
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document affected by Public Law 106-554 Section 1(a)(6)[902(a)]]
[Document affected by Public Law 106-554 Section 1(a)(6)[901]]
[Document affected by Public Law 106-554 Section 1(a)(6)[902(c)]]
[Document affected by Public Law 106-554 Section 1(a)(6)[903]]
[CITE: 42USC1395eee]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
        SUBCHAPTER XVIII--HEALTH INSURANCE FOR AGED AND DISABLED
 
                    Part D--Miscellaneous Provisions
 
Sec. 1395eee. Payments to, and coverage of benefits under, 
        programs of all-inclusive care for elderly (PACE)
        

(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 of this subchapter or 
    enrolled under part B of this subchapter and who is a PACE program 
    eligible individual (as defined in paragraph (5)) with respect to a 
    PACE program offered by a PACE provider under a PACE program 
    agreement--
            (A) the individual may enroll in the program under this 
        section; and
            (B) so long as the individual is so enrolled and in 
        accordance with regulations--
                (i) the individual shall receive benefits under this 
            subchapter solely through such program; and
                (ii) the PACE provider is entitled to payment under and 
            in accordance with this section and such agreement for 
            provision of such benefits.

                    (2) ``PACE program'' defined

        For purposes of this section, 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 agreement and regulations under this section.

        (C) Transition

            In the case of an individual who is enrolled under the 
        program under this section and whose enrollment ceases for any 
        reason (including that 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 transitional 
        care through appropriate referrals and making the individual's 
        medical records available to new providers.

                    (3) ``PACE provider'' defined

        (A) In general

            For purposes of this section, the term ``PACE provider'' 
        means an entity 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 program agreement with 
            respect to its operation of a PACE program.

        (B) Treatment of private, for-profit providers

            Clause (i) of subparagraph (A) shall not apply--
                (i) to entities subject to a demonstration project 
            waiver under subsection (h) of this section; and
                (ii) after the date the report under section 4804(b) of 
            the Balanced Budget Act of 1997 is submitted, unless the 
            Secretary determines that any of the findings described in 
            subparagraph (A), (B), (C), or (D) of paragraph (2) of such 
            section are true.

               (4) ``PACE program agreement'' defined

        For purposes of this section, the term ``PACE program 
    agreement'' means, with respect to a PACE provider, an agreement, 
    consistent with this section, section 1396u-4 of this title (if 
    applicable), and regulations promulgated to carry out such sections, 
    between the PACE provider and the Secretary, or an agreement between 
    the PACE provider 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 respect to a PACE program, an individual 
    who--
            (A) is 55 years of age or older;
            (B) subject to subsection (c)(4) of this section, is 
        determined under subsection (c) of this section to require the 
        level of care required under the State medicaid plan for 
        coverage of nursing facility services;
            (C) resides in the service area of the PACE program; and
            (D) meets such other eligibility conditions as may be 
        imposed under the PACE program agreement for the program under 
        subsection (e)(2)(A)(ii) of this section.

                    (6) ``PACE protocol'' defined

        For purposes of this section, the term ``PACE protocol'' means 
    the Protocol for the Program of All-inclusive Care for the Elderly 
    (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.

          (7) ``PACE demonstration waiver program'' defined

        For purposes of this section, the term ``PACE demonstration 
    waiver program'' means a demonstration program under either of the 
    following sections (as in effect before the date of their repeal):
            (A) Section 603(c) of the Social Security Amendments of 1983 
        (Public Law 98-21), as extended by section 9220 of the 
        Consolidated Omnibus Budget Reconciliation Act of 1985 (Public 
        Law 99-272).
            (B) Section 9412(b) of the Omnibus Budget Reconciliation Act 
        of 1986 (Public Law 99-509).

             (8) ``State administering agency'' defined

        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 agency 
    responsible for administration of the State plan under subchapter 
    XIX of this chapter in the State) responsible for administering PACE 
    program agreements under this section and section 1396u-4 of this 
    title in the State.

                    (9) ``Trial period'' defined

        (A) In general

            For purposes of this section, the term ``trial period'' 
        means, with respect 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 previously operating PACE 
                demonstration waiver programs

            Each contract year (including a year occurring before the 
        effective date of this section) during which an entity has 
        operated a PACE demonstration waiver program shall be counted 
        under subparagraph (A) as a contract year during which the 
        entity operated a PACE program as a PACE provider under a PACE 
        program agreement.

                    (10) ``Regulations'' defined

        For purposes of this section, the term ``regulations'' refers to 
    interim final or final regulations promulgated under subsection (f) 
    of this section to carry out this section and section 1396u-4 of 
    this title.

(b) Scope of benefits; beneficiary safeguards

                           (1) In general

        Under a PACE program agreement, a PACE provider shall--
            (A) provide to PACE program eligible individuals enrolled 
        with the provider, regardless of source of payment and directly 
        or under contracts with other entities, at a minimum--
                (i) all items and services covered under this subchapter 
            (for individuals enrolled under this section) and all items 
            and services covered under subchapter XIX of this chapter, 
            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 
            otherwise apply under this subchapter or such subchapter, 
            respectively; and
                (ii) all additional items and services specified in 
            regulations, based upon those required under the PACE 
            protocol;

            (B) provide such enrollees access to necessary 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 
        requirements of regulations.

              (2) Quality assurance; patient safeguards

        The PACE program agreement shall require the PACE provider to 
    have in effect at a minimum--
            (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 appeals) in accordance with regulations and 
        with other requirements of this subchapter and Federal and State 
        law that are designed for the protection of patients.

(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 accordance with the PACE 
        program agreement; and
            (B) who is entitled to medical assistance under subchapter 
        XIX of this chapter, shall be made (or who is not so entitled, 
        may be made) by the State administering agency.

                            (2) Condition

        An individual is not a PACE program eligible individual (with 
    respect to payment under this section) unless the individual's 
    health status has been determined by the Secretary or the State 
    administering agency, in accordance with regulations, to be 
    comparable to the health status of individuals who have participated 
    in the PACE demonstration 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, instrumental activities of daily living, and cognitive 
    impairment) that are part of a uniform minimum data set collected by 
    PACE providers on potential PACE program eligible individuals.

               (3) Annual eligibility recertifications

        (A) In general

            Subject to subparagraph (B), the determination described in 
        subsection (a)(5)(B) of this section for an individual shall be 
        reevaluated 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 severity of chronic condition, or degree 
        of impairment of functional capacity of the individual involved.

                   (4) Continuation of eligibility

        An individual 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) of this section if, in accordance with 
    regulations, in the absence of continued coverage under a PACE 
    program the individual reasonably would be expected to meet such 
    requirement within the succeeding 6-month period.

                    (5) Enrollment; disenrollment

        (A) Voluntary disenrollment at any time

            The enrollment and disenrollment of PACE program eligible 
        individuals in a PACE program shall be pursuant to regulations 
        and the PACE program agreement and shall permit enrollees to 
        voluntarily disenroll without cause at any time.

        (B) Limitations on disenrollment

            (i) In general

                Regulations promulgated by the Secretary under this 
            section and section 1396u-4 of this title, and the PACE 
            program agreement, shall provide that the PACE program may 
            not disenroll a PACE program eligible individual except--
                    (I) for nonpayment of premiums (if applicable) on a 
                timely basis; or
                    (II) for engaging in disruptive or threatening 
                behavior, as defined in such regulations (developed in 
                close consultation with State administering agencies).
            (ii) No disenrollment for noncompliant behavior

                Except as allowed under regulations promulgated to carry 
            out clause (i)(II), a PACE program may not disenroll a PACE 
            program eligible individual on the ground that the 
            individual has engaged in noncompliant behavior if such 
            behavior is related to a mental or physical condition of the 
            individual. For purposes of the preceding sentence, the term 
            ``noncompliant behavior'' includes repeated noncompliance 
            with medical advice and repeated failure to appear for 
            appointments.
            (iii) Timely review of proposed nonvoluntary 
                    disenrollment

                A proposed disenrollment, other than a voluntary 
            disenrollment, shall be subject to timely review and final 
            determination by the Secretary or by the State administering 
            agency (as applicable), prior to the proposed disenrollment 
            becoming effective.

(d) Payments to PACE providers on capitated basis

                           (1) In general

        In the case of a PACE provider 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 a Medicare+
    Choice organization under section 1395w-23 of this title (or, for 
    periods beginning before January 1, 1999, to an eligible 
    organization under a risk-sharing contract under section 1395mm of 
    this title). Such payments shall be subject to adjustment in the 
    manner described in section 1395w-23(a)(2) of this title or section 
    1395mm(a)(1)(E) of this title, as the case may be.

                        (2) Capitation amount

        The capitation amount to be applied under this subsection for a 
    provider for a contract year shall be an amount specified in the 
    PACE program agreement for the year. Such amount shall be based upon 
    payment rates established for purposes of payment under section 
    1395w-23 of this title (or, for periods before January 1, 1999, for 
    purposes of risk-sharing contracts under section 1395mm of this 
    title) and shall be adjusted to take into account the comparative 
    frailty of PACE enrollees and such other factors as the Secretary 
    determines to be appropriate. Such amount under such an agreement 
    shall be computed in a manner so that the total payment level for 
    all PACE program eligible individuals enrolled under a program is 
    less than the projected payment under this subchapter for a 
    comparable population not enrolled under a PACE program.

(e) PACE program agreement

                           (1) Requirement

        (A) In general

            The Secretary, in close cooperation with the State 
        administering agency, shall establish procedures for entering 
        into, extending, and terminating PACE program agreements for the 
        operation of PACE programs by entities that meet the 
        requirements for a PACE provider under this section, section 
        1396u-4 of this title, and regulations.

        (B) Numerical limitation

            (i) In general

                The Secretary shall not permit the number of PACE 
            providers 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 August 5, 1997; or
                    (II) as of each succeeding anniversary of August 5, 
                1997, 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 effect as of a previous anniversary date.
            (ii) Treatment of certain private, for-profit 
                    providers

                The numerical limitation in clause (i) shall not apply 
            to a PACE provider that--
                    (I) is operating under a demonstration project 
                waiver under subsection (h) of this section; or
                    (II) was operating under such a waiver and 
                subsequently qualifies for PACE provider status pursuant 
                to subsection (a)(3)(B)(ii) of this section.

                  (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 requirements 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 termination 
            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 contain such additional terms and conditions 
            as the parties may agree to, so long as such terms and 
            conditions are consistent with this section and regulations.

        (B) Service area overlap

            In designating a service area under a PACE program agreement 
        under subparagraph (A)(i), the Secretary (in consultation with 
        the State administering 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; development of outcome measures

        (A) Data collection

            (i) In general

                Under a PACE program agreement, the PACE provider 
            shall--
                    (I) collect data;
                    (II) maintain, and afford the Secretary and the 
                State administering agency access to, the records 
                relating to the program, including pertinent financial, 
                medical, and personnel records; and
                    (III) make available 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 
                effectiveness of the PACE program under this section and 
                section 1396u-4 of this title.
            (ii) Requirements during trial period

                During the first 3 years of operation 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).

        (B) Development of outcome measures

            Under a PACE program agreement, the PACE provider, the 
        Secretary, and the State administering agency shall jointly 
        cooperate in the development and implementation of health status 
        and quality of life outcome measures with respect to PACE 
        program eligible individuals.

                            (4) Oversight

        (A) Annual, close oversight during trial period

            During the trial period (as defined in subsection (a)(9) of 
        this section) with respect to a PACE program operated by a PACE 
        provider, the Secretary (in cooperation with the State 
        administering agency) shall conduct a comprehensive annual 
        review of the operation of the PACE program by the provider in 
        order to assure compliance with the requirements of this section 
        and regulations. Such a review shall include--
                (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 regulations; and
                (v) any other elements the Secretary or State 
            administering agency considers necessary or appropriate.

        (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 performance 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 promptly to the PACE provider, along with any 
        recommendations for changes to the provider's program, and shall 
        be made available to the public upon request.

             (5) Termination of PACE provider agreements

        (A) In general

            Under regulations--
                (i) the Secretary or a State administering agency may 
            terminate a PACE program agreement for cause; and
                (ii) a PACE provider may terminate an agreement after 
            appropriate notice to the Secretary, the State agency, and 
            enrollees.

        (B) Causes for termination

            In accordance with regulations establishing procedures for 
        termination of PACE program agreements, the Secretary or a State 
        administering agency may terminate a PACE program agreement with 
        a PACE provider for, among other reasons, the fact that--
                (i) the Secretary or State administering agency 
            determines that--
                    (I) there are significant deficiencies 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 1396u-4 of this title; and

                (ii) the entity has failed to develop and successfully 
            initiate, within 30 days of the date of the receipt of 
            written notice of such a determination, a plan to correct 
            the deficiencies, or has failed to continue implementation 
            of such a plan.

        (C) Termination and transition procedures

            An entity whose PACE provider agreement is terminated under 
        this paragraph shall implement the transition procedures 
        required under subsection (a)(2)(C) of this section.

          (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 comply with the 
        requirements of this section and regulations, the Secretary (and 
        the State administering 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 agreement under this section or section 1396u-4 
            of this title with respect to PACE program services 
            furnished by such provider until the deficiencies 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 1395w-27(g)(2) (or, for periods before January 1, 1999, 
        section 1395mm(i)(6)(B) of this title) or 1396b(m)(5)(B) of this 
        title in the case of violations by the provider of the type 
        described in section 1395w-27(g)(1) (or section 1395mm(i)(6)(A) 
        of this title for such periods) or 1396b(m)(5)(A) of this title, 
        respectively (in relation to agreements, enrollees, and 
        requirements under this section or section 1396u-4 of this 
        title, respectively).

      (7) Procedures for termination or imposition of sanctions

        Under regulations, the provisions of section 1395w-27(h) of this 
    title (or for periods before January 1, 1999, section 1395mm(i)(9) 
    of this title) shall apply to termination 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 a Medicare+Choice organization under part 
    C of this subchapter (or for such periods an eligible organization 
    under section 1395mm of this title).

     (8) Timely consideration of applications for PACE program 
                               provider status

        In considering an application for PACE provider program status, 
    the application shall 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. After the date the Secretary receives such 
    additional information, the application shall be deemed approved 
    unless the Secretary, within 90 days of such date, denies such 
    request.

(f) Regulations

                           (1) In general

        The Secretary shall issue interim final or final regulations to 
    carry out this section and section 1396u-4 of this title.

                      (2) Use of PACE protocol

        (A) In general

            In issuing such regulations, the Secretary shall, to the 
        extent consistent with the provisions of this section, 
        incorporate the requirements applied to PACE demonstration 
        waiver programs under the PACE protocol.

        (B) Flexibility

            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 nonstaff physicians according to 
        State licensing law requirements) under this section and section 
        1396u-4 of this title, the Secretary (in close consultation with 
        State administering agencies) may modify or waive provisions of 
        the PACE protocol so long as any such modification or waiver is 
        not inconsistent with and would not impair the essential 
        elements, objectives, and requirements of this section, but may 
        not modify or waive any of the following provisions:
                (i) The focus on frail elderly qualifying individuals 
            who require the level of care provided in a nursing 
            facility.
                (ii) The delivery of comprehensive, integrated acute and 
            long-term care services.
                (iii) The interdisciplinary team approach to care 
            management and service delivery.
                (iv) Capitated, integrated financing that allows the 
            provider to pool payments received from public and private 
            programs and individuals.
                (v) The assumption by the provider of full financial 
            risk.

       (3) Application of certain additional beneficiary and 
                             program protections

        (A) In general

            In issuing such regulations and subject to subparagraph (B), 
        the Secretary may apply with respect to PACE programs, 
        providers, and agreements such requirements of part C of this 
        subchapter (or, for periods before January 1, 1999, section 
        1395mm of this title) and sections 1396b(m) and 1396u-2 of this 
        title relating to protection of beneficiaries and program 
        integrity as would apply to Medicare+Choice organizations under 
        part C of this subchapter (or for such periods eligible 
        organizations under risk-sharing contracts under section 1395mm 
        of this title) and to medicaid managed care organizations under 
        prepaid capitation agreements under section 1396b(m) of this 
        title.

        (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 part C of this subchapter (or, for periods before 
            January 1, 1999, section 1395mm of this title) and section 
            1396b(m) of this title;
                (ii) not include any requirement that conflicts with 
            carrying out PACE programs under this section; and
                (iii) not include any requirement restricting the 
            proportion of enrollees who are eligible for benefits under 
            this subchapter or subchapter XIX of this chapter.

                          (4) Construction

        Nothing in this subsection shall be construed as preventing the 
    Secretary from including in regulations provisions to ensure the 
    health and safety of individuals enrolled in a PACE program under 
    this section that are in addition to those otherwise provided under 
    paragraphs (2) and (3).

(g) Waivers of requirements

    With respect to carrying out a PACE program under this section, the 
following requirements of this subchapter (and regulations relating to 
such requirements) are waived and shall not apply:
        (1) Section 1395d of this title, insofar as it limits coverage 
    of institutional services.
        (2) Sections 1395e, 1395f, 1395l, and 1395ww of this title, 
    insofar as such sections relate to rules for payment for benefits.
        (3) Sections 1395f(a)(2)(B), 1395f(a)(2)(C), and 1395n(a)(2)(A) 
    of this title, insofar as they limit coverage of extended care 
    services or home health services.
        (4) Section 1395x(i) of this title, insofar as it imposes a 3-
    day prior hospitalization requirement for coverage of extended care 
    services.
        (5) Paragraphs (1) and (9) of section 1395y(a) of this title, 
    insofar as they may prevent payment for PACE program services to 
    individuals enrolled under PACE programs.

(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 waivers from the 
    requirement under subsection (a)(3) of this section that a PACE 
    provider may not be a for-profit, private 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 subsection shall be the same as those for 
        PACE providers that are nonprofit, private organizations.

        (B) Numerical limitation

            The number of programs for which waivers are granted under 
        this subsection shall not exceed 10. Programs with waivers 
        granted under this subsection shall not be counted against the 
        numerical limitation specified in subsection (e)(1)(B) of this 
        section.

(i) Miscellaneous provisions

    Nothing in this section or section 1396u-4 of this title shall be 
construed as preventing a PACE provider from entering into contracts 
with other governmental or nongovernmental payers for the care of PACE 
program eligible individuals who are not eligible for benefits under 
part A of this subchapter, or enrolled under part B of this subchapter, 
or eligible for medical assistance under subchapter XIX of this title.

(Aug. 14, 1935, ch. 531, title XVIII, Sec. 1894, as added Pub. L. 105-
33, title IV, Sec. 4801, Aug. 5, 1997, 111 Stat. 528.)

                       References in Text

    Parts A, B, and C of this subchapter, referred to in subsecs. 
(a)(1), (e)(7), (f)(3), and (i), are classified to sections 1395c et 
seq., 1395j et seq., and 1395w-21 et seq., respectively, of this title.
    The Internal Revenue Code of 1986, referred to in subsec. 
(a)(3)(A)(i), is classified generally to Title 26, Internal Revenue 
Code.
    Section 4804(b) of the Balanced Budget Act of 1997, referred to in 
subsec. (a)(3)(B)(ii), is section 4804(b) of Pub. L. 105-33, which is 
set out as a note below.
    Section 603(c) of the Social Security Amendments of 1983, referred 
to in subsec. (a)(7)(A), is section 603(c) of Pub. L. 98-21, title VI, 
Apr. 20, 1983, 97 Stat. 168, which was not classified to the Code and 
was repealed by Pub. L. 105-33, title IV, Sec. 4803(d), Aug. 5, 1997, 
111 Stat. 550, subject to transition provisions.
    Section 9220 of the Consolidated Omnibus Budget Reconciliation Act 
of 1985, referred to in subsec. (a)(7)(A), is section 9220 of Pub. L. 
99-272, title IX, Apr. 7, 1986, 100 Stat. 183, which was not classified 
to the Code and was repealed by Pub. L. 105-33, title IV, Sec. 4803(d), 
Aug. 5, 1997, 111 Stat. 550, subject to transition provisions.
    Section 9412(b) of the Omnibus Budget Reconciliation Act of 1986, 
referred to in subsecs. (a)(7)(B) and (e)(1)(B)(i), is section 9412(b) 
of Pub. L. 99-509, title IX, Oct. 21, 1986, 100 Stat. 2062, which was 
not classified to the Code and was repealed by Pub. L. 105-33, title IV, 
Sec. 4803(d), Aug. 5, 1997, 111 Stat. 550, subject to transition 
provisions.
    For the effective date of this section, referred to in subsec. 
(a)(9)(B), see section 4803 of Pub. L. 105-33, set out below.


                         Transition; Regulations

    Section 4803 of title IV of Pub. L. 105-33 provided that:
    ``(a) Timely Issuance of Regulations; Effective Date.--The Secretary 
of Health and Human Services shall promulgate regulations to carry out 
this subtitle [subtitle I (Secs. 4801-4804) of title IV of Pub. L. 105-
33, enacting this section and section 1396u-4 of this title, amending 
sections 1396b, 1396d, 1396r-5, and 1396v of this title, and enacting 
provisions set out as notes under this section and section 1395b-6 of 
this title] in a timely manner. Such regulations shall be designed so 
that entities may establish and operate PACE programs under sections 
1894 and 1934 of the Social Security Act [this section and section 
1396u-4 of this title] (as added by sections 4801 and 4802 of this 
subtitle) for periods beginning not later than 1 year after the date of 
the enactment of this Act [Aug. 5, 1997].
    ``(b) Expansion and Transition for PACE Demonstration Project 
Waivers.--
        ``(1) Expansion in current number and extension of demonstration 
    projects.--Section 9412(b) of the Omnibus Budget Reconciliation Act 
    of 1986 [see subsec. (d) below], as amended by section 4118(g) of 
    the Omnibus Budget Reconciliation Act of 1987, is amended--
            ``(A) in paragraph (1), 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 sections 1894(e)(1)(B) and 1934(e)(1)(B) 
        of the Social Security Act' [subsec. (e)(1)(B) of this section 
        and section 1396u-4(e)(1)(B) of this title]; and
            ``(B) in paragraph (2)--
                ``(i) in subparagraph (A), by striking `, including 
            permitting the organization to assume progressively (over 
            the initial 3-year period of the waiver) the full financial 
            risk'; and
                ``(ii) in subparagraph (C), by adding at the end the 
            following: `In granting further extensions, an organization 
            shall not be required to provide for reporting of 
            information which is only required because of the 
            demonstration nature of the project.'
        ``(2) Elimination of replication requirement.--Section 
    9412(b)(2)(B) of such Act, as so amended, shall not apply to waivers 
    granted under such section after the date of the enactment of this 
    Act [Aug. 5, 1997].
        ``(3) Timely consideration of applications.--In considering an 
    application for waivers under such section before the effective date 
    of the repeals under subsection (d), subject to the numerical 
    limitation under the amendment made by paragraph (1), the 
    application shall be deemed approved unless the Secretary of Health 
    and Human Services, within 90 days after the date of its submission 
    to the Secretary, either denies such request in writing or informs 
    the applicant in writing with respect to any additional information 
    which is needed in order to make a final determination with respect 
    to the application. After the date the Secretary receives such 
    additional information, the application shall be deemed approved 
    unless the Secretary, within 90 days of such date, denies such 
    request.
    ``(c) Priority and Special Consideration in Application.--During the 
3-year period beginning on the date of the enactment of this Act [Aug. 
5, 1997]:
        ``(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 1934 of the Social 
    Security Act [this section and section 1396u-4 of this title]--
            ``(A) first, to entities that are operating a PACE 
        demonstration waiver program (as defined in sections 1894(a)(7) 
        and 1934(a)(7) of such Act [subsec. (a)(7) of this section and 
        section 1396u-4(a)(7) of this title]); and
            ``(B) then to entities that have applied to operate 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 Reconciliation Act of 1986 [see subsec. (d) below]--
            ``(A) to any entities that have applied for such waivers 
        under such section as of May 1, 1997; and
            ``(B) to any entity that, as of May 1, 1997, has formally 
        contracted with a State to provide services for which payment is 
        made on a capitated basis with an understanding that the entity 
        was seeking to become a PACE provider.
        ``(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 as of May 1, 1997, through formal activities 
    (such as entering 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) [97 Stat. 168].
            ``(B) Section 9220 of the Consolidated Omnibus Budget 
        Reconciliation Act of 1985 (Public Law 99-272) [100 Stat. 183].
            ``(C) Section 9412(b) of the Omnibus Budget Reconciliation 
        Act of 1986 (Public Law 99-509) [100 Stat. 2062].
        ``(2) Delay in application to current waivers.--
            ``(A) In general.--Subject to subparagraph (B), in the case 
        of waivers granted with respect to a PACE program before the 
        initial effective date of regulations described in subsection 
        (a), the repeals made by paragraph (1) shall not apply until the 
        end of a transition period (of up to 24 months) that begins on 
        the initial effective date of such regulations, and that allows 
        sufficient time for an orderly transition from demonstration 
        project authority to general authority provided under the 
        amendments made by this subtitle [subtitle I (Secs. 4801-4804) 
        of title IV of Pub. L. 105-33, enacting this section and section 
        1396u-4 of this title and amending sections 1396b, 1396d, 1396r-
        5, and 1396v of this title].
            ``(B) State option to seek extension of current period.--A 
        State may elect to maintain the PACE programs which (as of the 
        date of the enactment of this Act [Aug. 5, 1997]) were operating 
        in the State under the authority described in paragraph (1) 
        until a date (specified by the State) that is not later than 3 
        years after the initial effective date of regulations described 
        in subsection (a). If a State makes such an election, the 
        repeals made by paragraph (1) shall not apply to the programs 
        until the date so specified, but only so long as such programs 
        continue to operate under the same terms and conditions as apply 
        to such programs as of the date of the enactment of this Act, 
        and subparagraph (A) shall not apply to such programs.''


                    PACE Programs; Study and Reports

    Section 4804(a), (b) of title IV of Pub. L. 105-33 provided that:
    ``(a) Study.--
        ``(1) In general.--The Secretary of Health and Human Services 
    (in close consultation with State administering agencies, as defined 
    in sections 1894(a)(8) and 1934(a)(8) of the Social Security Act 
    [subsec. (a)(8) of this section and section 1396u-4(a)(8) of this 
    title]) shall conduct a study of the quality and cost of providing 
    PACE program services under the medicare and medicaid programs under 
    the amendments made by this subtitle [subtitle I (Secs. 4801-4804) 
    of title IV of Pub. L. 105-33, enacting this section and section 
    1396u-4 of this title and amending sections 1396b, 1396d, 1396r-5, 
    and 1396v of this title].
        ``(2) Study of private, for-profit providers.--Such study shall 
    specifically compare the costs, quality, and access to services by 
    entities that are private, for-profit entities operating under 
    demonstration projects waivers granted under sections 1894(h) and 
    1934(h) of the Social Security Act [subsec. (h) of this section and 
    section 1396u-4(h) of this title] with the costs, quality, and 
    access to services of other PACE providers.
    ``(b) Report.--
        ``(1) In general.--Not later than 4 years after the date of the 
    enactment of this Act [Aug. 5, 1997], 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 recommendations for changes in the operation of such amendments 
    as the Secretary deems appropriate.
        ``(2) Treatment of private, for-profit providers.--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 sections 
        1894(h) and 1934(h) of the Social Security 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).
            ``(B) The population enrolled with such entities is less 
        frail than the population enrolled with other PACE providers.
            ``(C) Access to or quality of care for individuals 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 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.''

                  Section Referred to in Other Sections

    This section is referred to in sections 1395ss, 1396r-5, 1396u-4 of 
this title.
