Despite being the “gold standard” for integrated care, the Program of All-Inclusive Care for the Elderly still only serves a relatively small number of beneficiaries. PACE’s issue, according to the Medicaid and CHIP Payment Access Commission (MACPAC), may be tied to its greatest strengths.
“The model is designed to be a very intimate, close relationship, community-based model of care,” Brian O’Gara, a long-term services and supports (LTSS) analyst at MACPAC, said during the commission’s September meeting. “So I think scalability is just an inherent issue with that model design.”
PACE offers beneficiaries a range of services that include home care, nutrition support, primary care, transportation, dentistry and more through an interdisciplinary team. The results are generally positive: PACE participants have lower mortality rates and less utilization of hospital and nursing home care than other Medicare or Medicaid beneficiaries. However, the model’s interdisciplinary nature also makes it tricky to grow.
The primary issue is PACE’s operating and startup costs, O’Gara explained. Establishing PACE operations typically involves a lengthy rollout timeline, costly facilities and complicated coordination between payers, providers and state and federal regulators. These costs make it challenging for PACE to see significant growth at scale.
Sabrena Lea, a panelist during the meeting and the deputy director of LTSS for the North Carolina Department of Health and Human Services, noted that PACE’s scalability barriers present risks to both providers and patients.
“Many PACE organizations, in their first two years, operate at a loss,” Lea explained. “That then becomes a risk for those individuals who are enrolled in PACE organizations.”
Despite these hurdles, PACE still has experienced growth, and participating beneficiaries often experience positive health outcomes in the setting of their choice. Medicaid spending on PACE has risen dramatically in recent years, and the model benefitted from nearly $4 billion of Medicaid spending in 2023, despite only serving about 63,000 beneficiaries, according to MACPAC. Some state Medicaid programs have seen savings due to PACE, though the commission noted that estimates of the model’s cost impacts are generally mixed.
“This is probably the gold standard when we think about integrated care,” Patti Killingsworth, the senior vice president of LTSS strategy at CareBridge and a MACPAC commissioner, said during the meeting. “It’s really the only model where you bring together all of the Medicaid payments and all of the Medicare payments and really, truly invest authority in a single entity to administer those benefits without having to carve them back out again into Medicare and Medicaid. And my experience in visiting PACE sites has been that they’re highly interdisciplinary, very coordinated, and that people tend to be very satisfied.”
