Chapter 16

Program of All-Inclusive Care for the Elderly (PACE)

Brenda Sulick and Christine van Reenen

Introduction

This chapter focuses on the Program of All-Inclusive Care for the Elderly (PACE), a fully integrated, provider-sponsored model of care designed to meet the specific health care needs of Medicare and/or Medicaid beneficiaries with both chronic medical conditions, and functional and/or cognitive impairments. It describes key features of the PACE model and highlights innovations at three PACE organizations that intended to address specific needs within their communities.

As Baby Boomers age, demand for and use of long-term services and supports (LTSS) will grow dramatically. LTSS include a range of supportive services needed by people who have limitations in their ability to care for themselves because of a physical, cognitive, or mental disability or condition (O’Shaughnessy 2010). According to the U.S. Administration on Aging (2009), the number of Americans aged 65 and over is expected to increase from 35 million in 2000 to 40 million in 2010 (a 15% increase) and then to 55 million in 2020 (a 36% increase for that decade.) The number of Americans aged 85 and over – those most likely in need of services – is projected to increase from 5.5 million in 2007, to 5.8 million in 2010, and then to 6.6 million in 2020 (a 15% increase for that decade).

Rapid growth in the numbers of older Americans will put pressure on states’ Medicaid programs and other sources of funding for long-term care. In 2008, the amount spent on long-term services and supports was $191.1 billion, of which Medicaid accounted for $119 billion, or 62.3% of the total. Out-of-pocket costs contributed $43.5 billion (22.7%). Private sources, including long-term care insurance and spending for nursing home and other home health services, were 11.7% ($22.3 billion). Other public sources, including all other public spending for nursing homes, home health services, continuing care retirement communities, assisted living facilities, and on-site nursing care facilities, were 3.3% ($6.2 billion; O’Shaughnessy 2010).

As states consider how to respond to a growing need for LTSS and its associated costs, one approach is to put greater emphasis on home and community-based versus institutional care (Henry J. Kaiser Family Foundation 2010). States’ efforts to “rebalance” their long-term care systems are already well underway. From 1997 to 2008, the percentage of Medicaid long-term care dollars spent on institutional care declined from 76% to 57%, with home and community-based services (HCBS) spending increasing from 24% of 43% of states’ long-term care spending (O’Shaughnessy 2010). States’ efforts to rebalance their long-term care systems from institutional to LTSS reflect the need to manage growth in long-term care expenditures, but also reflect older adults’ preference to remain in their homes as an alternative to institutional care (American Association of Retired Persons 2010). If current trends continue, the importance of effective home and community-based programs, including PACE, in addressing the needs of older Americans will increase.

The PACE model

The Program of All-Inclusive Care for the Elderly (PACE) is a recognized leader in the delivery of comprehensive, integrated care to adults with chronic illness, and functional and/or cognitive impairments. For more than 25 years, PACE organizations have integrated Medicare and Medicaid covered services into a single, comprehensive benefit package for a frail, nursing home qualified, largely dual-eligible population. PACE was one of the first home and community-based models designed to maximize program participants’ function and independence as an alternative to permanent nursing home placement.

The first PACE program, On Lok, which means “peaceful happy abode” in Cantonese, was established in San Francisco in 1973. On Lok’s success led to Congressional support for additional demonstration projects to test the PACE model, and, in 1997, PACE became a permanent Medicare provider and Medicaid state plan option. Currently, there are 75 operational PACE organizations, and approximately 40 additional health care organizations in various stages of PACE-site development. Nationwide, PACE organizations currently serve approximately 22,000 participants in 29 states. The number of PACE organizations has significantly increased in the past five years. This is due, in part, to grant funding for 15 providers to develop PACE organizations serving older adults in rural areas, and a growing recognition among new sponsors that PACE is an economically viable model of integrated and coordinated care.

PACE organizations enroll an exclusively high-cost Medicare beneficiary population. To qualify for the PACE program, a person must be 55 years of age or older, live in a PACE service area, and be certified by the state to need nursing home-level care. The typical PACE participant is very similar to the average nursing home resident. On average, the person is 80 years old, has 7.9 medical conditions, and is limited in approximately three activities of daily living. Approximately half of PACE participants have been diagnosed with some form of dementia. Although all PACE participants are assessed as clinically eligible for nursing home level of care by their states, on any given day, about 90% of PACE participants reside in their homes (National PACE Association 2010).

PACE is a unique health care delivery model with detailed regulatory requirements related to patient assessment, care management, the role of the comprehensive PACE interdisciplinary team, staffing, and participant input. PACE organizations are health care providers and not large insurers like most Medicare Advantage plans.

As both direct care providers and payers for care, PACE organizations create comprehensive, fully integrated health care delivery systems. PACE fully integrates the delivery of all Medicare and Medicaid covered benefits into a single benefit package, including medical care, and community-based and institutional long-term care at the individual beneficiary level. Interdisciplinary teams made up of physicians, nurse practitioners, nurses, social workers, physical, occupational, and recreational therapists, pharmacists, dietitians, personal care, and transportation providers, and others, regularly assess participants’ needs and develop comprehensive care plans specific to each individual. PACE programs are fully accountable for the overall quality of care provided by all providers, both employed and contracted, across all settings, and over time.

PACE organizations directly employ a broad range of health care providers, including physicians, nurses, therapists, health care aides and others, and must comply with extensive requirements related to the composition of the PACE interdisciplinary team and its role in assessment and care planning.

A full range of individualized health care services are provided to PACE participants without benefit limitations, co-pays, or deductible requirements, including all Medicare and Medicaid covered services, as well as those additional services determined medically necessary but not covered by Medicare or Medicaid. PACE organizations cannot shift the responsibility for providing care or incurring costs to other providers or payers. Further, PACE is prohibited by law from responding to payment reductions by altering program benefits or imposing deductibles and co-payments.

Research on various aspects of the PACE model indicate the benefits of its integrated, interdisciplinary approach to caring for frail older adults. Hirth’s and colleagues’ (2009) literature analysis found that PACE programs had “greater adult day health care use, lower skilled home health visits, fewer hospitalizations, fewer nursing home admissions, higher contact with primary care, longer survival rates, an increased number of days in the community, better health, better quality of life, greater satisfaction with overall care arrangements, and better functional status” (p. 158). They also noted that the PACE participants who improved the most were the ones with the most severe conditions when entering the program.

Despite the recognized value of the PACE model, several barriers have limited the program’s growth. One challenge is the amount of time and start-up capital required for developing a PACE organization. On average, it takes approximately 18 to 24 months to plan for and initiate PACE. Establishing a new PACE program requires providers to develop comprehensive care delivery systems encompassing all medical care and long-term services and supports required by the PACE participant population, all of whom meet their states’ criteria for nursing home level of care.

A second challenge is the lack of awareness and understanding of the program. For many states, PACE is a new concept of care delivery and it takes time for them to consider how PACE best fits into its existing institutional and community-based long-term care system. A third challenge is that some potential PACE participants choose not to enroll because they do not want to switch from their current physician to a PACE primary care physician or participate in the activities held at the PACE Center. PACE organizations are addressing these concerns, particularly in rural communities, by contracting with community primary physicians to supplement their PACE team.1

Best practice elements of the PACE model

The entire PACE model can be considered “best practice” because of its effectiveness in providing high-quality integrated care to a vulnerable population of older adults (Substance Abuse and Mental Health Services Administration 2007). All PACE programs are required to meet extensive regulatory requirements that are intended to assure coordination and integration of care across the full continuum of medical and long-term care services they provide. Important elements include comprehensiveness of services provided; an interdisciplinary team approach to needs assessment, care planning and care delivery; bundling of payment with the objective of aligning payer, provider, and patient incentives; and the use of high-quality standards. The following briefly explains these components.

Services

PACE participants receive a comprehensive package of services and benefits, including all Medicare and Medicaid covered benefits, from the PACE organization. For participants, there is never a co-pay or deductible. Unlike many other health care and long-term care models, PACE organizations provide medical care and social support, including preventive, acute, and long-term care services. Services provided by PACE include: 1) PACE Center Services: physicians (community-based primary care physicians are also available in some locations), nurse practitioners, nurses, social workers, physical therapy, occupational therapy, speech therapy, recreational therapy, nutrition counseling, personal care, chore services, transportation, meals, and escort services; 2) in-home services: home health care, personal care, homemaker/chore services, and meals; 3) specialist services: medical specialists, audiology, dentistry, optometry, and podiatry; and 4) inpatient services: hospital, nursing home, and inpatient specialists (Greenwood 2001). In addition, PACE participants receive other services determined necessary by the interdisciplinary team to improve and maintain their health status.

Interdisciplinary team

Each participant works with an interdisciplinary team that is responsible for initial and periodic assessments, care planning, and coordination of 24-hour delivery of care. The interdisciplinary team is required to include the following members: primary care physician, registered nurse, social worker, physical therapist, occupational therapist, recreational therapist or activities coordinator, dietitian, PACE center manager, home care coordinator, personal care attendants, and drivers.

The team process is “patient-centered,” and participants, family members, and other caregivers are encouraged to actively participate in the care-planning process. Additional members of the team may be included (for example, nurse practitioners, pharmacists, and others) in response to participants’ individual needs.

Assessment

Each participant receives an initial comprehensive assessment, plus reassessments on a semiannual and annual basis, with specific outcomes to be achieved identified. Additional reassessments are conducted in response to significant changes in participants’ health status, or at the request of participants and/or their caregivers. PACE participants’ assessments are robust, comprehensive, and include measures of physical and cognitive function and ability; medication use; participant and caregiver preferences for care; socialization and availability of family support; current health status and treatment needs; nutritional status; home environment, home access; participant behavior; psychosocial status; medical and dental status; and participant language. The assessment in each area is consolidated into a single care plan.

Comprehensive written care plan

Each PACE participant receives a comprehensive written plan of care that meets their needs for all care settings 24 hours a day, every day of the year. Care plans are developed by the PACE interdisciplinary team, the participant, and the participant’s family and other caregivers, and are continuously updated to respond to participants’ changing needs. The plan is used by PACE organizations to assess participant health care needs, manage participant care, and collaborate with providers, participants, and caregivers (Centers for Medicare & Medicaid Services [CMS] 2010).

PACE center

The PACE Center is the hub for delivery of PACE services. It is the location where participants go to socialize and receive services provided by their PACE interdisciplinary team. Additionally, it provides a central location for the interdisciplinary team to meet. The PACE Center must provide space for delivery of primary care, social services, restorative therapies (including physical and occupational therapies), personal care and supportive services, nutritional counseling, recreational therapy, and meals.

Capitated payment

PACE organizations receive monthly Medicare and Medicaid capitation payments for each participant. The majority of PACE participants (over 90%) are dually eligible (receive benefits from both Medicare and Medicaid). Medicare eligible participants who are not eligible for Medicaid pay monthly premiums equal to the Medicaid capitation amount, but no deductibles or co-insurance apply.

PACE providers assume full financial risk for participants’ care without limits on amount, duration, or scope of services. PACE organizations receive monthly payments for all Medicare and Medicaid covered benefits, as well as additional services necessary to maintain participants’ health and well-being. These funds are pooled so services are provided without regard to payer source. Because PACE payments are fixed, the incentives are strong to eliminate duplicative or unnecessary services, prevent avoidable hospitalizations, intervene in response to changes in participants’ health status, and provide timely preventive and primary care services to develop community-based alternatives to institutional care. Regular oversight and monitoring by CMS and the state assures the quality of care provided by PACE organizations.

Quality assessment and performance improvement

Each PACE organization is required to have a quality assessment and performance improvement (QAPI) program in place that evaluates the services it offers. A written QAPI plan is developed and outlines how the PACE organization proposes to meet minimum levels of performance set by CMS and the State. The plan is reviewed annually by the PACE organization’s governing body and must identify objective measures that demonstrate improved performance in various areas. These include: 1) utilization of PACE services, 2) caregiver and participant satisfaction, 3) outcome measures derived from data collected during assessments, 4) effectiveness and safety of staff-provided and contracted services, and 5) nonclinical areas, such as grievances and appeals, transportation services, meals, life safety, and environmental issues. Outcome measures must be based on current clinical practice guidelines and professional standards applicable to the care of PACE participants.

In brief, several elements of the PACE model may be considered as “best practice” because they are effective in caring for a population of vulnerable older adults with multiple chronic conditions, and may be replicated by other health care or care coordination models. Additionally, PACE organizations continue to develop innovative ways to meet the needs of their participants and communities.

Examples of best practice: urban and rural PACE organizations

While PACE regulatory requirements specify standard expectations of all PACE organizations, the model allows for flexibility and the development of new and innovative practices. The following are examples of innovative practices developed by PACE organizations in urban and rural settings. Additional information about these best practices can be obtained by contacting the organizations directly or the National PACE Association.

Best practice in an urban setting: co-location of a PACE organization with federally assisted housing, Community LIFE

Co-location, in this context, refers to providing access to PACE services to eligible individuals in senior housing facilities, such as federally assisted or public housing.2 This arrangement enables them to “age-in-place” (that is, live in their homes for as long as possible) and makes it safe for them to do so.

One PACE organization that has been successful with co-location is Community LIFE, located in Pittsburgh, Pennsylvania. Community LIFE is co-sponsored by Presbyterian Senior Care, the University of Pittsburgh Medical Center (UPMC) Health System, and the Jewish Association on Aging. Community LIFE has PACE centers in East Liberty, Homestead, McKeesport, and Tarentum, PA. Combined, the four Community LIFE centers serve approximately 370 PACE participants.

Community LIFE partnered with its local public housing authority in Allegheny County in 2002, to build a PACE center on the Homestead property, a 240-unit apartment building owned by the county. The Homestead Apartments are a mixed housing development for persons 62 years of age and older. With a HOPE VI grant from the U.S. Department of Housing and Urban Development, the Homestead apartment building had access to funding for revitalization of distressed properties. Using this funding, a 14,000 square foot Community LIFE center was built within the Homestead apartment complex to offer comprehensive services to both Homestead residents and individuals in the surrounding community who are eligible and wish to enroll in PACE. Currently, approximately 10% of Homestead residents participate in the Community LIFE program.

This co-location project has benefited multiple stakeholders. PACE participants in the Community LIFE Homestead program receive health care services in a convenient and familiar setting, enabling them to remain in their homes for as long as possible rather than move into institutional care. The broader community benefits because Community LIFE Homestead sponsors events for not only their participants, but the entire community, such as holding an “Ask the Doctor Day,” administering flu shots, and providing a mobile farmers market. Community LIFE benefits from co-location because it leases its center at reasonable rates from the housing authority, serves a number of PACE participants with their home-health needs efficiently through the economy of scale afforded by serving several participants in the adjacent housing, and receives visibility and access to future participants. The Allegheny Housing Authority benefits by being able to provide some of its most frail residents with quality health care. Additionally, providing services on a campus will likely reduce eventual vacancies and turnover that could result with the aging of its residents.

Best practice in a rural setting: the use of community physicians, Senior Community Care

An innovative practice used by some PACE organizations is contracting with community-based primary care physicians (PCPs). Senior Community Care (SCC), a service of the Volunteers of America, is a PACE program located in Western Colorado that has been successful in using community PCPs in their rural program. SCC serves all of Delta County and two-thirds of Montrose County, and had 186 participants in their program as of October 2010.

PACE organizations generally use a staff model, in which the primary physicians are employed by the program. In contrast, SCC contracts with community physicians in Delta and Montrose counties to provide medical care to their PACE-eligible participants. Community physicians’ responsibilities include working closely with the entire SCC team to coordinate all participant services, providing 24-hour care as part of a physicians’ call group, and acting as the attending physician when a participant requires hospitalization or care in a skilled nursing facility. In addition to the community physicians, SCC has a medical director that oversees all medical care and manages a caseload of about 20% of program participants. The community physicians provide the primary care for the remaining 80% of participants.

SCC was a recipient of the Rural PACE Pilot Grant Program, established by Congress under the Deficit Reduction Act of 2005, and administered by CMS. The practice of including community-based PCPs was built into the program when it was established in 2008, in order to provide prospective participants with an option to continue receiving their services from community-based PCPs. Some of their potential participants may have been unwilling to give up their relationship with their doctors, who, in some cases, had provided care to generations of their families.

Community PCPs have become an integral part of SCC’s interdisciplinary team. They call into the team meetings to discuss a participant’s intake, initial assessment, care plan, monthly updates, as well as participate in quality improvement activities. The SCC medical director and nurse practitioner also attend all team meetings. If a medical concern arises, the medical director and nurse practitioner provide medical care until the community physician is contacted. Physicians are reimbursed for phone conference calls, team meetings, and office visits. The SCC program also provides ongoing training to community physicians through personal meetings, conferences, and regular communication with its clinical staff.

The use of community physicians has proven to be highly beneficial for SCC. The participants benefit by being able to keep their current physicians with whom they are comfortable. The SCC program benefits by contracting with community physicians and eliminating a potential barrier to program enrollment (that is, requiring participants to change doctors). Finally, the community physicians like the program because they value the care coordination component, and are able to maintain their relationships with long-term patients and continue caring for them as they age and require more services. For organizations interested in exploring the possibility of contracting with community physicians for their program, SCC recommends having a clear understanding of the needs of your market and clientele, physician motivation, and the local systems of practice.

Building on the experience of an urban site to expand into a rural community, LIFE Geisinger

The LIFE Geisinger program, located in Danville, Pennsylvania, is considered a model of best practice because of its success in developing and implementing both a rural and an urban PACE program. LIFE Geisinger is part of the Geisinger Health System, a physician-led system that provides health care services, education, and research to 38 counties in Pennsylvania. Building on the experience they gained from its first site located in an urban area, LIFE Geisinger was able to expand to a second site located in a rural area. Additionally, managing PACE programs in difference environments allows LIFE Geisinger to make comparisons between the programs and share best practice that may be useful to other organizations. The following briefly describes the programs and best practices, along with lessons learned.

In 2006, LIFE Geisinger opened its urban PACE program in Scranton, Pennsylvania, serving Lackawanna and portions of Luzerne counties. The urban facility was developed in collaboration with a religious order of Sisters, with Geisinger taking on the financial risk for the new facility, and the religious order providing for 100% of the participants when it opened. As of October 2010, the urban program had 88 participants.

In 2008, LIFE Geisinger’s rural program was established in Northumberland County to serve four rural counties. This program was funded, in part, through a federal grant to expand the PACE model into rural areas. This program is co-located on property owned by a local housing authority, which is an old neighborhood school that includes independent apartments and a community-college outreach program for nurses wishing to obtain Registered Nursing licensure. LIFE Geisinger was interested in the school because it had a large vacant gymnasium suitable for the center with a small addition. The local housing authority partnered with Geisinger and financed $1.3 million in leasehold improvement costs to renovate the space to accommodate a PACE center. LIFE Geisinger currently leases the space at fair market prices, including the cost to cover the $1.3 million over a 10-year term. As of October 2010, LIFE Geisinger’s rural site had 71 participants enrolled in the program.

Best practice/lessons learned

LIFE Geisinger applied the experience and lessons gained from operating an urban PACE program to their second program established in a rural community. Best practices that were applied from LIFE Geisinger’s urban program to its rural program include assessing community need and support for a new program, identifying successful partners, and designing a facility that fits well with the community.

The first practice is assessing the community’s needs to determine if there was sufficient demand for the program and interest in supporting a new PACE organization. This includes the availability of referral networks that will help build the program and contract opportunities that will allow the organization to meet the PACE participants’ needs.

With the rural site, there were initially some challenges with program enrollment because the PACE model was unfamiliar in the community, and people thought it sounded “too good to be true.” A lack of trust also stemmed from the community’s past experience with a Medicare+Choice program that had withdrawn its plan from several counties. This made the community cautious about taking a risk on another new program. However, once individuals began to understand and trust the LIFE Geisinger program, the number of participants steadily increased. Within 14 months of operation, the LIFE Geisinger’s rural facility had a positive cash flow and was able to start returning the start-up investment made by their parent institution.

The second practice is to identify and work with successful partners that believe in the PACE philosophy. Both LIFE Geisinger’s urban and rural partners supported the PACE model and were vested in the program’s future success. Based on its experience, LIFE Geisinger recommends clarifying the partner’s role and desired level of involvement in the project in advance to avoid any misunderstandings. This is especially important if new construction is involved and the PACE program accepts the majority of the financial risk.

A final practice is to design a facility that not only meets the needs of the PACE organization, but also fits in with the community in order to gain acceptance. Regardless of whether a new building is being constructed or renovations are being made on an existing property, organizations should determine whether the size of the facility will meet the required regulations for offering PACE services, and whether the facility’s design and appearance is compatible with the local environment. The urban facility was a newly constructed structure with a contemporary design while the rural site involved renovations to a former school that was already a part of the community’s landscape.

LIFE Geisinger’s programs benefit all parties involved. The Sisters were able to participate in the development of a program that provides high-quality health care to frail, older adults. LIFE Geisinger was able to expand the PACE model in a rural community. Finally, the housing authority was able to renovate and rent a vacant property to a responsible partner that would help meet the health care needs of older adults in the community.

Summary

For over 25 years, the PACE model has successfully provided high quality and effective care to a targeted segment of the older adult population, those 55 and older who are nursing-home eligible. Because of the PACE program, many vulnerable individuals have been able to remain in their homes longer and avoid costly and unnecessary institutionalization. As the Baby Boom population continues to age over the next few decades, demand will grow for home and community-based programs like PACE. To help meet this need, PACE organizations are exploring and developing new opportunities to expand to other populations that would benefit from the PACE care model such as veterans, younger populations with disabilities, and middle-income older adults.

Acknowledgments

The authors appreciate the assistance they received from several persons in the preparation of this chapter. These include Richard A. DiTommaso, Executive Director, Pittsburgh Care Partnership/Community LIFE; Amy Minnich, Executive Director, LIFE Geisinger; Wayne Olsen, Senior Vice President, Volunteers of America; and Shawn Bloom, President/CEO, National PACE Association.

Notes

1. In order to engage community-based primary care physicians as PACE interdisciplinary team members, PACE organizations must obtain waivers of PACE regulatory requirements with the approval of both their state administering agencies and CMS. PACE organizations’ experience to-date points to the importance of identifying community-based physicians who understand and support the overall mission and objectives of PACE and commit to their role as interdisciplinary team members, which involves active participation in interdisciplinary team meetings, care planning, and quality improvement activities in addition to providing primary care services.

2. Federally assisted rental housing includes public housing and Section 202 housing. Public housing, which is publicly funded and administered, provides housing to eligible low-income families, the elderly, and persons with disabilities. Section 202 provides rental housing for low-income adults age 62 or older.

References

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