100-11 Programs of All-Inclusive Care for the Elderly (PACE)Manual: Chapter 17 - Application and Waiver Processes, and Program Agreement Requirements

Programs of All-Inclusive Care for the
Elderly (PACE)
Chapter 17 – Application and Waiver Processes, and
Program Agreement Requirements
Table of Contents
(Rev. 2, Issued: 06-09-11)
Transmittals for Chapter 17
10 - Overview of CMS and State Administering Agency Roles and Responsibilities
20 - CMS
20.1 - Provider Application
20.2 - Part D Application
20.3 - Limit on the Number of PACE Program Agreements
20.4 - Expansion Application
20.5 - Scenario 1
20.6 - Scenario 2
20.7 - Scenario 3
20.8- BIPA 903 Waivers
30 - State
30.1 - PACE State Plan Amendment
30.2 - State Readiness Review
30.3 - State Contract
40 - PACE Program Agreement
50 - Effect of Change of Ownership

10 - Overview of CMS and State Administering Agency Roles and
Responsibilities
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
The regulations issued by CMS for PACE, issued November 24, 1999, established
requirements for PACE under the Medicare and Medicaid programs. The second
regulation published on October 1, 2002, incorporated revisions to the original regulation,
implementing Section 903 of MIPPA (Pub. L. 106–554) by establishing a process
through which PACE organizations may request waiver of certain regulatory
requirements. In addition, it provided for greater flexibility in adapting the PACE service
delivery model to the needs of the particular organization and removed the requirement
that PACE organizations directly employ the interdisciplinary team, the program director,
and medical director and allowed for these positions to be contracted. The final rule
incorporating response to comments and updates to the regulation was published
December 8, 2006.
Section 1905(a)(26) of the Act, as added by Section 4802(a)(1) of the BBA, provided
authority for States to elect PACE as an optional Medicaid benefit. States notify CMS
that they have elected PACE as an option via a State Plan Amendment that is to be
submitted to CMS by the State Medicaid Agency. Each State is required to have a State
Administering Agency that is responsible for administering PACE Program Agreements
in their State. The State Medicaid Agency may or may not be the State Administering
Agency. The State Administering Agency closely cooperates with CMS in establishing
procedures for entering into, extending, and terminating PACE Program Agreements.
The State Administering Agency also cooperates with CMS in conducting oversight
reviews of PACE programs and has the authority to terminate a PACE Program
Agreement for cause.
The State Administering Agency is responsible for conducting a readiness review during
the application approval process to ensure that the PACE center meets the regulatory
requirements for environment and staffing.
It is the responsibility of the PACE organization and the State Administering Agency to
validate the information contained in each application. The Director of the State
Administering Agency confirms review and approval of the application by submitting a
signed certification with the application.
20 - CMS
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
20.1 - Provider Application
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
Information requested in the provider application is based on Sections 1894 and 1934 of
the Social Security Act, and the regulations at 42 CFR § 460.2 thru 460.210.

An individual authorized to act for the entity must submit to CMS a complete application
that describes how the entity meets all requirements of Part 460. It is the responsibility of
the PACE organization and the State Administering Agency to validate the information
contained in each application. An entity’s application must be accompanied by an
assurance from the State Administering Agency of the State in which the program is
located indicating that the State considers the entity to be qualified to be a PACE
organization and is willing to enter into a PACE program agreement with the entity.
A completed application includes:
• 	Cover Sheet with the appropriate signatures;
• 	Table of Contents for the Narrative part;
• 	Table of Contents for Documents part;
• 	Narrative part, with each question copied and brief and precise answers,
divided into chapters;
• 	Documents part, arranged by chapters; this part should follow the Narrative.
Materials such as marketing brochures and booklets should be inserted in
envelopes in the appropriate places in the application. The envelope should be
numbered as a single page.
The PACE Provider Application and related resources are located on the CMS webpage
at: http://www.cms.hhs.gov/PACE/06_ProviderApplicationandRelatedResources.asp#To
pOfPage.
This Provider Application has been updated to reflect the provisions of the December
2006 final PACE regulation. This file is in a zipped rich text format so States can
download a writeable version for submission. It also contains appendices (including the
Provider Arrangements File, Insurance Coverage File, and Payment Information Form)
that must be submitted to CMS as part of the PACE Provider Application.
CMS evaluates an application for approval as a PACE organization on the basis of the
information contained in the application, information obtained through onsite visits
conducted by CMS or the State Administering Agency, and information obtained by the
State Administering Agency.
An entity must state in its application the service area it proposes for its program. CMS,
in consultation with the State Administering Agency, may exclude from designation an
area that is already covered under another PACE program agreement to avoid
unnecessary duplication of services and avoid impairing the financial and service
viability of an existing program.

A PACE application can be submitted at any time during the year. As stated in 42 CFR §
460.20, within 90 days after an organization submits a complete application to CMS,
CMS can (1) approve the application; (2) deny the application and notify the entity in
writing of the basis for denial and the process for requesting reconsideration of the denial;
or (3) request additional information needed to make a final determination. Upon receipt
of all of the responses to the request for additional information and the completed State
Readiness Review, CMS has an additional 90 days to either approve the application or
disapprove the application and notify the entity in writing of the basis for the denial and
the process for requesting reconsideration of the denial. An application is deemed
approved if CMS fails to act on the application within 90 days after the date the
application is submitted by the organization or the date CMS receives all requested
additional information. For purposes of the 90-day time limit, the date that an application
is submitted to CMS is the date on which the application is delivered to the address
designated by CMS.
[42 CFR §§ 460.12(a)(1) and (b), 460.18, 460.20, 460.22, 460.72]
20.2 – Part D Application
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
PACE provider applicants must also submit a separate Medicare Prescription Drug Part D
application and bid to participate in the PACE program. Part D bids are submitted
electronically via the Health Plan Management System (HPMS); applicants must apply
for system access and be assigned a CMS user ID in order to submit the Part D bid.
Applicants must use the H number assigned to their organization application when
submitting a bid. 	Instructions and templates for completing the Part D bid are
downloadable from HPMS.
Final approval of the PACE provider application is contingent upon completion and
acceptance of the Part D application and bid approval. The PACE Part D application and
instructions are located on the CMS webpage
at: http://www.cms.hhs.gov/PrescriptionDrugCovContra/04_RxContracting_Application
Guidance.asp.
[42 CFR §§423, 460]
20.3 - Limit on the Number of PACE Program Agreements
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
There is a limit on the number of PACE program agreements that may be in effect on
August 5 of each year, the anniversary of the PACE statute. The number of PACE
organizations with which agreements are in effect, are not permitted to exceed:
• 	40 as of August 5, 1997, the date of enactment of the PACE statue, or
• 	As of each succeeding anniversary of that date, the numerical limitation for
the preceding year plus 20.

Based on the statutory language, CMS may enter into up to 80 PACE program
agreements as of August 5, 1999, and the limit on the number of PACE program
agreements increases by 20 each year thereafter.
[42 CFR § 460.24]
20.4 - Expansion Application
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
The most current version of the PACE Expansion Application is available
at http://www.cms.hhs.gov/PACE/07_Expansions.asp#TopOfPage.
The application is required for PACE organizations wishing to expand their service area
or add a new PACE center. In order to ensure quality of care for PACE participants, CMS
will only approve an expansion application after an organization has completed the first
trial period audit and achieved an acceptable corrective action plan for the initial PACE
center and service area.
There are three scenarios under which a PACE provider may expand operations. Each
scenario described below contains a list of steps that must be followed for expansion
approval.
20.5 - Scenario 1
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
A PACE Organization requests to expand its geographic service area without building
additional sites:
• 	PACE organization must obtain approval for expansion from State Medicaid
Agency (SMA) and State Administering Agency;
• 	PACE organization and State Administering Agency collaborate on the
provider application in its entirety. To the extent the expanded service area
reflects the same processes as the already approved service area of the
provider, the application can note this without resubmitting approved material;
• 	For an expansion application for a geographic service area expansion only,
CMS has 45 days to request additional information or approve the application.
Upon the receipt of responses to the request for additional information, CMS
has an additional 45 days to either approve or disapprove the application;
• 	If approved, the Program Agreement’s Appendix C is amended to reflect the
new service area.

20.6 - Scenario 2
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
A PACE Organization requests to open another physical site in the existing geographic
service area:
• 	PACE organization must obtain approval for expansion from State Medicaid
Agency and State Administering Agency;
• 	PACE organization and State Administering Agency collaborate on the
provider application in its entirety. To the extent the new site adopts the same
processes as the already approved sites of the provider, the application can
note this without resubmitting approved material;
• 	The State Administering Agency conducts a State Readiness Review of the
new site while the clock is stopped;
• 	For an expansion application for only a new center within an existing
geographical area, CMS has 45 days to request additional information or
approve the application. Upon completion of the State Readiness Review and
receipt of responses to the Request for Additional Information, CMS has an
additional 45 days to either approve or disapprove the application;
• 	If approved, the Program Agreement's Appendix C is amended to reflect the
new site.
20.7 - Scenario 3
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
A PACE Organization requests to expand its geographic service area and open another
physical site in the expanded area:
• 	PACE organization must obtain approval for expansion from State Medicaid
Agency and State Administering Agency;
• 	PACE organization and State Administering Agency collaborate on the
provider application in its entirety. To the extent the new site adopts the same
processes as the already approved sites of the provider, the application can
note this without resubmitting approved material;
• 	The State Administering Agency conducts a readiness review of the new site
while the clock is stopped;
• 	For an application to expand both service area and add a new center, CMS has
90 days to either request additional information or approve the application.
Upon completion of the State Readiness Review and receipt of the responses

to the request for additional information, CMS has an additional 90 days to
either approve or disapprove the application;
• 	If approved, the Program Agreement's Appendix C is amended to reflect the
new geographic area and new site.
http://www.cms.hhs.gov/PACE/07_Expansions.asp#TopOfPage
20.8 - BIPA 903 Waivers
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
The purpose of the waivers is to provide for reasonable flexibility in adapting the PACE
model to the needs of particular organizations (such as those in rural areas). Sections
1894(f)(2)(B) and 1934(f)(2)(B) of the Act provide for reasonable flexibility in adapting
the PACE service delivery model to the needs of particular organizations and permit the
Secretary, in close consultation with State Administering Agencies, to modify or waive
provisions of the PACE regulations so long as any such modification or waiver is not
inconsistent with and would not impair the essential elements, objections, and
requirements of these sections. These sections state that the following provisions may not
be modified or waived:
• 	The focus on frail elderly qualifying individuals who require the level of care
provided in a nursing facility;
• 	The delivery of comprehensive, integrated acute and long-term care services;
• 	The IDT approach to care management and service delivery;
• 	Capitated, integrated financing that allows the provider to pool payments
received from public and private programs and individuals; and
• 	The assumption by the provider of full financial risk.
The CMS advises PACE organizations to engage in dialogue with their State
Administering Agency regarding considerations for waiver requests prior to preparing
formal requests. This will help to ensure mutual understanding and agreement among
parties involved, preventing unnecessary work on the part of the PACE organization.
The following CMS link provides instructions for both PACE organizations and State
administering agencies in submitting BIPA 903 waivers to CMS:
http://www.cms.hhs.gov/PACE/08_BIPA903WaiverRequests.asp#TopOfPage.
Instructions to PACE organizations for preparing and submitting waiver requests to State
Administering Agencies under the authority of Section 903 of the BIPA are as follows:

• 	Any PACE organization that identifies the need for a BIPA 903 waiver should
include the following information in their waiver submission package:
ο 	Identification that the submitted document is a waiver request;
ο 	Identification of the regulatory section the PACE organization is
requesting to have waived;
ο 	Rationale behind the waiver request;
ο 	If applicable, process that will be followed to ensure participant care is not
compromised; and
ο 	Identification as to whether the issue was previously submitted as a BIPA
902 grandfathering request or if it is a new request under Section 903 of
BIPA;
• 	Waiver requests may be submitted to the State under either of the following
situations:
ο 	Waiver request as a document separate from an application but
accompanying an application; or
ο 	Waiver request independent of an application.
Waiver requests submitted in conjunction with provider applications must be marked as
separate documents by placing them in an independent envelope labeled "waiver
request." Waiver requests submitted independent of an application, as stand-alone
documents, must also be clearly labeled "waiver request".
Waiver requests must be submitted to the State Administering Agency. The request will
be reviewed by the State and then forwarded to CMS along with any concerns or
conditions. CMS evaluates a waiver request from a PACE organization or PACE
applicant on the basis of the following information: (1) the adequacy of the description
and rationale for the waiver provided by the PACE organization or PACE applicant,
including any additional information requested by CMS; and (2) information obtained by
CMS and the State Administering Agency in on-site reviews and monitoring of the
PACE organization. Within 90 days after receipt of a waiver request, CMS either
approves the request or denies the request and notifies the PACE organization or PACE
applicant in writing of the basis of the denial. For purposes of the 90-day time limit, the
date that a waiver request is received by CMS from the State Administering Agency is
the date on which the request is delivered to the address designated by CMS. A waiver
request is deemed approved if CMS fails to act on the request within 90 days after the
date the waiver request is received by CMS. CMS may withdraw approval of a waiver for
good cause.

[42 CFR §§ 460.10, 460.26, 460.28]
30 - State
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
30.1 - PACE State Plan Amendment
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
In order to elect PACE as a State plan option, a State Medicaid Agency must submit a
State Plan Amendment. The preprint for a State to elect PACE is found
at http://www.cms.hhs.gov/PACE. The State Plan Amendment must be approved before
CMS can enter into a PACE Program Agreement.
[42 CFR § 460.30(c)]
30.2 - State Readiness Review
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
States are responsible for conducting a State Readiness Review at the applicant’s site.
The purpose of this review is to determine the organization’s readiness to administer the
PACE program and enroll participants. The SRR includes a minimum set of criteria
established by CMS in conjunction with the States. States are free to add any additional
criteria to the State Readiness Review they deem necessary to help them determine if the
applicant (1) meets the requirements stipulated in the PACE regulation; (2) has developed
policies and procedures consistent with the PACE regulations; and (3) has established the
contracts necessary to provide all inclusive, quality care to its participants. Upon
completion of the SRR, the State will submit a report of their findings to CMS. More
information on the SRR can be found on the CMS website
at: www.cms.hhs.gov/PACE/04_InformationforStateAgencies.asp#TopOfPage.
During the initial and expansion application processes, the second clock may not begin
until all of the elements of the State Readiness Review tool are met to the satisfaction of
the State and submitted to CMS.
30.3 - State Contract
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
The PACE Program Agreement is a three-way contract between the PACE organization,
the State Administering Agency and CMS, and contains the PACE requirements from the
Federal statute and regulations. If the State Administering Agency has requirements
beyond those in the three-way PACE Program Agreement, those requirements should be
addressed in a separate contract between the State and the PACE organization. The
PACE three-way program agreement can be an attachment to the State-PACE
organization contract. The State contract with the PACE organization cannot be attached

or included as part of the three-way agreement. Each PACE organization must agree to
meet all applicable requirements under Federal, State, and local laws and regulations.
States may implement additional or more stringent requirements if they are consistent
with Sections 1894 and 1934 of the Act and with Federal laws and regulations. However,
if there is a conflict between the State and Federal requirements, the Federal requirements
would take precedence.
[42 CFR §§ 460.30(a), 460.32(a)(2); 71 FR 71258 (Dec. 8, 2006)]
40 - PACE Program Agreement
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)
The PACE Program Agreement is the contract executed between CMS, State
Administering Agency and the PACE organization upon approval of a permanent PACE
provider application.
This three-party contract governs provider operations and is signed by the
aforementioned parties. A PACE program agreement must include the following:
• 	A designation of the service area of the organization’s program. The area may
be identified by county, zip code, street boundaries, census track, block, or
tribal jurisdictional area, as applicable. CMS and the State Administering
Agency must approve any change in the designated service area;
• 	The organization’s commitment to meet all applicable requirements under
Federal, State, and local laws and regulations, including provisions of the
Civil Rights Act, the Age Discrimination Act, and the Americans With
Disabilities Act;
• 	The effective date and term of the agreement;
• 	A description of the organizational structure of the PACE organization and
information on administrative contacts including the name and phone number
of the program director, the name of all governing body members, and the
name and phone number of a contact person for the governing body;
• 	A participant bill of rights approved by CMS and an assurance that the rights
and protections will be provided;
• 	A description of the process for handing participant grievances and appeals;
• 	A statement of the organization’s policies on eligibility, enrollment, voluntary
disenrollment, and involuntary disenrollment;
• 	A description of services available to participants;

• 	A description of the organization’s quality assessment and performance
improvement program;
• 	A statement of the levels of performance required by CMS on standard quality
measures;
• 	A statement of the data and information required by CMS and the State
Administering Agency to be collected on participant care;
• 	The Medicaid capitation rate and the methodology used to calculate the
Medicare capitation rate; and
• 	A description of procedures that the organization will follow if the PACE
program agreement is terminated.
Additionally, an agreement may provide additional requirements for individuals to
qualify as PACE program eligible individuals in accordance with 42 CFR §
460.150(b)(4) and may contain any additional terms and conditions agreed to by the
parties if the terms and conditions are consistent with sections 1894 and 1934 of the Act
and the Part 460 regulations.
Additional information about the program agreement can be found on the CMS website
at: http://www.cms.hhs.gov/PACE/06_ProviderApplicationandRelatedResources.asp#To
pOfPage.
The program agreement is effective for a contract year and may be extended for
subsequent contract years in the absence of a notice by a party (CMS, State
Administering Agency, or the PACE organization) to terminate the agreement. The first
contract year can extend up to 23 months, that is, to December 31st of the year following
the effective date of the contract.
CMS or the State Administering Agency may terminate the program agreement at any
time for cause, including, but not limited to, uncorrected deficiencies in the quality of
care furnished to participants, the PACE organization’s failure to comply substantially
with the conditions for a PACE program, or non-compliance with the terms of the
agreement. The PACE organization may terminate the program agreement after timely
notice to CMS, the State Administering Agency and the participants. Notifications shall
be made as follows: 90 days before termination to CMS and the State Administering
Agency and 60 days before termination to the participants.
[42 CFR §§ 460.6, 460.30(b), 460.32, 460.34, 460.50]
50 - Effect of Change of Ownership
(Rev. 2, Issued: 06-09-11; Effective: 06-03-11; Implementation: 06-03-11)

CMS requires disclosure of any organizational changes that affect the philosophy,
mission, and operations of the PACE organization and impact care delivery to
participants. CMS believes that any change in ownership, relationships to another
corporate board and to any parent, affiliate, or subsidiary corporate entities, the PACE
governing body, its officials, program director, and medical director could result in a
substantial impact on the participants and their care. This does not include changes in
personnel or a change in the line of reporting of direct participant care staff.
CMS requires any PACE organization that is planning a change in organizational
structure to notify CMS and the State Administering Agency, in writing, at least 14 days
before the change takes place.
[42 CFR § 460.60(d)(3); 71 FR 71264 (Dec. 8, 2006)]

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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