Pace Administrative Mistakes 2025

title: "PACE in 2025: What Growing Organizations Are Getting Wrong Administratively" description: "For-profit PACE expansion is accelerating faster than back-office infrastructure can keep up. Here are the specific administrative failure modes showing up in growing PACE organizations — from encounter data gaps to enrollment process breakdowns to new CMS compliance requirements that many organizations are not ready for." date: 2026-02-25 author: "Ayin Health Solutions" category: "PACE" tags: "PACE", "Operations", "Compliance", "Enrollment", "Encounter Data" image: "/photography/Ayin_still_7.png" imageAlt: "Administrative team reviewing health plan compliance documentation" featured: false

The PACE market is growing faster than it has in decades. According to NORC's March 2025 market assessment, for-profit PACE organizations grew their contracts by 182% and their enrollment by 173% between 2016 and 2022 — while nonprofits grew by 6% and 44%, respectively. Private equity and venture capital-backed PACE organizations alone grew by 300% over the same period. As of mid-2025, there are 196 PACE programs operating across 33 states, with for-profits now accounting for more than a quarter of total enrollment. That growth trajectory is not slowing down. States are actively issuing RFPs — Georgia, Pennsylvania, New Jersey, Oregon, Louisiana, Tennessee — and new entrants are moving fast to operationalize. The problem is that operational speed and administrative readiness rarely travel together. And in PACE, the gap between the two creates specific, measurable, and often expensive problems.

The Encounter Data Transition Is Not Optional — And Most Organizations Are Behind

CMS is in the middle of a multi-year transition requiring PACE organizations to submit risk adjustment data through the Encounter Data System (EDS) rather than the legacy Risk Adjustment Processing System (RAPS). The January 2024 HPMS memo made clear that CMS expects comprehensive diagnosis data submitted via EDS, and the transition is now embedded in the CY 2025 and CY 2026 compliance calendar.

For CY 2026, CMS is blending risk scores using a 10% weight on the updated 2024 CMS-HCC model and a 90% weight on the 2017 model. The full transition — where PACE risk scores will be calculated exclusively from encounter data and FFS claims, aligned with the standard Medicare Advantage HCC model — is targeted for CY 2029.

That timeline sounds like runway. It is not.

Getting encounter data right requires accurate, complete, and timely submission of clinical diagnoses tied to actual services rendered. In PACE, that means capturing everything from PACE center visits to home health to behavioral health to transportation — across an IDT-driven care model that doesn't naturally generate a claim. Many PACE organizations are still submitting incomplete encounter records or relying on chart reviews to close diagnosis gaps rather than building the underlying documentation practices that produce clean encounter data from the start.

The downstream risks are concrete: inaccurate risk scores, revenue that doesn't reflect true member acuity, and audit exposure when CMS scrutinizes encounter submission quality. The 2026 audit protocol introduced by CMS explicitly identifies "universe accuracy" — meaning the accuracy and completeness of the data populations organizations submit for audit — as the foundational audit risk factor. An organization that can't produce clean encounter universes will trigger expanded review.

For new PACE entrants in particular, this is where under-investment in back-office technology shows up first. There is no shortcut to accurate encounter data. It requires the right system configuration, the right submission workflows, and regular validation before data leaves the organization.

The CY 2025 Compliance Calendar Has Real Teeth

The April 2024 CMS final rule introduced a batch of policy changes with a January 1, 2025 applicability date. Many PACE organizations were still adjusting operational processes well into 2025. Several of these changes create new administrative exposure if the workflows to support them aren't in place.

IDT reassessment timelines. IDTs must now reevaluate care plans within 180 days of the prior plan's finalization and within 14 days of any identified change in health or psychosocial status. If a hospitalization occurs within 14 days of a status change, reassessment must happen within 14 days of discharge. Tracking these triggers across a complex, high-acuity population is not manageable in a spreadsheet. It requires a care management platform integrated with enrollment and clinical data that surfaces the trigger in time to act.

Service scheduling requirements. Approved services must be scheduled within 7 calendar days of IDT approval. Medications must be arranged within 24 hours of provider orders. These are not aspirational standards — they are compliance requirements. An organization without workflow automation supporting these timelines will create documentation gaps that show up in audits.

Grievance resolution. PACE organizations must now resolve grievances within 30 days of receipt, with formal written procedures. The rule also clarifies who can submit grievances and requires that resolution notifications include participant rights information. This is operationally straightforward if you have a grievance tracking system. It is not straightforward if grievances are being tracked in email threads or shared folders.

The CY 2026 audit protocol compounds all of this. CMS has introduced new standardized templates for Requests for Additional Information (RAIs) and Corrective Action Plans (CAPs), and compliance program effectiveness is now evaluated through quarterly calls rather than a separate audit session. Organizations that haven't stress-tested their documentation practices against the updated protocol will learn about the gaps at the worst possible time — during fieldwork.

Enrollment Process Gaps in a Population That Doesn't Tolerate Them

PACE enrollment is structurally different from Medicare Advantage or Medicaid managed care. The frailty of the population means enrollment processes must move quickly and accurately. The average PACE enrollment tenure is two to three years, with death as the primary reason for disenrollment. This is not a population where enrollment errors self-correct over time.

What tends to go wrong:

Eligibility and assessment coordination. PACE enrollment requires nursing home level of care certification, Medicaid eligibility, Medicare eligibility (for dual-eligible participants), and geographic service area confirmation — all of which must be validated before enrollment is finalized. When any of these are mismatched, the downstream effects touch claims, risk adjustment, and capitation payments simultaneously.

Enrollment timing errors. PACE capitation payments are tied to enrollment effective dates. Delays or errors in reporting enrollment to CMS and the state Medicaid agency create reconciliation problems that are time-consuming and sometimes irrecoverable. New organizations often underestimate how much manual reconciliation is required before automated enrollment workflows are configured correctly.

Disenrollment documentation. When a participant dies, is hospitalized long-term, or voluntarily disenrolls, that transition must be documented and reported promptly. Lagging disenrollment reporting creates phantom capitation payments that will be recouped — often months later, after revenue has already been recognized.

Growing PACE organizations often understaff enrollment operations relative to their clinical build-out. The IDT, the PACE center, the transportation network — those get resourced first. Enrollment gets three people and a spreadsheet. That equation doesn't hold as census grows.

Rural Expansion Is Creating Operational Problems That Weren't in the Business Plan

The NORC data on for-profit rural expansion is striking: for-profit PACE enrollment in rural areas grew by 493% between 2016 and 2022, compared to 58% for nonprofits. That's largely a story of investor-driven market entry into underserved geographies. It's also a story of organizations discovering, after entry, that rural PACE creates specific administrative complications that urban program models don't prepare you for.

Transportation cost and documentation is the first problem that surfaces. PACE transportation is a covered service and a significant cost driver — and it's also encounter data that has to be captured and submitted. Rural programs run longer routes, use more non-emergency medical transportation vendors, and generate more variation in service delivery than urban programs. Capturing that accurately and consistently is harder.

Provider network adequacy documentation becomes more difficult when specialty providers are hours away. When a PACE participant requires specialist services outside the immediate area, the coordination documentation, authorization records, and encounter submission requirements don't change — but the volume of exceptions does.

And the enrollment ramp-up problem is more acute. PACE programs are typically not financially sustainable until enrollment reaches a critical threshold, often cited in the range of 100 to 200 participants. In a low-density rural market, reaching that threshold takes longer. The administrative infrastructure has to sustain the program during the ramp-up period, which requires careful cash flow management and operational efficiency from day one — not month eighteen.

California's 2025 moratorium on new PACE applications and service area expansions is a different kind of warning signal. When a major state effectively stops processing PACE applications because it has run out of regulatory bandwidth, it reflects how demanding new program oversight has become. The compliance burden on state agencies mirrors the compliance burden on organizations. Both are real.

Technology Gaps That PACE-Specific Operations Expose

PACE organizations frequently start with health plan administration platforms that were designed for MA or Medicaid managed care — and then discover that PACE workflows don't map cleanly. The IDT structure, the all-inclusive service model, the encounter data requirements for center-based services without a claim, the care plan trigger tracking — these aren't standard features in most platforms.

The practical result is workarounds. A system that wasn't built for IDT-driven care planning gets a custom module. Encounter data gets captured in a separate system and manually reconciled. Care plan reassessment triggers get tracked in a spreadsheet. Each workaround creates a compliance risk and a data quality problem.

Organizations that are new to PACE sometimes recognize this gap and invest in purpose-built PACE platforms early. More often, they discover the gap after go-live, when the workarounds are already load-bearing.

The check isn't whether you have a system. It's whether your system can produce a clean encounter data universe, track IDT reassessment triggers against the new CY 2025 timelines, and generate grievance documentation that meets the updated resolution requirements — without manual intervention at every step.

If your organization is navigating the encounter data transition, building out PACE enrollment operations, or preparing for a CMS audit, Ayin's encounter data and enrollment management services are built to support exactly this kind of operational complexity — or contact us to talk through where the gaps are.