New Compliance Obligations for PACE Organizations Coming in 2025 - McDermott Will & Emery

New Compliance Obligations for PACE Organizations Coming in 2025


On April 4, 2024, the Centers for Medicare & Medicaid Services (CMS) issued a final rule and press release revising the regulations governing the Medicare Advantage (MA) Program, Medicare Prescription Drug Benefit Program, and Programs of All-Inclusive Care for the Elderly (PACE). The final rule addresses policy and technical changes for contract year (CY) 2025 and finalizes several key provisions that were first proposed – but never finalized – in a proposed rule originally published on December 14, 2022. The final rule includes significant changes for Medicare Advantage plans, including revisions to permissible payment structures for agents and brokers, supplemental benefits, utilization management and more. The rule also includes meaningful new compliance obligations for PACE organizations, as discussed here.

McDermott hosted a webinar discussing the PACE policies announced in the final rule on Monday, April 22, 2024. Click here to learn more.

In Depth


PACE organizations are unique in that they not only approve the healthcare items and services needed by a participant, but they are also responsible for arranging for the provision of those services. Federal regulations require PACE organizations to provide participants access to care 24 hours a day, every day of the year. However, current regulations do not include specific timeframes for service delivery.

The final rule will add new requirements for PACE organizations regarding arranging and scheduling services. Specifically, PACE organizations must:

  • Arrange and schedule the dispensing of medications as expeditiously as the participant’s condition requires, but no later than 24 hours after the primary care provider orders the medication.
  • Arrange or schedule all other services that are approved by the participant’s care team as expeditiously as the participant’s health condition requires, but no later than seven calendar days after the date the interdisciplinary care team (IDT) or a member of the IDT first approves the service.

These timeframes apply only to the arranging and scheduling of services, and do not mandate that services actually be delivered within these timeframes. Routine or preventive services will be excluded from the seven-day requirement when certain conditions are met.


IDTs made up of primary care physicians, social workers, home-care coordinators, and other providers and support personnel are a core element of the PACE care delivery model. Each PACE participant must have an IDT that is tasked with implementing, coordinating and monitoring the participant’s plan of care. The plan of care is intended to capture the participant’s medical, physical, social and emotional needs, and to be a comprehensive, living document. CMS is implementing new requirements to encourage IDTs to more frequently revisit and revise the plan of care to incorporate up-to-date information about the participant’s health status and changing needs.

Specifically, the final rule requires IDTs to:

  • Develop and revise plans of care for each participant.
  • Take into consideration the most current assessment findings and identify services to be furnished.
  • Reevaluate each plan within 180 days from the date when the previous care plan was finalized.
  • Reevaluate the plan within 14 days after the PACE organization determines, or should have determined, that there has been a change in the participant’s health or psychosocial status.
  • If a participant is hospitalized within 14 days of a change in status, the IDT must reevaluate and revise the plan no later than 14 days after the participant’s date of discharge from the hospital.

The obligation to update the plan of care based on a situation in which the PACE organization “should have determined” that there was a change in the participant’s status establishes a somewhat ambiguous legal standard for PACE organizations. CMS did not provide additional clarity regarding the intended triggers for a PACE organization to further investigate a participant’s health status, or which individuals’ knowledge may result in an obligation on the part of the PACE organization. PACE organizations may consider implementing contractual obligations and operational processes to ensure compliance with these new requirements.


PACE organizations must have written safeguards addressing participants’ rights, including processes for grievances and appeals. Currently, PACE organizations have the flexibility to develop their own grievance resolution timeframes and procedures. Expressing concern that this flexibility has created inconsistencies in how PACE organizations handle grievances, CMS has implemented a new, formalized grievance process that will be uniform across organizations. The new rules:

  • Require PACE organizations to establish formal written procedures for identifying and resolving grievances.
  • Clarify which individuals are permitted to submit a grievance.
  • Require that grievance notifications include information on participants’ rights.
  • Require that grievances be resolved as expeditiously as required, but no later than 30 days after the organization has received the grievance.


The final rule also implements the following key changes:

  • Past Performance Evaluations: Entities that seek to offer a new PACE program or to expand an existing program will be subject to a past performance review, including consideration of whether the applicant was previously subject to an enrollment or payment sanction, failed to maintain fiscal soundness or exceeded a specific threshold for compliance actions, among other criteria.
  • Substantially Incomplete Applications: Any PACE application that does not include the proper state assurances documentation will be considered incomplete and invalid.
  • Personnel Medical Clearance: PACE organizations must develop and implement a comprehensive medical clearance process for staff with direct participant contact, with minimum conditions that CMS deems acceptable. Alternatively, a PACE organization may conduct individual risk assessments that meet CMS’s criteria.
  • Participant Notification Requirements: PACE organizations must disclose to current and potential PACE participants information related to performance and contract compliance deficiencies.
  • Service Determination Requests: All service requests made by participants and/or caregivers before the development of the participant’s initial plan of care must either be (1) approved and incorporated into the initial plan of care or (2) have a documented rationale for not being approved by the PACE organization.

Please contact our team with any questions regarding the final rule.