Assigned to HEALTH & APPROP                                                                                                 FOR COMMITTEE

ARIZONA STATE SENATE

Forty-seventh Legislature, Second Regular Session

CORRECTED

FACT SHEET FOR H.B. 2383

AHCCCS; PACE program

Purpose

            Establishes the Program of All-Inclusive Care for the Elderly (PACE) as an optional program for individuals who meet specified requirements.  Establishes requirements for the Arizona Health Care Cost Containment System (AHCCCS) Administration to administer and operate the program.  Establishes requirements for PACE contractors.

Background

            The Arizona Long-Term Care System (ALTCS) is the state’s Medicaid program for aged (65 and over), blind or disabled individuals who need ongoing services at a nursing facility level of care.  However, program participants do not have to reside in a nursing home and ALTCS also provides services in home and community-based settings (HCBS).  Similar to the acute care program, ALTCS delivers its long-term care services through a managed care approach by combining all acute medical care services, institutional services, case management, and home and community based services through a network of program contractors.   ALTCS participants are also covered for medical care, including doctor’s office visits, hospitalization, prescriptions, lab work and behavioral health services.  The income limit for this program is $1,809 a month.

            PACE was authorized by the federal Balanced Budget Act (BBA) of 1997.  It integrates Medicare, Medicaid and, in certain cases, private financing.  The PACE financing model combines capitated payments from Medicare and either Medicaid or private pay sources.  If a person does not qualify for Medicaid due to income and asset limits, the individual is responsible for the portion of the monthly premium Medicaid would otherwise pay.

            The BBA established the PACE model as a permanent Medicare entity and also allowed states the option of providing PACE services to Medicaid beneficiaries.  The federal requirements for the program are that participants be at least 55 years old, live in the PACE service area and be certified as eligible for nursing home care by the appropriate state agency; in this case, AHCCCS.  When enrolling in PACE, participants must be able to be served in a community-based setting.

            The PACE program is the sole source of Medicare and Medicaid services for enrollees.  The PACE model uses an interdisciplinary team (IDT), consisting of professional and paraprofessional staff, to assess participants’ needs, develop care plans and deliver all services (including acute care services and, when necessary, nursing facility services) through an integrated model.  PACE programs typically provide most social and medical services in an adult day health center, although services may be provided in other settings in accordance with a participant’s needs. 

            H.B. 2383 establishes the PACE program for individuals who are eligible for ALTCS (or agree to pay private fees) but who also meet additional specified eligibility requirements.  The bill also sets out the main components of the PACE model, including the IDT and the adult day center.  The bill requires the Auditor General to conduct an audit of the PACE program within three years of initial enrollment in the program.

            The fiscal note on H.B. 2383 indicates the fiscal impact of the bill will depend upon whether PACE programs enroll healthier, lower-cost ALTCS members who would have otherwise received services in HCBS settings or whether they enroll individuals who would have otherwise received services in an institutionalized setting.  Because federal law prohibits the levying of the two percent premium tax on PACE providers, there will be a reduction of state General Fund revenue of $60,000 for every 200 individuals enrolled in PACE.  In addition, AHCCCS estimates implementation costs of $553,000, of which $450,000 is ongoing.  The fiscal note estimates this figure may be high.  The Auditor General reports it would require $625,000 ($225,000 for Auditor General expenses and $400,000 to contract the cost effectiveness work).  This amount is not included in the fiscal note; however, the JLBC staff reports that this estimate is reasonable.

Provisions

Definitions

1. Defines the following terms:

a) “PACE” means the Program of All-Inclusive Care for the Elderly.

b) “PACE center” means a facility operated by a PACE organization where primary care and other services are furnished.

c) “PACE organization” means an organization that is a permanent provider under Medicare that allows the state the option to pay for PACE services under Medicaid, provides medical and long-term care services under a capitated arrangement and that meets federal requirements.

d) “Eligible participant” means a person who:

i. meets the eligibility and service needs requirements for the ALTCS program.

ii. meets the income eligibility requirements for the ALTCS program or is willing to pay private fees.

iii. is at least 55 years of age.

iv. resides in the PACE organization’s service area.

v. is willing to receive all services exclusively from the PACE organization and its contracted or referred providers.

e) “Interdisciplinary team” (IDT) means PACE staff and subcontractors appropriately licensed, certified or accredited who are responsible for assessment and development of care plans for participants, and for providing services and assessments to participants.

2. Defines other relevant terms.

General Program Requirements

3. Establishes the PACE program to provide managed care benefits to the frail elderly through a comprehensive medical and social delivery system using an IDT approach in an adult day health center.

4. Requires AHCCCS to offer PACE as a voluntary option for individuals who are at least 55 years old, live in the PACE service area, require nursing home care and qualify as an eligible participant.  Requires a person to meet those criteria, to agree to receive covered services through a PACE organization and be able to live in a community setting at the time of enrollment.

5. Establishes PACE as a state option under Medicaid.

6. Requires the AHCCCS Director to submit a state plan amendment to implement PACE as soon as practicable but not later than September 1, 2006.

7. Requires the AHCCCS Administration to administer the program and consider the use of existing programs, rules and procedures in the counties and the Department of Economic Security where appropriate.

8. Provides the AHCCCS Administration with the same powers and duties as it has for the ALTCS program.

9. Prohibits the PACE program from discriminating on the basis of an individual’s health during the enrollment of members and requires the program to comply with federal laws governing eligibility assessment.

10. Requires AHCCCS to forward a potential enrollee’s intake information to PACE organization staff and requires the staff to assess the applicant’s appropriateness for enrollment.

11. Requires denial letters to include the reason for the denial, any appeal rights and a direction to return to the AHCCCS Administration for review; requires the denial letter to be forwarded to the AHCCCS Administration for review.

12. Establishes the same requirements that apply to ALTCS members for: a) limits on the creation of trusts; b) the effect of annuities, promissory notes and other financial instruments on a person’s eligibility; and c) the estate recovery program

PACE Organization Application Process

13. Requires the AHCCCS Administration to begin accepting notices of intent to file an application within 30 days of the state plan amendment’s approval by the federal Centers for Medicare and Medicaid Services.

14. Requires an organization to file a notice of intent to establish a PACE program with the AHCCCS Administration and requires the notice to describe the service area for the organization.

15. Requires the AHCCCS Administration, upon receipt of a notice of intent, to provide adequate public notice and invite alternative proposals.  Requires the AHCCCS Administration to prescribe a deadline for applications for the defined service area of not more than 60 days after the original notice of intent. 

16. Requires the organization to reimburse AHCCCS for publication costs related to the public notice.

17. Requires a PACE organization’s application to be accompanied by an assurance from the AHCCCS Administration that it is willing to enter into an agreement and that the organization is qualified to be a PACE organization.  Allows the AHCCCS Administration to collect the direct costs of determining the qualifications of the PACE organization.

18. Requires the AHCCCS Administration, within 90 days after an organization applies to become a PACE organization, to either:  a) provide assurance that the organization qualifies; b) deny assurance based on noncompliance with state or federal law; or c) request additional information needed to make the decision.

19. Requires the AHCCCS Administration, if multiple proposals are submitted for the same service area, to prioritize the proposal that is most responsive and cost effective and conforms to the required elements for a PACE program.  Allows the AHCCCS Administration to develop additional criteria that are consistent with federal law.

20. Prohibits the AHCCCS Administration from authorizing more than four qualified PACE programs before October 1, 2009.

PACE Organization Contracts

21. Requires a PACE organization to be (or be a distinct part of) an entity of a city, county, state or tribal government or a private nonprofit charitable entity.

22. Requires PACE program service areas to be approved by the AHCCCS Administration and the federal Centers for Medicare and Medicaid Services.

23. Requires PACE organizations to:

a) have a governing board that includes community representation.

b) be able to provide the complete services package.

c) have a physical site to provide adult day services.

d) have a defined service area.

e) have safeguards against a conflict of interest.

f) have demonstrated fiscal soundness.

g) have a participants’ bill of rights.

24. Stipulates that PACE programs assume the risk of providing contracted services and establishes requirements for financial solvency of programs, including an annual audited financial and programmatic report.

25. Requires the AHCCCS Director to require contract terms to ensure adequate performance of the PACE organization, including specified measures of financial security.

26. Exempts PACE organizations from complying with the state statutes related to insurance but requires compliance with requirements for the AHCCCS Administration and ALTCS program contractors related to:

a) coordination of benefits for cost recovery from available third party payors.

b) prior authorization and utilization review.

c) notification of ineligible members.

d) prohibited collection practices.

e) accounting and other financial procedures for counties that operate programs.

f) accounting and other financial procedures for Department of Economic Security programs.

g) remedies for mistakes in eligibility determination.

h) remedies for the inappropriate provision of services to eligible members.

i) liens on damages a person receives as a result of legal claims for injury (if AHCCCS paid for treatment as a result of the injury).

j) prohibitions on knowingly filing improper claims, applicable civil penalties and grievance procedures.

k) the suspension of the program if federal monies are unavailable.

l) an annual contract with an independent consulting firm regarding reimbursement rates, including reporting and notification requirements.

m) the exemption from regulation by the Department of Insurance.

Services and IDT Requirements

27. Requires PACE organizations to establish an IDT at each PACE center to assess and meet the needs of each PACE participant and to assign each participant to an IDT.

28. Stipulates the types of professionals the IDT must include.

29. Requires a PACE program to provide the same services provided to ALTCS members, but also provide case management to coordinate services and promote access to all necessary medical, social and other services.

30. Stipulates that case management services direct each participant to the most appropriate amount, duration and type of services, continually monitor and reassess need and include:

a) an assessment to determine the level of case management and services needed.

b) an individual case management plan.

c) service plan implementation, including counseling, service authorization, referral for services and case coordination.

d) a review of the service plan as needed but at least once every six months.

31. Requires PACE to provide services pursuant to state law and federal Medicare and Medicaid requirements.

Capitation Payments

32. Requires the AHCCCS Administration to make a prospective monthly capitation payment to the PACE organization for each Medicaid participant.

33. Requires the PACE organization to accept the capitation payment as payment in full and prohibits the organization from billing, charging, collecting or receiving any other form of payment from the AHCCCS Administration with specified exemptions.

34. Requires Medicaid capitation rates for PACE organizations to be less than the amount that would have otherwise been paid for the member under ALTCS and adjusted to take into account the comparative frailty of PACE enrollees.

35. Requires the AHCCCS Administration to send written notice of the capitation rates at least 30 days before finalizing the rates.

Miscellaneous

36. Requires the Auditor General to conduct a performance audit of the PACE program no later than three years after enrollment begins in the first PACE program.  Requires the audit to include an evaluation of the cost effectiveness of the program and the impact on program contractors.

37. Requires the Auditor General to submit copies of the audit to the Governor, President of the Senate, Speaker of the House of Representatives and chairpersons of the Senate and House of Representatives Health Committees.

38. Becomes effective on the general effective date.

Correction

· Deletes a provision stating that AHCCCS is exempt from rulemaking.

House Action

HEALTH        2/15/06     DP      8-0-0-1

APPROP (B) 2/22/06     DPA   11-0-2-2

3^rd Read           3/15/06                44-9-7-0

Prepared by Senate Research

March 27, 2006

BKL/jas