Put your agency ahead of the pack with PACE

Unique program offers great benefits

C’mon. Several home care providers are considering it, but no one’s done it yet. Why not put your company on the vanguard by becoming the first home care sponsor of a Programs of All-Inclusive Care for the Elderly (PACE) program?

PACE received full Medicare program recognition with passage of the Balanced Budget Act of 1997 (BBA). The Medicare and Medicaid-capitated program for frail, nursing home-eligible elderly had previously been in demonstration status with the Health Care Financing Administration (HCFA).

PACE is modeled on the system of acute and long term care services developed in the early 1970s by On Lok Senior Services in San Francisco. On Lok slowly developed the PACE model in response to community concern for the frail elderly of San Francisco’s Chinatown, North Beach, and Polk Gulch neighborhoods.

Poor and vulnerable seniors from those communities were being "placed in nursing homes far away; they had no further contact with people they knew before, they were given food they’d never eaten before, and they basically went off and died," says On Lok director Kate O’Malley.

On Lok was granted Medicare demonstration status in 1979, and has been fully Medicare and MediCal-capitated since 1983. It now has six centers throughout San Francisco and about 750 enrollees.

With the help of more than $5 million in grant support from the Robert Wood Johnson Foundation, five other program sites replicated the On Lok model in the mid-1980s. The fully capitated sites now operate under Medicare and Medicaid waivers while awaiting HCFA’s release of the final PACE regulations as required in the BBA. Originally due out in August 1998, HCFA now says they’ll be issued by August 1999.

More information about PACE programs is available from the National PACE Association at (415) 749-2680. Its Web site is www.natlpaceassn.org. HCFA also has information about PACE on its Web site, www.hcfa.gov.

Today, 25 sites in 13 states are fully capitated; another eight operate PACE-like programs with only Medicaid capitation. At the end of 1997, there were only about 5,000 enrollees nationwide.

The little-known programs offer huge benefits for all involved. "It’s the best thing since sliced bread!" declares Judy Baskins, RN, vice president of geriatric services at Columbia, SC-based Palmetto-Richland Memorial Hospital. She oversees Palmetto Senior Care, one of six original PACE demonstration sites. It now serves 400 patients and has been fully Medicare and Medicaid-capitated since 1994. Baskins is also president of the National PACE Association in San Francisco.

"It allows providers the flexibility to provide care based on patient needs while maximizing Medicare and Medicaid reimbursement. It improves the quality of life of participants. It brings value and trust back into the health care system, and it allows patients and families to be more participatory and proactive rather than reactive about their health care choices," Baskins says.

Medicare and Medicaid also both gain from PACE. It is conservatively estimated to save at least 5% for Medicare; Medicaid savings varies between states, but ranges from around 5% to 15%.

PACE is an innovative program and it’s a win for patients, providers, and payers alike. But there’s one glitch that probably explains why no home care provider has yet opened one: It takes lots of money. Between $1 million and $1.5 million is needed at a minimum for program development expenses and to cover losses until there are a sufficient number of enrollees, Baskins estimates. That doesn’t include the cost of either constructing or renovating an adult day care center, which is the mainstay of PACE.

Wow! That’s a small fortune, especially for independent private duty companies. But every existing PACE program is not wealthy. To be sure, some have more resources than others. Hospitals and health systems run 49% of them. Community-based agencies, health centers, and long-term care providers operate the remainder.

One way to afford a PACE program is by obtaining grant funding. Money is already available for programs that involve the health and well-being of seniors and it’s only increasing. (See article on finding grant funding, Private Duty Homecare, December 1998, p. 165.)

Local foundations in particular may be interested in supporting such a beneficial program in their own backyard, Baskins advises.

If the upfront investment doesn’t frighten you, then assuming the full downstream financial risk for very sick and potentially very costly enrollees will. It shouldn’t, however. With an effective interdisciplinary team and aggressive case management, it is not only possible, but probable that you can provide the care that enrollees need without going bankrupt.

The current operating experience of all PACE programs bears that out. All are financially viable under capitation, according to O’Malley. Utilization data of PACE enrollees nationwide supports that position.

Despite the fact that they are all eligible for nursing home care, only about 7% are residents at any given time. PACE enrollees also have only a slightly higher hospitalization rate than then general Medicare population that includes healthy seniors: 2,180 days per 1,000 enrollees per year in 1997 vs. 2,014. Medicare does not separately report utilization data on the frail elderly receiving standard Part A benefits. When they are hospitalized, PACE enrollees have shorter lengths of stay than other Medicare patients; 4.1 vs. 6.6 days in 1996.

Stop-loss insurance is available to shift risk in the event of catastrophic care that enrollees need, Langford says.

The amount of money available to care for each PACE enrollee varies depending on the provider’s location. Like other Medicare risk programs, the PACE Medicare capitation is based on regional adjusted area per capita cost (AAPCCs), with a 2.39 adjuster to account for the frailty of PACE enrollees.

In 1997, the rates averaged $1,200 per member per month (PMPM). Medicaid payments averaged $2,100 PMPM during the same period. Most states take some discount from their overall long term care costs. The state of Maryland, for instance, uses a blended rate derived 70% from adult day care and 30% from nursing home expenses, according to Langford.

In one sense, the PACE capitation is a limitation. You only get a certain amount of money each month to care for some very old people that may require significant levels of care. On the other hand, though, it is liberating. It frees providers to give the service needed without being subjected to the normal and often restrictive rules that go with fee-for-service care.

For example, Medicare requires three days’ acute hospitalization for transitional care eligibility. A PACE enrollee who needed transitional level care would be directly admitted there, bypassing a more costly and unnecessary inpatient stay.

"Instead of looking at whether a person has this benefit, you can look at what they need," explains Anita Langford, senior director of long-term care at Baltimore-based Johns Hopkins Bayview Medical Center. Langford is responsible for Hopkins Elder Plus, the Johns Hopkins Health System’s PACE program located near the Bayview Medical Center campus.

The single most important variable in successfully operating a PACE program is very strong primary care. The idea is to aggressively manage enrollees, continually adjusting their care plans and reacting to even the slightest change in their condition to keep them as healthy as possible and out of high-end care for as long as possible.

PACE also requires a shift in care philosophy that emphasizes preventing functional declines rather than restoring functional impairments. For example, a traditional model would focus on preventing a 90-year-old with degenerative hip disease from falling. But under PACE capitation, it would be equally important to teach the individual how to fall.

"You have to have strong primary care. These strategies are not rocket science, but they are the hardest lesson to learn [in running a PACE program]. Fee-for-service has so shaped our standards of care that when you take that away, it takes a while to get used to the new system," says Baskins.

An interdisciplinary care team provides that necessary care management and shift in care philosophy. It should be egalitarian, advises Karen Armacost, RN, C, MSA, clinical director and acting program director of Hopkins Elder Plus.

"The physician’s not more important than the driver, because the driver’s the first person to note that the [enrollee] had a problem getting in the van today and not yesterday," she explains.

In addition to the drivers, the Hopkins team includes board-certified geriatricians, a nurse practitioner, two RNs, an LPN, part-time physical and occupational therapists, and several home health aides.

PACE care teams primarily interact with enrollees at each program’s adult day care center. There, enrollees receive everything from music therapy to exercise and hot meals.

PACE team members also staff primary care clinics, where enrollees receive most of their day-in, day-out medical care. If enrollees require facility-based care, the team oversees their treatment. Although most PACE programs either have their own or contract with a home care agency, some members of the care team also follow patients in their homes. At Hopkins ElderCare, an RN is always on call, and geriatricians make house calls if necessary.

Adult day care is the center of PACE. Across all PACE programs, the center accounts for about 36% of operating expenses. On average, enrollees go there nine days a month.

The second-largest PACE component is home care. Nationwide, it’s about 22% of operating costs. If you’re not able to consider operating your own PACE program and your business is located near an existing one, consider approaching that program about subcontracting for home care services, Baskins suggests.

With PACE participants coming in and out of day care, visiting clinics, and receiving care at home, communication and coordination are critical. Add to that the oversight of those in facilities and the sometimes challenging home and family situations of enrollees, and you have a resource-intensive service.

"The management is complex. It’s amazing. We can’t believe 68 people keep us this busy! But it’s a great model. It makes great sense instead of all this fragmented care," says Armacost.

If you’re willing to break the ice and become the first home care organization that develops a PACE program, your efforts will be rewarded, says Langford. "It’s a wonderful quality-of-life program, and it’s the wave of the future. But it’s also very challenging. Don’t do it unless you like challenges."