I
105TH CONGRESS
1ST SESSION
H. R. 1464
To amend titles XVIII and XIX of the Social Security Act to expand and
make permanent the availability of cost-effective, comprehensive acute
and long-term care services to frail elderly persons through Programs
of All-inclusive Care for the Elderly (PACE) under the Medicare and
Medicaid programs.
IN THE HOUSE OF REPRESENTATIVES
APRIL 28, 1997
Mr. THOMAS (for himself, Mr. CARDIN, Mr. BILIRAKIS, and Mr. STARK) intro-
duced the following bill; which was referred to the Committee on Ways
and Means, and in addition to the Committee on Commerce, for a period
to be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To amend titles XVIII and XIX of the Social Security Act
to expand and make permanent the availability of cost-
effective, comprehensive acute and long-term care serv-
ices to frail elderly persons through Programs of All-
inclusive Care for the Elderly (PACE) under the Medi-
care and Medicaid programs.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Programs of All-inclu-
sive Care for the Elderly (PACE) Coverage Act of 1997’’.
SEC. 2, COVERAGE OF PACE UNDER THE MEDICARE PRO-
GRAM.
(a) IN GENERAL.—Title XVIII of the Social Security
Act is amended by adding at the end the following new
section:
‘‘PAYMENTS TO, AND COVERAGE OF BENEFITS UNDER,
PROGRAMS OF ALL-INCLUSIVE CARE FOR THE EL-
DERLY (PACE)
‘‘SEC. 1894. (a) RECEIPT OF BENEFITS THROUGH
ENROLLMENT
IN PACE PROGRAM; DEFINITIONS
FOR
PACE PROGRAM RELATED TERMS.—
‘‘(1) BENEFITS THROUGH ENROLLMENT IN A
PACE PROGRAM.—In accordance with this section, in
the case of an individual who is entitled to benefits
under part A or enrolled under part B and who is
a PACE program eligible individual (as defined in
paragraph (5)) with respect to a PACE program of-
fered by a PACE provider under a PACE program
agreement—
‘‘(A) the individual may enroll in the pro-
gram under this section; and
‘‘(B) so long as the individual is so en-
rolled and in accordance with regulations—
‘‘(i) the individual shall receive bene-
fits under this title solely through such
program, and
‘‘(ii) the PACE provider is entitled to
payment under and accordance with this
section and such agreement for provision
of such benefits.
‘‘(2) PACE PROGRAM DEFINED.—For purposes
of this section and section 1833, the term ‘PACE
program’ means a program of all-inclusive care for
the elderly that meets the following requirements:
‘‘(A) OPERATION.—The entity operating
the program is a PACE provider (as defined in
paragraph (3)).
‘‘(B) COMPREHENSIVE
BENEFITS.—The
program provides comprehensive health care
services to PACE program eligible individuals
in accordance with the PACE program agree-
ment and regulations under this section.
‘‘(C) TRANSITION.—In the case of an indi-
vidual who is enrolled under the program under
this section and whose enrollment ceases for
any reason (including the individual no longer
qualifies as a PACE program eligible individual,
the termination of a PACE program agreement,
or otherwise), the program provides assistance
to the individual in obtaining necessary transi-
tional care through appropriate referrals and
making the individual’s medical records avail-
able to new providers.
‘‘(3) PACE PROVIDER DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this
section, the term ‘PACE provider’ means an en-
tity that—
‘‘(i) subject to subparagraph (B), is
(or is a distinct part of) a public entity or
a private, nonprofit entity organized for
charitable 
purposes 
under 
section
501(c)(3) of the Internal Revenue Code of
1986, and
‘‘(ii) has entered into a PACE pro-
gram agreement with respect to its oper-
ation of a PACE program.
‘‘(B) TREATMENT OF PRIVATE, FOR-PROF-
IT PROVIDERS.—Clause (i) of subparagraph (A)
shall not apply—
‘‘(i) to entities subject to a dem-
onstration project waiver under subsection
(h); and
‘‘(ii) after the date the report under
section 5(b) of the Programs of All-inclu-
sive Care for the Elderly (PACE) Coverage
Act of 1997 is submitted, unless the Sec-
retary determines that any of the findings
described in subparagraph (A), (B), or (C)
of paragraph (2) of such section are true.
‘‘(4) PACE PROGRAM AGREEMENT DEFINED.—
For purposes of this section, the term ‘PACE pro-
gram agreement’ means, with respect to a PACE
provider, an agreement, consistent with this section,
section 1933, and regulations promulgated to carry
out such sections, between the PACE provider, the
Secretary, and a State administering agency for the
operation of a PACE program by the provider under
such sections.
‘‘(5) PACE PROGRAM
ELIGIBLE
INDIVIDUAL
DEFINED.—For purposes of this section, the term
‘PACE program eligible individual’ means, with re-
spect to a PACE program, an individual who—
‘‘(A) is 55 years of age or older;
‘‘(B) subject to subsection (c)(4), is deter-
mined under subsection (c) to require the level
of care required under the State medicaid plan
for coverage of nursing facility services;
‘‘(8) STATE
ADMINISTERING
AGENCY
DE-
FINED.—For purposes of this section, the term
‘State administering agency’ means, with respect to
the operation of a PACE program in a State, the
agency of that State (which may be the single agen-
cy responsible for administration of the State plan
under title XIX in the State) responsible for admin-
istering PACE program agreements under this sec-
tion and section 1933 in the State.
‘‘(9) TRIAL PERIOD DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this
section, the term ‘trial period’ means, with re-
spect to a PACE program operated by a PACE
provider under a PACE program agreement,
the first 3 contract years under such agreement
with respect to such program.
‘‘(B) TREATMENT
OF
ENTITIES
PRE-
VIOUSLY
OPERATING
PACE
DEMONSTRATION
WAIVER
PROGRAMS.—Each contract year (in-
cluding a year occurring before the effective
date of this section) during which an entity has
operated a PACE demonstration waiver pro-
gram shall be counted under subparagraph (A)
as a contract year during which the entity oper-
ated a PACE program as a PACE provider
under a PACE program agreement.
‘‘(10) REGULATIONS.—For purposes of this
section, the term ‘regulations’ refers to regulations
promulgated under subsection (f) to carry out this
section and section 1933.
‘‘(b) SCOPE
OF BENEFITS; BENEFICIARY SAFE-
GUARDS.—
‘‘(1) IN GENERAL.—Under a PACE program
agreement, a PACE provider shall—
‘‘(A) provide to PACE program eligible in-
dividuals, regardless of source of payment and
directly or under contracts with other entities,
at a minimum—
‘‘(i) all items and services covered
under this title (for individuals enrolled
under this section) and all items and serv-
ices covered under title XIX, but without
any limitation or condition as to amount,
duration, or scope and without application
of deductibles, copayments, coinsurance, or
other cost-sharing that would generally
apply under this title or such title, respec-
tively; and
‘‘(ii) all additional items and services
specified in regulations, based upon those
required under the PACE protocol;
‘‘(B) provide such enrollees access to nec-
essary covered items and services 24 hours per
day, every day of the year;
‘‘(C) provide services to such enrollees
through 
a 
comprehensive, 
multidisciplinary
health and social services delivery system which
integrates acute and long-term care services
pursuant to regulations; and
‘‘(D) specify the covered items and services
that will not be provided directly by the entity,
and to arrange for delivery of those items and
services through contracts meeting the require-
ments of regulations.
‘‘(2) QUALITY
ASSURANCE; 
PATIENT
SAFE-
GUARDS.—The PACE program agreement shall re-
quire the PACE provider to have in effect at a mini-
mum—
‘‘(A) a written plan of quality assurance
and improvement, and procedures implementing
such plan, in accordance with regulations, and
‘‘(B) written safeguards of the rights of
enrolled participants (including a patient bill of
rights and procedures for grievances and ap-
peals) in accordance with regulations and with
other requirements of this title and Federal and
State law designed for the protection of pa-
tients.
‘‘(c) ELIGIBILITY DETERMINATIONS.—
‘‘(1) IN
GENERAL.—The determination of
whether an individual is a PACE program eligible
individual—
‘‘(A) shall be made under and in accord-
ance with the PACE program agreement, and
‘‘(B) who is entitled to medical assistance
under title XIX, shall be made (or who is not
so entitled, may be made) by the State admin-
istering agency.
‘‘(2) CONDITION.—An individual is not a PACE
program eligible individual (with respect to payment
under this section) unless the individual health sta-
tus has been determined, in accordance with regula-
tions, to be comparable to the health status of indi-
viduals who have participated in the PACE dem-
onstration waiver programs. Such determination
shall be based upon information on health status
and related indicators (such as medical diagnoses
and measures of activities of daily living, instrumen-
tal activities of daily living, and cognitive impair-
ment) that are part of a uniform minimum data set
collected by PACE providers on potential eligible in-
dividuals.
‘‘(3) 
ANNUAL
ELIGIBILITY
RECERTIFI-
CATIONS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the determination described in sub-
section (a)(5)(B) for an individual shall be re-
evaluated at least annually.
‘‘(B) EXCEPTION.—The requirement of
annual reevaluation under subparagraph (A)
may be waived during a period in accordance
with regulations in those cases where the State
administering agency determines that there is
no reasonable expectation of improvement or
significant change in an individual’s condition
during the period because of the advanced age,
severity of the advanced age, severity of chronic
condition, or degree of impairment of functional
capacity of the individual involved.
‘‘(4) CONTINUATION OF ELIGIBILITY.—An indi-
vidual who is a PACE program eligible individual
may be deemed to continue to be such an individual
notwithstanding a determination that the individual
no longer meets the requirement of subsection
(a)(5)(B) if, in accordance with regulations, in the
absence of continued coverage under a PACE pro-
gram the individual reasonably would be expected to
meet such requirement within the succeeding 6–
month period.
‘‘(5) ENROLLMENT; DISENROLLMENT.—The en-
rollment and disenrollment of PACE program eligi-
ble individuals in a PACE program shall be pursu-
ant to regulations and the PACE program agree-
ment and shall permit enrollees to voluntarily
disenroll without cause at any time.
‘‘(d) PAYMENTS
TO
PACE PROVIDERS
ON
A
CAPITATED BASIS.—
‘‘(1) IN GENERAL.—In the case of a PACE pro-
vider with a PACE program agreement under this
section, except as provided in this subsection or by
regulations, the Secretary shall make prospective
monthly payments of a capitation amount for each
PACE program eligible individual enrolled under the
agreement under this section in the same manner
and from the same sources as payments are made
to an eligible organization under a risk-sharing con-
tract under section 1876. Such payments shall be
ments for a PACE provider under this section,
section 1933, and regulations.
‘‘(B) NUMERICAL LIMITATION.—
‘‘(i) IN
GENERAL.—The Secretary
shall not permit the number of PACE pro-
viders with which agreements are in effect
under this section or under section 9412(b)
of the Omnibus Budget Reconciliation Act
of 1986 to exceed—
‘‘(I) 40 as of the date of the en-
actment of this section, or
‘‘(II) as of each succeeding anni-
versary of such date, the numerical
limitation under this subparagraph for
the preceding year plus 20.
Subclause (II) shall apply without regard
to the actual number of agreements in ef-
fect as of a previous anniversary date.
‘‘(ii) TREATMENT
OF
CERTAIN
PRI-
VATE, FOR-PROFIT PROVIDERS.—The nu-
merical limitation in clause (i) shall not
apply to a PACE provider that—
‘‘(I) is operating under a dem-
onstration project waiver under sub-
section (h), or
‘‘(II) was operating under such a
waiver and subsequently qualifies for
PACE provider status pursuant to
subsection (a)(3)(B)(ii).
‘‘(2) SERVICE AREA AND ELIGIBILITY.—
‘‘(A) IN
GENERAL.—A PACE program
agreement for a PACE program—
‘‘(i) shall designate the service area of
the program;
‘‘(ii) may provide additional require-
ments for individuals to qualify as PACE
program eligible individuals with respect to
the program;
‘‘(iii) shall be effective for a contract
year, but may be extended for additional
contract years in the absence of a notice by
a party to terminate and is subject to ter-
mination by the Secretary and the State
administering agency at any time for cause
(as provided under the agreement);
‘‘(iv) shall require a PACE provider to
meet all applicable State and local laws
and requirements; and
‘‘(v) shall have such additional terms
and conditions as the parties may agree to
consistent with this section and regula-
tions.
‘‘(B) SERVICE
AREA
OVERLAP.—In des-
ignating a service area under a PACE program
agreement under subparagraph (A)(i), the Sec-
retary (in consultation with the State admin-
istering agency) may exclude from designation
an area that is already covered under another
PACE program agreement, in order to avoid
unnecessary duplication of services and avoid
impairing the financial and service viability of
an existing program.
‘‘(3) DATA COLLECTION.—
‘‘(A) IN GENERAL.—Under a PACE pro-
gram agreement, the PACE provider shall—
‘‘(i) collect data,
‘‘(ii) maintain, and afford the Sec-
retary and the State administering agency
access to, the records relating to the pro-
gram, including pertinent financial, medi-
cal, and personnel records, and
‘‘(iii) make to the Secretary and the
State administering agency reports that
the Secretary finds (in consultation with
State administering agencies) necessary to
monitor the operation, cost, and effective-
ness of the PACE program under this Act.
‘‘(B) REQUIREMENTS DURING TRIAL PE-
RIOD.—During the first three years of oper-
ation of a PACE program (either under this
section or under a PACE demonstration waiver
program), the PACE provider shall provide
such additional data as the Secretary specifies
in regulations in order to perform the oversight
required under paragraph (4)(A).
‘‘(4) OVERSIGHT.—
‘‘(A) ANNUAL, CLOSE OVERSIGHT DURING
TRIAL PERIOD.—During the trial period (as de-
fined in subsection (a)(9)) with respect to a
PACE program operated by a PACE provider,
the Secretary (in cooperation with the State ad-
ministering agency) shall conduct a comprehen-
sive annual review of the operation of the
PACE program by the provider in order to as-
sure compliance with the requirements of this
section and regulations. Such a review shall in-
clude—
‘‘(i) an on-site visit to the program
site;
‘‘(ii) comprehensive assessment of a
provider’s fiscal soundness;
‘‘(iii) comprehensive assessment of the
provider’s capacity to provide all PACE
services to all enrolled participants;
‘‘(iv) detailed analysis of the entity’s
substantial compliance with all significant
requirements of this section and regula-
tions; and
‘‘(v) any other elements the Secretary
or State agency considers necessary or ap-
propriate.
‘‘(B) CONTINUING OVERSIGHT.—After the
trial period, the Secretary (in cooperation with
the State administering agency) shall continue
to conduct such review of the operation of
PACE providers and PACE programs as may
be appropriate, taking into account the per-
formance level of a provider and compliance of
a provider with all significant requirements of
this section and regulations.
‘‘(C) DISCLOSURE.—The results of reviews
under this paragraph shall be reported prompt-
ly to the PACE provider, along with any rec-
ommendations for changes to the provider’s
program, and shall be made available to the
public upon request.
‘‘(5) TERMINATION OF PACE PROVIDER AGREE-
MENTS.—
‘‘(A) IN GENERAL.—Under regulations—
‘‘(i) the Secretary or a State admin-
istering agency may terminate a PACE
program agreement for cause, and
‘‘(ii) a PACE provider may terminate
such an agreement after appropriate notice
to the Secretary, the State agency, and en-
rollees.
‘‘(B) CAUSES FOR TERMINATION.—In ac-
cordance with regulations establishing proce-
dures for termination of PACE program agree-
ments, the Secretary may terminate a PACE
program agreement with a PACE provider for,
among other reasons, the fact that—
‘‘(i) the Secretary or State admin-
istering agency determines that—
‘‘(I) there are significant defi-
ciencies in the quality of care provided
to enrolled participants; or
‘‘(II) the provider has failed to
comply substantially with conditions
for a program or provider under this
section or section 1933; and
‘‘(ii) the entity has failed to develop
and successfully initiate, within 30 days
after the date of notice of such a deter-
mination, and continue implementation of
a plan to correct the deficiencies.
‘‘(C) TERMINATION AND TRANSITION PRO-
CEDURES.—An entity whose PACE provider
agreement is terminated under this paragraph
shall implement the transition procedures re-
quired under subsection (a)(2)(C).
‘‘(6) SECRETARY’S OVERSIGHT; ENFORCEMENT
AUTHORITY.—
‘‘(A) IN GENERAL.—Under regulations, if
the Secretary determines (after consultation
with the State administering agency) that a
PACE provider is failing substantially to com-
ply with the requirements of this section and
regulations, the Secretary (and the State ad-
ministering agency) may take any or all of the
following actions:
‘‘(i) Condition the continuation of the
PACE program agreement upon timely
execution of a corrective action plan.
‘‘(ii) Withhold some or all further
payments under the PACE program agree-
ment under this section or section 1933
with respect to PACE program services
furnished by such provider until the defi-
ciencies have been corrected.
‘‘(iii) Terminate such agreement.
‘‘(B) APPLICATION
OF
INTERMEDIATE
SANCTIONS.—Under regulations, the Secretary
may provide for the application against a
PACE provider of remedies described in section
1876(i)(6)(B) or 1903(m)(5)(B) in the case of
violations by the provider of the type described
in section 1876(i)(6)(A) or 1903(m)(5)(A), re-
spectively (in relation to agreements, enrollees,
and requirements under this section or section
1933, respectively).
‘‘(7) PROCEDURES FOR TERMINATION OR IMPO-
SITION OF SANCTIONS.—Under regulations, the pro-
visions of section 1876(i)(9) shall apply to termi-
nation and sanctions respecting a PACE program
agreement and PACE provider under this subsection
in the same manner as they apply to a termination
and sanctions with respect to a contract and an eli-
gible organization under section 1876.
‘‘(f) REGULATIONS.—
‘‘(1) IN GENERAL.—The Secretary shall issue
regulations to carry out this section and section
1933.
‘‘(2) USE OF PACE PROTOCOL.—
‘‘(A) IN GENERAL.—In issuing such regu-
lations, the Secretary shall, to the extent con-
sistent with the provisions of this section, incor-
porate the requirements applied to PACE dem-
onstration waiver programs under the PACE
protocol.
‘‘(B) FLEXIBILITY.—The Secretary (in
close consultation with State administering
agencies) may modify or waive such provisions
of the PACE protocol in order to provide for
reasonable flexibility in adapting the PACE
service delivery model to the needs of particular
organizations (such as those in rural areas or
those that may determine it appropriate to use
non-staff physicians accordingly to State licens-
ing law requirements) under this section and
section 1933 where such flexibility is not incon-
sistent with and would not impair the essential
elements, objectives, and requirements of the
this section, including—
‘‘(i) the focus on frail elderly qualify-
ing individuals who require the level of
care provided in a nursing facility;
‘‘(ii) the delivery of comprehensive, in-
tegrated acute and long-term care services;
‘‘(iii) the interdisciplinary team ap-
proach to care management and service de-
livery;
‘‘(iv) capitated, integrated financing
that allows the provider to pool payments
received from public and private programs
and individuals; and
‘‘(v) the assumption by the provider
over time of full financial risk.
‘‘(3) APPLICATION
OF
CERTAIN
ADDITIONAL
BENEFICIARY AND PROGRAM PROTECTIONS.—
‘‘(A) IN GENERAL.—In issuing such regu-
lations and subject to subparagraph (B), the
Secretary may apply with respect to PACE pro-
grams, providers, and agreements such require-
ments of sections 1876 and 1903(m) relating to
protection of beneficiaries and program integ-
rity as would apply to eligible organizations
under risk-sharing contracts under section 1876
and to health maintenance organizations under
prepaid capitation agreements under section
1903(m).
‘‘(B) CONSIDERATIONS.—In issuing such
regulations, the Secretary shall—
‘‘(i) take into account the differences
between populations served and benefits
provided under this section and under sec-
tions 1876 and 1903(m);
‘‘(ii) not include any requirement that
conflicts with carrying out PACE pro-
grams under this section; and
‘‘(iii) not include any requirement re-
stricting the proportion of enrollees who
are eligible for benefits under this title or
title XIX
‘‘(g) WAIVERS OF REQUIREMENTS.—With respect to
carrying out a PACE program under this section, the fol-
lowing requirements of this title (and regulations relating
to such requirements) are waived and shall not apply:
‘‘(1) Section 1812, insofar as it limits coverage
of institutional services.
‘‘(2) Sections 1813, 1814, 1833, and 1886, in-
sofar as such sections relate to rules for payment for
benefits.
‘‘(3) Sections 1814(a)(2)(B), 1814(a)(2)(C),
and 1835(a)(2)(A), insofar as they limit coverage of
extended care services or home health services.
‘‘(4) Section 1861(i), insofar as it imposes a 3-
day prior hospitalization requirement for coverage of
extended care services.
‘‘(5) Sections 1862(a)(1) and 1862(a)(9), inso-
far as they may prevent payment for PACE program
services to individuals enrolled under PACE pro-
grams.
‘‘(h) DEMONSTRATION PROJECT FOR FOR-PROFIT
ENTITIES.—
‘‘(1) IN
GENERAL.—In order to demonstrate
the operation of a PACE program by a private, for-
profit entity, the Secretary (in close consultation
with State administering agencies) shall grant waiv-
ers from the requirement under subsection (a)(3)
that a PACE provider may not be a for-profit, pri-
vate entity.
‘‘(2) SIMILAR TERMS AND CONDITIONS.—
‘‘(A) IN
GENERAL.—Except as provided
under subparagraph (B), and paragraph (1),
the terms and conditions for operation of a
PACE program by a provider under this sub-
section shall be the same as those for PACE
providers that are nonprofit, private organiza-
tions.
‘‘(B) NUMERICAL LIMITATION.—The num-
ber of programs for which waivers are granted
under this subsection shall not exceed 10. Pro-
grams with waivers granted under this sub-
section shall not be counted against the numeri-
cal limitation specified in subsection (e)(1)(B).
‘‘(i) MISCELLANEOUS PROVISIONS.—
‘‘(1) CONSTRUCTION.—Nothing in this section
or section 1933 shall be construed as preventing a
PACE provider from entering into contracts with
nongovernmental payers for the care of PACE pro-
gram eligible individuals who are not eligible for
benefits under part A, or enrolled under part B, or
eligible for medical assistance under title XIX.’’.
SEC. 3. ESTABLISHMENT OF PACE PROGRAM AS MEDICAID
STATE OPTION.
(a) IN GENERAL.—Title XIX of the Social Security
Act is amended—
(1) in section 1905(a) (42 U.S.C. 1396d(a))—
(A) by striking ‘‘and’’ at the end of para-
graph (24);
(B) by redesignating paragraph (25) as
paragraph (26); and
(C) by inserting after paragraph (24) the
following new paragraph:
‘‘(25) services furnished under a PACE pro-
gram under section 1933 to PACE program eligible
individuals enrolled under the program under such
section; and’’;
(2) by redesignating section 1933 as section
1934, and
(3) by inserting after section 1932 the following
new section:
‘‘SEC. 1933. PROGRAM OF ALL-INCLUSIVE CARE FOR THE
ELDERLY (PACE).
‘‘(a) OPTION.—
‘‘(1) IN GENERAL.—A State may elect to pro-
vide medical assistance under this section with re-
spect to PACE program services to PACE program
eligible individuals who are eligible for medical as-
sistance under the plan and who are enrolled in a
PACE program under a PACE program agreement.
Such individuals need not be eligible for benefits
under part A, or enrolled under part B, of title
XVIII to be eligible to enroll under this section.
‘‘(2) BENEFITS
THROUGH
ENROLLMENT
IN
PACE PROGRAM.—In the case of an individual en-
rolled with a PACE program pursuant to such an
election—
‘‘(A) the individual shall receive benefits
under the plan solely through such program,
and
‘‘(B) the PACE provider shall receive pay-
ment in accordance with the PACE program
agreement for provision of such benefits.
‘‘(3) APPLICATION OF DEFINITIONS.—The defi-
nitions of terms under section 1894(a) shall apply
under this section in the same manner as they apply
under section 1894.
‘‘(b) APPLICATION OF MEDICARE TERMS AND CON-
DITIONS.—Except as provided in this section, the terms
and conditions for the operation and participation of
PACE program eligible individuals in PACE programs of-
fered by PACE providers under PACE program agree-
ments under section 1894 shall apply for purposes of this
section.
‘‘(c) ADJUSTMENT IN PAYMENT AMOUNTS.—
‘‘(1) CAPITATION PAYMENT.—In the case of in-
dividuals enrolled in a PACE program under this
section, the amount of payment under this section
shall not be the amount calculated under section
1894(d), but shall be an amount, specified under the
PACE agreement, which is less than the amount
that would otherwise have been made under the
State plan if the individuals were not so enrolled.
The payment under this section shall be in addition
to any payment made under section 1894 for indi-
viduals who are enrolled in a PACE program under
such section.
‘‘(2) TRANSITION DURING TRIAL PERIOD.—
‘‘(A) IN GENERAL.—Consistent with regu-
lations, a PACE provider may elect to receive
payment for a portion of its allowable operating
losses (as defined in such regulation) during the
trial period. Such portion shall decrease over
the duration of the trial period.
‘‘(B) PAYMENT
UNDER
PLAN.—Payment
under this paragraph shall represent only the
portion of such losses attributable to State
plans under this title.
‘‘(C) 
USE
OF
PAYMENTS.—Payments
under this paragraph may only be used in a
manner specified in regulations.
‘‘(d) WAIVERS OF REQUIREMENTS.—With respect to
carrying out a PACE program under this section, the fol-
lowing requirements of this title (and regulations relating
to such requirements) shall not apply:
‘‘(1) Section 1902(a)(1), relating to any re-
quirement that PACE programs or PACE program
services be provided in all areas of a State.
‘‘(2) Section 1902(a)(10), insofar as such sec-
tion relates to comparability of services among dif-
ferent population groups.
‘‘(3) Sections 1902(a)(23) and 1915(b)(4), re-
lating to freedom of choice of providers under a
PACE program.
‘‘(4) Section 1903(m)(2)(A), insofar as it re-
stricts a PACE provider receiving prepaid capitation
payments.’’.
‘‘(e) POST-ELIGIBILITY TREATMENT OF INCOME.—
A State may provide for post-eligibility treatment of in-
come for individuals enrolled in PACE programs under
this section in the same manner as a State treats post-
eligibility income for individuals receiving services under
a waiver under section 1915(c).’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1902(j) of such Act (42 U.S.C.
1396a(j)) is amended by striking ‘‘(25)’’ and insert-
ing ‘‘(26)’’.
(2) Section 1924(a)(5) of such Act (42 U.S.C.
1396r–5(a)(5)) is amended—
(A) in the heading, by striking ‘‘FROM OR-
GANIZATIONS
RECEIVING
CERTAIN
WAIVERS’’
and inserting ‘‘UNDER PACE PROGRAMS’’, and
(B) by striking ‘‘from any organization’’
and all that follows and inserting ‘‘under a
PACE demonstration waiver program (as de-
fined in subsection (a)(9) of section 1933) or
under a PACE program under such section.’’.
(3) Section 1903(f)(4)(C) of such Act (42
U.S.C. 1396b(f)(4)(C)) is amended by inserting ‘‘or
who is a PACE program eligible individual enrolled
in a PACE program under section 1933’’ after ‘‘sec-
tion 1902(a)(10)(A)’’.
SEC. 4. EFFECTIVE DATE; TRANSITION.
(a) TIMELY ISSUANCE OF REGULATIONS; EFFECTIVE
DATE.—The Secretary of Health and Human Services
shall promulgate regulations to carry out this Act in a
timely manner. Such regulations shall be designed so that
entities may establish and operate PACE programs under
sections 1894 and 1933 for periods beginning not later
than 1 year after the date of the enactment of this Act.
(b) EXPANSION AND TRANSITION FOR PACE DEM-
ONSTRATION PROJECT WAIVERS.—
(1) EXPANSION IN CURRENT NUMBER OF DEM-
ONSTRATION PROJECTS.—Paragraph (1) of section
9412(b) of the Omnibus Budget Reconciliation Act
of 1986 is amended by inserting before the period at
the end the following: ‘‘, except that the Secretary
shall grant waivers of such requirements to up to
the applicable numerical limitation specified in sec-
tion 1894(e)(1)(B) of the Social Security Act’’.
(2) EXTENSION.—Paragraph (2)(C) of such
section is amended by adding at the end the follow-
ing: ‘‘In granting further extensions, an organization
shall not be required to provide for reporting of in-
formation which is only required because of the dem-
onstration nature of the project.’’.
(3) ELIMINATION
OF
REPLICATION
REQUIRE-
MENT.—Subparagraph (B) of paragraph (2) of such
section shall not apply to waivers granted under
such section after the date of the enactment of this
Act.
(4) TIMELY
CONSIDERATION
OF
APPLICA-
TIONS.—In considering completed an application for
waivers under such section before the effective date
of repeals under subsection (c), subject to the nu-
merical limitation under the amendment made by
paragraph (1), the application shall be deemed
granted unless the Secretary of Health and Human
Services, within 90 days after the date of its submis-
sion to the Secretary, either denies such request in
writing or informs the applicant in writing with re-
spect to any additional information which is needed
in order to make a final determination with respect
to the application. After the date the Secretary re-
ceives such additional information, the application
shall be deemed granted unless the Secretary, within
90 days of such date, denies such request.
(c) PRIORITY AND SPECIAL CONSIDERATION IN AP-
PLICATION.—During the 3-year period beginning on the
date of the enactment of this Act—
(1) PROVIDER
STATUS.—The Secretary of
Health and Human Services shall give priority, in
processing applications of entities to qualify as
PACE programs under section 1894 or 1933 of the
Social Security Act—
(A) first, to entities that are operating a
PACE demonstration waiver program (as de-
fined in section 1894(a)(7) of such Act), and
(B) then entities that have applied to oper-
ate such a program as of May 1, 1997.
(2) NEW WAIVERS.—The Secretary shall give
priority, in the awarding of additional waivers under
section 9412(b) of the Omnibus Budget Reconcili-
ation Act of 1986, to any entities that have applied
for such waivers under such section as of May 1,
1997.
(3) SPECIAL CONSIDERATION.—The Secretary
shall give special consideration, in the processing of
applications described in paragraph (1) and the
awarding of waivers described in paragraph (2), to
an entity which either, as of May 1, 1997—
(A) has formally contracted with a State to
provide services for which payment is made on
a capitated basis with an understanding that
entity was seeking to become a PACE provider,
or
(B) through formal activities (such as en-
tering into contracts for feasibility studies) has
indicated a specific intent to become a PACE
provider.
(d) REPEAL OF CURRENT PACE DEMONSTRATION
PROJECT WAIVER AUTHORITY.—
(1) IN GENERAL.—Subject to paragraph (2),
the following provisions of law are repealed:
(A) Section 603(c) of the Social Security
Amendments of 1983 (Public Law 98–21).
(B) Section 9220 of the Consolidated Om-
nibus Budget Reconciliation Act of 1985 (Pub-
lic Law 99–272).
(C) Section 9412(b) of the Omnibus Budg-
et Reconciliation Act of 1986 (Public Law 99–
509).
(2) DELAY IN APPLICATION.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the repeals made by paragraph (1)
shall not apply to waivers granted before the
initial effective date of regulations described in
subsection (a).
(B) APPLICATION
TO
APPROVED
WAIV-
ERS.—Such repeals shall apply to waivers
granted before such date only after allowing
such organizations a transition period (of up to
24 months) in order to permit sufficient time
for an orderly transition from demonstration
project authority to general authority provided
under the amendments made by this Act.
SEC. 5. STUDY AND REPORTS.
(a) STUDY.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (in close consultation with State
administering agencies, as defined in section 1894 of
the Social Security Act) shall conduct a study of the
quality and cost of providing PACE program serv-
ices under the Medicare and Medicaid programs
under the amendments made by this Act
(2) STUDY OF PRIVATE, FOR-PROFIT PROVID-
ERS.— Such study shall specifically compare the
costs, quality, and access to services by entities that
are private, for-profit entities operating under dem-
onstration projects waivers granted under section
1894(h) of the Social Security Act with the costs,
quality, and access to services of other PACE pro-
viders.
(b) REPORT.—
(1) IN GENERAL.—Not later than 4 years after
the date of the enactment of this Act, the Secretary
shall provide for a report to Congress on the impact
of such amendments on quality and cost of services.
The Secretary shall include in such report such rec-
ommendations for changes in the operation of such
amendments as the Secretary deems appropriate.
(2) TREATMENT OF PRIVATE, FOR-PROFIT PRO-
VIDERS.—The report shall include specific findings
on whether any of the following findings is true:
(A) The number of covered lives enrolled
with entities operating under demonstration
project waivers under section 1894(h) of the
Social Security Act is fewer than 800 (or such
lesser number as the Secretary may find statis-
tically sufficient to make determinations re-
specting findings described in the succeeding
subparagraphs).
(B) The population enrolled with such en-
tities is less frail than the population enrolled
with other PACE providers.
(C) Access to or quality of care for individ-
uals enrolled with such entities is lower than
such access or quality for individuals enrolled
with other PACE providers.
(D) The application of such section has re-
sulted in an increase in expenditures under the
Medicare or Medicaid programs above the ex-
penditures that would have been made if such
section did not apply.
(c) INFORMATION
INCLUDED
IN
ANNUAL
REC-
OMMENDATIONS.—The Physician Payment Review Com-
mission shall include in its annual recommendations under
section 1845(b) of the Social Security Act, and the Pro-
spective Payment Review Commission shall include in its
annual 
recommendations 
reported 
under 
section
1886(e)(3)(A) of such Act, recommendations on the meth-
odology and level of payments made to PACE providers