Many families and seniors are desperate for alternatives to nursing homes. By 2030, one in five Americans will be over age 65, and most older adults say they would prefer to live in their homes for as long as possible. The Program for All-Inclusive Care for the Elderly (PACE), which currently has more than 80,000 enrollees in more than 130 programs across 33 states and the District of Columbia, may provide the answer.
PACE Model Gains Traction
PACE is one of the oldest and most successful models of integrating services for high-need people with acute and LTSS needs. PACE provides government-funded medical care and social services to people older than 55 whose complex medical needs qualify them for nursing home care, but who can live at home with the right help. Care is delivered at neighborhood PACE centers or at home.
Despite these challenges, PACE programs provide care at a cost that is 12% less per person per month than the costs the state Medicaid programs otherwise would incur. Additionally, PACE participants had fewer hospitalizations, re-admissions, and emergency room visits. Family and caregivers highly recommended PACE (97.5%) and a majority felt it reduced their burden (58%). Although all people enrolled in PACE are eligible for nursing home care, only seven percent live in nursing homes.
The holistic approach to care supports participants’ health, well-being, and independence while reducing hospitalizations and nursing home placements. To meet this goal, PACE organizations focus on preventive care. Services include transportation, home care, medication management, dental care, specialty care, physical, occupational, and speech therapy, social services, meals, socialization, recreational activities, and more for members.
PACE uses Medicare and Medicaid funds to cover medically-necessary care and services. What people pay for PACE depends on their financial situation. For those who qualify for Medicare, all Medicare-covered services are paid for by Medicare. For those who also qualify for their State’s Medicaid program, they either have a small monthly payment or pay nothing for the long-term care portion of the PACE benefit. Those who don’t qualify for Medicaid are charged a monthly premium to cover the long-term care portion of the PACE benefit and a premium for Medicare Part D drugs. However, in PACE there is never a deductible or copayment for any drug, service, or care approved by the PACE team.
Government Support for PACE Expansion
As it is governed at the state level, many have responded either by supporting the launch of PACE programs, or expanding current offerings. Seven states are actively expanding existing PACE programs, including Massachusetts, Ohio, New Jersey, Florida, Oregon, Kentucky, and Maryland.
Ohio recently announced one of the largest PACE expansions underway, with new programs planned for nine counties and $50 million in federal funding allocated by the state legislature. An additional four states (Connecticut, Georgia, Illinois, and Minnesota) are either launching PACE programs or have pending PACE legislation.
As a result of this activity, the number of PACE enrollees is expected to jump to 200,000 by 2028.
The federal government and many state Medicaid programs are increasingly incentivizing the growth of PACE as part of the effort to control healthcare costs and improve outcomes.
PACE enrollees are expected to jump to 200,000 by 2028
In December 2023, the PACE Expanded Act was reintroduced in Congress. The proposed legislation would make it easier to expand PACE programs to additional communities, particularly rural and underserved areas.
The Act seeks to simplify the application process for new PACE programs and would allow greater flexibility in how PACE services can be provided. For instance, it includes provisions that would support the development of more integrated and localized PACE programs.
CMS has signaled its interest in expanding PACE offerings as part of a broader effort to reduce hospital admissions for the elderly, which would likely influence funding and reimbursement strategies for PACE programs.
Technology Integration in PACE
During the COVID-19 pandemic, CMS allowed temporary flexibilities for PACE programs around telehealth and home care delivery. As of 2024, CMS has signaled that it may make some of these flexibilities permanent, particularly around remote monitoring and the ability to provide services to participants at home through telemedicine. This could present new opportunities for PACE providers to expand their services and increase access.
In addition, PACE providers are increasingly adopting new health IT tools to manage care more effectively, including the integration of Electronic Health Records (EHRs), patient portals, and remote patient monitoring devices. Providers are also using predictive analytics to identify potential risks and health needs before they escalate into more serious issues, allowing for more proactive care management.
Challenges in the PACE Market
Growth does not come without challenges. Like many sectors in healthcare, PACE programs are facing challenges related to workforce shortages, especially among nurses, home health aides, and other essential staff. This continues to impact the ability of PACE providers to deliver the timely and high-quality care they are known for.
PACE providers may need to explore creative solutions, including using technology to improve access to care. For example, Dina supports PACE center utilization and participant outcomes by building targeted in-home service networks and then activating an easy-to-use coordination platform for streamlined access to services.
Another challenge: CMS and state regulations continue to evolve. The regulatory landscape has become more complex, particularly regarding data security and privacy requirements. Ensuring that PACE programs have adequate infrastructure to comply with standards related to HIPAA, quality reporting, and fraud prevention is critical to maintain accreditation and avoid penalties.
Despite these challenges, PACE continues to incorporate many of the reforms the Medicare program seeks to promote, including person-centered care that is delivered and coordinated by a provider-based, comprehensive system, with financial incentives aligned to promote quality and cost-effectiveness through capitated financing.
In the coming years, PACE and other nursing home alternatives will be in great demand to meet the needs of our aging population.
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