In San Francisco in the 1970s, a group of people who cared about and respected the role of seniors in their community created a new model of care that allowed their elders to be fully cared for while living independently at home. This was the genesis of what we know as the Program of All-Inclusive Care for the Elderly, or PACE.
Today, PACE participants are, for the most part, those who receive both Medicare and Medicaid benefits. However, it could act as the desired model of care for millions of Medicare beneficiaries who aren’t eligible for Medicaid. In fact, many impartial experts and think tanks, such as the Milken Institute, the Bipartisan Policy Center, Duke University Margolis Center for Health Policy and AARP’s Public Policy Institute, have cited PACE as a potential solution for the nation’s eldercare crisis, which will only worsen as the baby boomers continue to flood the aging and nursing services infrastructure.
Related: PACE could expand amid possible nursing home closures: InnovAge CEO
So what is PACE, and whom does it serve? In short, PACE enrollees are people older than 55 who qualify for a nursing-home level of care. PACE allows them to remain in their own homes by providing their healthcare needs through an interdisciplinary team, including doctors, nurses, social workers, physical therapists, occupational therapists and others. PACE is obligated under the federal statute through which it was created to provide all medically necessary care approved by the individual’s interdisciplinary team.
PACE programs receive funding from Medicare, Medicaid and individuals who pay premiums. For those eligible for both Medicare and Medicaid, those payments cover all costs of participation. Those not eligible for Medicaid pay a monthly premium.
The PACE funding model means there is a built-in incentive to keep the patient healthy. The hallmark feature of the program is the PACE center, which enrollees visit several times a week to see their doctors, receive medications and therapies and socialize with each other over meals and activities. At the end of the day, they return home, where their living arrangements and health needs
are constantly monitored. Transportation is one of the core services provided through PACE.
The program works. Several independent studies, including those from the Institute of Medicine and the Health and Human Services Department, have shown that PACE enrollees enjoy a high quality of life, with fewer emergency department and hospital visits, fewer nursing home admissions and better outcomes overall than those not enrolled in the program. During the COVID-19 pandemic, PACE participants on average experienced roughly one-third the rates of either infection or death when compared with nursing home residents.
It also has financial advantages. Medicaid capitated payments are 12% less than what a state would otherwise pay for individuals with similar needs who seek care outside of PACE.
For seniors who are on Medicare but not eligible for Medicaid, there are currently 155 PACE organizations, with 326 PACE centers that serve more than 70,000 people in 32 states and the District of Columbia. There is no reason why those numbers shouldn’t be three or four times as high, with PACE programs in every state.
According to the Milken Institute, every day since 2010, roughly 10,000 baby boomers have turned 65. By 2030, the youngest of the boomers, people born between 1946 and 1964, will be at least 65. In all, roughly half (52%) of this generation is expected to require a high level of long-term care at some point, with care periods varying from less than a year (19%) to more than five years (14%). Eldercare is costly on multiple levels, straining families financially and emotionally.
In PACE, a person with only Medicare coverage would pay on average $4,216, plus Medicare Part D prescription costs, each month for PACE. Other home care alternatives might be comparable on cost, but they are not nearly as comprehensive as PACE.
What are the barriers? One is the additional Medicare Part D prescription costs for those who do not qualify for Medicaid. At approximately $900 per month, these are higher for PACE enrollees than other Medicare beneficiaries. Congress is considering legislation to address this inequity.
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While the initial investment for starting a PACE program is significant, sponsoring organizations are seeing the benefits in the long term. And a shift from investing in facility-based care to investing in home- and community-based services is generating access to the funds that sponsoring organizations need
for PACE.
Far more significant barriers than start-up costs are those associated with state budgeting, eligibility and enrollment, along with legislative and regulatory limits, including enrollment caps, on the establishment of new programs. If those barriers were removed—and it would not necessarily cost additional tax dollars to remove them—PACE would become a more mainstream, accepted and affordable option for our elderly and their families.
PACE has the potential to keep more people out of nursing homes—where there soon may not be enough beds anyway—and safely cared for. Though the model dates to the 1970s, it’s a program whose time has come.
