The PACE program was permanently established by the Balanced Budget Act of 1997 as a part of the Medicare program and an option for state Medicaid programs to merge payments for beneficiaries eligible for both programs. The program of capitated payments is generally limited to dual-eligibles who are at least 55 years old and require nursing home level of care. Their care usually is provided through PACE centers, adult day-care facilities where teams of healthcare providers are based.
“That's probably the closest thing to an integrated program that exists now,” says MaryBeth Musumeci, a senior health policy analyst at the Kaiser Family Foundation.
The care model has spread to 85 programs in 29 states, which serve about 25,000 beneficiaries, according to the National PACE Association. Each PACE program has an average of 260 enrollees and about 90% of PACE participants are dual-eligibles.
The program's statutory limitations to dual-eligibles who qualify for nursing-home care has limited its scope, but those strictures have also focused it on one of the costliest groups within the dual-eligible category, research indicates. An analysis by the Kaiser Commission on Medicaid and the Uninsured issued last month found that 74% of the approximately 900,000 dual-eligibles who incur the highest Medicaid costs are receiving long-term care, such as nursing-home services. And these costliest Medicaid beneficiaries are more likely than lower-cost dual-eligibles to be “over age 80, white, non-Hispanic and less likely to be married,” according to the report.
PACE has paid off, according to some supporters. For instance, the Oklahoma PACE program, which was launched in 2008 and includes only 100 beneficiaries in one location, saves the state about $1 million annually, says Ashley Herron, PACE coordinator for the Oklahoma Health Care Authority. Those savings are based on what the state estimates the beneficiaries would cost its Medicaid program if they were in nursing homes.
However, researchers who have examined many of the PACE programs have found mixed results. The two major evaluations of the program conducted for the CMS—one in 2000 and one in 2008—both found the program's enrollees consistently have some improvements in their health status, including mental and general physical health status, Grabowski notes. The 2000 study by Apt Associates and the 2008 study by Mathematica Policy Research found beneficiaries were happier with the program's care coordination than they were before when trying to navigate between Medicare and Medicaid on their own.
Those findings echo the experiences that PACE participants reported in recent focus groups organized by the AARP Public Policy Institute. The study that resulted from the feedback of those beneficiaries concluded that PACE participants were particularly happy with its care coordination and opportunities for social interactions provided by the PACE centers.
Such considerations are as important as analyses of the dollars involved and the technical aspects of restructuring the care dual-eligibles, Susan Reinhard, an AARP senior vice president and director of its Public Policy Institute, said at a December 2011 briefing by the Alliance for Health Reform, a nonpartisan health policy group.
“Changes to the way care is organized for these people who are dually eligible could have profound effects on their lives and frankly the lives of the families that surround them and support them in many different ways,” she says.
It is the fiscal analyses of the PACE programs that have been the programs' “not-so-good news,” Grabowski says.
For example, the analysis by Apt found some savings to Medicare from the PACE program, but they were dwarfed by the program's increased costs for Medicaid. Overall, the total capitated payment for PACE enrollees was 9.7% more in the one year studied than the projected fee-for-service cost of those patients to both Medicare and Medicaid.
The 2008 study found similar costs to Medicare under its standard fee-for-service program and the PACE program but Medicaid costs rose under PACE.
“It's often been sold as this sort of win-win of lowering costs and improving quality, and at least to date, it hasn't realized that full potential,” Grabowski says. “It has improved quality of care and outcomes but at a higher cost.”
The central question that the CMS and state Medicaid officials need to answer when considering spreading PACE, according to Grabowski and other researchers, is whether the increase in quality warrants the growth in spending.
The program's slow growth demonstrates that states already have assessed the program's value and cost equation and found it is an unworthy vehicle to treat the broader population of costly dual-eligibles, says Judy Feder, professor of public policy at Georgetown University in Washington. That limited state utilization of PACE is a lesson the CMS is unlikely to miss when it is considering state proposals for the dual-eligible pilot programs planned for the future.
“It is a particular model of care—not solely but largely daycare-based—for the frailest of the dual-eligibles,” Feder says. Conversely, the CMS' coming pilot projects to overhaul care for dual-eligibles intend “to reach far more broadly.”
Such shortcomings may occur in the case of exact copies of existing PACE programs, say some program supporters, but variations of the model that retain core elements are more likely to provide improved health outcomes at reduced costs.
For instance, several states are considering variations known as a “virtual PACE program” or “PACE without walls,” which would provide “that model of integrated care but to do it without tying people to that one-stop physical location,” Kaiser's Musumeci says.
Such changes would move closer to approximating medical homes or health homes, both of which assign high-cost dual-eligibles with multiple health conditions to one physician or clinical team that coordinates all of their care—with the goal of improving their health status. It also would retain the health team approach that produced positive health outcomes in studies, while eliminating the infrastructure cost of maintaining PACE centers.