A program aimed at keeping low-income older adults out of nursing homes is poised for rapid growth over the next 18 months, but could face challenges as it expands into new states and rural communities.
Massachusetts, Ohio, New Jersey, Florida, Oregon, Kentucky and Maryland are expanding Programs of All Inclusive Care for the Elderly. Illinois will launch the care model this year in five locations and legislation to fund PACE is pending in Minnesota and Connecticut.
Related: PACE gains speed as states seek nursing home alternative
An aging population, nursing home closures and increased state funding for home-and community-based services are igniting growth in the 34-year-old Centers for Medicare and Medicaid Services care model.
A little more than 70,000 older adults in 32 states participate in the model. The program provides home care, prescriptions, meals and transportation to enrollees. They can also socialize and receive a variety of medical services at neighborhood PACE centers. The program is funded by Medicare and Medicaid, with the majority of participants eligible for both and paying nothing for the services. Some Medicare-only enrollees pay a premium to cover the long-term care and drug aspects of the program.
PACE providers receive capitated payments—a predictable, upfront, set amount of money—from Medicare and Medicaid to cover each participant. States calculate what the fee-for-service expense would be for participants if they were in nursing homes and pay PACE providers a discount of approximately 14%.
The high cost of operating PACE, uncertainty over state funding and staffing shortages are raising concerns that some states could run into trouble if they expand the program too quickly.
“You can’t just go in and throw one on the ground,” said Shawn Bloom, president and CEO of the National PACE Association. “It requires a lot of patience and a lot of investment. Organizations that understand the dynamics of the PACE model and respect it is why we now have fairly high quality PACE programs across the country.”
Many PACE providers report high satisfaction rates among participants. Moreover, a 2021 report by the Health and Human Services Department found PACE enrollees were significantly less likely to be hospitalized, use emergency departments or referred to nursing homes than Medicare Advantage members.
States, including Kentucky, are aggressively expanding the model to tap into potential Medicaid savings, and a growing number of local and national PACE operators are eager to help.
The state launched PACE in 2021. Three programs have begun since then and two more are scheduled to start in the next few months. Kentucky Gov. Andy Beshear (D) wants PACE to serve the majority of the state by the end of the year, according to a spokesperson.
That could be a lofty goal, according to Richard Fish, CEO of One Senior Care. The Pennsylvania-based company is opening two PACE centers in rural Kentucky communities this summer.
Fish said he anticipates one of the biggest challenges will be finding enough staff in rural communities to work at the centers. The company needs to hire home care aides, drivers, nurses, therapists and social workers. He is considering a number of creative ways to source talent.
“[A hospital system] could hire someone and we could lease them or we could split that person’s time 50-50,” Fish said.
Attracting participants could be another challenge. Kentucky has approximately 8,000 people dually eligible for Medicare and Medicaid who likely qualify for PACE, according to healthcare consulting firm ATI Advisory. Attracting enough participants in a given area to scale a program could be tough for operators in some areas, according to Bluegrass Care Navigators President and CEO Liz Fowler. The nonprofit launched Kentucky’s first PACE program in Lexington in late 2022 and has 30 participants across five counties.
“In one eastern Kentucky community in Appalachia we heard very clearly that seniors would be reluctant to have people come into their homes,” Fowler said. “There was more mistrust. This was a community that has been more fraught with opioid misuse and overdoses.”
States' commitment to PACE over the long haul could be a wildcard as well. In 2020, Wyoming ended PACE funding after seven years due to budget cuts.
Jade Gong, a senior advisor at ATI Advisory who advises PACE operators, said she doubts what happened in Wyoming is likely to happen in other states. While many states are aggressively expanding PACE, they are being thoughtful about the program, Gong said.
“We know that the model works and many states are very intentional about wanting to have significant coverage of PACE in their state and that is a very positive thing,” Gong said.