(a)

1. (1) The department may enter into contracts with public or private organizations for implementation of the PACE program, and also may enter into separate contracts with PACE organizations, to fully implement the single state agency responsibilities assumed by the department in those contracts, Section 14132.94, and any other state requirement found necessary by the department to provide comprehensive community-based, risk-based, and capitated long-term care services to California’s frail elderly.
2. (2) The department may enter into separate contracts as specified in paragraph (1) with up to 15 PACE organizations. This paragraph shall become inoperative upon federal approval of a capitation rate methodology, pursuant to subdivision (n) of Section 14301.1.

(b) The requirements of the PACE model, as provided for pursuant to Section 1894 (42 U.S.C. Sec. 1395eee) and Section 1934 (42 U.S.C. Sec. 1396u-4) of the federal Social Security Act, shall not be waived or modified. The requirements that shall not be waived or modified include all of the following:

1. (1) The focus on frail elderly qualifying individuals who require the level of care provided in a nursing facility.
2. (2) The delivery of comprehensive, integrated acute and long-term care services.
3. (3) The interdisciplinary team approach to care management and service delivery.
4. (4) Capitated, integrated financing that allows the provider to pool payments received from public and private programs and individuals.
5. (5) The assumption by the provider of full financial risk.

6. (6) The provision of a PACE benefit package for all participants, regardless of source of payment, that shall include all of the following:

   1. (A) All Medicare-covered items and services.
   2. (B) All Medicaid-covered items and services, as specified in the state’s Medicaid plan.
   3. (C) Other services determined necessary by the interdisciplinary team to improve and maintain the participant’s overall health status.

(e)

1. (1) The department shall establish capitation rates paid to each PACE organization at no less than 95 percent of the fee-for-service equivalent cost, including the department’s cost of administration, that the department estimates would be payable for all services covered under the PACE organization contract if all those services were to be furnished to Medi-Cal beneficiaries under the fee-for-service Medi-Cal program provided for pursuant to Chapter 7 (commencing with Section 14000).
2. (2) This subdivision shall be implemented only to the extent that federal financial participation is available.
3. (3) This subdivision shall become inoperative upon federal approval of a capitation rate methodology, pursuant to subdivision (n) of Section 14301.1.

(g)

1. (1) Notwithstanding subdivision (b), and only to the extent federal financial participation is available, the department, in consultation with PACE organizations, shall seek increased federal regulatory flexibility from the federal Centers for Medicare and Medicaid Services to modernize the PACE program, which may include, but is not limited to, addressing all of the following:

   1. (A) Composition of PACE interdisciplinary teams (IDT).
   2. (B) Use of community-based physicians.
   3. (C) Marketing practices.
   4. (D) Development of a streamlined PACE waiver process.
2. (2) This subdivision shall be operative upon federal approval of a capitation rate methodology pursuant to subdivision (n) of Section 14301.1.