II 

108TH CONGRESS 

2D SESSION S. 2369

To require the Secretary of Health and Human Services to undertake activities to ensure the provision of services under the PACE program to 

frail elders living in rural areas, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 29, 2004

Mrs. LINCOLN (for herself, Mr. BROWNBACK, Mr. BREAUX, and Mr. JEFFORDS) introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL

To require the Secretary of Health and Human Services 

to undertake activities to ensure the provision of services 

under the PACE program to frail elders living in rural 

areas, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Community Options 

5 for Rural Elders Act of 2004’’ or the ‘‘CORE Act of 

6 2004’’. 

7 SEC. 2. DEFINITIONS. 

8 In this Act: 
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1 (1) CMS.—The term ‘‘CMS’’ means the Cen2 ters for Medicare & Medicaid Services. 

3 (2) ELIGIBLE PARTICIPANT.—The term ‘‘eligi4 ble participant’’ means a PACE program eligible in5 dividual (as defined in sections 1894(a)(5) and 1934 

6 (a)(5) of the Social Security Act (42 U.S.C. 

7 1395eee(a)(5); 1396u–4(a)(5))). 

8 (3) HRSA.—The term ‘‘HRSA’’ means the 

9 Health Resources and Services Administration. 

10 (4) ORHP.—The term ‘‘ORHP’’ means the Of11 fice of Rural Health Policy of HRSA. 

12 (5) PACE PROGRAM.—The term ‘‘PACE pro13 gram’’ has the meaning given that term in sections 

14 1894(a)(2) and 1934(a)(2) of the Social Security 

15 Act (42 U.S.C. 1395eee(a)(2); 1396u–4(a)(2)). 

16 (6) PACE PROGRAM AGREEMENT.—The term 

17 ‘‘PACE program agreement’’ has the meaning given 

18 that term in sections 1894(a)(4) or 1934(a)(4) of 

19 the Social Security Act (42 U.S.C. 1395eee(a)(4); 

20 1396u–4(a)(4)). 

21 (7) PACE PROVIDER.—The term ‘‘PACE pro22 vider’’ has the meaning given that term in sections 

23 1894(a)(3) or 1934(a)(3) of the Social Security Act 

24 (42 U.S.C. 1395eee(a)(3); 1396u–4(a)(3)). 
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1 (8) RURAL AREA.—The term ‘‘rural area’’ has 

2 the meaning given that term in section 

3 1886(d)(2)(D) of the Social Security Act (42 U.S.C. 

4 1395ww(d)(2)(D)). 

5 (9) RURAL PACE PROVIDER APPLICANT.—The 

6 term ‘‘rural PACE provider applicant’’ means a 

7 PACE provider or a public entity or private, non8 profit entity organized under section 501(c)(3) of 

9 the Internal Revenue Code of 1986, that has applied 

10 to provide services in a rural area in a manner con11 sistent with the objectives of the PACE program and 

12 this Act. 

13 (10) RURAL PACE PROVIDER.—The term ‘‘rural 

14 PACE provider’’ means a rural PACE provider ap15 plicant that has been approved to provide services in 

16 whole or in part in a rural area in a manner con17 sistent with the objectives of the PACE program and 

18 this Act. 

19 (11) RURAL PROVIDER.—The term ‘‘rural pro20 vider’’ means a health care, housing, or community 

21 service provider offering services in whole or in part 

22 in a rural area. 

23 (12) RURAL SERVICE AREA.—The term ‘‘rural 

24 service area’’ means a rural area served by a PACE 

25 provider. 
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1 (13) SECRETARY.—The term ‘‘Secretary’’ 

2 means the Secretary of Health and Human Services. 

3 SEC. 3. PURPOSES. 

4 The purposes of this Act are—

5 (1) to require the Secretary to undertake activi6 ties to fully exercise existing statutory and regu7 latory authority to waive certain PACE program ele8 ments which may impair the ability of otherwise 

9 qualified entities to provide PACE services to quali10 fied beneficiaries in rural areas; 

11 (2) to establish a foundation of experience in 

12 utilizing the PACE program model to serve qualified 

13 beneficiaries in rural areas such that the model’s 

14 transition to those areas proceeds rationally and in 

15 full consideration of the unique needs of rural, frail 

16 elders; and 

17 (3) to regularly evaluate and report on the clin18 ical and cost-effectiveness of providing PACE serv19 ices in meeting the needs of medicare and medicaid 

20 beneficiaries living in rural areas. 

21 SEC. 4. PROGRAM TO SUPPORT PACE DEVELOPMENT IN 

22 RURAL AREAS. 

23 (a) IN GENERAL.—The Secretary shall provide for 

24 the Administrator of HRSA to work with the Adminis25 trator of CMS to establish PACE providers in rural areas. 
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1 (b) ADAPTION OF PROGRAM FOR REQUIREMENTS OF

2 RURAL PARTICIPANTS.—In order to support the establish3 ment of PACE providers in rural areas, the Secretary 

4 shall permit a rural PACE provider applicant to modify 

5 the PACE program to be operated by the provider while 

6 delivering services consistent, to the maximum extent fea7 sible, with the general intent and scope of services of that 

8 program, in order to adapt the PACE program to the 

9 unique requirements of eligible participants residing in 

10 rural areas and the challenges of providing services to 

11 such participants. 

12 (c) DEEMED APPROVAL OF PROVISION OF A PACE 

13 PROGRAM AGREEMENT OF A RURAL PACE PROVIDER

14 APPLICANT.—In the case of a rural PACE provider appli15 cant with a PACE program agreement—

16 (1) the rural PACE provider applicant shall 

17 identify the provisions of such agreement that the 

18 applicant proposes to apply if the applicant is ap19 proved to be a rural PACE provider; and 

20 (2) the Secretary shall review such provisions 

21 and, if the Secretary approves the applicant to be a 

22 rural PACE provider, deem such provisions as the 

23 Secretary determines appropriate to apply to the 

24 rural PACE provider’s PACE program agreement.
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1 (d) APPLICATION OF FLEXIBILITY IN EXERCISING

2 WAIVER AUTHORITY.—The Secretary shall utilize the au3 thority provided under section 903 of the Medicare, Med4 icaid, and SCHIP Benefits Improvement and Protection 

5 Act of 2000 (114 Stat. 2763A–583), as enacted into law 

6 by section 1(a)(6) of Public Law 106–554, and the regula7 tions issued to carry out that authority to allow for max8 imum flexibility in the operations of rural PACE pro9 viders. In exercising such authority, the Secretary shall 

10 waive or modify regulatory requirements applicable under 

11 part 460 of title 42, Code of Federal Regulations to the 

12 extent necessary for a rural PACE provider. The waiver 

13 or modification of regulatory requirements shall include 

14 requirements relating to—

15 (1) the PACE Center; 

16 (2) employment; 

17 (3) the use of community-based primary care 

18 physicians; 

19 (4) the format, structure, and composition of 

20 the interdisciplinary team and its meetings; and 

21 (5) other requirements as are necessary for 

22 purposes of providing, operating, and integrating 

23 PACE services in rural areas. 

24 (e) WAIVER AUTHORITY.—
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1 (1) IN GENERAL.—Subject to paragraph (2), 

2 the Secretary shall waive such requirements of titles 

3 XI, XVIII, and XIX of the Social Security Act (42 

4 U.S.C. 1301 et seq.; 1395 et seq.; 1396 et seq.) as 

5 may be necessary for purposes of supporting the de6 livery of PACE services in rural areas as set forth 

7 by the rural PACE provider applicants in their ap8 plications. 

9 (2) REQUIRED WAIVER OF FULL FINANCIAL

10 RISK REQUIREMENT FOR INITIAL 3-YEARS OF OPER11 ATION.—

12 (A) IN GENERAL.—The Secretary—

13 (i) shall waive the requirement that a 

14 rural PACE provider in at least its first 3 

15 years of operation be at full financial risk; 

16 and 

17 (ii) upon request by the rural PACE 

18 provider, may waive such requirement with 

19 respect to years of operation after the first 

20 3 years of operation if the Secretary deter21 mines that the rural PACE provider is op22 erating properly and has demonstrated a 

23 reasonable basis for not assuming full risk. 

24 (B) SOME RISK REQUIRED.—Nothing in 

25 subparagraph (A) shall be construed to imply 
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1 that a rural PACE provider shall bear no finan2 cial risk for the population it serves. 

3 SEC. 5. STARTUP AND TECHNICAL ASSISTANCE FOR RURAL 

4 PACE PROVIDERS. 

5 (a) SITE DEVELOPMENT GRANTS.—

6 (1) IN GENERAL.—The Secretary shall award 

7 $7,500,000 in site development grants to rural 

8 PACE providers. 

9 (2) AMOUNT PER AWARD.—A grant awarded 

10 under paragraph (1) to a rural PACE provider shall 

11 not exceed $750,000. 

12 (3) USE OF FUNDS.—Funds made available 

13 under a grant awarded under paragraph (1) may be 

14 used for the following expenses only if such expenses 

15 are incurred in relation to establishing or delivering 

16 PACE program services in a rural area: 

17 (A) Feasibility analysis and planning. 

18 (B) Interdisciplinary team development. 

19 (C) Development of a provider network, in20 cluding contract development. 

21 (D) Development or adaptation of claims 

22 processing systems. 

23 (E) Preparation of special education and 

24 outreach efforts required for the PACE pro25 gram. 
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1 (F) Development of expense reporting re2 quired for calculation of outlier payments or 

3 reconciliation processes. 

4 (G) Development of any special quality of 

5 care or patient satisfaction data collection ef6 forts. 

7 (H) Establishment of a working capital 

8 fund to sustain fixed administrative, facility, or 

9 other fixed costs until the provider reaches suf10 ficient enrollment size. 

11 (I) Startup and development costs incurred 

12 prior to the approval of the rural PACE pro13 vider applicant’s application by CMS. 

14 (J) Any other efforts determined by the 

15 rural PACE provider to be critical to the pro16 vider’s successful startup, as approved by the 

17 Secretary. 

18 (4) ADMINISTRATION OF SITE DEVELOPMENT

19 GRANTS.—The Secretary shall instruct the ORHP, 

20 to develop, in consultation with the Administrator of 

21 CMS, criteria for awarding site development grants 

22 and to establish processes for administering and 

23 overseeing the awarded grant funds. A prerequisite 

24 for receiving a site development grant shall be the 

25 approval of the rural PACE provider applicant’s ap-
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1 plication by CMS. The grant approval process and 

2 the administration of grant funds shall be the re3 sponsibility of ORHP. 

4 (5) APPROPRIATION.—

5 (A) IN GENERAL.—Out of any funds in the 

6 Treasury not otherwise appropriated, there are 

7 appropriated to the Secretary to carry out this 

8 subsection for the period of fiscal years 2005 

9 through 2006, $7,500,000. 

10 (B) AVAILABILITY.—Funds appropriated 

11 under subparagraph (A) shall remain available 

12 for expenditure through fiscal year 2009. 

13 (b) TECHNICAL ASSISTANCE PROGRAM.—

14 (1) IN GENERAL.—The Secretary, through 

15 ORHP, shall award up to $250,000 for each of fis16 cal years 2005 through 2007 to a public entity or 

17 private, nonprofit entity organized under section 

18 501(c)(3) of the Internal Revenue Code of 1986, for 

19 the purpose of establishing a technical assistance 

20 program to provide—

21 (A) outreach and education to State agen22 cies and provider organizations interested in es23 tablishing PACE programs in rural areas; and
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1 (B) technical assistance necessary to sup2 port providers awarded grants under subsection 

3 (a). 

4 (2) PREFERENCE IN CHOOSING A TECHNICAL

5 ASSISTANCE PROVIDER.—In selecting an entity for a 

6 grant under paragraph (1), the Secretary shall—

7 (A) give preference to a technical assist8 ance program operated by an entity with pre9 vious experience in conducting outreach and 

10 support related to PACE program development 

11 and expansion for State agencies and prospec12 tive PACE entities across a nationally rep13 resentative number of States and providers; and 

14 (B) consider the entity’s familiarity with 

15 the delivery of health services to frail elderly in16 dividuals who reside in rural areas. 

17 (3) APPROPRIATION.—Out of any funds in the 

18 Treasury not otherwise appropriated, there are ap19 propriated to the Secretary to carry out this sub20 section for each of fiscal years 2005 through 2007, 

21 $250,000. 

22 (c) FUND FOR REIMBURSEMENT OF OUTLIER COSTS

23 OF GRANTEES.—

24 (1) IN GENERAL.—The Secretary shall establish 

25 an outlier fund to reimburse rural PACE providers 
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1 awarded a grant under subsection (a)(1) for outlier 

2 costs (as defined in paragraph (2)) incurred with re3 spect to eligible participants enrolled with such pro4 viders who reside in, or receive services in, a rural 

5 area in accordance with the outlier expense payment 

6 specified in paragraph (3). 

7 (2) OUTLIER COSTS DEFINED.—

8 (A) IN GENERAL.—In paragraph (1), the 

9 term ‘‘outlier costs’’ means the inpatient and 

10 related physician and ancillary costs incurred 

11 with respect to an eligible participant described 

12 in paragraph (1) in excess of $50,000 for the 

13 most recent 12-month period. 

14 (B) INCLUSION IN ONLY 1 PERIOD.—

15 Outlier costs may not be included in more than 

16 1 12-month period for purposes of calculating 

17 an outlier expense payment under paragraph 

18 (3). 

19 (3) OUTLIER EXPENSE PAYMENT.—

20 (A) PAYMENT FOR OUTLIER COSTS.—Sub21 ject to subparagraph (B) and the amount ap22 propriated under paragraph (5), in the case of 

23 a rural PACE provider described in paragraph 

24 (1) that has incurred outlier costs for an eligi25 ble participant for the most recent 12-month 
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1 period, the rural PACE provider shall receive 

2 an outlier expense payment equal to 80 percent 

3 of such costs. 

4 (B) LIMITATIONS.—

5 (i) COSTS INCURRED PER ELIGIBLE

6 PARTICIPANT.—The total amount of outlier 

7 expense payments made under subpara8 graph (A) to a rural PACE provider for 

9 outlier costs incurred with respect to an el10 igible participant shall not exceed 

11 $100,000 per participant for the 12-month 

12 period used to calculate the payment. 

13 (ii) COSTS INCURRED PER PRO14 VIDER.—No rural PACE program provider 

15 may receive more than $500,000 in total 

16 outlier expense payments paid to the pro17 vider in a 12-month period. 

18 (iii) OVERALL LIMIT.—In no case may 

19 the aggregate amount of outlier expense 

20 payments made under this subsection for a 

21 fiscal year exceed the amount available for 

22 expenditure under paragraph (5). 

23 (4) REQUIREMENT TO ACCESS RISK RESERVES

24 PRIOR TO PAYMENT.—A rural PACE provider shall 

25 access and exhaust any risk reserves held or ar-
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1 ranged for the provider (other than revenue or re2 serves maintained to satisfy the requirements of sec3 tion 460.80(c) of title 42, Code of Federal Regula4 tions) and any working capital established through 

5 a grant awarded under subsection (a), prior to re6 ceiving any payment from the outlier fund estab7 lished under this subsection. 

8 (5) APPROPRIATION.—

9 (A) IN GENERAL.—Out of any funds in the 

10 Treasury not otherwise appropriated, there are 

11 appropriated to the Secretary to carry out this 

12 subsection—

13 (i) $2,000,000 for fiscal year 2005; 

14 (ii) $5,000,000 for fiscal year 2006; 

15 and 

16 (iii) $3,000,000 for fiscal year 2007. 

17 (B) AVAILABILITY.—Funds appropriated 

18 under subparagraph (A) shall remain available 

19 for expenditure through fiscal year 2009. 

20 SEC. 6. EVALUATION OF PACE PROVIDERS SERVING RURAL 

21 SERVICE AREAS. 

22 (a) IN GENERAL.—Beginning with October 1 of the 

23 first fiscal year that begins after the date of enactment 

24 of this Act, and for each of the 2 succeeding fiscal years 

25 thereafter, the Secretary shall submit to Congress annual 
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1 progress reports on the provision of PACE programs in 

2 rural areas. 

3 (b) COMPREHENSIVE EVALUATION.—

4 (1) IN GENERAL.—In addition to the annual 

5 progress reports to be submitted in accordance with 

6 subsection (a), not later than 60 months after the 

7 effective date of final regulations implementing this 

8 Act, the Secretary shall submit a comprehensive 

9 overall evaluation of the clinical and cost-effective10 ness of rural PACE providers. Funds otherwise 

11 made available to the Secretary for the purpose of 

12 conducting research or evaluations shall be used for 

13 the costs of conducting such evaluation. 

14 (2) REQUIREMENTS.—The evaluation required 

15 under paragraph (1) shall include the following: 

16 (A) An analysis of the quality and cost of 

17 providing PACE program services to eligible 

18 participants in rural areas as compared to such 

19 outcomes and costs for a comparable population 

20 of eligible participants that did not receive such 

21 services from a rural PACE provider. 

22 (B) Such recommendations regarding the 

23 extension or expansion of rural PACE providers 

24 as the Secretary determines appropriate. 
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1 (c) EXTENSION OF WAIVERS.—In order to ensure 

2 continuity of care and services, the Secretary is authorized 

3 to provide for the continued participation of a rural PACE 

4 provider beyond the otherwise approved periods under this 

5 Act as well as to extend those waivers of PACE program 

6 requirements under the authority of subsections (c) and 

7 (d) of section 4 to rural PACE providers if the Secretary 

8 finds that the providers comply with the objectives of the 

9 PACE program and this Act. 

10 (d) ADVISORY GROUP.—

11 (1) IN GENERAL.—The Secretary shall estab12 lish, and actively consult with, an advisory group 

13 that will review and comment on progress related to 

14 providing PACE program services in rural areas. 

15 (2) DUTIES.—The advisory group shall review 

16 and make recommendations with respect to—

17 (A) the consideration of prospective PACE 

18 provider applications to serve rural areas; 

19 (B) the evaluation design, criteria, and re20 sults achieved by rural PACE providers; and 

21 (C) the technical assistance activities pro22 vided under section 5(b) that support those pro23 viders and States. 

24 (3) MEMBERSHIP.—
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1 (A) NUMBER.—Not more than 9 individ2 uals shall be appointed to the advisory group 

3 established under this subsection. 

4 (B) EXPERTISE.—A member of the advi5 sory group shall have experience with, and un6 derstanding of 1 or more of the following areas: 

7 (i) The development, organization, 

8 and operation of the PACE program. 

9 (ii) Providing services to frail elderly 

10 individuals who reside in rural areas. 

11 (iii) Federal and State programs and 

12 initiatives that are related to the PACE 

13 program.

Æ