On April 12, 2023, the Centers for Medicare and Medicaid Services (“CMS”) released a final rule updating key regulations pertaining to Programs of All-Inclusive Care for the Elderly (“PACE”) (the “Final Rule”). Overall, these changes, summarized below, will offer significant administrative and operational flexibilities. Except as otherwise noted, the requirements of the Final Rule are effective January 1, 2024.
Changes to Contract Year Definition
CMS is required to conduct a comprehensive annual review of PACE organizations’ operations during the first three contract years of operating a PACE program (known as the “trial period”) to assure compliance with all significant requirements. Historically, the initial contract year was defined as being the first 12 to 23 months, as determined by CMS, which enabled CMS to adjust the length of the initial contract year so that it ends on December 31st. In light of issues CMS has encountered with scheduling and conducting the first trial period audit for new PACE programs, CMS is amending the definition of contract year to provide that a PACE organization’s initial contract year may be 19 to 30 months, as determined by CMS, but in any event will end on December 31st. CMS stated that this change will provide the agency with more flexibility when scheduling initial trial period audits and will allow PACE programs sufficient time to operate before their first trial period audit.
In response to concerns raised by commenters that a longer initial contract year could delay service area expansions (since PACE organizations must successfully complete their first trial period audit and implement acceptable corrective action plans, if applicable, before CMS and the State administering agency will approve a service area expansion or PACE center site expansion), CMS stated that it intends to promptly schedule first year reviews, taking into consideration when organizations begin enrolling participants and whether an organization has had sufficient time to operate.
This provision is effective June 5, 2023.
PACE Enforcement Authority for Civil Monetary Penalties and Intermediate Sanctions
CMS clarified its enforcement authority for civil monetary penalties (“CMPs”) and intermediate sanctions (i.e., enrollment or payment suspensions) for PACE programs. Pursuant to the June 3, 2019 final rule, if CMS makes a determination that could lead to the termination of a PACE program, it has the discretion to take alternative enforcement actions in the form of a CMP or an intermediate sanction.
In the Final Rule, CMS clarified that in circumstances where CMS has made a determination that could lead to a termination, CMS would likely impose a CMP or an intermediation sanction on a PACE organization prior to terminating the PACE organization unless there was imminent risk to a PACE participant. CMS explained that this is because it views CMPs and intermediate sanctions as corrective in nature, since they are imposed when the PACE organization has been found to be noncompliant, and they provide time for the PACE organization to correct the issue(s) that led to the noncompliance with the ultimate goal of mitigating any actual or potential harm to PACE participants.
Under the Final Rule, CMS is revising the regulation at 42 C.F.R. § 460.50(b) to provide that neither CMS nor the State administering agency has to determine that the circumstances in § 460.50(b)(2) exist (i.e., that within thirty days of the date of receipt of written notice of a determination that there are either significant deficiencies in the quality of care furnished to participants or that the PACE organization failed to comply substantially with the conditions for a PACE program or the terms of the PACE program agreement, the PACE organization failed to develop and successfully initiate a plan to correct the deficiencies to continue implementation of the plan of correction) prior to imposing a CMP or intermediate sanction.
CMS has emphasized that it is committed to collaboration and due diligence before determining whether an enforcement action is necessary. PACE organizations will still be encouraged to self-disclose and self-correct compliance deficiencies at any time, and CMS will consider such self-disclosure and self-correction in addition to the financial condition of the PACE program when deciding whether to impose an enforcement action.
PACE Contracted Services
Through monitoring and oversight, CMS has observed that some PACE organizations are not providing timely access to medical specialists, often because PACE organizations do not have contracts in effect for the medical specialties commonly utilized by their participants. To address this, CMS is amending § 460.70(a) to specify that the written contracts that PACE organizations are required to have with each outside organization, agency, or individual that furnishes administrative or care-related services not furnished directly by the PACE organization must include, at a minimum, the medical specialties listed in § 460.70(a)(1). This list will include 25 specialties, though CMS emphasizes that the list is not exhaustive.
PACE organizations will be required to execute contracts with specialists prior to enrollment of participants, and these contracts will need to be maintained on an ongoing basis to ensure appropriate and timely access to all necessary care and services. PACE organizations will also be required to make reasonable and timely attempts to contract with medical specialists. CMS is establishing a requirement that the PACE organization ensure ongoing access to necessary care and services that would otherwise be provided to participants by a contracted specialist and that the participant’s needs are met, through a different mechanism (which may include hospitalization) if at any time a PACE organization is unable to directly contract with a specific entity to provide specialist services. PACE organizations will also be expected to promptly report any contracting issues to CMS and the State administering agency and include information on what attempts were made, the reason why the contract was not effectuated, and the PACE organization’s plan to provide access to the necessary services.
The Final Rule also exempts PACE organizations that choose to directly employ some medical specialists from the contract requirements noted above. CMS indicated that in those instances, assuming the PACE participants have sufficient access to the employed specialist(s), the PACE organization would not be required to contract with additional providers in that specialty. In order for this exception to be met, the PACE organization must have the specialist actively employed prior to enrollment of participants and cannot rely on future employment to satisfy this requirement.
Finally, CMS clarified that PACE organizations may contract with telehealth specialists, contract with providers outside of the service area, or create temporary contracts to meet participant needs. CMS provided that telehealth services may be utilized for PACE so long as other regulatory requirements are met, such as in-person comprehensive assessments, contracting requirements for providers, and proper determinations by a participant’s Interdisciplinary Team (“IDT”), which is comprised of the participant’s primary care provider, nurse, social worker, dietitian, and others.
Service Determination Request
PACE organizations must have written procedures for grievances and appeals. CMS also created a process for service determination requests – the first stage of an appeal – which includes a written notification requirement for extension requests. Based on feedback from PACE organizations, CMS is allowing IDTs to provide notification either orally or in writing to the participant or their designated representative when the IDT extends the timeframe for a service determination request.
This revision is effective June 5, 2023.
PACE Maintenance of Records
PACE organizations were historically required to maintain various written communications related to participant grievances in the medical record, which jeopardizes the confidentiality of such communications because they can be accessed by all PACE organization staff. Under the Final Rule, CMS is removing language in the regulation requiring PACE organizations to maintain original documentation, or an unaltered electronic copy, of any written communication the PACE organization receives relating to the care, health or safety of a participant, in any format. CMS is also amending the regulation to require that a PACE organization maintain all written communications received in any format from participants or other parties in their original form when the communications relate to a participant’s care, health, or safety. This change moves language located at § 460.210(b)(6) to § 460.200(d)(2) and by doing so, removes the requirement that the communications be stored in the participant’s medical record.
Additionally, though CMS will continue to require PACE organizations to ensure that communications relating to the care, health, or safety of a participant are included in the medical record, CMS will also allow PACE organizations operational flexibility on how these communications are included: PACE organizations will be permitted to summarize information in the medical record as long as the summary is accurate and thorough, and the original documentation of the communication is maintained outside the medical record and is accessible by the PACE organization’s employees and contractors as needed, and available to CMS and States upon request.
If you have any questions about PACE programs or the Final Rule, please contact a member of the Sheppard Mullin Healthcare Team.