Keeping PACE with long-term care costs means a savings for participating states

In Tennessee and Texas, Programs of All-Inclusive Care for the Elderly (PACE) is showing cost savings of 15% to 17%, Shawn Bloom, executive director, recently told a National Conference of State Legislatures session on controlling long-term care costs.

"PACE is the only truly integrated Medicare and Medicaid managed care model for the elderly in the country today," he said.

The PACE model is centered around the belief that it’s better for the well-being of seniors with chronic care needs and their families to be served in the community whenever possible. PACE serves individuals ages 55 and older who have been certified by their state to need nursing home care, are able to live safely in the community at the time of enrollment, and live in a PACE service area. Although all PACE participants must be certified as needing nursing home care, only about 7% of them nationally actually live in a nursing home. If a PACE enrollee needs nursing home care, the PACE program pays for it and continues to coordinate care.

Care and services provided through PACE include adult day care that offers nursing, physical, occupational, and recreational therapies, meals, nutritional counseling, social work, and personal care; medical care provided by a PACE physician familiar with the history, needs, and preferences of each participant; home health care and personal care; all necessary prescription drugs; social services; medical specialists such as audiologists, dentists, optometrists, podiatrists, and speech therapists; respite care; and hospital and nursing home care when necessary.

Enrollees similar to other seniors

The National PACE Association ( says the typical PACE enrollee is similar to many recipients of long-term care — an 81-year-old widow, living alone or with relatives, with several chronic medical conditions, and more likely than not, suffering some degree of cognitive impairment. The typical enrollee requires help with personal care and with activities of daily living to maintain safety and security.

National PACE Association vice president for public affairs Robert Greenwood wrote in an issue brief for the Center for Medicare Education that a key to the PACE model is the combining of Medicare dollars with state Medicaid funds or an individual’s personal resources to deliver a more comprehensive set of services.

"Medicare’s traditional emphasis on reimbursing for acute care often prevents older individuals from accessing the kind of preventive and chronic care services they need," Mr. Greenwood said.

PACE relies on interdisciplinary teams of physicians, nurse practitioners, nurses, social workers, therapists, van drivers, aides, and others who meet regularly to exchange information and solve problems as the conditions and needs of PACE participants change. "This approach empowers those involved and allows more information to be available at the critical points when decisions are being made," according to Mr. Greenwood.

A capitated system that works

PACE receives a monthly capitated payment (Medicare combined with Medicaid or a patient’s private resources) and is responsible for the care its participants need.

"The financial interests of the PACE program and the care needs of the persons it serves are aligned in a unique way," Mr. Greenwood said.

"Regardless of whether needed services would be reimbursed under traditional fee-for-service Medicare and Medicaid, PACE provides a comprehensive set of preventive, primary, acute, and long-term care services that are specifically tailored to the needs of each PACE participant to help him or her avoid hospital or nursing home placement to the greatest extent possible. The program is designed to monitor participants closely for even subtle changes in needs that, left unattended, could lead to costly acute care episodes," he added.

PACE participants regularly attend an adult day center, on average three days a week. The centers typically contain a health clinic with an on-site physician and nurse practitioner, physical and occupational therapy facilities, and at least one common room for social and recreational activities. Because PACE participants have regular contact with primary care professionals who know them well, slight changes in their health status or mood can be addressed immediately.

A study of the PACE site in Chattanooga, TN, indicates that it is providing a 17% cost saving relative to the TennCare MCO/BHO and nursing facility system. The assessment reports that participant satisfaction levels and family member/caregiver satisfaction levels are extremely high (96.9% to 100%). Nearly three-fourths of disenrollments from the program are due to the death of the participant. Inpatient hospitalization rates are low, averaging 1,140 days per 1,000 and a 3.1-day average length of stay.

TennCare director of long-term care Joanna Damons, who conducted the March 2001 study, recommended that PACE enrollment be increased from 211 to 302 participants. She said data collected in the evaluation do not support an assumption that PACE participants have lower acuity levels than individuals in nursing homes, and concluded that enrollee clinical care quality can be increased through PACE, particularly use of preventive measures that prevent avoidable hospitalizations and use of community-based care to reduce the length of hospital stays.

Program saves money

A December 2000 study of the PACE program in Texas found that it saved state and federal government organizations an estimated 14% compared to nursing home and medical care. Texas comptroller of public accounts Carole Rylander recommended that the state expand PACE and noted legislation authorizing it to go from one site to a total of 16.

"Despite caring for a more frail population that Medicare in general. . . . PACE enrollees have fewer hospital admissions and shorter hospital stays," Ms. Rylander wrote. "PACE will help the state to meet growing demand for long-term care."

Praise for the program

Praise for PACE also has come from Centers for Medicare & Medicaid Services Administrator Thomas Scully. At an April 2002 meeting of the National PACE Association, Scully said, "More nursing homes are not the answer people want. We know that when people have a choice, they choose to stay home rather than move into a nursing home. I love PACE. . . . If a provider is having a problem getting a PACE program started, let me know if I can help. I would be glad to talk to a governor or state Medicaid director if that would be helpful. I am one of the PACE program’s biggest fans. If there is something we need to address in regulations to help a rural PACE provider, let me know and we will take a look at it."

David Reyes, executive director of Total Longterm Care in Denver, runs one of the fastest-growing PACE programs. It started in 1990 with a small center on the garden level of a high-rise unit for the elderly that was owned by a hospital with which PACE contracted to provide the medical services for its clients.

A second center was opened on the western side of Denver in 1994, and a third center was opened in 1997 on the north side of town. Mr. Reyes also was responsible for the closure of the initial PACE site and occupancy of a new, larger site in the downtown area.

"We recently started construction on a center to serve the northeast quadrant of the city and that should open April 1," he tells State Health Watch. "And we’ve broken ground for what will be two sites sharing space to the west of the city. In the past two years, we’ve doubled in size and plan to double again in the next two years, by continuing to expand into new areas. We should end up with eight centers and 1,200 enrollees, up from about 220 enrollees when I came here in 1996."

Mr. Reyes says one reason the program is growing is that they did a marketing analysis on name recognition of PACE with the general public and the level of understanding health professionals had of what PACE was about.

"We kicked up our marketing efforts with media blitzes, ads, and other things to increase the general awareness that we exist," he says. "I cringe when I hear that we’re considered the best-kept secret in Denver. We want people who have loved ones who could use our services to call us first. It’s a snowball effect — the more people whose lives you touch, the more the word gets out."

Mr. Reyes’ program also is participating in a demonstration project with the Department of Veterans Affairs (VA) in which they have a shared risk contract with the local VA center. Each entity provides some services to enrollees and some PACE staff are housed at the VA center.

Colorado’s legislature has approved a law to expand PACE statewide, and a feasibility study is to be done to determine communities that can support a program.

"There’s a huge endorsement for this model at the state level," he says. "I believe what we have is the future of health care for seniors."

[Contact Mr. Bloom and Mr. Greenwood at (703) 535-1565; Ms. Damons at (800) 342-3145; Ms. Rylander at (888) YOURTEX; and Mr. Reyes at (303) 869-4664.] n