(1) (a) The general assembly hereby finds and declares that it is the intent of this section to replicate the ON LOK program in San Francisco, California, that has proven to be cost-effective at both the state and federal levels. The PACE program is part of a national replication project authorized in section 9412(b)(2) of the federal "Omnibus Budget Reconciliation Act of 1986", as amended. The general assembly finds that, by coordinating an extensive array of medical and nonmedical services, the needs of the participants will be met primarily in an outpatient environment in an adult day health center, in their homes, or in an institutional setting. The general assembly finds that such a service delivery system will enhance the quality of life for the participant and offers the potential to reduce and cap the costs to Colorado of the medical needs of the participants, including hospital and nursing home admissions.

(b) Repealed.

(2) The general assembly has determined on the recommendation of the state department that the PACE program is cost-effective. As a result of such determination and after consultation with the joint budget committee of the general assembly, application has been made to and waivers have been obtained from the federal health care financing administration to implement the PACE program as provided in this section. The general assembly, therefore, authorizes the state department to implement the PACE program in accordance with this section. In connection with the implementation of the program, the state department shall:

(a) Provide a system for reimbursement for services to the PACE program pursuant to this section;

(b) Develop and implement a contract with any public, private, nonprofit, or for-profit entity providing the PACE program, as permitted by federal law, that sets forth contractual obligations for the PACE program as required by the state department, including but not limited to reporting and monitoring of utilization of services and of the costs of the program, quality of care, and a comprehensive assessment of the provider's fiscal soundness;

(c) Acknowledge that it is participating in the national PACE project as initiated by congress;

(d) Be responsible for certifying the eligibility for services of all PACEprogram participants.

(3) The general assembly declares that the purpose of this section is to provide services that would foster the following goals:

(a) To maintain eligible persons at home as an alternative to long-term institutionalization;

(b) To provide optimum accessibility to various important social and health resources that are available to assist eligible persons in maintaining independent living;

(c) To provide that eligible persons who are frail elderly but who have the capacity to remain in an independent living situation have access to the appropriate social and health services without which independent living would not be possible;

(d) To coordinate, integrate, and link such social and health services by removing obstacles that impede or limit improvements in delivery of these services;

(e) To provide the most efficient and effective use of capitated funds in the delivery of such social and health services.

(f) Repealed.

(4) Within the context of the PACE program, the state department may include any or all of the services listed in sections 25.5-5-102, 25.5-5-103, 25.5-5-202, and 25.5-5-203, as applicable.

(5) An eligible person may elect to receive services from the PACE program as described in subsection (4) of this section. If such an election is made, the eligible person shall not remain eligible for services or payment through the regular medicare or medicaid programs. All services provided by said programs shall be provided through the PACE program in accordance with this section. An eligible person may elect to disenroll from the PACE program at any time.

(6) The state department, in cooperation with the single entry point agencies established in section 25.5-6-106, shall develop and implement a coordinated plan to provide education about PACE program site operations under this section. The state board shall adopt rules:

(a) To ensure that case managers and any other appropriate state department staff discuss the option and potential benefits of participating in the PACE program with all eligible long-term care clients. These rules shall require additional and on-going training of the single entry point agency case managers in counties where a PACE program is operating. This training shall be provided by a federally approved PACE provider. In addition, each single entry point agency may designate case managers who have knowledge about the PACE program; and

(b) To allow PACE providers to contract with an enrollment broker to include the PACE program in its marketing materials to eligible long-term clients.

(6.5) An eligible person who is enrolled in a managed care organization, an organization contracted with the state department pursuant to part 4 of article 5 of this title, or other risk-bearing entity may elect to withdraw from or terminate such enrollment and enroll in and receive services through a PACE program. The state board's rules shall define how such election is made. The effective date of an eligible person's election shall not be more than thirty days after the eligible person's date of election.

(7) For purposes of this section:

(a) "Dually eligible person" means a person who is eligible for assistance or benefits under both medicaid and medicare.

(b) "Eligible person" means a frail elderly individual who voluntarily enrolls in the PACE program and whose gross income does not exceed three hundred percent of the current federal supplemental security income benefit level, whose resources do not exceed the limit established by the state department of human services for individuals receiving a mandatory minimum state supplementation of SSI benefits pursuant to section 26-2-204, C.R.S., or in the case of a person who is married, do not exceed the amount authorized in section 25.5-6-101, and for whom a physician licensed pursuant to article 36 of title 12, C.R.S., certifies that such a program provides an appropriate alternative to institutionalized care. "Eligible person" may also include a dually eligible person.

(c) "Frail elderly" means an individual who meets functional eligibility requirements, as established by the state department, for nursing home care and who is fifty-five years of age or older.

(d) "Upper payment limit" means a federal upper payment limit on the amount of the medicaid payment for which federal financial participation is available for a class of services and a class of health care providers, as specified in 42 CFR 447.

(8) Using a risk-based financing model, any public, private, nonprofit, or for-profit entity providing the PACE program, as permitted by federal law, shall assume responsibility for all costs generated by PACE program participants, and shall create and maintain a risk reserve fund that will cover any cost overages for any participant. The PACE program is responsible for the entire range of services in the consolidated service model, including hospital and nursing home care, according to participant need as determined by the multidisciplinary team. Any public, private, nonprofit, or for-profit entity providing the PACE program, as permitted by federal law, is responsible for the full financial risk at the conclusion of the demonstration period and when permanent waivers from the federal health care financing administration are granted. Specific arrangements of the risk-based financing model shall be adopted and negotiated by the federal health care financing administration, any public, private, nonprofit, or for-profit entity providing the PACE program, as permitted by federal law, and the state department.

(9) Nothing in this section requires a PACE program site operator to hold a certificate of authority as a health maintenance organization under part 4 of article 16 of title 10, C.R.S., for purposes of the PACE program.

(10) (a) The state department shall perform a feasibility study, conditioned on the receipt of sufficient gifts, grants, and donations, in order to identify viable communities that may support a PACE program site. This study shall be completed on or before May 1, 2003.

(b) The state department, consistent with the results of the feasibility study, shall use its best efforts to have in operation:

(I) One additional PACE program site by July 1, 2004;

(II) A total of four additional PACE program sites by July 1, 2005; and

(III) A total of six additional PACE program sites by July 1, 2006.

(c)

(I) No later than May 30, 2003, the executive director of the state department shall submit to the joint budget committee of the general assembly and to the health and human services committees of the house of representatives and the senate, or any successor committees, a written report of the results of the feasibility study conducted under paragraph (a) of this subsection (10).

(II) No later than January 1, 2007, the executive director of the state department shall submit to the joint budget committee of the general assembly and to the health and human services committees of the house of representatives and the senate, or any successor committees, a final written report detailing the expansion of PACE program sites across the state.

(11) The state board shall promulgate such rules, pursuant to article 4 of title 24, C.R.S., as are necessary to implement this section.

(12) (a) The general assembly shall make appropriations to the state department to fund services under this section provided at a monthly capitated rate. The state department shall annually renegotiate a monthly capitated rate for the contracted services.

(b) Repealed.

(c) The monthly capitated rate negotiated with the state department shall be included in the contract with the PACE organization and must be based upon a prospective monthly capitation payment to a PACE organization for a medicaid participant enrolled in a PACE program that is less than what would otherwise have been paid under the state medicaid plan if the participant were not enrolled in the PACE program.

(d)

(I) The state department, with the participation of Colorado PACE organizations, shall develop an actuarially sound upper payment limit methodology that complies with federal law relating to PACE organizations and addresses a PACE-comparable population and employs functional, diagnostic, and other information on the PACE population and its service use and cost characteristics. The state department shall contract with an actuary that has experience with the methods described in this paragraph (d).

(II) For purposes of computing the upper payment limit, the state department shall provide to the contracted actuary state long-term care options data describing the health characteristics, functional acuity, and long-term services and supports needs of the PACE-comparable population, as well as relevant medicare and medicaid claims, cost, utilization, and vital statistics data necessary for the computation. The upper payment limit methodology must apply grade of membership methods to characterize the health deficit structure of long-term services and supports populations, demonstrating an empirical upper payment limit.

(III) Notwithstanding the provisions of this paragraph (d) to the contrary, the state department shall not be required to develop an upper payment limit methodology pursuant to this paragraph (d) or comply with the requirements of subparagraph (I) of paragraph (e) of this subsection (12) if the state department does not receive sufficient gifts, grants, and donations to fund the contract for actuarial services pursuant to subparagraph (I) of this paragraph (d).

(e)

(I) Contingent upon any necessary federal approval, until the upper payment limit methodology is developed pursuant to paragraph (d) of this subsection (12) and adopted in state board rules, the percentage of the upper payment limit used to calculate the monthly capitated rate shall not be less than the percentage negotiated by the state department with the PACE organizations for the 2016-17 state fiscal year.

(II) This paragraph (e) is repealed, effective July 1 of the year following the year in which the executive director notifies the revisor of statutes that the state board has adopted rules relating to the upper payment limit methodology developed pursuant to paragraph (d) of this subsection (12).

(13) The state department may accept grants and donations from private sources for the purpose of implementing this section.

(14) (a) No later than sixty days prior to the closing or effective date of a conversion of a nonprofit PACE provider to a for-profit PACE provider, the nonprofit PACE provider shall:

(I) Transmit a conversion plan and written notice of the conversion to the attorney general, which conversion plan must include, at a minimum:

(A) A copy of the results of an independent valuation of the fair market value of the business that proposes to convert;

(B) A detailed explanation of the plans for distribution of the proceeds of the conversion, including whether the proceeds will be distributed to a new nonprofit entity or to an existing organization and, if to an existing nonprofit organization, which organization and the reasons for selecting that organization, or, if to a new nonprofit organization, how the initial board of directors will be selected;

(C) Information about any compensation, bonus, or inducement to any officers or directors of the converting entity resulting from the conversion; and

(D) The PACE organization's audited financial statements for its three most recent fiscal years for Colorado, and separately, for those operations outside of Colorado, for any such operations that may be related to the conversion; and

(II) Bear all costs associated with public oversight and review by the attorney general of the conversion, including the retention of outside experts, if any.

(b) Within ten days after the receipt of the conversion plan, the attorney general shall post the complete conversion plan on its website and receive public comments about the plan, which shall also be posted as soon as practicable to the attorney general's website. Public comment shall be received for a minimum of thirty days and available on the website for at least the duration of the comment period.

(c) Nothing in this section shall be construed to affect the common law authority of the attorney general.