Bill
SB 1804
IL PACE rate reform: blended 30/70 HCBS/SNF base, reflect high acuity, use actuarial methods, include high-cost drugs, add geographic adjustments to fund comprehensive care.
Status: Introduced (IL); subsequently amended, passed, and signed into law.
Introduced: early 2025. Enacted actions show final passage and Governor’s signature in June 2025; effective date reported as September 1, 2025. (Text states rates apply on and after the act’s effective date, no earlier than July 1, 2022.)
Purpose
- Require the Illinois Department of Healthcare and Family Services (HFS) to reform the rate‑setting methodology for the Program of All‑Inclusive Care for the Elderly (PACE) so PACE organizations are paid rates that better reflect the services they deliver and the needs of their enrollees.
Key provisions
- Blended case‑mix rate structure: HFS must establish a blended case‑mix rate that assumes a population mix of 30% Home & Community‑Based Services (HCBS) and 70% Skilled Nursing Facility (SNF) care for the comparable population — i.e., a 30/70 HCBS/SNF case‑mix base is to be used in rate development.
- Reflect comprehensive PACE care and higher acuity: Rates must more accurately reflect the comprehensive nature of PACE (medical, social, long‑term care supports) and the higher risk/acuity and frailty of PACE participants relative to other populations.
- Broader cost considerations: When developing rates, HFS must consider standard cost experience and the PACE population’s unique characteristics and care needs, including State Plan services or populations required under PACE but not included in Medicaid managed care contracts.
- Actuarial methods and certification:
- HFS shall develop capitation rates using actuarial methods and may apply a standardized methodology across managed‑care models while addressing features that distinguish PACE.
- Rates must be actuarially certified prior to implementation.
- The primary data source for each PACE organization’s rate development should be that organization’s cost and utilization data for Medical Assistance (or other HFS‑deemed sources).
- High‑cost drugs/treatments: The blended rate methodology must include a mechanism to account for costs related to high‑cost drugs and treatments.
- Upper payment limit and mitigation: Consistent with federal law, HFS must calculate an upper payment limit and consider nursing‑home placement risk when estimating level of care. HFS may pay PACE organizations at a rate within the certified actuarially sound range to mitigate adverse impacts of the new methodology.
- Geographic adjustments and reasonable cost coverage: Rates may be statewide with geographic adjustments and must provide for reasonable, appropriate, and attainable costs for each PACE organization within a region.
Who is affected
- PACE organizations/providers — payment methodology and revenues will change.
- PACE participants — intended to ensure adequate funding for their higher acuity needs and comprehensive services.
- Illinois Medicaid/HFS — responsible for implementing new rate methodology, actuarial work, and federal compliance.
- State budget/Medicaid spending — potential fiscal effects (not quantified in the summary text).
Timeline and procedural notes
- Statutory language states the provisions apply to rates established on/after the act’s effective date, “no earlier than July 1, 2022.”
- Legislative history included in the provided materials shows the bill was passed by both chambers, sent to and signed by the Governor in June 2025, with an effective date listed as September 1, 2025 (Chapter No. 2025‑156).
Potential impacts
- Intended: More accurate, sustainable payments for PACE providers that reflect higher acuity and comprehensive services, potentially improving program stability and participant care.
- Fiscal: Could increase Medicaid expenditures or reallocate existing payments; exact fiscal impact depends on actuarial rate outcomes and appropriation decisions.
- Administrative: Increased workload for HFS (actuarial analyses, data collection, rate certification) and adjustments by PACE organizations to new rate structure.
Note: The bill text contains some formatting/placement irregularities in the provided draft; the summary focuses on substantive, operative provisions regarding the PACE rate methodology.
Compiled from official sources — confirm details with the bill’s official record.
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