100-11 Programs of All-Inclusive Care for the Elderly (PACE)Manual: Chapter 16 - Sanctions, Enforcement Actions and Termination

Programs of All-Inclusive Care for the
Elderly (PACE)
Chapter 16 – Sanctions, Enforcement Actions and
Termination
Table of Contents
(Rev. 2, Issued: 06-09-11)
Transmittals for Chapter 16
10 - Introduction
20 - Enforcement
30 - Violations for which CMS May Impose Sanctions
40 - Suspension of Enrollment or Payment by CMS
50 - CMP
60 - Additional Actions by CMS or the State
70 - Termination of the PACE Program Agreement
70.1 - Transitional Care
70.2 - Termination Procedures

10 - Introduction
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
PACE is a partnership between CMS, the State, and the PACE organization. CMS and
the State work together to ensure the benefits and services provided are of high quality
and meet the requirements set forth in the statute and regulations and by the State in
which the PACE organization resides. When compliance actions fail to achieve the
desired result or an instance of non-compliance is especially egregious, CMS may take
enforcement action. CMS recognizes that in addition to the sanctions, enforcement
actions and termination set forth below, each State will have their own actions that may
be implemented when a PACE organization is out of compliance.
20 - Enforcement
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
Enforcement activity begins when: (1) deficiencies are serious enough to escalate directly
to the enforcement activity stage and/or; (2) core compliance deficiencies remain
unresolved during the compliance activity stage after providing the PACE organization
with the appropriate notice and opportunity to correct the deficiencies.
Enforcement actions (also known as “intermediate sanctions”) include the following two
categories of actions: (1) enrollment and/or payment suspensions and; (2) civil money
penalties (CMPs). Enrollment and payment suspensions are imposed for serious
contractual deficiencies defined by statute and are designed to ensure the deficiencies
which formed the basis for the sanction are corrected and not likely to recur. CMPs are
also intended to be imposed for serious contractual deficiencies defined by statute and are
designed to be punitive in nature. Depending on the particular deficiency and statutory
basis for taking the action, CMS may impose both suspensions of enrollment and
payment and a CMP.
[42 CFR § 460.40]
30 - Violations for which CMS May Impose Sanctions
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
There are specific violations for which CMS may impose sanctions on the PACE
organization and they are as follows:
• 	The PACE organization fails substantially in furnishing the medically
necessary items and services to the participant that are covered by PACE if
the failure has adversely affected (or has a substantial likelihood of adversely
affecting) the participant;
• 	The PACE organization involuntary disenrolls a participant in violation of 42
CFR § 460.164;

• 	The PACE organization discriminates on the basis of an individual’s health
status or need for health care services in the enrollment or disenrollment
process, among Medicare beneficiaries or Medicaid recipients, or both, who
are eligible to enroll in a PACE program;
• 	The PACE organization engages in any practice that would reasonably be
expected to have the effect of denying or discouraging enrollment, except as
permitted by 42 CFR § 460.150 by Medicare beneficiaries or Medicaid
recipients whose medical condition or history indicates a need for substantial
future medical services;
• 	The PACE organization imposes premium charges on a participant enrolled
under Medicare or Medicaid that is more than the allowable amount;
• 	The PACE organization misrepresents or falsifies information that is
furnished to CMS or the State or, to an individual or any other entity under
Part 460;
• 	The PACE organization prohibits or restricts a covered healthcare
professional, who is acting within their lawful scope of practice, from
advising a participant (their patient) about the patient’s health status, medical
care, or treatment for the participant’s condition or disease, regardless of
whether the PACE program provides the benefits for that care or treatment;
• 	The PACE organization operates a physician incentive plan that does not meet
the requirements of Section 1876(i)(8) of the Act;
• 	The PACE organization employs or contracts with any individual who is
excluded from participation in Medicare or Medicaid under Section 1128 or
1128A of the Act (or with any entity that employs or contracts with such an
individual) for the provision of health care, utilization review, medical social
work, or administrative services.
[42 CFR § 460.40]
40 - Suspension of Enrollment or Payment by CMS
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
CMS may suspend enrollment of Medicare beneficiaries due to the above mentioned
violation after the date CMS notifies the PACE organization of the violation. For
individuals enrolled after the date CMS notifies the PACE organization of the violation,
CMS may suspend Medicare payment to the PACE organization and deny payment to the
State of Federal Financial Participation for medical assistance for services furnished
under the PACE program agreement. The State Administering Agency determines if
suspension of enrollment should occur with Medicaid recipients. A suspension or denial

of payment remains in effect until CMS is satisfied that the PACE organization has
corrected the cause of the violation and the violation is not likely to recur.
[42 CFR § 460.42; 71 FR 71259 (Dec. 8, 2006)]
50 - CMP
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
There are certain violations for which CMS will impose a civil money penalty (CMP).
The penalty is amounts up to the following maximum amounts, depending on the type of
violation.
CMP violations include:
• 	For each violation regarding enrollment or disenrollment specified in 42 CFR
§ 460.40(c) or (d), $100,000 plus $15,000 for each individual not enrolled as a
result of the PACE organization’s discrimination in enrollment or
disenrollment or practice that would deny or discourage enrollment;
• 	For each violation regarding excessive premiums specified in 42 CFR §
460.40(e), $25,000 plus double the excess amount above the permitted
premium charged a participant by the PACE organization (the excess amount
charged is deducted from the penalty and returned to the participant);
• 	For each misrepresentation or falsification of information as specified in 42
CFR § 460.40(f)(1), $100,000;
• 	For any other violation specified in 42 CFR § 460.40, $25,000;
ο 	The provisions of Section 1128A of the Act (other than subsections (a)
and (b)) apply to a civil money penalty under this section in the same
manner as they apply to a civil money penalty or proceeding under Section
1128A(a).
[42 CFR § 460.46]
60 - Additional Actions by CMS or the State
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
After CMS consults with the State Administering Agency, if CMS determines the PACE
organization is not in substantial compliance with the PACE requirements, CMS or the
State Administering Agency can take one or more of the following actions:
• 	The continuation of the PACE Program Agreement is contingent on the PACE
organization’s timely execution of a corrective action plan;

• 	The PACE organization must correct the deficiency or CMS and/or the State
Administering Agency can withhold some or all payments under the PACE
agreement;
• 	Termination of the PACE Program Agreement.
[42 CFR § 460.48]
70 - Termination of the PACE Program Agreement
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
CMS or the State Administering Agency may terminate a PACE Program Agreement at
any time for cause and a PACE organization may terminate an agreement after
appropriate notice to CMS, State Administering Agency and its participants. CMS or the
State Administering Agency may terminate a PACE Program Agreement with the PACE
organization for cause including, but not limited to, the following:
• 	There are significant deficiencies in the quality of care furnished to
participants or the PACE organization has failed to comply substantially with
conditions for a PACE program or PACE organization under the Part 460
regulations or with the terms of its PACE Program Agreement; and, within 30
days of the date of receipt of the written notice regarding the deficiencies, the
PACE organization failed to develop and successfully initiate a plan to correct
the deficiencies or failed to continue implementation of such a plan, or CMS
and the State Administering Agency determined that the deficiencies cannot
be corrected; or
• 	CMS or the State Administering Agency determines that the PACE
organization cannot ensure the health and safety of its participants. The
determination may result from the identification of deficiencies that CMS or
the State Administering Agency determines cannot be corrected.
If the PACE organization initiates the termination, it is required to give CMS and the
State Administering Agency 90 days notice and participants 60 days notice before
termination in order to provide sufficient time to transition participants to alternative
care. If a participant is eligible for Medicaid, the State should provide assistance in
arranging for the alternative care. Neither the State nor CMS considers termination
lightly. The primary concern is protecting the health and safety of the participant and all
possible ramifications of terminating a program agreement, including the likelihood of
participants becoming institutionalized, will be considered before taking such severe
action.
[42 CFR § 460.50; 71 FR 71261 (Dec. 8, 2006)]
70.1 - Transitional Care
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)

The PACE organization must develop a detailed written plan for phase-down in the event
of termination. Such plan must describe how the organization plans to take the following
actions:
• 	The plan must include a process for informing participants, the community,
CMS and the State Administering Agency in writing about the termination
and transition phases;
• 	The steps that the PACE organization will take to assist participants to obtain
reinstatement of conventional Medicare and Medicaid benefits;
• 	Transitioning the participants’ care to other providers;
• 	Termination of marketing and enrollment activities.
An entity whose PACE Program Agreement is in the process of being terminated must
implement its phase-down plan discussed above and provide assistance to each
participant in obtaining necessary transitional care through appropriate referrals and
ensuring that the participants’ medical records are available to new providers.
[42 CFR § 460.52]
70.2 - Termination Procedures
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
If CMS terminates an agreement with a PACE organization, it furnishes the PACE
organization with the following: (1) a reasonable opportunity to develop and implement a
corrective action plan to correct the deficiencies that were the basis of CMS’s
determination that cause exists for termination; and (2) reasonable notice and opportunity
for a hearing, including the right to appeal an initial determination, before terminating the
agreement.
CMS may terminate an agreement without invoking any of the above mentioned
procedures if CMS determines that a delay in termination, resulting from compliance
with these procedures before termination, would pose an imminent and serious risk to the
health of participants enrolled with the organization.
[42 CFR § 460.54]

Transmittals Issued for this Chapter
Rev # 	Issue Date 	Subject 	Impl Date CR#
R2PACE 06/09/2011 	Initial Publication of Manual 	06/03/2011 NA
R1_SO 06/03/2011 	Initial Publication of Manual - Rescinded and
replaced by Transmittal 2
06/03/2011 NA
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