
noted that 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 stated that 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 proposed rule (81 FR 54682), 1999 IFC (64 FR 
66248), and the 2006 final rule (71 FR 71285), the role of primary care 
physician 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 also stated in the 2006 final rule 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 role 
of the primary care physician consistent with state licensure 
requirements for nurse practitioners (71 FR 71285).
    As discussed in the proposed rule, the PACE program agreement has 
replaced the PACE Protocol. We noted that, like certain other 
requirements that were based on the PACE Protocol, we believed the 
composition of the IDT needs to change to reflect evolving medical 
practices and technologies. We stated that we believed it is 
appropriate to expand the primary care physician role on the IDT to 
include certain other primary care providers. Accordingly, we proposed 
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 proposed 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 also proposed to revise Sec.  460.102(c)(2) to refer to 
primary care provider rather than primary care physician. We stated 
that these 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 proposed 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

[[Page 25641]]

by state laws with regard to oversight, practice authority, and 
prescriptive authority. We noted that, with increasing shortages of 
primary care providers across the country, we believed 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 proposed redesignating the current language in paragraph (e) as 
paragraph (f) and, in a new paragraph (e), we proposed 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. We explained that referencing Sec.  460.71 
should make it clear to POs 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, we noted, 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.
    A discussion of the public comments we received on our proposal 
regarding primary care providers on the IDT, and our responses to those 
comments, appears below.
    Comment: Commenters strongly supported revising the regulations to 
require a primary care provider to serve on the IDT instead of 
requiring a primary care physician. This would permit nurse 
practitioners, physician assistants, and community-based physicians to 
fill this role. Some commenters suggested what they believed to be 
necessary corresponding revisions to other sections of the PACE 
regulations related to the settings in which a primary care provider 
provides services. Specifically, commenters suggested that we clarify 
in Sec.  460.98 whether a primary care provider may provide services in 
a community-based setting. Similarly, the commenters requested a 
clarifying revision to Sec.  460.98(c)(1) regarding the primary care 
services furnished at the PACE center. A few commenters recommended 
that a nurse practitioner be listed as a provider who can serve as the 
medical director for a PO. Commenters also questioned if the PO's 
medical director must be a medical doctor.
    Response: We appreciate the support for the proposed revisions to 
Sec.  460.102 regarding the primary care provider and will finalize 
that change to the regulation as proposed. Regarding the suggestion 
that we clarify whether a primary care provider may provide services in 
a community-based setting, we do not believe that a clarification is 
necessary in light of the removal of the ``primarily served'' 
requirement discussed below. We do appreciate the suggested clarifying 
revision to Sec.  460.98(c)(1) to ensure consistency between the two 
sections of the regulation. As discussed in section III.G.1. of this 
final rule, we are revising Sec.  460.98(c)(1) to refer to ``primary 
care, including services furnished by a primary care provider as 
defined in Sec.  460.102(c) and nursing services''. Regarding the role 
of the PACE medical director and which disciplines can serve in this 
capacity, we initially proposed regulation text at Sec.  460.60(b) that 
would require a PO to 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. However, at this time, we are not finalizing the change to 
specify that a physician must as serve as the medical director. We 
intend to address questions regarding the PACE medical director role in 
future guidance or rulemaking.
    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 authorizes 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 proposed to revise Sec.  
460.102(c)(1) to allow community-based physicians to fill the role of 
primary care provider on the IDT. As we explained in the proposed rule, 
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 patients in those community settings 
often become PACE participants. Newly enrolled PACE participants often 
request to continue receiving care from their community-based 
physician. We noted in the proposed rule that we wanted to allow this 
flexibility for PACE participants because we believed it supports the 
continuity of care for participants. Therefore, we proposed 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. As proposed, community-based physicians 
would be able to continue working in their community settings while 
contracting with the POs to provide PACE services. We also stated in 
the proposed rule that, in combination with the revision to paragraph 
(b)(1), this would effectively be a global waiver of the IDT member and 
``primarily served'' requirements for community-based primary care 
physicians.
    A discussion of the public comments we received on our proposal 
regarding the ``primarily served'' requirement, and our responses to 
those comments, appears below.
    Comment: Most commenters concurred with eliminating the ``primarily 
served'' requirement for community-based physicians and suggested that 
this be extended to other types of community-based providers and 
possibly all members of the IDT.
    Response: We thank the commenters for their support for this 
change. In response to these comments, as well as in response to 
comments we received on the alternative IDT proposals that are 
discussed next, we are finalizing changes to the ``primarily served'' 
requirement that renders our proposal on community-based physicians 
unnecessary. Changes to the ``primarily served'' requirement are 
further discussed below.
    In the proposed rule, 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.
    As we explained in the proposed rule, we continue to believe that a 
well-

[[Page 25642]]

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 proposed rule (81 FR 54683) and 
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 noted in the proposed rule that 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 the revisions to Sec.  460.102(c), 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. We noted that these 
monitoring activities would serve as a safeguard to help ensure there 
is no negative impact to the quality of care being provided. We stated 
that we believed 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 
solicited public comments on this approach. A discussion of the 
comments we received on this option, and our response to those 
comments, appears below.
    Comment: Most commenters expressed opposition to deleting IDT 
composition requirements. Several suggested that we retain the 
composition requirement for an IDT but modify it to allow for a range 
of health professionals and functions that participate in assessment 
and care planning based on the needs of individual PACE participants. 
One commenter thought that we should continue to require every member 
of the IDT to be present in the development of a participant's plan of 
care.
    Response: We thank the commenters for their input on the first 
proposed alternative approach. In response to a majority of commenters 
who expressed concern regarding the deletion of IDT composition 
requirements, we have determined that the current requirements should 
be retained at this time.
    As discussed in the proposed rule, 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 proposed rule (81 FR 54683), 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. We explained that 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 solicited public comments on whether we should extend this 
flexibility to all POs without the need to request a waiver.
    Comment: Most commenters concurred with eliminating the ``primarily 
served'' requirement for community-based physicians and suggested also 
eliminating the requirement for other types of community-based 
providers and all members of the IDT. In addition, some commenters 
believed that the current requirement, i.e. ``primarily serve'' is 
vague and has led to misinterpretations of this requirement. In 
addition, commenters emphasized the operational challenges POs face, 
which can lead to a need for qualified staff that can serve on a part-
time, rather than full-time basis. Other commenters stated that the use 
of community-based physicians has expanded the range of primary care 
providers PACE participants can choose from, and in many cases has 
permitted participants to retain their existing primary care physician 
when enrolling in PACE. A few commenters recommended retaining the 
``primarily served'' requirement and expressed concern that members of 
the IDT should be knowledgeable and experienced with the needs of the 
PACE population. One commenter acknowledged that including community-
based physicians on the IDT likely promotes continuity of care for 
newly-enrolled participants, but may cause conflicts regarding 
treatment and the approval of services over time. This commenter 
asserted that the inclusion of community-based physicians should 
continue to be addressed through the waiver process. Other commenters 
supported the proposals but indicated that protections must be in place 
to ensure the integrity of the PACE organization's mission.
    Response: We have carefully considered the comments we received on 
this proposal, as well as the comments we received on the similar 
proposal related to community-based physicians. Overall, commenters 
were very supportive of the change to eliminate the ``primarily 
served'' requirement for individuals who serve on the IDT. However, 
some commenters expressed concerns about eliminating this requirement 
based on the belief that providers that primarily serve PACE 
participants, with presumably more direct and extensive experience 
rendering care to the PACE population, would be best positioned to 
understand and address the needs of those participants. While we 
understand this concern, we believe that community-based providers, 
regardless of their experience serving a PACE population, nonetheless 
must have the requisite expertise and ability to practice within the 
scope of their licensure. As long as these community-based providers 
are willing to fulfill the requirements for members of the IDT, we do 
not believe they should be precluded from doing so based on a 
requirement that they ``primarily serve'' PACE participants. Comments 
received were supportive of our proposals overall and support our 
conclusion that the benefits of requiring IDT members to have 
experience serving PACE participants, in and of itself, do not outweigh 
the benefits of eliminating the ``primarily served'' requirement. We 
note, as did certain commenters, that a number of waivers have been 
granted of the ``primarily served'' requirement for members of the IDT 
in recent years, with beneficial results. Furthermore, we are not aware 
of any adverse impact in overall quality of care for POs operating 
under such waivers. We agree with commenters that use of community-
based providers has promoted continuity of care, allowed POs greater 
flexibility in the delivery of primary care to participants, and has 
increased operating efficiencies without compromising quality of care. 
We note that quality of care provided by POs will continue to be a 
focus of CMS and SAA oversight and monitoring activities. By reducing 
operational challenges and expanding PACE participant provider

[[Page 25643]]

choices, we continue to support efforts to ensure PACE participants 
have access to quality care and qualified providers. Based on the 
supportive comments we received, as well as our positive experience in 
granting waivers of the ``primarily served'' requirement, we are 
revising the regulations to delete the requirement that members of the 
IDT must serve primarily PACE participants. Specifically, we will 
update the regulation by removing Sec.  460.102(d)(3).
4. Participant Assessment (Sec.  460.104)
    Section 460.104 sets forth the requirements for PACE participant 
assessments. As we explained in the proposed rule (81 FR 54683) and 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. We stated in the proposed rule that, under 
our proposal to modify Sec.  460.102, to the extent an IDT member 
serves multiple roles on the IDT, that member may represent the 
clinical expertise for which he or she 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 proposed to add the phrase ``in-
person'' after ``initial'' in paragraph (a)(1). We explained that 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 proposed 
to change the requirement that the initial comprehensive assessment be 
completed ``promptly following enrollment'' to ``in a timely manner in 
order to meet the requirements in paragraph (b) of this section.'' We 
noted in the proposed rule that 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.
    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 
proposed 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 final rule, we proposed that the 
primary care physician role be changed to primary care provider to 
allow other licensed primary care providers (specifically, nurse 
practitioners, physician assistants, and community-based physicians) to 
be part of the core IDT.
    In Sec.  460.104(a)(2), we proposed 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 
believed stating that they must occur ``at appropriate intervals'' is 
unnecessary and superfluous language. We proposed 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 proposed 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 proposed 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 proposed to 
revise the heading to ``Initial comprehensive assessment criteria.'' We 
also proposed to add ``in-person'' to this section to make it 
consistent with the terminology in Sec.  460.104(a)(1) and (2). We 
stated in the proposed rule that we believed 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.'' We noted 
in the proposed rule that 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 
proposed 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 stated that we believed 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, we noted in the proposed rule, 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 stated that we 
believed 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 proposed 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 proposed to create a new paragraph under Sec.  460.104(b). 
Under new paragraph (b)(1), we proposed 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. We explained in the proposed 
rule that 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. We 
noted that we would expect 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 proposed 
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 PO's network 
to furnish routine or preventive

[[Page 25644]]

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. We noted in the proposed rule that 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 proposed to delete the requirement in paragraph (c)(2) 
requiring the annual reassessments by the physical therapist, 
occupational therapist, dietician, and home care coordinator. We 
proposed to delete corresponding references to annual reassessments in 
paragraph (d). We proposed to keep the requirement that PACE 
participants be reassessed semiannually, every 6 months. We stated that 
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 noted in the proposed rule that we believed 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 proposed to remove ``recreational therapist or activity 
coordinator'' from the list of IDT members that must participate in the 
semiannual reassessment. As stated in the proposed rule, we believed 
reducing the number of 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. We explained in the proposed rule that 
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 and activity 
coordinators are part of the IDT and can update the IDT on the 
participants' successes or needs for recreational therapy or 
involvement in activities. We stated in the proposed rule that we 
believed 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 stated 
that we did not believe we needed 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 
(c)(1)(i) through (v) and would be redesignated as paragraphs (c)(1) 
through (c)(4). In the redesignated paragraph (c)(1), we proposed to 
revise ``physician'' to ``provider'' for consistency. We also proposed 
to redesignate paragraph (c)(1)(v) as (c)(4) and revise the provision 
to delete the examples.
    Section 460.104(d) discusses unscheduled reassessments. We proposed 
changes to paragraph (d) to remove the reference to annual 
reassessments. We proposed to change the language in (d)(1) from 
``listed in paragraph (a)(2) of this section'' to ``listed in paragraph 
(c) of this section.'' As we explained in the proposed rule, this 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 
proposed to change paragraph (d)(2), regarding unscheduled 
reassessments at the request of the participant or the participant's 
designated representative, to also align with IDT members listed in 
paragraph (c). We noted in the proposed rule that we believed reducing 
the number of IDT members that are required to conduct the unscheduled 
reassessments would reduce the burden on POs and allow the POs to 
allocate their resources more efficiently, while still meeting the care 
needs of participants.
    We noted in the proposed rule that, under Sec.  460.64, PO staff 
with direct participant contact must only act within the scope of their 
authority to practice. Therefore, if the IDT members 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. We stated in the proposed rule that, for these 
reasons, we did not believe we needed to require all core members of 
the IDT to conduct unscheduled reassessments.
    A discussion of the public comments we received on our proposals 
regarding participant assessments under Sec.  460.104, and our 
responses to those comments, appears below.
    Comment: Some commenters did not support the proposed changes to 
Sec.  460.104(d)(1) and (2) as they believed that not all service 
requests require an in-person assessment by each of the IDT members 
included in paragraph (c). These commenters suggested the IDT should 
retain the ability to determine which members of the IDT should conduct 
the reassessment, and include those IDT members that are actively 
involved in the participant's plan of care. Another commenter stated 
that some PACE participants have become overwhelmed by the large number 
of IDT members managing their care and, as a result, have disenrolled 
from the PACE program. Several commenters expressed the need to make 
the most effective use of IDT resources while meeting the needs of PACE 
participants. Lastly, a commenter requested that CMS clarify whether it 
has any concerns that providing POs with this greater flexibility could 
impact the quality of care for PACE participants.
    Response: In an effort to align Sec.  460.104(d)(1) and (d)(2), we 
inadvertently increased the number of IDT members required for in-
person reassessments in (d)(2). In support of our efforts to reduce 
provider burden and balance the needs of PACE participants and PO 
resources, we believe that POs should retain the ability to identify 
the appropriate IDT members needed for an unscheduled reassessment at 
the request of the participant or designated representative as Sec.  
460.104(d)(2) currently permits, and we did not intend to require all 
IDT members referenced in Sec.  460.104(c) to participate in conducting 
these reassessments. We do not anticipate that maintaining the current 
requirement will impact the quality of care for PACE participants as we 
will continue to rely on POs to apply their clinical expertise when 
conducting unscheduled reassessments and expect that the IDT will 
involve other IDT members as appropriate.

[[Page 25645]]

    Based on the comments received about unnecessary and potentially 
overwhelming IDT member presence at reassessments, as well as the 
implications of our inadvertent change to align requirements, we are 
not finalizing the IDT member changes to Sec.  460.104(d)(2) as 
proposed and will maintain the current requirement.
    Comment: In general, commenters concurred with the proposed 
revisions to Sec.  460.104. However, commenters expressed concern 
regarding the proposed revision to Sec.  460.104(c)(2) that would 
eliminate the requirement for annual reassessments that include the 
other team disciplines such as physical therapist (PT), occupational 
therapist (OT), dietician, and home health coordinator. Commenters 
stated that by deleting the annual reassessment by the other team 
disciplines, POs may miss an opportunity to identify new or emergent 
participant issues. Commenters believed that an annual assessment by 
these disciplines is beneficial for the PACE participant.
    Response: We appreciate the comments regarding the role of the 
other team disciplines, such as PTs, OTs, dieticians and home health 
coordinators, in patient assessments and that they continue to be 
included in an annual assessment. However, we will continue to require 
reassessments to be performed on a semiannual basis, that is, every 6 
months. We believe that the primary care provider, registered nurse, 
and Master's-level social worker who participate in the semiannual 
reassessment can collectively determine, based on the participant's 
plan of care and IDT discussions, which other IDT members should be 
present during this reassessment. We expect the other disciplines, such 
as OTs and PTs, to be included as needed. As previously stated, 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 should involve other IDT 
members as appropriate. For these reasons, after considering the 
comments, we are finalizing the changes to Sec.  460.104(c)(2) as 
proposed.
    Comment: Commenters suggested that we allow POs to conduct in-
person initial comprehensive assessments and reassessments using modern 
technology such as video conferencing, where participants and the IDT 
members are able to interact ``face-to-face'' and in real time but from 
different locations. Another commenter requested CMS allow for the use 
of remote technologies, noting that doing so would be particularly 
helpful in rural areas due to longer travel times and higher costs 
associated with conducting in-person reassessments. Other commenters 
expressed that not all service requests warrant an in-person 
reassessment. These commenters noted that in some cases, such requests 
could easily be addressed by the IDT members most familiar with the 
participant and actively involved in the plan of care. These IDT 
members would evaluate the request and update the care plan 
accordingly.
    Response: We appreciate the recommendations regarding the use of 
modern technology in conducting initial assessments and reassessments 
and minimizing the burden associated with in-person reassessments for 
service requests, especially those requests that do not involve complex 
clinical decision making and/or input from specialty providers. In 
addition, we recognize that the current in-person requirements for 
unscheduled reassessments in response to service requests can sometimes 
delay access to services because of the time necessary to coordinate 
among the appropriate IDT members and conduct the in-person 
reassessment. Based on the comments we received in response to the 
discussion of PACE participant assessments in the proposed rule, we 
have carefully examined the reassessment requirements to determine 
whether it may be appropriate for a reassessment to be conducted via 
remote technology in some circumstances, as suggested by commenters, to 
ensure timely delivery of services and reduce burden on POs. As a 
result of feedback from the industry recommending that we allow the use 
of remote technology to reduce the burden associated with in-person 
reassessments, and to more efficiently address the care needs of PACE 
participants and afford POs more flexibility, we are revising Sec.  
460.104(d)(2) to specify that POs may use remote technologies to 
perform unscheduled reassessments in some circumstances. Specifically, 
when a participant (or his or her designated representative) makes a 
request to initiate, eliminate or continue a particular service, also 
known as a service request, the appropriate members of the IDT, as 
determined by the IDT, may use remote technologies to conduct 
unscheduled reassessments when the IDT determines that the use of 
remote technology is appropriate, the service request will likely be 
deemed necessary to improve or maintain the participant's overall 
health status, and the participant or his or her designated 
representative agrees to the use of remote technology. While we are not 
eliminating the requirement to perform unscheduled reassessments in 
response to service requests, or to conduct those reassessments in 
person in certain cases, we believe that permitting POs to use remote 
technologies to conduct reassessments under the circumstances described 
above will facilitate appropriate evaluation of PACE participants and 
promote the timely delivery of care and effective communication between 
the IDT and the participant and his or her designated representative. 
The regulation will continue to require POs to conduct a reassessment 
in response to a service request. However, we are revising the 
regulation to allow the appropriate member(s) of the IDT, as identified 
by the IDT, to conduct the reassessment using remote technology in 
specific circumstances. We expect that POs will use remote technology 
for service requests that are necessary to maintain participants' 
health and well-being in the community setting, and may include 
services such as improving sanitary conditions in the home, respite 
care, or items needed to manage and treat non-complex medical 
conditions. Additionally, POs must still conduct an in-person 
reassessment prior to denying a service delivery request and cannot use 
remote technology to conduct these reassessments.
    We want to emphasize that remote technologies should be used on a 
case-by-case basis and may not be appropriate for participants that 
have complex medical needs and/or require a more hands-on approach for 
conducting unscheduled reassessments. We expect IDT members to utilize 
their clinical judgment in determining when remote technologies are 
appropriate and when an unscheduled reassessment should be conducted 
in-person, without using remote technologies.
    In addition, we expect that circumstances may arise that warrant a 
follow-up ``in-person'' reassessment. For example, during an 
unscheduled reassessment initially conducted using remote video 
technology, the IDT may determine that a more extensive evaluation is 
needed that cannot be accomplished through remote technologies. We 
consider remote technologies that allow interactive and immediate 
dialogue between the IDT and the PACE participant, caregiver, and/or 
designated representative to be appropriate for conducting 
reassessments. This includes reassessments via telephone, video

[[Page 25646]]

conferencing, live instant messaging and chat software, or other media 
that allow sufficiently direct and interactive communication to permit 
the IDT to assess the participant's health status and evaluate the need 
for a particular service.
    Based on our audit findings and general oversight of POs, we have 
found that the majority of service requests are approved, and can and 
should be processed by POs in a more expeditious manner. Audits 
conducted during calendar years 2017 and 2018 found that many service 
requests were not processed in a timely manner, leading to delays in 
the provision of the requested service. According to the 2017 PACE 
Annual Report, 55 out of 74 POs were cited for not processing service 
requests in a timely manner. Feedback from the POs suggests that the 
administrative burden associated with conducting in-person 
reassessments often causes delays in processing service requests and 
decision making regarding whether to approve or deny a request. Because 
the majority of service requests are approved, we have determined that 
the use of remote technologies is most appropriate for this type of 
unscheduled reassessment because it will reduce travel times and help 
to more expeditiously connect the IDT to PACE participants in the 
community, especially those who reside in rural settings and/or receive 
the majority of care in settings outside the PACE center due to 
physical or cognitive limitations or participant preference. We also 
believe this policy will help to prevent delays in care for fairly 
straightforward service requests that do not involve complex clinical 
decision making.
    We emphasize that the use of remote technologies will be voluntary 
for participants, and POs cannot mandate that participants and/or their 
caregivers or designated representatives utilize such technologies 
during unscheduled reassessments. If a participant does not wish to 
allow for reassessments to be conducted with remote technologies, the 
IDT must conduct the reassessment in-person without using remote 
technology.
    We encourage POs to utilize remote technologies as appropriate to 
improve communication with participants in all aspects of care 
delivery, however, use of remote technology does not supersede 
requirements that mandate in-person reassessments. This includes 
unscheduled reassessments at the request of the participant or 
designated representative where the PO would deny a request; under 
Sec.  460.104(d)(2), we will continue to require POs to conduct an in-
person reassessment before denying a request from a PACE participant.
    The timeframe for notifying the participant or designated 
representative of the PO's decision to approve or deny the request will 
remain unchanged, and must be done in accordance with Sec.  
460.104(d)(2)(ii) through (iv). We also note that under Sec.  
460.104(e)(4), POs must furnish any approved services in the revised 
plan of care as expeditiously as the participant's health condition 
requires.
    Lastly, at this time we do not believe it would be appropriate to 
conduct initial comprehensive assessments and other periodic 
reassessments through remote technologies. These assessments must 
continue to be performed in-person without the use of remote technology 
because they help to establish and/or maintain the therapeutic 
relationship between PACE participants and/or their caregivers and the 
PO, and we do not want to create circumstances in which the IDT misses 
an opportunity to identify new or emergent participant issues due to 
the inherent limitations of remote technologies, especially in 
circumstances where a more hands-on approach and/or in-person 
visualization is needed to more accurately and effectively evaluate 
participant care needs. In summary, with the exception of IDT member 
requirements in Sec.  460.104(d)(2), we are finalizing all the other 
changes to Sec.  460.104 as proposed. In addition, based on public 
comments, we are further amending the regulation in Sec.  460.104(d)(2) 
to allow for the use of remote technologies to conduct unscheduled 
reassessments in response to service delivery requests when the IDT 
determines that the use of remote technology is appropriate and the 
service request will likely be deemed necessary to improve or maintain 
the participant's overall health status and the participant or his or 
her designated representative agrees to the use of remote technology.
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. As we noted in the proposed rule, 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 proposed to revise this section by 
adding requirements to provide more clarity without changing the 
fundamental aspects of the plan of care process.
    First, we proposed 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.'' We explained 
in the proposed rule that 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 timeframe. We noted that 
this proposed change is consistent with the proposed changes to Sec.  
460.104(b).
    Next, we proposed to add language to clarify which members of the 
IDT are required to develop the plan of care within 30 days. The 
proposed language stated 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. We noted in the 
proposed rule that the added language aimed 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 and would remain responsible for 
developing the plan of care based on the initial discipline-specific 
assessments. We acknowledge here that both Sec. Sec.  460.104(b) and 
460.106(a) mention the development of a plan of care, however, only 
Sec.  460.106(a) includes changes that reference the IDT members in 
Sec.  460.104(a)(2). We clarify here that the intent of Sec.  
460.104(b) is to achieve consensus among all IDT team members in 
developing one single plan of care, and that requirement is unchanged 
in this rule. The changes to Sec.  460.106(a) specify which IDT members 
must be involved in the development of the plan of care based on their 
expertise and insights gained from conducting those comprehensive 
initial assessments, while Sec.  460.104(b) maintains the requirement 
that the single plan of care must have the consensus of all IDT members 
through team discussions with the full IDT as indicated in the 
regulation and preamble discussions. In other words, while the eight 
disciplines responsible for conducting initial assessments will 
actively develop the proposed plan of care, the care plan

[[Page 25647]]

cannot be finalized without a team discussion with the full IDT 
included in Sec.  460.102(b)(1) through (11) to gather input from all 
remaining IDT members and consensus from the full team. We believe that 
all members of the IDT bring valuable perspectives to this process and 
therefore reiterate that the changes to the IDT members required to 
develop the plan of care in Sec.  460.106(a) do not impact the 
requirement in Sec.  460.104(b) that all IDT members agree upon the 
plan of care through team discussions.
    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 noted in the proposed rule that we believed 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. We stated that current regulations do not 
explicitly require POs to follow industry standards in developing and 
following care plan interventions. We noted that we believed adding new 
requirements will help POs to effectively and efficiently identify and 
address each participant's care planning needs. Therefore, we proposed 
to add three new requirements to Sec.  460.106(b). In paragraph (b)(3), 
we proposed 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 
proposed to require that the plan of care identify each intervention 
and how it will be implemented. We stated in the proposed rule that 
interventions should be targeted, specific actions implemented to 
improve a participant's health care outcome. And finally, in paragraph 
(b)(5), we proposed to require that the plan of care identify how each 
intervention will be evaluated to determine progress in reaching 
specified goals and desired outcomes.
    The following is a summary of the public comments we received on 
the proposed changes to the plan of care requirements in Sec.  460.106 
and our responses to comments.
    Comment: Overall, commenters supported the proposed revisions to 
Sec.  460.106. A few commenters urged CMS to provide exceptions for 
extenuating circumstances (such as when a participant is hospitalized 
or out of the service area during the initial 30 days of enrollment, or 
services are disrupted due to catastrophic weather-related events) to 
the requirement for developing a comprehensive plan of care within 30 
days of the date of enrollment.
    Response: In consideration of the supportive comments, we are 
finalizing this provision as proposed. However, we wish to address the 
recommendation regarding an exception to the requirement for developing 
a comprehensive plan of care within 30 days of the date of enrollment 
due to extenuating circumstances. We recognize that there may be 
circumstances, albeit rare, that would prevent a PO from conducting a 
timely comprehensive assessment for newly-enrolled PACE participants. 
However, this is a fundamental part of care planning and is key to a 
PO's ability to fulfill its mission and provide quality care to its 
participants. Therefore, it is our expectation that POs will comply 
with the 30-day timeframe in Sec.  460.106(b) and make every effort to 
conduct timely assessments in order to develop and begin to implement 
the individualized plan of care in a timely manner. In those rare 
situations in which the circumstances prevent a timely assessment, and 
development of a plan of care, the PO is expected to document the 
specific circumstances and detail the steps taken to provide immediate 
care as needed and complete the assessment and plan of care as soon as 
feasible given the circumstances.

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 proposed to combine paragraphs (b)(1)(i) and (b)(1)(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 proposed 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.'' The changes to Sec.  
460.112(b) are not substantive in nature but are intended to simplify 
the regulatory 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 explained in the proposed rule that 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 proposed 
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 PO 
receives the participant's notice of voluntary disenrollment as set 
forth in Sec.  460.162(a). As discussed in the proposed rule (81 FR 
54686) and section III.J.5. of this final rule, we proposed 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. We explained in the proposed rule 
that, 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.
    We received no comments on our proposed revisions to Sec.  460.112, 
and therefore, we are finalizing this provision as proposed.
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 the

[[Page 25648]]

proposal regarding marketing materials under Sec.  460.82(c)(1), 
discussed in section III.F. of this final rule, we proposed 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 we explained in the proposed rule, we 
established a similar 5 percent language threshold for marketing 
materials in the MA program (Sec.  422.2264(e)), and we believed this 
threshold is also appropriate for PACE because of the similarities in 
population make-up between the MA program and PACE. Moreover, we noted 
in the proposed rule, we strive 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 proposed 
to add the word ``PACE'' before the words ``participant rights'' to 
specify that participant rights specific to PACE must be displayed. We 
explained in the proposed rule that 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. As proposed, the language would explicitly state that 
the PACE participant rights must be posted in the PACE center. We 
received no comments on our proposed changes to Sec.  460.116, and 
therefore, we are finalizing the changes as proposed.
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) 
to 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) (71 FR 71292, 71336, and 71337). Therefore, we proposed 
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).
    We did not receive any comments on our proposed technical change to 
Sec.  460.122(c)(1). Therefore, we are finalizing this provision as 
proposed.

I. Subpart H--Quality Assessment and Performance Improvement

    As discussed in section III.A. of this final rule, to update the 
terminology to comport with that used in other CMS programs, we 
proposed 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 that we 
proposed 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 proposed 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. As we noted in the proposed rule, this change 
would leave no requirements under Sec.  460.140, so we also proposed 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 
proposed 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 and performance 
improvement'' with the term ``quality improvement''), we proposed to 
revise paragraph (a) to require a PO to have a written quality 
improvement plan that is collaborative and interdisciplinary in nature. 
As we explained in the proposed rule, the PACE program is unique in its 
structure in that it has a collaborative and interdisciplinary approach 
in treatment of PACE participants. We stated that we believed 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 PTs). 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 explained in 
the proposed rule that we believed requiring a collaborative and 
interdisciplinary quality improvement plan will help POs identify and 
improve PACE quality issues more appropriately. Therefore, we proposed 
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)
    As discussed in section III.I.1. of this final rule, we proposed to 
redesignate the content of Sec.  460.140 to Sec.  460.130, and 
therefore, we proposed to remove Sec.  460.140.
    The following is a summary of the public comments we received on 
the proposed changes to the quality requirements in subpart H and our 
responses to comments.
    Comment: We only received comments on the proposed revision to 
Sec.  460.132. The many comments we received were all in favor of the 
proposed revision. Commenters believed that the term ``collaborative 
and interdisciplinary in nature'' accurately describes the quality 
improvement plans that POs have under the current requirements. One 
commenter recommended that CMS also require POs to solicit ongoing 
collective input from individuals and their families and caregivers 
when developing quality improvement plans. Another commenter urged CMS 
to put additional protections in place to ensure that any quality 
improvement plan is comprehensive and accounts for care provided across 
the ``care'' continuum and in various settings.
    Response: We appreciate the comments and are finalizing the

[[Page 25649]]

modifications to Sec.  460.132 and the other changes to subpart H as 
proposed. Regarding the two recommendations we received on quality 
improvement plans, we will take this input into account as we consider 
future subregulatory guidance or rulemaking on PACE quality 
requirements.

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 proposed rule (81 FR 54687) and 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 proposed 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.
    A discussion of the public comments we received on this proposal, 
and our responses to those comments, appears below.
    Comment: Several commenters expressed support for our proposal to 
codify the longstanding policy of using criteria developed by the SAA 
to determine if an individual's health or safety would be jeopardized 
by living in a community setting. Another commenter recommended that we 
develop a new PACE eligibility criterion for individuals who are 
institutionalized but have a realistic potential to return to their 
homes. Another commenter requested that CMS work with states to ensure 
that SAA criteria are sufficiently clear, so as to ensure consistent 
application.
    Response: We thank the commenters for their support. We did not 
propose any additional criteria for PACE eligibility, and therefore, we 
believe the comment regarding development of a new PACE eligibility 
criterion is outside of the scope of this regulation. With regard to 
the request for us to work with states to ensure that the SAA criteria 
they develop are clear, we believe that since the states are 
responsible for developing the criteria, it is also the states' 
responsibility to ensure the criteria are sufficiently clear.
    Comment: One commenter requested that in developing the final rule 
we take into consideration the systems and protocols implemented by 
states to process PACE eligibility determinations and that we allow for 
flexibility in our requirements and accommodate the various state 
protocols, some of which may provide beneficiary protections in 
addition to what CMS requires.
    Response: We did not propose any changes to the requirements for 
determining eligibility for PACE, and therefore, we believe this 
comment is outside of the scope of this regulation. We are finalizing 
this provision as proposed.
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 proposed 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.
    We received no comments on our proposal to require that 
notification to CMS and the SAA be in the form and manner specified by 
us; therefore, we are finalizing this provision as proposed.
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 a 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 explained in the proposed rule that we were concerned 
about possible misinterpretations of this provision, and therefore, we 
proposed 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.
    A discussion of the public comment we received on this proposal, 
and our response to this comment, appears below.
    Comment: One commenter expressed support for our proposal and urged 
us to ensure that messaging regarding the potential for disenrollment 
be clear and easy to understand in PACE participant materials.
    Response: We thank the commenter for its support. We will take the 
suggestion regarding clear messaging into consideration when developing 
additional subregulatory guidance on PACE disenrollment and beneficiary 
protections. We are finalizing this provision as proposed.
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 Sec.  460.156(a)(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 
proposed 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. As we noted in the proposed rule, 
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

[[Page 25650]]

based on the risk that a beneficiary's personal information may be lost 
or exposed.
    A discussion of the public comments we received on this proposal, 
and our responses to those comments, appears below.
    Comment: Commenters were generally supportive of our proposal to 
delete the sticker requirement and revise the PACE membership card 
requirement. One commenter stated that this change may result in POs 
having to reissue all PACE membership cards, which could impose 
additional administrative burdens on the POs.
    Response: We appreciate the commenters' support for this change. 
With regard to the potential for additional administrative burden, we 
note that this change relieves POs of the requirement to produce and 
distribute additional materials (that is, the stickers) for 
participants' Medicare and Medicaid cards. Moreover, POs are already 
required to provide PACE membership cards. While the new requirement to 
include the PO's phone number on the PACE membership card will affect 
some POs that do not currently include contact information on their 
cards, we believe most POs include this information already. Further, 
the elimination of the sticker requirement will lessen ongoing burden 
and costs for POs. Therefore, we are finalizing this provision without 
modification.
    Comment: One commenter requested that CMS revise the enrollment 
effective date requirement in Sec.  460.158 to enable enrollment to 
become effective on the date of the signed enrollment agreement. The 
commenter stated that the current enrollment period (effective the 
first day of the calendar month following the date of the executed 
enrollment agreement) causes delays in obtaining PACE services and PACE 
participant and family dissatisfaction.
    Response: Consistent with the PACE Protocol (64 FR 66300), we 
established in Sec.  460.158 that a participant's enrollment in the 
program is effective the first day of the calendar month following the 
date the PO receives the signed enrollment agreement. We did not 
propose any changes to Sec.  460.158 in the proposed rule, and 
therefore, we believe this comment about revising the enrollment 
agreement effective date is outside the scope of this rule. In 
addition, we note that enrollment of individuals and payment to POs is 
based on whole calendar months. In other words, Medicare and Medicaid 
capitation payments are paid to a PO for an entire month and are not 
pro-rated. Medicare and Medicaid capitation payment in whole month 
increments is consistent with the requirement that enrollment in a PO 
is always effective on the first calendar day of a month and 
disenrollment is always effective on the last calendar day of a month. 
Given that both enrollment and Medicare and Medicaid payment occur in 
whole month increments, we would be unable to accommodate such a 
request for a change to Sec.  460.158.
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 proposed to 
retain this language in new paragraph (b) and add new paragraphs (a) 
and (c). 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 PO 
receives the notice. To align with the proposed changes in Sec.  
460.112(c)(3) and our current practices for Medicare health plan 
disenrollment, in paragraph (a), we proposed 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.
    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). As we stated 
in the proposed rule, through record review during on-site audits and 
follow-up regarding 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 a contractor of the PO in an effort to reduce 
costs for the PO. To help prevent this practice, we proposed 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 
noted in the proposed rule 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.
    A discussion of the public comments we received on our voluntary 
disenrollment proposals, and our responses to those comments, appears 
below.
    Comment: One commenter requested that we create an exception to the 
voluntary disenrollment effective date for participants electing the 
Medicare hospice benefit and allow voluntary disenrollments for those 
individuals to be effective prior to the first day of the month 
following the date the PO receives the participant's notice of 
voluntary disenrollment. The commenter stated that the current 
requirement may delay the start of hospice services and can lead to 
dissatisfaction for participants and their family members.
    Response: Enrollment of individuals and payment to POs is based on 
whole calendar months. In other words, Medicare and Medicaid capitation 
payments are paid to a PO for an entire month and are not pro-rated. 
Medicare and Medicaid capitation payment in whole month increments is 
consistent with the requirement that enrollment in a PO is always 
effective on the first calendar day of a month and disenrollment is 
always effective on the last calendar day of a month. Given that both 
enrollment and Medicare and Medicaid payment occur in whole month 
increments, we are unable to accommodate the request for an exception 
for participants electing the Medicare hospice benefit. Therefore, we 
are finalizing the proposed change to Sec.  460.162(a) without such an 
exception.
    Comment: Several commenters opposed the proposal to revise Sec.  
460.162 to specify 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. The 
commenters requested that we retain the current regulation, which 
simply states that a PACE participant may voluntarily disenroll from 
the program without cause at any time. One commenter expressed concern 
that states' enrollment and disenrollment systems may not allow for 
disenrollment from a PACE program to be effective the first day of the 
following month if notice is given beyond a certain day of the

[[Page 25651]]

month. This commenter stated that while it is possible to disenroll a 
Medicare-only beneficiary effective the first day of the month 
following notification, disenrollment of Medicaid-only and dual-
eligible PACE participants involves states' Medicaid systems, which may 
require notification to be provided in advance of a ``cutoff date'' in 
order for a disenrollment to be effective the first day of the 
following month. In these situations, the commenter stated, 
disenrollment requests received from Medicaid-only and dual-eligible 
PACE participants after a cutoff date may be delayed until the first 
day of the second month following receipt.
    Response: We note that sections 1894(c)(5)(A) and 1934(c)(5)(A) of 
the Act state that PACE participants shall be permitted to voluntarily 
disenroll without cause at any time. After carefully considering the 
commenters' concerns, we respectfully disagree that concerns about 
state enrollment and disenrollment systems outweigh the need to protect 
participants by requiring POs to effectuate participant requests for 
disenrollment from the PO in an expeditious manner. While we appreciate 
the commenter's concern about state systems, we believe that it would 
be inappropriate to require that some PACE participants who wish to 
leave PACE remain enrolled for an additional month because of the 
inability of a state Medicaid agency to react to the participant's 
request in a timely manner. Delaying the effective date of a valid 
disenrollment request should not be the course of action when a 
participant's request for disenrollment is received toward the end of a 
month. We also note that imposing an early cutoff date creates 
unnecessary delays for participants who do not have Medicaid, even 
though the processing of their request does not involve any of the 
state systems issues described by the commenter. We believe 
establishing a policy of differing disenrollment effective dates based 
on PACE participants' eligibility for Medicaid and when they choose to 
submit the disenrollment request to the PO, would be challenging for 
POs to successfully implement and potentially confusing to 
participants. We also believe it would result in inequitable treatment 
among PACE participants. We further note that MA organizations and 
Medicare PDP sponsors have a longstanding requirement to effectuate 
voluntary disenrollment requests on the first day of the following 
month, regardless of when the request is received during the month or 
whether the beneficiary is eligible for Medicaid. We have 
operationalized this requirement for PACE 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. We believe that Medicare participants who have 
chosen to receive their Medicare health and drug benefits through PACE, 
instead of through an MA plan or a Medicare PDP, should not have their 
disenrollment delayed solely because they submit their request for 
disenrollment in the latter part of a month.
    Comment: One commenter expressed support for the proposed 
requirement that POs ensure their employees or contractors do not steer 
or encourage disenrollment of PACE participants due to a change in 
health status. In addition, this commenter requested that we add 
``functional, cognitive, or psychosocial'' as health status changes for 
which disenrollment should not be encouraged. In support of the 
comment, the commenter referenced the expansion of the non-
discrimination provisions contained within Sec.  460.40(a)(3) to 
include prohibitions on discrimination on the basis of ``functional, 
cognitive, or psychosocial status.''
    Response: We appreciate the comment and agree that these sections 
of the PACE regulations should be consistent. However, as we explain in 
our discussion of Sec.  460.40(a)(3) in section III.E.1 of this final 
rule, we inadvertently included the reference to ``functional, 
cognitive, or psychosocial status'' in the proposed rule and have 
restored the current language in this final rule. While we may consider 
revising the description of health status in future rulemaking, we are 
not doing so in this rule, and the reference to ``health status'' will 
remain in both Sec.  460.40 and Sec.  460.162. Therefore, we are 
finalizing this proposed change to Sec.  460.162(c) without 
modification.
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 proposed 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 PO sends notice of the disenrollment to the 
participant. For example, if a PO 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 
proposed to add this requirement to make it clear when a participant's 
involuntary disenrollment is effective. Additionally, we proposed to 
add this requirement to protect participants' due process, as our 
regulations and guidance do not currently include an advance notice 
requirement. We noted in the proposed rule that the PO must not send 
the disenrollment notice until the SAA has reviewed the involuntary 
disenrollment and determined that the PO has adequately documented 
acceptable grounds for disenrollment, as required by current paragraph 
(e) (proposed paragraph (f)). We stated that we believed 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, we noted in the proposed rule, 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 later. 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 proposed to redesignate 
(a)(1) as (b)(1) and 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 explained 
in the proposed rule that we proposed the change because we believed 
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. We noted that the revision would

[[Page 25652]]

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 proposed to redesignate paragraphs (a)(2) to (a)(6) as 
(b)(4) to (b)(8) and to add two additional reasons for involuntary 
disenrollment in new paragraphs (b)(2) and (b)(3). In paragraph (b)(2), 
we proposed 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 spend-down 
liability or any amount due under the post-eligibility treatment of 
income processes as permitted under Sec.  460.182 and Sec.  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 spend-down 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 spend-down 
obligation and post-eligibility treatment of income. Section 460.154(g) 
requires that a participant who 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 spend-down liability and amount due under 
the post-eligibility treatment of income process. We explained in the 
proposed rule that, operationally, a PO needs the ability to 
involuntarily disenroll participants based on nonpayment of these 
amounts. We noted that 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 stated that we understood 
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. We 
explained that we have previously addressed this issue for many POs 
through approval of waivers, but we believed addressing it through a 
regulatory change is more efficient and is permitted under the PACE 
statutory authority. Moreover, we noted, as with any involuntary 
disenrollment, an involuntary disenrollment based on nonpayment of 
applicable Medicaid spend-down 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 
grounds for disenrollment before it becomes effective.
    In paragraph (b)(3), we proposed to add language that would permit 
involuntary disenrollment in situations where the participant's 
caregiver engages in disruptive or threatening behavior. We also 
proposed to redesignate current paragraphs (b)(1) and (b)(2) as 
paragraphs (c)(1)(i) and (c)(1)(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 proposed 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. We noted in the proposed rule that this would include any 
family member involved in the participant's care. We stated that we 
believed 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. We also noted that 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 believed could 
include disruptive or threatening behavior of a caregiver (64 FR 
66300).
    We explained in the proposed rule that, 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 
gained more experience with PACE, we realized 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. We noted in the proposed rule that, 
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. We stated that we have 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 in which 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. We 
noted in the proposed rule that the proposed revision would obviate the 
need for those waivers, thereby reducing the burden on POs, states, and 
CMS.
    We emphasized in the proposed rule that a PO must only pursue 
involuntary 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 set forth 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 
programs for which the participant is eligible and must make sure 
medical records are available to the new providers. We explained in the 
proposed rule that this will help ensure that the participant receives 
needed care. We noted that we did not propose 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

[[Page 25653]]

caregiver's noncompliance with the participant's plan of care or terms 
of the PACE enrollment agreement.
    A discussion of the public comments we received on our involuntary 
disenrollment proposals, and our responses to those comments, appears 
below.
    Comment: Two commenters expressed support for our proposed 
clarification of the effective date of an involuntary disenrollment and 
the new proposed requirement for advance notice of the disenrollment. 
Another commenter expressed general support for these proposals but 
requested that we waive the 30-day advance notice requirement when a 
PACE participant is out of the PO's service area for more than 30 days 
without giving prior notice to the PO or obtaining approval from the 
PO.
    Response: We appreciate the commenters' support for our proposals; 
however, we do not believe it would be appropriate to waive the advance 
notice requirement in circumstances where a participant is out of the 
PO's service area for a specified time period. We believe the proposed 
requirement to notify a participant in advance of the PO's decision to 
involuntarily disenroll the participant is an important protection for 
all participants, and while we agree that a participant's temporary 
absence from the service area may raise coverage challenges, we are 
concerned the lack of advance notice would result in some erroneous 
disenrollments, given that the participant may not have an opportunity 
to address any misunderstanding as to the participant's location before 
the disenrollment takes effect. In the absence of a requirement for 
advance notice, a PO potentially could issue a disenrollment notice on 
the last day of month and effectuate the disenrollment the next day. We 
also note that beneficiaries enrolled in MA plans, Medicare PDPs and 
Medicare cost plans are provided advance notice of an involuntary 
disenrollment. We believe that Medicare participants who have chosen to 
receive their Medicare health and drug benefits through PACE, instead 
of through an MA plan, Medicare PDP, or Medicare cost plan should have 
the same protection that advance notice of involuntary disenrollment 
affords.
    Comment: One commenter recommended that CMS consider incorporating 
into the PACE regulations the grievance and appeals processes available 
to Medicaid managed care beneficiaries in involuntary disenrollment 
situations.
    Response: While there are some similarities between the regulatory 
requirements for Medicaid managed care and PACE, they are not 
completely aligned with regard to how grievances and appeals are 
defined. We have established specific requirements for PACE regarding 
grievances (defined in Sec.  460.120 as a complaint expressing 
dissatisfaction with service delivery or the quality of care furnished) 
and appeals (defined in Sec.  460.122 as a participant's action taken 
with respect to the PO's noncoverage of, or nonpayment for, a service). 
Moreover, we have specified the limited reasons that a participant may 
be involuntarily disenrolled from PACE in Sec.  460.164, and we require 
that before an involuntary disenrollment is effective, the SAA must 
review and determine in a timely manner that the PO has adequately 
documented acceptable grounds for the disenrollment. The state must 
provide an appeal avenue for both Medicaid and non-Medicaid 
participants related to involuntary disenrollments. Since Medicare-only 
participants do not have access to the State Fair Hearings process, 
states must develop an administrative review process for PACE 
participants who are not eligible for Medicaid to address appeals of 
involuntary disenrollments. And while the PACE regulations do not 
require the PO to establish an appeal process for an involuntary 
disenrollment, they are not prohibited from doing so. Because PACE 
already requires prior state review of a proposed involuntary 
disenrollment, as well as an avenue of resolution in response to a PO's 
action to involuntary disenroll a participant, we do not believe it is 
necessary to incorporate additional protections based on Medicaid 
managed care requirements.
    Comment: One commenter expressed concern about the potential for 
POs to involuntarily disenroll participants considered ``difficult to 
serve'' based on the actions of their caregivers. However, the 
commenter noted that its concerns are mitigated by the expanded anti-
discrimination protections proposed in Sec.  460.40. The same commenter 
stated that PACE participants should not be held responsible for the 
actions of their caregivers unless the participant is involved to some 
extent in the disruptive behavior. Two commenters requested that we 
provide guidance to POs for instances in which a caregiver's behavior 
is viewed as potentially jeopardizing the health or safety of the 
participant, or the safety of others. Another commenter opposed 
involuntary disenrollment based on caregiver behavior, viewing such 
action as punitive to the participant and creating the potential for 
adverse health and safety issues. This commenter requested that POs be 
directed to find alternative arrangements instead of disenrolling the 
participant.
    Response: We do not believe that involuntary disenrollment based on 
the disruptive behavior of a caregiver or family member should be 
contingent upon the involvement or encouragement of the participant. 
Due to the type of individual eligible for and enrolled in a PO (that 
is, frail elderly meeting a nursing home level of care) and the type of 
services needed, there is a greater prevalence of involvement by 
caregivers in most aspects of the participant's care. In addition, 
there may be participants who are entirely dependent on a caregiver or 
family member to obtain or arrange for care or services, leading to a 
greater potential for disruptive or threatening behavior on the part of 
the caregiver that hinders the PO's ability to provide services to the 
participant or to others or potentially jeopardizes the health or 
safety of the participant, or the safety of others. We believe such 
instances, while rare, may necessitate the involuntary disenrollment of 
the participant for the safety of the participant, the caregiver or 
others. We note that all PO requests for involuntary disenrollment due 
to disruptive or threatening behavior are reviewed for appropriateness 
by the SAA prior to the disenrollment occurring. We expect the PO to 
take appropriate action in a manner consistent with the legal 
requirements applicable to the jurisdictions in which it operates, 
including state laws relating to mandatory reporting of elder abuse, 
whenever abuse or neglect of a participant may have occurred. We expect 
POs to attempt alternative arrangements; however, as we stated in the 
proposed rule, we understand that is not always possible. We thank the 
commenters for their concern. Subsequent to the publication of this 
final rule, we will provide guidance to POs for instances in which a 
caregiver's behavior is viewed as potentially jeopardizing the health 
or safety of the participant, or the safety of others.
    Regarding the comment referring to expanded anti-discrimination 
protections, as we discussed previously in sections III.E.1 of this 
final rule, we inadvertently included a reference to ``functional, 
cognitive, or psychosocial status'' in Sec.  460.40(a)(3) in the 
proposed rule, even though our intention was solely to redesignate the 
paragraph, and we have restored the existing language in this final 
rule.
    Comment: One commenter requested that we establish a process for 
expedited

[[Page 25654]]

SAA review of a PO's request for involuntary disenrollment on the basis 
of threatening or disruptive behavior and that this process not exceed 
30 days. The same commenter suggested that CMS provide advance notice 
to PACE participants when an involuntary disenrollment request is filed 
with the SAA and that the PO begin transferring the participant to fee-
for-service (that is, non-PACE) providers pending final SAA 
determination.
    Response: We agree that advance notification to participants of the 
potential for involuntary disenrollment based on caregiver behavior may 
be helpful; however, we did not propose a new requirement for a notice 
that would be issued to the participant when the PO submits a request 
for involuntary disenrollment to the SAA. We also did not propose the 
creation of a new option for an expedited SAA review of requests for 
involuntary disenrollment or a new process in which participants are 
transferred to non-PACE providers prior to the SSA approving the 
request for involuntary disenrollment. While we believe these 
recommendations are outside the scope of this rule, we will take these 
comments under consideration for future subregulatory guidance or 
rulemaking.
    Comment: Commenters were supportive of our proposal to include as a 
basis for involuntary disenrollment the disruptive or threatening 
behavior of family members that are involved in the participant's care 
and involuntary disenrollment based on nonpayment of applicable 
Medicaid spend-down liability or any amount due under the post-
eligibility treatment of income process.
    Response: We appreciate the support expressed by the commenters to 
establish these additional bases for involuntary disenrollment. After 
considering the comments, we are finalizing those proposed changes, as 
well as our other involuntary disenrollment proposals without 
modification.
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 proposed to change the title 
to ``Disenrollment responsibilities'' to better describe the subject of 
this section.
    We received no comments on this proposal, and therefore, we are 
finalizing it without modification.
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 proposed to change ``in a 
timely manner'' to ``within 30 days,'' which would help ensure a smooth 
transition for participants. We proposed 30 days because we believed 
this would balance 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.
    Comment: One commenter expressed support for our proposal to 
require POs to make appropriate referrals and ensure medical records 
are made available to new providers ``within 30 days,'' as opposed to 
in a ``timely manner.'' Another commenter requested that we clarify the 
actions to which the proposed timeframe refers.
    Response: We did not propose any changes to the actions the PO must 
take to facilitate a participant's reinstatement in other Medicare and 
Medicaid programs after disenrollment. We believe the actions to which 
the 30-day timeframe applies are adequately specified in the 
regulation; just as the current timeliness requirement applies to both 
making appropriate referrals and ensuring medical records are made 
available to new providers, the PO will be expected to carry out both 
of those actions ``within 30 days'' once the final rule takes effect. 
We are finalizing this provision as proposed.

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. As we explained in the 
proposed rule, 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 (b)(4). Consistent with 
the revisions to Sec.  460.32(a)(12), we proposed 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. We explained in the 
proposed rule that 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 specifying the capitation amount in the program 
agreement is sometimes operationally impractical. Additionally, we 
noted in the proposed rule, 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 stated that we believed 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 we believed it would 
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 also proposed to redesignate paragraphs (b)(3) and (b)(4) as 
paragraphs (b)(4) and (b)(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

[[Page 25655]]

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. We explained in the 
proposed rule that 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 noted in the proposed rule 
that we proposed 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 believed 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 proposed 
that the monthly capitation amount be consistent with efficiency, 
economy, and quality of care. We explained in the proposed rule that, 
by efficiency and economy, we meant 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. We noted that 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. We stated that 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 solicited comments about other rate methodologies 
we may consider requiring for Medicaid capitation payment amounts for 
PACE. We requested 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. We provided as an example that Medicaid rates for many of the 
state financial alignment demonstrations require actuarially sound 
rates. We noted, 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 did not propose changes to the 
rate methodology for Medicaid capitation payments, but we stated that 
we would use public comment to inform possible future PACE rulemaking 
concerning Medicaid capitation payments.
    The following is a summary of the public comments we received on 
the proposed provisions regarding Medicaid payment and our responses to 
comments.
    Comment: All commenters supported the proposal to incorporate the 
state's Medicaid rate methodology or the Medicaid rates into the PACE 
program agreement instead of requiring the actual rates. Most 
commenters supported the proposal without reservation. However, one 
commenter stated that while the commenter supports the Medicaid rate 
methodology proposal, it seems to remove the incentive for the state to 
negotiate the Medicaid rates in a timely manner.
    Response: We appreciate the support for this proposed change. In 
response to the comment expressing concern that states will have less 
incentive to update and negotiate their rates in a timely manner, we 
will take this into consideration when issuing updated guidance to 
states regarding the Medicaid rate setting process.
    Comment: All commenters supported the proposal to add the 
requirement that Medicaid PACE capitation rates be sufficient and 
consistent with efficiency, economy and quality of care. However, two 
commenters recommended that CMS use alternate language instead of 
``sufficient'', such as ``reasonable and appropriate'' or ``reasonable, 
appropriate and attainable'', which is part of the standard in Sec.  
438.4(a) for actuarially sound capitation rates in Medicaid managed 
care. One commenter recommended defining ``sufficient'' in regulation 
to mean 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. Two commenters also 
requested details or guidance on how the ``lower bound'' would be 
calculated. Two commenters suggested requiring sufficient language in 
the rate method description to enhance transparency of the Medicaid 
rate setting process. Two commenters recommended requirements to ensure 
Medicaid rates take into account the full financial risk for all 
Medicaid covered services, including nursing home care, without a 
restriction or adjustment for length of stay. One commenter recommended 
that the final rule promote use of experience and risk based 
methodologies in general, and support state flexibility in tailoring 
rate setting methods to reflect state circumstances. Another commenter 
recommended allowing direct use of appropriate adjusted experience from 
Medicaid managed LTC programs in addition to or in place of FFS 
experience or PACE experience.
    Response: We appreciate the overall support for this proposed 
change. In response to the commenter that recommended we modify 
language in the final rule to clarify that rates should be actuarially 
sound, we are not able to require that PACE rates be actuarially sound 
because actuarially sound rates could exceed the amount that was 
otherwise paid by the state, if the individuals were not enrolled in 
PACE, and PACE rates are required by statute to be less than the amount 
that would have otherwise been paid if participants were not in PACE. 
In response to the commenters that recommended alternative language to 
``sufficient and consistent with efficiency, economy and quality of 
care'', which is terminology that governs Medicaid fee-for-service 
payments at section 1902(a)(30)(A) of the Act, and instead recommended 
language consistent with established standards used in Medicaid managed 
care, we agree this standard would be more appropriate because PACE as 
a capitated model is more aligned with Medicaid managed care than 
Medicaid fee-for-service. In response to commenters' concerns regarding 
transparency of the state's rate method,

[[Page 25656]]

and that rates take into account the full financial risk that POs 
assume, we will take that into consideration when issuing updated 
guidance to states regarding the Medicaid rate setting process. In 
response to the commenter questioning how the ``lower bound'' will be 
defined, we did not intend to establish or define a specific lower 
bound for PACE Medicaid rates, but would expect the state to be able to 
demonstrate that the Medicaid rates comply with regulatory 
requirements. In response to the comment regarding state use of 
Medicaid managed LTC experience in development of PACE rates, the 
current regulation requires that the Medicaid rates be less than the 
amount that would otherwise been paid under the state plan if the 
participants were not enrolled in PACE, among other requirements. That 
amount is not limited to a fee-for-service comparable population, and 
states are not prohibited from using Medicaid managed care data in 
determining the amount that would otherwise have been paid, but they 
must be able to demonstrate that the amount meets the existing PACE 
requirements. Recognizing that more states will be using managed care 
experience for their comparable population, we will take that into 
consideration when issuing updated guidance to states regarding the 
Medicaid rate setting process in PACE. We appreciate the overall 
support for the proposed changes. While we are finalizing 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, we have decided not to 
finalize the proposed language that rates be sufficient and consistent 
with efficiency, economy and quality of care. However, we appreciate 
all of the comments and feedback and will take this input into account 
as we consider any changes during future rulemaking.
    Comment: Regarding alternative rate methodologies for PACE Medicaid 
payments, some commenters suggested: Using Grade of Membership 
methodology to identify a long-term-care admission cohort; permitting a 
``tiered'' rate structure that Medicare-only individuals would be 
required to pay based on services provided under the program; requiring 
actuarial certification of rates; requiring that rates related to LTSS 
be consistent across Medicaid and PACE; and that CMS develop a 
workgroup with stakeholders including the National PACE Association and 
POs regarding alternate methods for rate setting. Two comments related 
to the Medicare PACE capitation amounts and suggested: That Medicare 
rates for POs be consistent with Medicare Medicaid Plans (MMP) or Dual 
Special Needs Plans (DSNP) to create a level playing field; and that 
changes to PACE Medicare rates be made to align with MA rules.
    Response: We appreciate the feedback provided in response to our 
request for comments about other rate methodologies that may be applied 
to PACE Medicaid payments. While we did not propose changes to the rate 
methodology for Medicaid capitation payments, we will use the public 
comments received to inform possible future PACE rulemaking concerning 
Medicaid payment. We did not propose any changes to the Medicare 
payment requirements under Sec.  460.180, and therefore, we believe the 
recommendations for changes to the Medicare PACE rates are outside of 
the scope of this rule.

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 on-site 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 are more specific than those provided in statute, 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 proposed to revise these provisions of the existing 
regulations.
    As we explained in the proposed rule, 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 noted in the proposed 
rule that we no longer believed that the activities listed in Sec.  
460.190(b)(1)(i) through (b)(1)(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 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. We 
stated in the proposed rule that the use of this technology has saved 
significant resources in travel dollars and staff downtime (experienced 
while they are traveling). Therefore, we proposed 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 (b)(1)(v).
    In addition, we proposed revisions to the language at Sec.  
460.190(b)(1) and a new paragraph in Sec.  460.190(b)(2) to more 
closely mirror the text of statute. We noted in the proposed rule that 
the proposed 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. We 
explained that greater flexibility to conduct portions of the review 
remotely would allow our reviews of POs to gain some of the same

[[Page 25657]]

efficiencies that CMS currently achieves through the use of web-based 
technologies in other programs. Specifically, we proposed 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 proposed 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 
proposed to retain the language found in current (b)(2), (b)(3), and 
(b)(4), but proposed to redesignate these as (b)(3), (b)(4), and 
(b)(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. We 
explained in the proposed rule that 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 stated that 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 noted in the proposed rule that we believed 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 proposed 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 SAA, 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. We 
stated in the proposed rule that this risk assessment would rely 
largely on the organization's past performance and ongoing compliance 
with CMS and state requirements. However, we proposed that the risk 
assessment also 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. We noted that 
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 and/or self-reported adverse events, also known as PACE 
Quality Data, as necessary. We stated that we believe using MA and Part 
D is an appropriate model on which to base PACE audits, because like in 
MA and Part D, a PO is responsible for providing a participant's 
benefits in accordance with our regulations. We also explained that 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 noted that we believed 
this will be a useful tool in selecting organizations for audit and 
will 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, as we stated in the 
proposed rule, there has been some uncertainty as to which 
circumstances trigger the requirement that a PO take action to correct 
deficiencies. We proposed 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 proposed 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 proposed 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)
    As we stated in the proposed rule, PACE participants are a frail 
and vulnerable population, and we recognized 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. However, we explained in the proposed rule that we believed 
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 proposed 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 believed they should be fully 
aware of the PO's performance and level of compliance with statutory 
and regulatory requirements. We also encouraged POs to make review 
results available to other potential participants and the public, for 
example, by releasing a summary of the reports online. We stated in the 
proposed rule that posting comprehensive review results online would 
satisfy PO requirements under Sec.  460.196(d).
    The following is a summary of the public comments we received on 
the proposed provisions regarding federal and state monitoring and our 
responses to comments.
    Comment: The majority of commenters supported our proposal to no 
longer mandate an onsite audit every 2 years for every PO following the 
3-year trial period. However, while supportive of our proposal to 
change how often we audit POs following the trial period, multiple 
commenters were concerned with allowing POs to go too long without an 
audit. These commenters thought that CMS should set an outer limit (or 
maximum length of time) that a PO can go without having an audit. These 
commenters referenced the frail population in PACE as a reason to 
ensure that POs get an audit on a regular basis. These commenters

[[Page 25658]]

suggested a maximum length of time between audits ranging from 3 to 6 
years.
    Response: We agree with the commenters that there should be a 
defined length of time that a PO can go without an audit following the 
trial period. We do not believe that a maximum time limit needs to be 
implemented through regulation as it is an internal decision and we 
need operational flexibility to modify this timeframe when necessary 
based on how the PACE program changes through the years. Therefore, we 
intend to implement internal guidelines to ensure that POs are audited 
with an appropriate frequency, but not modify the proposed regulatory 
text. Additionally, we believe by utilizing a risk assessment for audit 
selection, we will be able to appropriately safeguard this frail 
population by targeting, as often as necessary, those POs that CMS 
believes may present a higher risk to participants' health and safety.
    Comment: A few commenters, although not against us finalizing the 
proposed regulatory changes to monitoring requirements, urged caution 
in expanding the time between PACE audits following the trial period. 
One commenter mentioned that increasing the time between audits would 
place a heavier burden on SAAs. Another commenter mentioned that if a 
PO is embarking on an expansion, the frequency of monitoring should 
increase during this period of expansion.
    Response: We appreciate these commenters' concerns. We understand 
that some SAAs may choose to audit POs more frequently if we decide not 
to audit a particular PO for a number of years. We believe this is an 
important part of our partnership with the SAAs, and encourage states 
to monitor POs as often as they believe necessary. While we may not 
continue to audit all organizations as frequently after the trial 
period as we did prior to the implementation of this regulation, we 
will continue frequent account management monitoring and quality 
reporting for all POs. We believe that this account management 
monitoring, along with our risk assessment and audits, will help us 
maintain an appropriate level of oversight in PACE. We also appreciate 
the comment regarding audits when POs are embarking on an expansion, 
and we will retain authority to audit POs more frequently if needed.
    Comment: Two commenters expressed concern with reducing the number 
of onsite audits conducted by CMS after the trial period. One commenter 
said reducing the number of onsite audits would be eliminating the 
tools that are proven to work in assessing quality of care. The other 
commenter suggested that if we audit less frequently, we should collect 
documentation from the PO more frequently to compensate.
    Response: While we understand these commenters' concerns, we are 
confident that we will still conduct effective oversight over POs even 
if we no longer require onsite visits at least every 2 years. POs that 
present a higher risk to participants will still be audited on a more 
frequent basis. Only those organizations that are assessed to be a 
lower risk will go longer between reviews. Additionally, while we may 
audit an organization less frequently, POs are still subject to routine 
account management monitoring and quality reporting. Additionally, the 
SAA may audit or monitor POs as they see fit, including requesting 
documentation from POs between audits.
    Comment: Several commenters requested clarification on the risk 
assessment CMS intends to use to select POs for audits. Commenters 
encouraged CMS to be transparent in how we select POs, including what 
performance measures we will be using for the risk assessment. Some 
commenters wanted confirmation that the risk assessment would not be 
arbitrary and would utilize reasonable standards. Another commenter 
wanted clarification on whether the risk assessment would be consistent 
from region to region. Lastly, one commenter requested that grievances 
be considered in whatever risk assessment is created.
    Response: We appreciate these commenters' questions and comments 
concerning the risk assessment. We believe that by utilizing a data 
based risk assessment we will be able to appropriately target POs for 
audit. While we will strive to be transparent in factors or performance 
standards we will use for our risk assessment, this is an internal tool 
that will likely change slightly every year based on what CMS PACE 
subject matter experts believe is important. At a minimum, this 
assessment tool will likely review data related to grievances, 
complaints and access to care and take into account when the PO was 
last audited. Additionally, the risk assessment will likely include 
measures related to performance level of the PO and any referrals made 
by either CMS or the SAA. While we do not intend to publish the exact 
measures utilized in the risk assessment, we anticipate including 
information in an annual audit report that will discuss the risk 
assessment for PO audits at a high level, as well as the POs selected 
for audit in a given year. The annual report may also include 
summarized audit results, including, common conditions/findings cited 
and any audit scores applied based on conditions cited. The annual 
report will be released by us each year through an HPMS memorandum to 
the industry.
    Comment: We received several comments on our proposed use of 
technology for conducting audits, specifically using webinars to audit 
a PO when we would not be onsite for the audit. Most of the commenters 
expressed support for our proposal to use technology to conduct audits. 
These commenters warned, however, that while the use of technology is 
good, POs are small and have limited resources, and reminded us that 
not all organizations will be equipped to handle webinar audits in the 
same way.
    Response: Since PACE is a direct care model, there are times when 
audits must be conducted onsite. However, allowing the use of webinar 
technology would allow us to conduct comprehensive reviews of a PO's 
ability to provide care and services, through review of participant 
health records, appeals, grievances, and other key program areas. We 
recognize that most POs are small, and some do not have the 
sophisticated electronic systems of some larger organizations. Auditors 
will work within the systems that POs have when conducting audits.
    Comment: One commenter questioned if webinar use would mean that 
auditors would no longer need remote access to POs' systems, like 
electronic health records.
    Response: While we believe that the use of webinars would reduce 
the instances where auditors may need remote access to review 
participant records, there may still be instances where remote access 
is needed. Among other factors, because POs are direct care models, 
auditors are sensitive to the amount of time PO staff is required to 
spend conducting the audit and away from providing care to 
participants. Therefore, auditors may determine that conducting 
portions of the audits through remote access, rather than through a 
webinar, would be more beneficial to the PO and participants.
    Comment: One commenter opposed our proposed removal of specific 
program elements from the regulation that might be reviewed while 
onsite during the trial period audits, specifically marketing, 
enrollment and disenrollment procedures, participant services, 
grievances and appeals.
    Response: We appreciate this commenter's concerns, however, the 
removal of the specific elements from

[[Page 25659]]

the regulation text does not mean we will no longer be reviewing those 
elements, either during the trial period or during routine audits. 
While we are eliminating the reference to specific portions of the 
regulation, it remains our intent that audits are comprehensive reviews 
of a PO's compliance with PACE regulations. A key part of that review 
will be focused on participant records, and all other services relating 
to a participant's experience and access to care which may continue 
include review of marketing, participant services, enrollment and 
disenrollment procedures, and grievances and appeals.
    Comment: One commenter questioned if CMS intends to release a new 
PACE manual and audit guide after this rule is finalized.
    Response: After publication of this final rule, we intend to update 
the PACE manual to reflect the new rules, including the monitoring 
section of the manual. The PACE audit protocol (guide) was revised in 
2017 and was posted for public comment through the Paperwork Reduction 
Act process. Following publication of the final rule, both the PACE 
audit protocol and internal auditor instructions will be assessed and 
updated as needed. The current PACE audit protocol is available at 
https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/PACE_Audits.html.
    Comment: One commenter expressed a concern with for-profit POs, and 
recommended for-profit organizations should be audited more often than 
not-for-profit organizations.
    Response: For purposes of auditing following the trial period, POs 
that are selected for audit will be selected using a risk assessment 
tool that assesses a number of factors related to PACE performance. We 
do not intend to select POs based on for-profit or not-for-profit 
status.
    Comment: One commenter requested that we make auditors aware of the 
differences between MA and Part D plans and POs.
    Response: We agree that PACE is a unique program as both a payer 
and direct care provider. PACE auditors are trained to understand the 
unique nature of the PACE program prior to conducting any audits.
    Comment: One commenter encouraged CMS to conduct transparent exit 
interviews at the conclusion of a PO audit.
    Response: We agree that we should always strive to be transparent 
with our audits, including conducting exit conferences to discuss 
conditions of non-compliance with the PO prior to auditors concluding 
the audit. Our audit process was revised in 2017 and the new audit 
protocol for PACE was approved under the Paperwork Reduction Act 
approval process. This new audit process includes conducting exit 
interviews following the CMS audit in order to ensure we are 
transparent regarding the potential non-compliance noted during the 
review.
    Comment: Multiple commenters were supportive of our proposed 
revision to the requirements for disclosure of the results of PO 
reviews. Several of these commenters supported our proposal that POs be 
responsible for making the review results available for examination in 
a place that is readily accessible to not only participants, but also 
their family members, caregivers, and authorized representatives. A few 
commenters, while supportive of the disclosure requirements, thought 
CMS should be responsible for posting the results of the review so that 
all consumers can make an informed decision about their PACE program.
    Response: We agree that disclosing audit results to more than just 
participants is important, particularly for family members, caregivers, 
and authorized representatives that are responsible for making informed 
decisions regarding appropriate health care. We appreciate commenters' 
support for our proposal to require POs to make these disclosures. We 
also appreciate the benefits of CMS reporting some results at a 
national level in order to continue promoting improvements across the 
industry, and allowing participants and others to make informed 
decisions.
    We published our first annual audit report in 2018 which summarized 
audit results from the 2017 audit year, including common conditions/
findings, and provided a general overview of the audit structure. That 
report is available at https://www.cms.gov/Medicare/Compliance-and-Audits/Part-C-and-Part-D-Compliance-and-Audits/PACE_Audits.html. As 
noted previously in this final rule, we anticipate this report will 
continue to be released to the industry via HPMS annually and will 
include not only summarized information regarding common conditions, 
but information specific to individual POs as well, including audit 
scores.
    Comment: Two commenters commented on the format of the disclosed 
review results. One commenter encouraged CMS to make reports as reader 
friendly as possible in order to aid participants and family members 
with understanding the results. The other commenter requested that 
results be published in a standardized manner to help participants and 
caregivers understand them.
    Response: We agree with the commenters that reports and results 
should be standardized and in an easily readable format. During our 
audit redesign, we developed standardized reports and will continue to 
refine them based on continued audit experience and PO feedback.
    Comment: One commenter encouraged CMS to not only disclose audit 
results publicly, but also create a rating system for POs based on 
quality measures to help participants and their caregivers in making 
informed decisions.
    Response: We thank the commenter for the suggestion. We believe 
requiring POs to make audit results available to caregivers will help 
caregivers, participants and their families make informed decisions 
about participants' care. While we currently score POs' performance in 
audits, and publish those scores in an annual report, we do not intend 
to develop a separate rating system due to the unique nature and 
structure of POs around the country.
    Comment: Several commenters, while supportive of POs disclosing 
audit results to participants and their families, caregivers, and 
authorized representatives, were concerned that audit reports are too 
negative. These commenters stated that by focusing only on a PO's 
deficiencies, the disclosure of these results skew or bias a 
participant or a participant's caregiver when making a decision about 
care. These commenters stated that the disclosure of results should 
focus on positive aspects of the organization, as well as deficiencies.
    Response: We understand the concern presented by these commenters. 
CMS audits are intended to assess a PO's compliance with PACE 
regulations and manual guidance. Our audits focus on those areas in the 
PO that are not in compliance and need corrective action implemented. 
Our audits also focus on the participant experience and access to care. 
POs are currently required to make the results of these reviews readily 
available to participants; however, we believe that it is important 
that caregivers, family members, and authorized representatives are 
also able to see these results.
    Comment: Some commenters offered their support for our proposed 
modifications to clarify the circumstances when a PO must take action 
to correct deficiencies identified by CMS or the SAA.
    Response: We appreciate the support for this proposal.

[[Page 25660]]

    After considering the comments, we are finalizing the changes to 
the federal and state monitoring requirements as proposed.

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; or (iii) for medical records of disenrolled 
participants, 6 years after the date of disenrollment. We proposed 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. We explained 
in the proposed rule that 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 noted that POs that offer qualified prescription drug 
coverage currently must comply with the Medicare Part D record 
retention requirement in Sec.  423.505(d). In addition, we stated that 
the 10-year record retention policy is also consistent with 
recordkeeping requirements under the Medicaid Drug Rebate Program 
(Sec.  447.510(f)). We proposed to extend the 10-year record retention 
requirement to all PACE records for consistency with these programs and 
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.
    The following is a summary of the public comments we received on 
the proposed provisions regarding data collection, record maintenance 
and reporting, and our responses to comments.
    Comment: One commenter supported our proposal to change the PACE 
record retention requirement from 6 to 10 years.
    Response: We thank the commenter for its support.
    Comment: One commenter requested that CMS require POs to collect 
and report participant data for several ``sociodemographic'' factors, 
including age, race, ethnicity, primary language, gender identify, 
sexual orientation, in connection with PACE quality policies.
    Response: We do not currently collect this information from POs, 
but will take this suggestion into account as we consider future 
subregulatory guidance or rulemaking on PACE quality requirements.
    As a result of the comments, we are making no changes to our 
proposal and are finalizing the modifications to Sec.  460.200 as 
proposed.

IV. Provisions of the Final Rule

    For the most part, this final rule incorporates the provisions of 
the proposed rule. Those provisions of this final rule that differ from 
the proposed rule are as follows:
    In section III.C.4. of this final rule, Subpart B--PACE 
Organization Applications and Waivers, we are clarifying the timeframes 
for applications at Sec.  460.20(c)(2).
    In section III.C.6. of this final rule, we are clarifying the PACE 
waiver submissions process at Sec.  460.26.
    In section III.F.10. of this final rule, we are revising the text 
to specify expectations for agent/broker training at Sec.  
460.82(e)(4).
    In section III.G.3. of this final rule, regarding the IDT for PACE 
participants, we are revising Sec.  460.98(c)(1) to refer to ``primary 
care, including services furnished by a primary care provider as 
defined in Sec.  460.102(c) and nursing services''.
    In section III.G.3. of this final rule, we are not finalizing our 
changes to Sec.  460.104(d)(2) as proposed and will maintain the 
current provision which requires that the appropriate members of the 
IDT, as identified by the IDT, must conduct the in-person assessment. 
We are however revising Sec.  460.104(d)(2) to specify that unscheduled 
reassessments may be performed using remote technology in certain 
circumstances. Specifically, when a participant or his or her 
designated representative makes a request to initiate, eliminate or 
continue a particular service, the appropriate members of the IDT, as 
determined by the IDT, may use remote technologies to conduct 
unscheduled reassessments when the IDT determines that the use of 
remote technology is appropriate and the service request will likely be 
deemed necessary to improve or maintain the participant's overall 
health status and the participant or his or her designated 
representative agrees to the use of remote technology.
    In section III.F.3. of this final rule, we are finalizing the 
provisions related to the compliance oversight program as proposed at 
Sec.  460.63 in part. We are not finalizing the provision that would 
require POs to audit and monitor their operations, but we are 
finalizing the provision that would require POs to identify, respond to 
and correct non-compliance and fraud, waste and abuse.
    In section III.F.2. of this final rule, we are not finalizing the 
proposal to add a new Sec.  460.62(a)(8) specifying that the governing 
body of the PO must have full legal authority and responsibility for 
adopting and implementing the compliance oversight program.
    In section III J.1. of this final rule, we are revising Sec.  
460.182(b)(3) to require that the Medicaid capitation rate provides for 
reasonable, appropriate and attainable costs that are required under 
the PACE program agreement for the operation of the PO for the time 
period and the population covered.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.) 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 comments 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.
    On August 16, 2016 (81 FR 54692 through 54697), we solicited public 
comment on each of these issues for the following sections in the 
proposed rule that contained information collection requirements. As 
indicated below, we received comments pertaining to the IDT under Sec.  
460.102. Otherwise, no PRA-related comments were received and the 
provisions were adopted as proposed.

[[Page 25661]]

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2016 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      Adjusted
            BLS occupation title              BLS  occupation  BLS mean hourly    and support    hourly wage ($/
                                                    code         wage ($/hr)      costs ($/hr)         hr)
----------------------------------------------------------------------------------------------------------------
Other Technical Occupations (hereinafter,            29-9000            31.19            31.19            62.38
 technical staff)...........................
----------------------------------------------------------------------------------------------------------------

B. Proposed Information Collection Requirements (ICRs)

1. ICRs Regarding Global Change for Quality Assessment and Performance 
Improvement (Part 460)
    This final rule replaces 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), (c), (c)(1) and (c)(2) 460.138(b), and 460.172(c). The change also 
affects 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 $62.38hr 
for technical staff to replace or amend existing written materials with 
the updated term. In aggregate, we estimate an annualized burden of 
41.3 hours ([124 PO x 1 hour] / 3) at a cost of $2576 (41.3 hr. x 
$62.38/hr). We are annualizing the one-time estimate since we do not 
anticipate any additional burden after OMB's 3-year approval period 
expires. The revised requirements and added burden have been submitted 
to OMB for approval under control number 0938-0790 (CMS-R-244). This 
information request is subject to renewal. The control number's current 
expiration date is June 30, 2020.
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 Sec.  460.12(a), we 
proposed revisions to specify that this section also applies to 
expansion applications. This change would codify (in the CFR) the 
current PACE manual requirements pertaining to application submissions.
    Until 2016 for initial PACE applications and 2017 for expansion 
applications, PACE applications were submitted in hard copy format. 
Applications were often hundreds of pages long, expensive to reproduce 
and transmit, and administratively inefficient. This rule finalizes our 
proposal to 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 provides 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. This rule also finalizes our proposal under Sec.  
460.12(b)(2) to 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 codifies the current PACE manual provisions 
pertaining to the practice of application submissions.
    Section 460.12(c)(1) requires 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, this 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 0938-1326. 
Subject to renewal, the expiration date specific to this control number 
is December 31, 2021.
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, we finalized our proposal to 
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. The reorganized CFR text also clarifies 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, expires, 
June 30, 2020).
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, we 
revised the requirement so

[[Page 25662]]

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. This change will 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. The requirements and burden 
are approved by OMB under control number 0938-0790 (CMS-R-244, expires 
June 30, 2020).
5. ICRs Regarding the PACE 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 
(Sec. Sec.  460.32(a)(12) and 460.182(b)). In this rule we are 
finalizing our proposal 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 POs is annually. We do not believe it is always 
practical or efficient to include the actual Medicaid capitation rates 
in the PACE program agreement. In response, we finalized our proposal 
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 that PACE program agreements be updated to include the 
Medicaid capitation rates, we estimate that each PO would save 30 
minutes annually. Therefore, we estimate an aggregate annual reduction 
of 62 hours (124 POs x 0.5 hr) at a savings of $3,868 (62 hr x $62.38/
hr).
    The revised requirement and burden have been submitted to OMB for 
approval under control number 0938-0790 (CMS-R-244, expires June 30, 
2020).
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 rule revises this 
section by requiring that the PO's governing body must be able to 
administer a quality 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) 
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, expires June 
30, 2020).
7. ICRs Regarding the Creation of a Compliance Oversight Program (Sec.  
460.63)
    In the proposed rule we proposed to create a new section, Sec.  
460.63 that would have required all POs to implement compliance 
oversight programs for their organizations that was would parallel the 
existing compliance program infrastructure required of Part D plan 
sponsors. In particular, we proposed requiring that POs have compliance 
oversight programs for their entire organization with two compliance 
elements, 1) internal monitoring and auditing, and 2) prompt response, 
investigation and correction of non-compliance and fraud, waste and 
abuse.
    As described in section III.F.3. of this final rule, we received 
several comments related to underestimating the burden on the proposed 
compliance oversight program. Specifically, commenters suggested that 
additional staff and resources would be required to implement the two 
proposed provisions across the PO's full operations. As a result of 
these comments we are not finalizing the proposal to require POs to 
adopt compliance oversight requirements related to internal monitoring 
and auditing but are finalizing a new Sec.  460.63 which requires POs 
to have a compliance oversight program for responding to compliance 
issues, investigating potential compliance problems, and correcting 
non-compliance and fraud, waste and abuse.
    In the proposed rule, based on our experience with the program we 
estimated 150 hours to create training materials and devote staff to 
implementing the new program. We estimated this burden based on our 
combined experience with compliance programs in MA and Part D as those 
programs, like PACE are structured so that there is a single 
organization responsible for the care of enrollees/participants. 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 were developed.
    In this final rule, because we are not finalizing the requirement 
for POs to adopt internal monitoring and auditing we are reducing the 
150 hour estimate of the one-time burden for each PO by a factor of 10. 
In addition, since we published the proposed rule, the number of POs 
has increased from 119 to 124.
    For each PO, we estimate a one-time burden of 15 hours at $62.38/hr 
for technical staff to create written training materials and written 
procedures for the expansion of a PO's existing system of responding to 
and correcting non-compliance (that the PO previously established in 
its role as a Part D plan sponsor) to prospectively encompass all of 
its PACE operations. In aggregate, we estimate an annualized burden of 
620 hours ([124 PO x 15 hour] / 3) at a cost of $38,676 (620 hr x 
$62.38/hr). We are annualizing the one-time estimate since we do not 
anticipate any additional

[[Page 25663]]

burden after OMB's 3-year approval period expires.
    To estimate the annual burden of reporting fraud and abuse, we 
assume each PO would take 20 hours annually. Therefore, the aggregate 
hourly burden is 2,480 hr (124 POs x 20 hours), at an aggregate cost of 
$154,702 (2,480 hr x $62.38/hr).
    The revised requirements and added burden have been submitted to 
OMB for approval under control number 0938-0790 (CMS-R-244, expires 
June 30, 2020).
8. 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. We amended 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) do not have any effect on the burden that is 
currently approved by OMB under control number 0938-0790 (CMS-R-244, 
expires June 30, 2020).
9. 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. The amendments to Sec.  
460.68(a)(3) 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 also added 
language in Sec.  460.68(a)(4) and (a)(5) similar to the requirements 
found in regulations governing Long Term Care facilities.
    In Sec.  460.68(a)(4), we finalized our proposal to add a new 
restriction that would prevent POs from employing or contracting with 
individuals or organizations 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 finalized our proposal 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 written policies and procedures related to the hiring of 
individuals with criminal histories and revising their employment 
applications. We estimate a one-time burden of 10 hr at $62.38/hr for 
technical staff to make these revisions to the written policies and 
procedures. In aggregate, we estimate an annualized burden of 413.3 
hours ([124 POs x 10 hr]/3 yr) at a cost of $25,782 (413.3 hr x $62.38/
hr). We are annualizing the one-time estimate since we do not 
anticipate any additional burden after OMB's 3-year approval period 
expires. The revised requirements and added burden have been submitted 
to OMB for approval under control number 0938-0790 (CMS-R-244, expires 
June 30, 2020).
10. ICRs Regarding Marketing (Sec.  460.82)
    Section 460.82 sets out requirements governing the marketing 
activities of POs. In this final rule, we are allowing the use of non-
employed agents/brokers, provided they are appropriately trained, to 
market PACE programs. We also finalized our proposal to expand the 
scope of prohibited marketing practices to include additional means of 
marketing through unsolicited contact. In addition, we finalized our 
proposal 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. We 
no longer believe that the documented marketing plan is necessary 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 $62.38/hr for technical 
staff to revise the written marketing policies and materials. In 
aggregate, we estimate an annualized burden of 206.7 hours ([124 POs x 
5 hr]/3 yr) at a cost of $12,894 (206.7 hr x $62.38/hr).
    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 annually. We 
estimate an aggregate reduction of 1,240 hours (124 POs x 10 hr) at a 
savings of $77,351 (1,240 hr x $62.38/hr).
    We are annualizing the one-time estimates since we do not 
anticipate any additional burden after OMB's 3-year approval period 
expires. The revised requirements and burden have been submitted to OMB 
for approval under control number 0938-0790 (CMS-R-244, expires June 
30, 2020).
11. ICRs Regarding the IDT (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 final 
rule will 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.
    This final rule permits a PO to have one individual fulfill 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.
    In response to public comments to proposed rule CMS-4168-P, this 
final rule further revises Sec.  460.102 to delete the requirement that 
members of the IDT must serve primarily PACE participants.
    We estimate a one-time burden of 1 hr at $62.38/hr for technical 
staff to update their PO's policy and procedures. In aggregate, we 
estimate an annualized burden of 41.3 hr ([124 POs x 1 hr]/3 yr) at a 
cost of $2,576 (41.3 hr x $62.38/hr). We are annualizing the one-time 
estimate since we do not anticipate any additional burden after OMB' 3-
year approval period expires. The revised requirements and added burden 
have been submitted to OMB for approval under control number 0938-0790 
(CMS-R-244, expires June 30, 2020).

[[Page 25664]]

12. ICRs Regarding 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 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 rule we are finalizing our proposal to remove the requirement 
in Sec.  460.104(c)(2) requiring annual reassessments by the physical 
therapist, occupational therapist, dietician, and home care 
coordinator. In addition to the periodic reassessments, Sec.  
460.104(d) sets forth the requirements for unscheduled reassessments. 
In this final rule, we are revising Sec.  460.104(d)(2) to specify that 
the appropriate members of the IDT may use remote technologies to 
conduct unscheduled reassessments when a participant or his or her 
caregiver or designated representative makes a request to initiate, 
eliminate or continue a particular service, and the IDT determines that 
the use of remote technology is appropriate and the service request 
will likely be deemed necessary to improve or maintain the 
participant's overall health status and the participant or his or her 
designated representative agrees to the use of remote technology.
    While these requirements involve a collection of information, we 
believe that the burden associated with these requirements 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 and in the absence of federal regulation.
13. ICRs Regarding 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 final rule amends this requirement 
by specifying that the IDT must develop the plan of care within 30 days 
of the participant's date of enrollment. In Sec.  460.106(b), we 
finalized 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 provide clarification regarding 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. We expect POs to keep up-to-date with 
current practice standards related to plans of care and believe 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 stated 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 and in the absence of federal regulation.
14. 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. In this rule we are finalizing our proposal to require 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 $62.38/hr 
for technical staff to revise the written material about participant 
rights. In aggregate, we estimate an annualized burden of 206.7 hours 
([124 POs x 5 hr]/3 yr) at a cost of $12,894 (206.7/hr x $62.38/hr). 
Section 460.116(c)(2) states that the PO must display the participant 
rights in a prominent place in the PACE center. In this rule we are 
finalizing our proposal 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 0.5 
hr at $62.38/hr for technical staff to revise the notices. In 
aggregate, we estimate an annualized burden of 20.7 hours ([124 POs x 
0.5 hr]/3 yr) at a cost of $1,291 (20.7 hr x $62.38/hr).
    We are annualizing the one-time estimates since we do not 
anticipate any additional burden after OMB's 3-year approval period 
expires. The revised requirements and added burden have been submitted 
to OMB for approval under control number 0938-0790 (CMS-R-244, expires 
June 30, 2020).
15. 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. In this rule we are finalizing our proposal to 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, and would entirely remove Sec.  460.140. This regulatory 
reorganization has no impact on any requirements or burden estimates.
16. 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. In this rule we are 
finalizing our proposal to revise Sec.  460.132(a) and (c)(3) by 
referring to a quality improvement (QI) plan. Revisions would also 
require that POs have a written quality improvement

[[Page 25665]]

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 $62.38/hr to update 
material. In aggregate, we estimate an annualized burden of 41.3 hours 
([124 POs x 1 hr]/3 yr) at a cost of $2,576 (41.3 hr x $62.38/hr) to 
update QI plans. We are annualizing the one-time estimate since we do 
not anticipate any additional burden after OMB's 3-year approval period 
expires. The revised requirements and added burden have been submitted 
to OMB for approval under control number 0938-0790 (CMS-R-244, expires 
June 30, 2020).
17. 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. In this rule we 
are finalizing our proposal to add the phrase, ``in the form and manner 
specified by CMS'' and to codify current practice in which such 
notifications are submitted to CMS and SAA electronically, noting that 
this change would not revise any requirements or burden estimates. The 
requirements and burden are approved by OMB under control number 0938-
0790 (CMS-R-244). Subject to renewal, the control number's current 
expiration date is June 30, 2020.
18. 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 optional benefit. We 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 $62.38/hr to update 
enrollment materials. In aggregate, we estimate an annualized burden of 
41.3 hr ([124 POs x 1 hr]/3 yr) at a cost of $2,576 (41.3 hr x $62.38/
hr). We are annualizing the one-time estimate since we do not 
anticipate any additional burden after OMB's 3-year approval period 
expires. The revised requirements and added burden have been submitted 
to OMB for approval under control number 0938-0790 (CMS-R-244). Subject 
to renewal, the control number's current expiration date is June 30, 
2020.
19. 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 finalized our proposal 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 an annual 
decrease of 1 minute for each organization. The aggregate annual 
reduction is 2.1 hours (124 POs x 1 minute/response) at a savings of 
$131 (2.1 hr x $62.38/hr). The revised requirements and burden have 
been submitted to OMB for approval under control number 0938-0790 (CMS-
R-244). Subject to renewal, the control number's current expiration 
date is June 30, 2020.
    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 that would occur in the absence of 
federal regulation.
20. 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. 
In this rule we are finalizing our proposal 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 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).
21. 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. In this rule we are finalizing our proposal 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 anticipate that these changes may result in technical staff 
redisplaying documents. We estimate a one-time burden of 0.5 hr at 
$62.38/hr for technical staff to redisplay the review results. In 
aggregate, we estimate an annualized burden of 20.7 hours ([124 POs x 
0.5 hr]/3 yr) at a cost of $1,291 (20.7 hr x $62.38/hr). We are 
annualizing the one-time estimate since we do not anticipate any 
additional burden after OMB' 3-year approval period expires. The 
revised requirements and added burden have been submitted to OMB for 
approval under control number 0938-0790 (CMS-R-244, expires June 30, 
2020).
22. 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. In 
this rule we are finalizing our proposal to change this requirement 
from 6 to 10 years.
    We believe that the burden to store records 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.

[[Page 25666]]

Thus, the expense to go from 6 years to 10 years is minimal so we are 
not itemizing this burden. The requirements and burden for storing 
records for 6 years are currently approved by OMB under control number 
0938-0790 (CMS-R-244, expires June 30, 2020). The revised requirements 
have been submitted to OMB under this control number for approval.

C. Summary of Annual Burden Estimates for Requirements

                                                Table 3--Information Collection Requirements and Burden *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         OMB control
                                                           number                     Responses    Burden per                  Labor cost    Total cost
           Section(s) in title 42 of the CFR              (expires     Respondents      (per        response     Total time   per hour ($/   (annual in
                                                          June 30,                   respondent)      (hr)          (hr)           hr)        dollars)
                                                            2020)
--------------------------------------------------------------------------------------------------------------------------------------------------------
part 460 (global term change).........................     0938-0790           124             1             1       ** 41.3         62.38      ** 2,578
Sec.   460.32 (program agreement).....................     0938-0790           124             1          -0.5           -62         62.38        -3,868
Sec.   460.63 (update policies and procedures)........     0938-0790           124             1            15         620.0         62.38        38,676
Sec.   460.63 (annual report of fraud and abuse)......     0938-0790           124             1            20       2,480.0         62.38       154,702
Sec.   460.68(a) (program integrity for PACE).........     0938-0790           124             1            10         413.3         62.38        25,784
Sec.   460.82 (revise policies and written materials).     0938-0790           124             1             5         206.7         62.38        12,892
Sec.   460.82 (remove requirements)...................     0938-0790           124             1           -10         -1240         62.38       -77,351
Sec.   460.102 (update policies and procedures).......     0938-0790           124             1             1          41.3         62.38         2,578
Sec.   460.116 (revise explanations of rights)........     0938-0790           124             1             5         206.7         62.38        12,892
Sec.   460.116 (redisplay `participant rights' as          0938-0790           124             1           0.5          20.7         62.38         1,289
 `PACE participant rights')...........................
Sec.   460.132 (update QI plan).......................     0938-0790           124             1             1          41.3         62.38         2,578
Sec.   460.154 (revise enrollment agreement)..........     0938-0790           124             1             1          41.3         62.38         2,578
Sec.   460.156 (removing sticker requirement).........     0938-0790           124             1        -0.017          -2.1         62.38          -131
Sec.   460.196 (disclosure of review results).........     0938-0790           124             1           0.5          20.7         62.38         1,289
                                                       -------------------------------------------------------------------------------------------------
    TOTAL.............................................  ............           124             1        varies       2,829.2        Varies       176,486
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The $154,702 burden for Sec.   460.63 is an annual burden. All other cost burdens are first year burdens which have been annualized by dividing by 3
  since we do not anticipate any further burden. All items with savings are annual for each of the 3 years.
** To clarify rounding procedures: 2,578 = 124 total respondents x \1/3\ (annualized for 3 years) x 62.38. However, the 124/3 is displayed as 41.3 not
  41.3333.

D. Submission of PRA-Related Comments

    We have submitted a copy of this final 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.
    We invite public comments on these information collection 
requirements. If you wish to comment, please identify the rule (CMS-
4168-F) the ICR's CFR citation, CMS ID number, and OMB control number. 
Comments and recommendations must be received by the OMB desk officer 
via one of the following transmissions: OMB, Office of Information and 
Regulatory Affairs, Attention: CMS Desk Officer, Fax: (202) 395-5806 
OR, Email: [email protected].
    To obtain copies of a supporting statement and any related forms 
for the collection(s) summarized in this rule, you may make your 
request using one of following:
    1. Access CMS' website at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
    2. Email your request, including your address, phone number, OMB 
number, and CMS document identifier, to [email protected].
    3. Call the Reports Clearance Office at (410) 786-1326.
    PRA-related comments are due July 3, 2019.

VI. Regulatory Impact Statement

    We have examined the impacts of this final 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), the Congressional Review Act (5 U.S.C. 804(2), and Executive 
Order 13771 on Reducing Regulation and Controlling Regulatory Costs 
(January 30, 2017).
    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 45 provisions. 
We determined that 20 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 with 
aggregate annualized burden (for the first 3 years) of $176,486 
($257,836 in costs minus $81,350 in savings). One of those 22 
provisions, (the compliance oversight provision), has effects outside 
of the scope of the PRA, so the additional impacts of it, and the 
remaining three provisions are assessed in this regulatory impact 
statement.
    The provision discussed in section III.K.1. of this final rule, the 
modification of Sec.  460.182 regarding Medicaid payment, has no 
savings or cost; the provision discussed in section III.L.1. of this 
final rule, the modification of Sec.  460.190 regarding monitoring, has 
a savings of $1,523,253 to POs and a savings of $2,638,144 to the 
government without any transfer to POs; the provision discussed at 
III.G.4. of this final rule, the modification of Sec.  460.104(d)(2) to 
allow use of remote technologies for certain participant assessments 
has a qualitative savings which is not further quantified. It follows 
that this final rule has a net savings of 4 million arising primarily 
from the monitoring provision. These estimates are summarized in detail 
in Table 4. We discuss these four provisions in more detail below.

[[Page 25667]]



                             Table 4--Impact 1 2 of Final Rule by Provision and Year
----------------------------------------------------------------------------------------------------------------
                                                                                     1st year      2nd and later
          Provision name             Regulatory citation   Section of final rule      savings      year savings
----------------------------------------------------------------------------------------------------------------
Medicaid Payment..................  Sec.   460.182.......  III.K.1..............              $0              $0
Monitoring........................  Sec.   460.190.......  III.L.1..............   \3\ 4,161,397   \3\ 4,161,397
Participant Assessment............  Sec.   460.104(d)(2).  III.G.4..............               0               0
Various \4\.......................  Various..............  V....................       (382,754)        (73,352)
                                                                                 -------------------------------
    Total.........................  .....................  .....................       3,778,643       4,088,045
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Positive numbers indicate savings; negative numbers indicate cost.
\2\ Although the Participant Assessment provision (Section III.G.4, Sec.   460.104(d)(2)) is not scored
  quantitatively, it is a savings. The Medicaid provision is neither a savings nor cost. The additional
  flexibility for the IDT provision has neither cost nor savings to the government due to the fact that most POs
  are currently exercising these flexibilities through PACE waivers.
\3\ The government saves $2,638,144 and the POs save $1,523,253.
\4\ The numbers in this row are derived from the summary Table 3 in the Collection of Information section as
  follows: The first year cost is 382,754 and is the sum of three items: (i) The aggregate of all items saved is
  $81,350, (ii) The annual cost of reporting fraud and abuse is $154,702, (iii) the aggregate of all items with
  cost minus the $154,702 when multiplied by 3 is 309,402 (the numbers in Table 3 are divided by 3 to create an
  annualized cost and hence have to be multiplied by 3). The 2nd and later year costs are $73,352, the
  difference of $81,350 (the aggregate of all items with savings) and the $154,702 annual cost of reporting
  fraud and abuse.

A. Medicaid Payment (Sec.  460.182 (Discussed in Section III.K.1. of 
This Final Rule))

    The 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, which we 
believed 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 will continue to 
review and approve Medicaid capitation rates under PACE. Therefore, we 
do not believe this provision will affect spending.

B. Participant Assessment (Sec.  460.104(d) Discussed in Section 
III.G.4 of This Final Rule)

    This provision reduces the required IDT members at a ``change in 
participant status'' reassessment under Sec.  460.104(d)(1) from 8 to 3 
members and allows use of remote technology to conduct reassessments 
for certain participant service requests under Sec.  460.104(d)(2). We 
expect the reduction of required IDT members from eight to three will 
result in savings by reducing labor costs. Similarly, we expect the use 
of remote technology for reassessments related to service delivery 
requests will result in savings from reduced travel costs for PO staff 
and PACE participants.
    We are scoring this as a qualitative savings and not further 
quantifying it. The primary reasons for not quantifying it further are 
due to our inability to assess the number of these participant service 
requests and the typical travel time that would have been required for 
such reassessments. Furthermore, removing a travel requirement for 
requests might result in an increase in requests and this effect is 
difficult to quantify.

C. Monitoring (Sec.  460.190 (Discussed in Section III.L.1. of This 
Final 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, based on our experience with audits. Since 
publishing the proposed rule, we have implemented a new PACE audit 
protocol. Having used that new protocol for two years, we now have a 
better understanding of the costs of audits to both PO's and the 
government. We are updating our analysis to reflect our current 
projections, which result in significantly increased estimated savings 
for both POs and the government.
    Under the provision we are finalizing, we estimate that we will 
perform 35 audits per year, 20 during PO trial periods and 15 post 
trial period (routine) audits. If we did not finalize this provision, 
we estimate that we would perform 72 audits per year, 34 during PO 
trial periods, and 38 post trial period (routine) audits.
    In the proposed rule, we made the following assumptions in 
estimating costs of an audit for a PO. Mean hourly wages have been 
updated to reflect current estimates. The assumptions are summarized in 
Table 5.
     Personnel: We estimated:
    ++ 2 Medical and Health Service Managers, occupational code 11-9111 
on the Bureau of Labor Statistics (BLS) website accessible at 
www.bls.gov/oes/current/oes_nat.htm, with an average hourly wage of 
$53.69
    ++ 1 Secretary and Administrative assistant, code 43-6010, with an 
average hourly wage of $19.74.
    However, in the time since the proposed rule was published, CMS has 
implemented and operated a new PACE audit protocol which has allowed us 
to better estimate the costs of audits on a PO. We now estimate the 
following for personnel:

Table 5--National Occupational Mean Hourly Wage and Adjusted Hourly Wage
------------------------------------------------------------------------
                                            Occupation      Mean hourly
            Occupation title                   code         wage ($/hr)
------------------------------------------------------------------------
Nurse Manager...........................         11-9111           53.69
Executive Assistant.....................         43-6011           28.56
Medical Records and Health Information           29-2071           20.59
 Technician.............................
Compliance Officer......................         13-1041           34.39
------------------------------------------------------------------------


[[Page 25668]]

    Additionally, in the proposed rule we estimated 80 hours uniformly 
per person; 40 hours the week before the audit and 40 hours the week of 
the audit. Based on updated information, we now estimate that audits 
will take approximately 150 hours per person for POs to complete. This 
estimate includes all of the pre-audit work, including (i) compiling 
and (ii) submitting audit documentation; (iii) 2 weeks of audit 
fieldwork; the post-audit work of (iv) collecting and (v) submitting 
impact analyses, (vi) reviewing and (vii) commenting on the draft audit 
report, and (viii) submitting and (ix) implementing corrective action 
plans for conditions of non-compliance.
     Fringe benefits: We estimate 100 percent (of hourly wage) 
for fringe benefits and overhead.
    Based on these assumptions, we can compute the difference between 
72 and 35 audits per year. In the proposed rule, we estimated that POs 
would save approximately $737,336.00. However, based on the new 
assumptions, and as a result of more accurate estimates, we now 
estimate that savings per year to POs would be $1,523,253. The 
calculations are exhibited in Table 6.

                                              Table 6--PO Savings From Finalizing the Monitoring Provision
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Number of
                                                                                         Fringe     Number              audits per year     Number of
                       Occupational title                           Code     Wage/hr    benefit     staff    Hours per    if provision   audits per year
                                                                                         factor    required     audit       is  not        if provision
                                                                                                                           finalized        finalized
--------------------------------------------------------------------------------------------------------------------------------------------------------
Nurse Manager..................................................    11-9111     $53.69          2          1        150               72               35
Executive Assistant............................................    43-6011      28.56          2          1        150               72               35
Medical Records and Health Information Technician..............    29-2071      20.59          2          1        150               72               35
Compliance Officer.............................................    13-1041      34.39          2          1        150               72               35
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                                                                        Aggregate  cost     Aggregated
                      Summary descriptions                                                                   Cost  per       if not          cost if
                                                                                                               audit       finalized        finalized
--------------------------------------------------------------------------------------------------------------------------------------------------------
Summary dollar amounts.........................................  .........  .........  .........  .........    $41,169       $2,964,168       $1,440,915
--------------------------------------------------------------------------------------------------------------------------------------------------------
Savings (Not finalized minus finalized)........................  .........  .........  .........  .........  .........  ...............        1,523,253
--------------------------------------------------------------------------------------------------------------------------------------------------------

In the proposed rule we used the following assumptions 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:
    ++ 220 hours at the GS-13 level with an hourly average wage of 
$46.46
    ++ 40 hours at the GS-15 level with an hourly average wage of 
$64.59

Based on our experiences auditing POs since publishing this proposed 
rule, we are now using the revised assumptions:
     3 FTEs to conduct each audit and 1 FTE for audit oversight 
and 1 FTE to conduct audit close out activities.
     Hours spent:
    ++ 220 hours at the GS-13 level with an hourly average wage of 
$46.46 (includes 3 FTEs for 200 hours each and 1 FTE for 20 hours)
    ++ 60 hours at the GS-15 level with an hourly average wage of 
$64.59
    In the proposed rule, we estimated that travel cost approximately 
$1,395 per audit. However, since this proposed rule was published, we 
now estimate that travel costs approximately $5,940 per audit.
    Finally, we continue to have the following additional assumptions 
related to government costs.
     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. In the proposed rule, we estimated that the 
savings to CMS was $1,029,454.70 per year. Based on the revised 
assumptions, we now estimate the savings to the government to be 
$2,638,144. The calculations are exhibited in Table 7.

                                          Table 7--Government Savings From Finalizing the Monitoring Provision
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Number of
                                                                               Mean                 Number              audits per year     Number of
                       Occupational title                           Code      hourly     Fringe     staff    Hours per    if provision   audits per year
                                                                               wage     benefit     needed     audit        is  not        if provision
                                                                                                                           finalized        finalized
--------------------------------------------------------------------------------------------------------------------------------------------------------
CMS Staff Employee.............................................    GS 13-1     $46.46          2          3        200               72               35
CMS Staff Employee.............................................    GS 13-1      46.46          2          1         20               72               35
CMS Manager....................................................    GS 15-1      64.59          2          1         60               72               35
Cost of Travel.................................................  .........   1,980.00          1          3          1               72               35
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                                                                         Aggregate cost
                      Summary descriptions                                                                    Cost per       if not      Aggregated cost
                                                                                                               audit       finalized       if finalized
--------------------------------------------------------------------------------------------------------------------------------------------------------
Summary dollar amounts.........................................  .........  .........  .........  .........    $71,301       $5,133,686       $2,495,542
Savings (Not finalized minus finalized)........................  .........  .........  .........  .........  .........  ...............        2,638,144
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 25669]]

D. The Compliance Oversight Program (Sec.  460.63 (Discussed in Section 
III.F.3. of This Proposed Rule))

    In the proposed rule, we pointed out that current regulations do 
not require POs to implement compliance programs similar to those 
required in the regulations governing the MA and Part D programs, and 
we proposed 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. We proposed adopting PACE program 
requirements that would result in POs expanding their already existing 
Part D compliance programs under the Part D program to ensure 
compliance oversight for the totality of the PO's operations. 
Specifically, we proposed to require all POs 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.
    In the proposed rule, we proposed a burden associated with the 
requirements under Sec.  460.63 which 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.
    In the proposed rule, we estimated 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 proposed 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, 
we indicated in our proposal that the PO would have to spend some time 
going forward monitoring their own compliance, and reporting and 
responding to any suspected fraud, waste and abuse. Therefore, in the 
proposed rule, we estimated 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 included the routine monitoring 
and identification of compliance risks as identified in the course of 
self-evaluations and audits. We estimated 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 
believed the burden to be small, and we believed that 200 hours would 
cover the ongoing responsibilities of each PO. This includes PO 
monitoring of its own compliance; corrective action as a result of that 
monitoring; and updating PO monitoring measures and procedures.
    We solicited comments from POs regarding this burden estimate in 
the proposed rule. The following is a summary of the public comments we 
received on the ``Compliance Oversight Program'' proposed burden 
estimate and our response to those comments.
    Comment: Many commenters suggested that we underestimated the 
burden of implementing a compliance oversight program in PACE. These 
commenters suggested more staff would be needed, and the cost and hours 
to both implement and maintain a compliance oversight program were 
underestimated. One commenter suggested we use our burden estimates for 
the monitoring proposal in Subpart K in order to estimate the burden of 
POs implementing an internal monitoring and auditing program as a part 
of the compliance oversight program, since the same staff would likely 
be used. One commenter mentioned that the time involved in conducting 
ongoing internal monitoring would be similar to the time POs currently 
spend when undergoing a CMS audit. Another commenter mentioned that 
there would be a large increase in manual data collection which needed 
to be included in the burden.
    Response: Based on comments received, and because we have a strong 
policy interest in not creating undue burden, we have reviewed our 
proposed provision and the proposed burden associated with it. We 
believe that the majority of the burden associated with our initial 
proposal is due to the first element of our proposal which would have 
required POs to adopt internal monitoring and auditing that would cover 
all PACE operations. Because POs are currently required to have a 
compliance program as Part D plan sponsors, we estimated the cost of 
new PACE requirements would be to update materials and expand efforts 
currently in place under Part D to implement these new PACE provisions 
and ensure that the full PACE operations were being affirmatively 
reviewed and that compliance concerns identified anywhere in the PO's 
operation were being promptly addressed. Although we did not separately 
analyze the cost of each of these two elements in our first proposal, 
the majority of burden was associated with the development and 
implementation of the internal monitoring and auditing element. We are 
not finalizing that element at this time in order to further evaluate 
the anticipated burden. We are finalizing the compliance oversight 
requirements which require promptly responding to non-compliance and 
fraud, waste and abuse. Because we are not expanding the scope of what 
an organization is required to monitor and because we believe POs are 
currently addressing compliance concerns in their organizations as they 
arise outside of Part D, we anticipate only a minimal burden with this 
element. Therefore, we revised our burden estimates and decreased the 
hours to implement this revised provision by a factor of 10. The number 
of hours would therefore be reduced from 150 hours to 15 hours for one 
staff member. Additionally, we decreased the estimate of how many hours 
an organization will spend following the implementation of this 
provision from 200 to 20 hours. We decreased these numbers because we 
are not finalizing the element that would have required POs to expand 
their internal monitoring and auditing efforts, and we are only 
finalizing the provision that would require an organization to have a 
system for responding to, investigating and correcting non-compliance. 
Since there will be no increased data collection, we believe this 
reduced burden accurately reflects the revised provision.
    As discussed above, and as a result of these comments, we have 
decided not to

[[Page 25670]]

finalize the first proposed element related to internal monitoring and 
auditing, and finalize only the second element of the proposed 
compliance oversight program, related to responding to, correcting and 
reporting non-compliance and fraud, waste and abuse.
    As in the proposed rule we make separate estimates for the initial 
year and for subsequent years. Additionally, since the proposed rule 
was published the number of POs increased from 119 to 124. Because we 
are not adopting the element of the proposal that would have required 
POs to establish internal monitoring and auditing the estimates of 150 
and 200 hours use in the proposed rule are reduced by a factor of 10. 
Table 8 exhibits the estimates under the proposed and final rule. As we 
are finalizing, we estimate an initial year burden of $116,026.80 (or 
$38,675.6 per year for 3 years) and a subsequent burden of $154,702.40 
for later years.

                      Table 8--Impact of the Compliance Provision (Proposed and Final Rule)
----------------------------------------------------------------------------------------------------------------
                                                                                                    Final rule
                    Item                        Proposed rule     Final rule      Proposed rule     subsequent
                                                initial year     initial year   subsequent years       years
----------------------------------------------------------------------------------------------------------------
Number of POs...............................               119             124               119             124
Wage estimates per hour.....................             59.44           62.38             59.44           62.38
Hours needed to develop and implement                      150              15               200              20
 training...................................
                                             -------------------------------------------------------------------
    Total burden \1\........................        $1,061,004        $116,027        $1,414,672        $154,702
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Total burden is the product of the previous three rows: Number of POs * Wages Estimates Per Hour * Hours
  needed to develop and implement training.

    Based on the above analysis, we have determined that this final 
rule does not reach the economic threshold, and therefore, 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. However, as shown in Table 4, this final rule has a 
net impact of savings, not cost, and consequently, we are not preparing 
an analysis for the RFA because we have determined, and the Secretary 
certifies, that our changes to this regulation would not have a 
significant economic impact, nor net additional costs requiring 
possible regulatory relief, 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 604 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 final 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 2019, that 
threshold is approximately $154 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 final rule 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 rule 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 
statute requires that states designate the agency of the state 
responsible for the administration of the

[[Page 25671]]

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.
    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017 and requires that the 
costs associated with significant new regulations ``shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations.'' OMB's interim 
guidance, issued on April 5, 2017, https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/M-17-21-OMB.pdf, explains that 
``E.O. 13771 deregulatory actions are not limited to those defined as 
significant under E.O. 12866 or OMB's Final Bulletin on Good Guidance 
Practices.'' Accordingly, this final rule is considered an E.O. 13771 
deregulatory action. We estimate that this rule generates $3.3 million 
in annualized cost savings, discounted at 7 percent relative to year 
2016, over a perpetual time horizon.
    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 amends 42 CFR chapter IV as set forth below:

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

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

    Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, 
and 1395hh.


Sec.  423.4  [Amended]

0
2. Section 423.4 is amended in paragraph (4) of 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 is revised to read as follows:

    Authority: 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 in 
Sec.  423.4 of this chapter, must abide by all applicable Part D 
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;
0
b. Revising paragraph (b); and
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:
* * * * *

[[Page 25672]]

    (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;
0
b. Removing paragraph (a)(3);
0
c. Redesignating paragraphs (b) through (d) as paragraphs (c) through 
(e);
0
d. Adding a new paragraph (b); and
0
e. 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 12 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) 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.
    (1) The State administering agency forwards a PACE organization's 
waiver requests to CMS along with any concurrence, concerns or 
conditions regarding the waiver.
    (2) Entities submitting an application to become a PACE 
organization may:
    (i) Submit a waiver request as a document separate from the 
application by submitting it first to the State administering agency 
which, in turn, will forward the waiver request to CMS indicating the 
State's concurrence, concerns or conditions regarding the waiver 
request; or
    (ii) Submit a waiver request directly to CMS in conjunction with 
the application. This request must include a letter from the State 
administering agency indicating the State's concurrence, concerns or 
conditions regarding the waiver request.
    (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 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 amended by--
0
 a. Redesignating the introductory text and paragraphs (a) through (e), 
(f) introductory text, (f)(1) and (2), and (g) through (j) as 
paragraphs (a) introductory text and (a)(1) through (5), (6) 
introductory text, (6)(i) and (ii), and (7) through (10) respectively; 
and
0
 b. Adding new paragraph (b).
    The addition reads as follows:


Sec.  460.40  Violations for which CMS may impose sanctions.

* * * * *
    (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--
0
a. By revising paragraph (a) introductory text.
0
b. In paragraph (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)'';
0
c. In paragraph (a)(2) by removing the reference ``Sec.  460.40(e)'' 
and adding in its place the reference ``Sec.  460.40(a)(5)''; and
0
d. In paragraph (a)(3) by removing the reference ``Sec.  460.40(f)(1)'' 
and adding in

[[Page 25673]]

its place the reference ``Sec.  460.40(a)(6)(i)''.
    The revision reads as follows:


Sec.  460.46  Civil money penalties.

    (a) CMS may impose civil money penalties up to the maximum amounts 
specified in paragraphs (a)(1) through (4) of this section. These 
amounts will be adjusted in accordance with the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Pub. L. 
114-74) and updated amounts specified in 45 CFR part 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 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 in accordance with Sec.  460.70, a medical director who is 
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) to read as 
follows:


Sec.  460.62  Governing body.

    (a) * * *
    (7) A quality improvement program as described in Sec.  460.130.
* * * * *

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, and correct non-compliance with CMS' program requirements, as 
well as measures that prevent, detect, and correct fraud, waste, and 
abuse. The compliance oversight program must, at a minimum, include 
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.
    (a) 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.
    (b) The PACE organization must conduct appropriate corrective 
actions (for example, repayment of overpayments, disciplinary actions 
against responsible employees) in response to the potential violation.
    (c) 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, (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.  460.66  [Amended]

0
19. Section 460.66 is amended by removing paragraphs (b) and (c) and 
removing the paragraph designation from paragraph (a).

0
20. Section 460.68 is amended--
0
a. In paragraph (a)(2) by removing the word ``or'' after ``;'';
0
b. By revising paragraph (a)(3); and
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--
0
a. By revising paragraph (b)(1)(iii);
0
b. By redesignating paragraphs (d)(5)(vi) through (ix) as paragraphs 
(d)(6)(i) through (iv);
0
c. By adding paragraph (d)(6) introductory text;
0
d. By revising newly redesignated paragraphs (d)(6)(i), (ii) and (iii);
0
e. In paragraph (e), by removing the term ``PACE Center services'' and 
adding in its place the term ``PACE center services'' wherever it 
appears; and
0
f. In paragraph (e)(2) by removing the reference ``Sec.  460.98(d)'' 
and adding in its place the reference ``Sec.  460.98(c)''.
    The revisions and addition 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.  460.60(a) and (b) and Sec.  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.

[[Page 25674]]

    (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), 
and adding paragraphs (c) and (d) 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).
* * * * *
    (c) The PACE organization must develop a training program for each 
personal care attendant to establish the individual's competency in 
furnishing personal care services and specialized skills associated 
with specific care needs of individual participants.
    (d) Personal care attendants must exhibit competency before 
performing personal care services independently.

0
23. Section 460.82 is amended by revising paragraphs (c)(1), (e) 
introductory text, (e)(3), (e)(4), (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 they enroll in the PACE program, 
and are not in the form of cash or other monetary rebates.
    (4) Marketing by any individual or entity that is directly or 
indirectly compensated by the PACE organization based on activities or 
outcomes unless the individual or entity has been appropriately trained 
on PACE program requirements, including but not limited to, subparts G 
and I of this part.
    (i) PACE organizations are responsible for the activities of 
contracted individuals or entities who market on their behalf.
    (ii) PACE organizations that choose to use contracted individuals 
or entities for marketing purposes must develop a method to document 
training has been provided.
    (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.

0
24. Section 460.98 is amended--
0
a. By revising paragraphs (c)(1);
0
b. In paragraph (d) heading by removing the term ``Pace Center'' and 
adding in its place the term ``PACE center''; and
0
c. In paragraph (d)(3) by removing the term ``Pace center'' and adding 
in its place the term ``PACE center''.
    The revision reads as follows:


Sec.  460.98  Service delivery.

* * * * *
    (c) * * *
    (1) Primary care, including services furnished by a primary care 
provider as defined in Sec.  460.102(c) and nursing services.
* * * * *


Sec.  460.100  [Amended]

0
25. Section 460.100 is amended in paragraph (e)(3)(i) by removing the 
term ``POs'' and adding in its place the term ``PACE organizations,'' 
and by 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), and (c)(2) introductory text;
0
b. Removing paragraph (d)(3);
0
c. Redesignating paragraph (e) as paragraph (f); and
0
d. Adding paragraph (e).
    The revisions and additions 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:
* * * * *
    (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--
0
a. Revising paragraphs (a)(1), (a)(2) introductory text, (a)(2)(i), 
(3), (4) introductory text, (b), (c), (d) introductory text, (d)(1) and 
(d)(2) introductory text;
0
b. Redesignating paragraphs (d)(2)(i) through (v) as paragraphs 
(d)(2)(ii) through (vi);
0
c. Adding new paragraph (d)(2)(i).
    The revisions and additions 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

[[Page 25675]]

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 appropriate members of the interdisciplinary 
team, as identified by the interdisciplinary team, must conduct a 
reassessment. The interdisciplinary team member(s) may conduct the 
reassessment via remote technology when the interdisciplinary team 
determines that the use of remote technology is appropriate and the 
service request will likely be deemed necessary to improve or maintain 
the participant's overall health status and the participant or his or 
her designated representative agrees to the use of remote technology.
    (i) An in-person reassessment must be conducted:
    (A) When participant or his or her designated representative 
declines the use of remote technology.
    (B) Before a PACE organization can deny a service request.
* * * * *

0
28. Section 460.106 is amended by revising paragraph (a) and by 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 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); and
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. Section 460.120 is amended in paragraph (f) by removing the phrase 
``quality assessment and performance improvement'' and adding in its 
place the phrase ``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:

[[Page 25676]]

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. Section 460.134 is amended in 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. In the section heading and paragraphs (b), (c) introductory text, 
(c)(1), and (c)(2) by removing the term ``quality assessment and 
performance improvement'' and adding in its place the term ``quality 
improvement''.
0
b. In paragraphs (a) heading and (b) heading by removing the term 
``Quality assessment and performance improvement'' and adding in its 
place the term ``Quality improvement''.


Sec.  460.138  [Amended]

0
38. Section 460.138 is amended in paragraph (b) by removing the term 
``quality assessment and performance improvement'' and replacing it 
with ``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.
* * * * *

0
43. Section 460.156 is amended by revising paragraph (a)(2) and 
removing paragraph (a)(4) to read 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--
0
a. By redesignating paragraphs (a) through (e) as paragraphs (b) 
through (f), respectively;
0
b. By adding new paragraph (a);
0
c. By revising newly redesignated paragraph (b)(1);
0
d. By redesignating newly redesignated paragraphs (b)(2) through (6) as 
paragraphs (b)(4) through (8), respectively;
0
e. By adding new paragraphs (b)(2) and (3);
0
f. In newly redesignated paragraph (b)(4) by removing the reference 
``paragraph (b)'' and by adding in its place the reference ``paragraph 
(c)''; and
0
g. By 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 spend 
down 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

[[Page 25677]]

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. Section 460.172 is amended in 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 revising paragraph (b) introductory 
text to 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:
* * * * *

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); and
0
c. Adding a new paragraph (b)(2).
    The revision 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:


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 State administering agency 
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: March 15, 2019.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: April 3, 2019.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2019-11087 Filed 5-28-19; 4:15 pm]
BILLING CODE 4120-01-P