[Code of Federal Regulations]

[Title 42, Volume 3]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 42CFR460.80]



[Page 426-427]

 

                         TITLE 42--PUBLIC HEALTH

 

  CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF 

                  HEALTH AND HUMAN SERVICES (CONTINUED)

 

PART 460_PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)--Table 

of Contents

 

               Subpart E_PACE Administrative Requirements

 

Sec. 460.80  Fiscal soundness.



    (a) Fiscally sound operation. A PACE organization must have a 

fiscally sound operation, as demonstrated by the following:

    (1) Total assets greater than total unsubordinated liabilities.

    (2) Sufficient cash flow and adequate liquidity to meet obligations 

as they become due.

    (3) A net operating surplus or a financial plan for maintaining 

solvency that is satisfactory to CMS and the State administering agency.

    (b) Insolvency plan. The organization must have a documented plan in 

the event of insolvency, approved by CMS and the State administering 

agency, which provides for the following:

    (1) Continuation of benefits for the duration of the period for 

which capitation payment has been made.

    (2) Continuation of benefits to participants who are confined in a 

hospital on the date of insolvency until their discharge.

    (3) Protection of participants from liability for payment of fees 

that are the legal obligation of the PACE organization.

    (c) Arrangements to cover expenses. (1) A PACE organization must 

demonstrate that it has arrangements to cover expenses in the amount of 

at least the sum of the following in the event it becomes insolvent:

    (i) One month's total capitation revenue to cover expenses the month 

before insolvency.

    (ii) One month's average payment to all contractors, based on the 

prior quarter's average payment, to cover expenses the month after the 

date it declares insolvency or ceases operations.



[[Page 427]]



    (2) Arrangements to cover expenses may include, but are not limited 

to, the following:

    (i) Insolvency insurance or reinsurance.

    (ii) Hold harmless arrangement.

    (iii) Letters of credit, guarantees, net worth, restricted State 

reserves, or State law provisions.