7.1 How should we start implementing a MediCaring Communities model? Answer: PACE!


7.1.1. Overview of the PACE Model

PACE (Program of All-Inclusive Care for the Elderly) has an outstanding reputation among beneficiaries, their caregivers, and other stakeholders such as state and federal policy makers. PACE programs receive approval to serve enrollees living within a specific geographic area. PACE assumes broad responsibility for a comprehensive array of services (note: “all-inclusive” in the title) including primary care, hospitalization, and LTSS for their enrolled population, all without co-pays or deductibles. Nearly all PACE enrollees have Medicare and Medicaid capitation, though a few have only Medicaid and even fewer have only Medicare and pay the Medicaid PMPM on their own. PACE programs must operate a physical center for day activities and clinical services and must provide transportation.

Evidence for the effectiveness and cost-efficiency of the PACE model is variable, though the program is widely admired for its comprehensiveness and client satisfaction.[201] Other than generating an operating reserve as a risk-bearing entity, PACE programs are not intended to reduce overall spending.  Rather, PACE aims to support substantially disabled people in the community and reduce the need for nursing homes. Savings on medical care buttress operations and services, and nearly all PACE programs are organized as non-profit entities.

Since becoming a permanent program in 1997, PACE has expanded slowly to 116 programs serving almost 35,000 beneficiaries in 32 states.[202],[203] Expansion has been limited by an array of statutory and regulatory requirements. Most obviously, PACE enrollment is limited to persons who are 55 years old or older and meet the nursing home level of care in their state but are living in the community without PACE supports at least long enough for what is often a month-long assessment process. Therefore, a hospitalized frail elderly person who wants to use PACE has to go home, at just the time when health is least stable, and go through the admissions process, and then wait until the start of the next month to be enrolled in PACE. Since that person can go directly to a nursing home and the nursing home will be paid retroactively when all the paperwork catches up, the path of least resistance is often just to use the nursing home option.

The initial assessment for PACE enrollment includes face-to-face assessments with at least these eight members of the IDT: the primary care physician, registered nurse, master’s level social worker, physical therapist, occupational therapist, home care coordinator, dietitian, and recreational therapist or activity coordinator.[204] The core team can call on others (e.g., dentist, audiology, speech-language pathology) as needed to join in the initial assessment. From the perspective of many frail elderly persons and their families, this can be overwhelming in terms of intrusiveness, time requirement, unfamiliar people, and delay—all for a program which is still unfamiliar.

Frail elders who are not yet impoverished enough to qualify for Medicaid face another difficult hurdle. They must pay the same rate as Medicaid pays for the LTSS components of all-inclusive care that Medicare does not cover. That monthly cost is set at a blended rate to cover the whole range of services, from occasional use of the PACE center to nursing home care, so the fee is usually more than $3000 per person per month. At the time when the elderly person with Medicare-only insurance would most benefit from the coordination and support provided by PACE, the person is not yet using services costing more than $3000 per month, and the elderly person and his or her family think it is an unreasonable fee. Indeed, they often believe that the elder will die before needing that much service. At a later point when the arrangements for staying at home are falling apart and nursing home care or extensive home care seems likely, the fee suddenly seems reasonable to the elder and family, but not to the PACE program. The upshot is that very few persons who have Medicare but still are not poor enough for Medicaid have signed up for PACE.

For many years, PACE enrollees had to give up their regular physician and come to the day care center at least a few days each week. Many people are loath to give up their physician and change to one they do not yet trust who is hired by a program they do not yet trust; and many also do not want or could not physically manage attendance at the PACE center. CMS now can waive these restrictions, but the PACE program has to undertake to have them waived and many physicians and social workers outside of PACE do not know of the added flexibility after it is granted, so they don’t think to refer appropriate patients.

PACE also requires a substantial infrastructure, including the capital investment in a PACE center and clinical site, the data and management for managed Medicare, the data and management for managed LTSS, the acceptance of substantial downside risk, and the liabilities of transportation and activities with a large number of elderly persons with serious physical and mental handicaps. The federal regulations require a one-month operating reserve, and prudence requires building a substantial reserve or having substantial reinsurance to cover unusually expensive medical costs.

An estimated 12% of Medicare beneficiaries over 65 years old are also eligible for Medicaid.[205] The remaining 88% (whom we call “pre-duals”) use their personal assets to obtain essential social services and supports and to pay out-of-pocket medical costs or insurance to cover co-insurance and deductibles. They will become eligible for Medicaid if they live with high care needs longer than their savings and income can support. They will spend down more rapidly if their services are badly managed and poorly coordinated.

7.1.2. How PACE can expand to lead a MediCaring Community

In November 2015, Congress provided an opportunity to take the straightjackets off PACE. Since PACE was Congressionally established and CMS had been given little authority to test innovations in PACE, and since PACE had been left out of the Affordable Care Act authorization for the Center for Medicare and Medicaid Innovation (CMMI), PACE has always been quite constrained in undertaking anything more novel than PACE itself. The PACE Innovation Act in November 2015 put innovations with PACE under CMMI authority, so CMMI now has broad authority to shape and fund innovations in the PACE model.[206] CMMI can use this authority in a variety of ways. If CMMI allows this, PACE programs could test expanding to serve two additional categories of frail elderly people: (1) persons who are frail but not yet disabled enough to meet their state’s Medicaid definition of a nursing home level of care (with or without Medicaid or Medicare coverage), and (2) persons who are still paying for their own LTSS services because they are not yet poor enough for Medicaid. The first group can be called the “at risk” population since they are at risk of progressing to a nursing home level of care. The second group can be called the “pre-dual” population, since they have Medicare coverage and will end up with Medicaid coverage also if they spend down their assets and income to the Medicaid threshold.

As PACE grows to take on these new populations in the defined geographic area, the program would also take on responsibility for monitoring and improving the eldercare services for the community, including persons not enrolled in PACE. We refer to this modification of the PACE model as a PACE expansion program. PACE expansion programs would offer a comprehensive model of care to frail elderly people, without regard to their insurance coverage and whether or not they are disabled enough to qualify for a Medicaid nursing home level of care.

The key elements in the PACE expansion model are these:

  • Maintain the multidisciplinary approach with comprehensive elder-driven care planning that is a hallmark of PACE.
  • Enable enrollment of persons who are living with disabilities and fragile health associated with aging and who live in the geographic community, but who still have more income and assets than the Medicaid threshold.
  • Provide a more flexible set of services that responds to varying needs with a set of private payment levels that makes enrollment affordable to many more people in need of PACE services.
  • Meet the otherwise unmet priority needs of the community’s frail elderly by investing some of the savings from more prudent use of Medicare funds in community-based services.
  • Measure progress, ensure sustainability, and package the model for replication in other communities.

We expect the population who enroll in this flexible PACE expansion model will be comprised primarily of Medicare-only beneficiaries, many of whom also have Medigap to cover deductibles and co-insurance. Few will have long-term care insurance, with the majority therefore being at risk of spending down to Medicaid if they live a long time with substantial medical and LTSS needs.

In traditional PACE, virtually all enrollees are already dual eligible, either because they have been poor for a long time, or because they have been impoverished by the costs of serious illness (for the beneficiary or for a spouse). A few people are not eligible for Medicare, having not worked the required time or not having disability wait time or age qualifications, and each state has a rate for Medicaid-only PACE participants. A very few people in PACE now have only Medicare insurance and not Medicaid, and these elders must buy in at the Medicaid rate. In the PACE expansion program, one of the goals is to enroll persons still capable of paying for many of their supportive care services and to use the program to slow their rate of spend-down to Medicaid by providing more appropriate services aligned with a practical and comprehensive care plan. The opportunities for PACE expansion are illustrated in Table 7.1.

Table 7.1: The PACE Expansion Population: For Frail Elders >55 years old


Medicare only

Dual Eligible

Medicaid only

Elder needs Nursing Home Level of Care


Possible but rare in current PACE

Current PACE

Current PACE

Small numbers

Elder does not need Nursing Home Level of Care




7.1.3. Services and Pricing for LTSS in PACE Expansion, 55 years old and older

Payment for the expanded PACE model will be a combination of Medicare, Medicaid, and private payment. Medicare would continue paying the appropriate Medicare Advantage rate as traditionally modified for frailty in PACE. The additional services of PACE could be offered to the Medicare-only clients as a series of tiered packages paid on a PMPM basis. The following are examples of possible tiers:

  • Tier 0: An introductory package that provides assessment, care planning, and navigation for a small fee and does not require enrolling in PACE. If the person does not enroll, the fee could be paid by Medicare with a new payment code or by the frail elderly person or his or her family. Tier 0 functions both to set things right for the elderly person and to introduce them to PACE. If the elderly person enrolls in PACE, then the PACE program will cover the costs of this assessment, as in traditional PACE.
  • Tier 1: A basic package of routine and stand-by services: Periodic assessment, care planning, referral and navigation, patient activation and education, caregiver training and support, workforce recruitment and education, medication management and access, short-term or occasional day care, adapted transportation, short-term caregiver respite, and 24/7 on-call assistance (with the beneficiary’s care plan in hand).
  • Tier 2: All of the above plus regular personal care services up to 45 hours per week or regular day care and transportation.
  • Tier 3: All of the above plus personal care of more than 45 hours per week or long-term nursing home placement.

Tier 2 may need to be split in various ways, or to have some services that are “add on” if needed. Perhaps this would apply to substantial dental needs or needs for especially expensive hearing aids. The exact contents of each tier and the pricing for each will need to be worked out with examples and experience. However, clearly, Tier 0 will incur only a small charge, Tier 1 will be quite affordable, and Tier 3 will be just as expensive as it really is to provide this level of support—often $10,000 per month. The program, the elderly person, and the family will have strong incentives to stretch to avoid Tier 3 costs, which is a good alignment of incentives with the community interest. The comprehensive PACE program and its care planning and coordination will also help to reduce the rate of spend-down to Medicaid among people who enroll as Medicare-only patients.

Depending upon the frequency of Medicaid beneficiaries enrolling before being nursing home eligible, and of Medicare-only beneficiaries spending down long after enrollment, Medicaid may need to develop new payment rates for these new situations.

Certain details of operations have been worked out for traditional PACE, for example, regarding the interface with hospice, Part D medication coverage, long-term care insurance, and disenrollment for cause. These details seem to be generally appropriate for PACE expansion populations and constitute another reason that building MediCaring Communities on a PACE base is appealing.

7.1.4. Quality Measures and Beneficiary Protections

The quality measures that CMS is now implementing for PACE programs are quite limited, focusing on falls, pressure ulcers and readmissions. While these tally certain adverse events in a beneficiary’s life, they do not begin to reflect the special character of PACE and the reason that beneficiaries would want their services. CMS has convened a Technical Expert Panel to frame and suggest new quality measures for PACE. CMS or the initial group of PACE expansion programs will have to address the current shortcomings by developing additional measures of quality, both for PACE expansion enrollees and for the frail elderly population in the area, since this PACE expansion will take a true population health approach. PACE expansion programs could try out new metrics that focus on the dimensions of quality that are important to frail elderly patients and families—e.g., confidence in the care system, preparation for the likely course, comfortable dying, reduced caregiver strain, and lower out-of-pocket costs and total care costs.

Since nearly all traditional PACE participants have had no substantial assets beyond their PACE capitations, the negotiated care plan has been the arbiter of services supplied. The dynamics of care planning with populations that still have their own resources and can purchase extra services outside the PACE care plan will require some standard-setting and monitoring.

As with virtually all Medicare innovations, beneficiaries would be free to leave the expanded PACE program service delivery at any time, returning to traditional Medicare or their prior Medicare Advantage plan and, if qualified, to whatever Medicaid program is standard for this beneficiary. The PACE program would have an appeals and grievance process, as it does now, and recourse to the usual beneficiary protection appeals that Medicare and Medicaid provide.

7.1.5. The Expanded PACE Program as a MediCaring Community

With an expanded PACE program, many frail, disabled, and ill Medicare-only beneficiaries could receive the considerable benefits of longitudinal care planning and well-coordinated LTSS without delays and at an affordable cost. Medicare would continue paying the relevant Medicare capitation rate. More appropriately tailored medical interventions would generate savings that the program would use to fund additional LTSS services, thereby supporting highly integrated comprehensive services that would benefit the entire community, as well as providing a focus for monitoring and management of system performance.

The population health management function requires (1) implementation of improved metrics for quality dashboards that reflect patient/family experience and that can be used across the geographic area in order to inform planning, and (2) creation of a trustworthy process for setting priorities for the community’s eldercare services.

Current PACE programs have Participant Advisory Committees and must have PACE participant or family representation on their governing boards. The expanded PACE program for frail elders can enhance their existing Advisory Committee to take on the population health monitoring and responsibility for the well-being of frail elders in the geographic area (Core Component #5, page 91). PACE programs can also partner with other organizations, such as local Area Agencies on Aging, to guide the community’s progress in efforts aimed at improving the local LTSS delivery system.

7.1.6. How to Implement PACE Expansion for Frail Elders

  • Identify states that are willing to expand current PACE programs to serve the PACE expansion populations in a geographically defined community. Enrollment would focus on adults >55 years old who are living with frailty or advanced, complex illness.
  • Identify PACE programs and their communities that are eager to test the MediCaring Communities approach to PACE expansion.
  • Develop and refine payment approaches, such as a tiered PMPM matched with bundles of services, which would support enrollment of the Medicare-only pre-duals population.
  • Develop a community quality performance dashboard with public reporting of quality metrics and goals.
  • Gain cooperation with CMS/CMMI in moving ahead

[201] (Ghosh, Orfield and Schmitz 2014)

[202] (National PACE Association n.d.)

[203] (National PACE Association, PACE Census and Capitation Rate Information 2015)

[204] (Centers for Medicare and Medicaid Services, Regulations and Guidance Manuals. Programs of All-Inclusive Care for the Elderly (PACE) Rev. 2 2011)

[205] (MedPAC and MACPAC 2015)

[206] (PACE Innovation Act, Public Law 114-85 2015)

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