April 23, 2024

CMS Publishes Final Rule on Programs of All-Inclusive Care for the Elderly (PACE)

Holland & Knight Alert
Nate Lykins | Doug Wolford


  • The Final Rule governing the Programs of All-Inclusive Care for the Elderly (PACE) was released by the Centers for Medicare & Medicaid Services (CMS) on April 4, 2024.
  • The Final Rule gives CMS additional grounds on which to deny PACE organizations’ initial and service area expansion applications, imposes immunization requirements on staff who have direct contact with PACE participants, establishes deadlines for reviewing recommendations and scheduling services for PACE participants, and alters the grievance resolution process.
  • Effective June 3, 2024, the Final Rule applies to coverage beginning on Jan. 1, 2025.

The Centers for Medicare & Medicaid Services (CMS) published a Final Rule on April 4, 2024, that makes a number of changes to regulations governing the Programs of All-Inclusive Care for the Elderly (PACE). Among other things, the Final Rule gives CMS additional grounds on which to deny PACE organizations’ initial and service area expansion applications, imposes immunization requirements on staff who have direct contact with PACE participants, establishes deadlines for reviewing recommendations and scheduling services for PACE participants, and alters the grievance resolution process. The Final Rule is effective June 3, 2024, and applies to coverage beginning on Jan. 1, 2025.

Additional Grounds for Denying PACE Applications

According to the Final Rule, CMS may deny an organization’s initial or service area expansion application if the organization failed to comply with PACE program requirements during the 12 months preceding the deadline for submitting 1) the application or 2) the response to CMS’ request for additional information. For purposes of this requirement, noncompliance exists if the organization:

  • is subject to an enrollment or payment sanction for one or more of the violations specified in PACE regulations (e.g., failure of the PACE organization to provide medically necessary services, discrimination in enrollment or disenrollment of individuals based on health status or need for health services, and involuntary disenrollment of a PACE participant in violation of applicable regulations), even if the reasons for the sanction have been corrected and the sanction has been lifted
  • fails to maintain fiscal soundness or has filed for or is under state bankruptcy proceedings
  • meets or exceeds the 13-point threshold for compliance actions under any one PACE agreement (The Final Rule establishes point values for certain compliance actions that CMS may take. Specifically, notices of noncompliance are worth one point, warning letters are worth three points, and corrective action plans are worth six points. CMS will add the point values for each PACE organization’s program agreement together to determine whether it has met or exceeded the 13-point threshold.)

Significantly, the Final Rule also allows CMS to deny an initial PACE application when the applicant’s parent organization or another subsidiary of the applicant’s parent organization meets the noncompliance criteria above. According to CMS, entities that are part of the same parent organization are likely to use similar structures, policies and procedures, thus "increasing the likelihood that any part of a parent organization that has at least one poorly performing legal entity may be at increased risk of poor performance." CMS also stated that this requirement will "prevent organizations from manipulating our past performance methodology by establishing new legal entities and using those to submit PACE applications … ."

This ground for denying an initial application would not apply to a parent organization that completed the acquisition of a subsidiary that meets the criteria for denial within the 24 months preceding the application submission deadline. Still, the ability to deny applications based on the poor performance of an applicant’s affiliates could be a concern for parent organizations that have one or more subsidiaries that participate in the PACE program.

Immunization Requirements for Staff with Direct Patient Contact

The Final Rule also imposes medical clearance requirements for PACE staff who have direct contact with PACE participants, including the requirement that such staff must "have all immunizations up to date before engaging in direct participating contact." Although CMS considered requiring staff to have a particular set of vaccinations, it decided to take a less specific approach after commenters expressed concerns about their ability to retain staff. CMS will continue assess the need for vaccinations and encourages PACE organizations to consider resources such as the Centers for Disease Control and Prevention's CDC’s Advisory Committee on Immunization Practices when determining which immunizations to require for staff members.

Deadlines for Reviewing Recommendations and Scheduling Services

The Final Rule requires PACE organizations to meet specific deadlines for reviewing recommendations and scheduling services for PACE participants. Specifically, the appropriate members of the interdisciplinary team (IDT) must review and either approve or deny recommendations 1) from hospitals, emergency departments and urgent care providers within 48 hours of the participant’s discharge and 2) from other employees and contractors within seven calendar days after the recommendation is made. In addition, a PACE organization must 1) "arrange and schedule" the dispensing of medication within 24 hours of ordering and 2) "arrange or schedule" the delivery of all other services within seven calendar days of approval by the IDT or a member of the IDT. These deadlines for scheduling services and acting on recommendations are maximum time frames, and PACE organizations will be expected to act more quickly if a patient’s condition requires it.

In response to comments received about the scheduling requirements, CMS stated that these provisions do not require PACE organizations to actually provide services to participants within these timeframes unless a participant’s condition so requires. For example, the Final Rule does not require medication to be delivered to a participant within 24 hours unless the participant’s condition requires delivery in that timeframe. Instead, a PACE organization must notify the participant’s pharmacy or pharmacy service of the approved medication order and provide all necessary information for the pharmacy to fill the medication order and provide the participant with timely access to the medication.

Similarly, the Final Rule does not require other services to be provided within seven calendar days. Rather, the PACE organization is "expected to take affirmative steps to make sure the approved service was set up, scheduled, or arranged within [seven calendar days], which may include scheduling appointments and/or purchasing the item the IDT approved." In addition, routine or preventative services are excluded from the seven-calendar day deadline when certain requirements are met.

Changes to the Grievance Process and Deadlines for Resolving Complaints

The Final Rule arguably expands the scope of complaints that qualify as grievances by clarifying that a complaint need not request remedial action to qualify as a "grievance" and stating that grievances may be between the participant and the PACE organization or "any other entity or individual through which the PACE organization provides services to the participant." Thus, a complaint expressing dissatisfaction with one of the PACE organization’s contractors could be a grievance that the PACE organization itself would need to resolve.

The Final Rule also establishes deadlines for resolving grievances. Under these provisions, a PACE organization must take action to resolve the grievance based on its investigation as expeditiously as the case requires, but no later than 30 calendar days after the PACE organization receives the grievance. In addition, a PACE organization must notify the individual who submitted the grievance no later than three calendar days after the grievance is resolved.

CMS decided not to finalize a provision that would have required PACE organizations to resolve grievances that could have an "imminent and significant" impact on the health or safety of the participant no later than 24 hours after receiving the grievance. Instead, the Final Rule notes that PACE quality improvement regulations require PACE organizations to immediately correct "any identified problem that directly or potentially threatens the health and safety of a PACE participant."

The deadlines for resolving grievances have important implications for existing PACE regulations and other sections of the Final Rule. Under existing regulations, PACE organizations, must respond to requests to initiate, modify or continue a service (referred to as "service determination requests") within three days. According to the Final Rule, PACE organizations must respond to complaints using the Complaints Tracking Module (CTM), CMS' central repository for complaints, within certain timeframes as well. Specifically, PACE organizations are generally required to resolve complaints within 30 days of the date they are assigned in CTM. PACE organizations, however, must resolve "immediate need complaints" within two calendar days and "urgent complaints" within seven calendar days. (For additional information, see Holland & Knight's previous alert, "CMS Proposes Changes for Programs of All-Inclusive Care for the Elderly (PACE)," Nov. 16, 2023.)

In the Final Rule, CMS reconciles the competing deadlines for resolving grievances, service determination requests and CTM complaints by requiring PACE organizations to respond to CTM complaints within the "shortest applicable timeframe." Thus, if a CTM complaint is not an "immediate need" or "urgent complaint" but qualifies as a service determination request, then the PACE organization must respond to it within three days rather than 30 days. Accordingly, PACE organizations must carefully review CTM complaints to determine what the earliest deadline could be.

For more information on the Final Rule or PACE in general, please contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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