CMS Pub. 100-11, ch. 1, § 20.5

The PACE regulation which established the requirements for PACE organizations is

based on the On Lok, Inc. Protocol. The Protocol provided authority for CMS and the

State Administering Agency (the State Agency designated to administer the PACE

program), to waive specific requirements of the Protocol, if, in their judgment, the

following criteria were met:

• The intent of the requirements were met by the proposed alternative and safe

and quality care would be provided;

• Written requests for waivers were required to be approved by CMS and the

State Administering Agency before implementation of the proposed

alternative.

CMS incorporated the requirement under the Protocol in the PACE regulations to the

extent consistent with the BBA provisions in Sections 1894 and 1934 of the Act. The

intention was to allow some flexibility to promote PACE in rural and Tribal areas while

maintaining consistency with the requirements for other PACE programs. The rationale

for limited view of the flexibility provisions was based on our belief that all PACE

demonstration programs were in compliance with the PACE protocol and, therefore,

would need to make only minor changes in their operations to meet the PACE regulatory

requirements. CMS intended to provide more flexibility to all PACE organizations once

sufficient experience in administering the PACE program was achieved. However, CMS

learned that although the early PACE demonstration programs initially complied with the

Protocol, most of them modified the Protocol requirements as they expanded, using the

flexibility authorized in the Protocol. While many of these modifications were related to

the allowable areas of service coverage and arrangement provisions, many others were

not authorized by the flexibility clause in the Protocol. Furthermore, many of the later

PACE demonstration programs also inappropriately exercised the flexibility clause in the

Protocol, especially with regard to direct employment of staff. Finally, very few of the

waivers were requested in writing or approved by CMS or the State Administering

Agency before implementation. Subsequently CMS revised regulations on the waiver

process in accordance with the requirements of the Medicare, Medicaid, and SCHIP

Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554).

[64 FR 66302 (Nov. 24, 1999) and 67 FR 61496 (Oct. 1, 2002)]