"PACE did the impossible for my mother. I never thought she would be able to live with us again."
What can PACE do for your State?
States are struggling to meet the demands of a larger elderly population within an increasingly strained budgetary environment. Not only is the need greater, but the growing emphasis on providing home and community-based alternatives to institutional care is challenging existing state programs to rethink their program and funding priorities. Moreover, legal challenges to the status quo, specifically the Supreme Court decision on Olmstead and the number of state legal challenges it inspired, are leading State officials to search for innovative ways to provide an increasingly complex array of health care services to the disabled, many of whom are also elderly.
PACE is a tested and proven program capable of delivering community-based care to the frail and disabled elderly. As your State begins to address these challenges, you will find that PACE can help.
PACE, the Program of All-inclusive Care for the Elderly, coordinates and provides all needed preventive, primary, acute and long term care services so that nursing home eligible older adults can continue living active lives in the community. Significantly, PACE provides these services with cost savings based upon a predictable, capitated payment that combines Medicare and Medicaid funding. As a result, State health expenditures for the frail elderly become predictable and straightforward. Through PACE, today's fragmented health care financing and delivery systems come together to serve the unique needs of each individual in a way that makes sense to the elderly consumers, their informal caregivers, advocates, health care providers and policymakers. All of these services are offered at a predictable capitated payment rate that maintains people in the community, where they want to live.
The PACE for States Fact Sheet Series contains additional information regarding these benefits.
PACE Empowers Frail Elderly to Age in Place
Today, many frail older adults dependent upon Medicaid find themselves locked into a system characterized by few choices and little opportunity to remain independent in their communities. These individuals and their family caregivers are increasingly demanding options to the traditional nursing home environment. They want to age in place in their local communities. They need integrated, seamless and hassle-free financial and service delivery systems; and they deserve high quality care and services.
- Within a community-based environment, PACE provides consumers with all of their health, medical and social services, including preventive, rehabilitative, curative and supportive services in day health centers, homes, hospitals and nursing homes.
- PACE utilizes interdisciplinary teams, including physicians, nurse practitioners, nurses, social workers, therapists, van drivers and aides to exchange information and solve problems as the conditions and needs of each participant change—all with the objective of enabling older adults to age in place in their community.
- In contrast to institutional and home and community-based services programs, the primary care physician is an integral member of the PACE interdisciplinary team. This allows for full coordination of Medicare primary and acute care with Medicaid long term care services.
- The PACE financing model combines payments from Medicare and Medicaid and private pay sources (for those not eligible for Medicaid) into one flat-rate payment, which provides for the entire range of individualized long term care, primary and acute care and services. This capitated reimbursement mechanism also allows PACE programs to provide participants with important services that might not otherwise be covered by Medicaid or Medicare.
- PACE utilizes transportation systems to enable participants to live as independently as possible in the community, while ensuring access to the supportive services, medical specialists, therapies and other medical care they need.
- PACE is the only program that has been proven successful in addressing the needs of individuals who are dually eligible for Medicare and Medicaid in one fully-integrated program.
PACE Meets Olmstead Requirements
In its Olmstead decision, the U.S. Supreme Court determined that States may violate Title II of the Americans with Disabilities Act if they provide care to people with disabilities in institutional settings when they could be appropriately served in a home-or community-based setting. This decision is forcing States to critically examine their long term care strategies and expand the home and community-based services options offered to the frail elderly, many of whom have one or more disabilities.
- PACE provides States with a cost effective, community-based model of care for older adults who meet institutional nursing home eligibility requirements.
- States may offer PACE amending their State plan, rather than going through the extensive waiver process that is required for other home and community-based services programs.
- Unlike traditional home and community-based services programs, PACE is easily able to manage the care needs of individuals with complex medical conditions.
- Through the PACE financing model, providers receive a known monthly capitated rate from Medicare and Medicaid (and, if applicable, from private pay sources) for each participant, which they are able to utilize in innovative ways to provide for their enrollees' comprehensive care needs.
- PACE providers offer the complete breadth of community-based primary care, acute care and long term care services, either directly or through subcontractor arrangements with other providers.
- Because of their capitated payment and assumption of responsibility to provide all needed care, PACE providers have a financial incentive to prevent and/or delay nursing home placement for their participants, a goal desired by the frail elderly.
- PACE providers are able to develop programs for individuals with complex medical needs, individuals not well served by traditional home and community-based programs.
- PACE providers have the regulatory and financial flexibility they need to creatively meet the medical and social needs of frail older adults.
PACE Provides High Clinical Outcomes and Beneficiary Satisfaction
The quality of care provided in today's long term care system and the quality of life older adults are able to achieve in that system are under enhanced scrutiny from the press, State and Federal officials, consumers, and advocates. States are being called upon to ensure that providers achieve high clinical outcomes for their clients, and that these individuals are able to maintain a high quality of life despite their frailty or medical conditions.
- Research by Abt Associates demonstrates that, in comparison to "traditional" Medicare/Medicaid enrollees, PACE participants have lower rates of inpatient utilization, higher utilization of ambulatory services and a lower mortality rate. In addition, participants reported better health status and quality of life. These findings were most pronounced for enrollees with high levels of physical impairment.
- A study by the Commonwealth of Massachusetts found that the rate of preventable hospitalizations was substantially lower for PACE participants than for their counterparts receiving other community-based or institutional services.
- A study by the State of Texas found that, despite caring for a more frail population than Medicare in general, PACE participants in Texas had fewer hospital admissions and shorter hospital stays.
PACE Helps States Predict Costs and Save Money
Older adults are a very small component of the Medicaid-eligible population; however, in 2000, Medicaid long term care expenditures represented over one-third of the total $194 billion spent by Medicaid programs for all medical services. In light of these costs, States are finding it increasingly difficult to reimburse providers adequately for the cost of providing high quality, traditional nursing home care, and are falling behind in their ability to offer home and community-based services alternatives to institutional care. In addition, the inability to integrate Medicaid and Medicare funding has resulted in fragmented systems and increased administrative costs to States.
- PACE enhances a State's ability to predict costs for a long term care population. Because PACE providers assume full financial risk for all services, including nursing home care, States are afforded greater predictability in terms of Medicaid long term care expenditures and insurance against higher costs associated with nursing home placement. Once an individual enrolls in a PACE program, the financial risk related to nursing home placement is borne by the provider, not the State.
- PACE providers receive capitated payments from Medicare, Medicaid and private pay participants as payment for all covered benefits. The type, intensity or duration of services required does not affect these fixed monthly payments.
- PACE providers assume full financial risk for the costs of care for their participants. Providers cannot shift costs back to their payers or disenroll individuals who require extensive or expensive care.
- PACE has the longest and most extensive history of any model in managing total care for the frail elderly while on a fixed budget. The State of Tennessee found that its PACE program provides a 17% cost savings compared to the TennCare MCO/BHO and Nursing Facility System. The State of Texas found that its PACE program saves the State and Federal governments an estimated 14% compared to nursing home and medical care.
- PACE reduces nursing home admissions and their related operational costs. In addition to this immediate cost savings to States, PACE programs also substantially lower future capital expenditures to construct nursing homes. Approximately $1.5 million in capital expenditures is needed to develop a PACE site able to serve 250 to 300 enrollees. This translates to about $5,000 per enrollee, far less than the cost per bed to build a nursing home.
PACE Serves Dual Eligible
The dual eligible population experiences high costs and requires high levels of service coordination and integration. Although elderly beneficiaries make up only 12% of all Medicaid eligibles, they incur 28% of States' Medicaid expenditures. In deliberating how best to address the needs of dual eligibles with long term care needs, States have a variety of options, including State plan services; home and community-based waiver services; and managed care options, both mandatory and voluntary, involving various combinations of waiver authorities. An increasing number of States are developing managed care options for dual eligibles that coexist with these programs, although the extent to which long term care services have been included among capitated managed care benefits remains limited.
- Because PACE focuses exclusively on older adults who meet State eligibility criteria for nursing home level of care, the focus is on a subset of the dual eligible population that experiences high costs and requires high levels of service coordination and integration.
- Most PACE enrollees are dually eligible for Medicare and Medicaid.
- PACE provides a full range of primary, acute and long term care services in both community and institutional settings for the nursing-home-qualified, dual eligible population. By using a team-managed approach to care, PACE integrates a comprehensive package of acute and long term health services in both inpatient and outpatient settings.
- Under PACE, Medicare and Medicaid services are fully integrated. PACE offers a wide range of acute and long term care services tailored to individual needs by utilizing community-based long term care, case management and a variety of specialty providers. In addition, the capitated financing allows PACE to offer clients services that might not otherwise be covered by Medicare or Medicaid.
- Due to the capitated payments from Medicare, Medicaid and private pay sources, the PACE programs assume full financial risk.
- The 24-hour nature of the PACE program allows for systematic coordination of health care delivery with housing.
- The unique status of PACE as a State plan option gives States an opportunity to integrate Medicare and Medicaid financing for the dual eligible population without going through a lengthy waiver approval process.