Set the PACE by being a provider for the frail elderly
Program expanded to include more providers
A government program that provides Medicare, Medicaid, and community-based services to frail seniors is now offering more opportunities to providers of long-term care.
The Program of All-inclusive Care for the Elderly (PACE) was limited to 15 providers nationwide as a demonstration project. The Budget Reconciliation Act of 1997 has now given it provider status. The program may be expanded to 40 providers, with the potential of adding 20 in each successive year.
Right now, there are more than 70 organizations in PACE development; 12 have Medicare and Medicaid waivers. Several others deliver services under Medicaid capitation, with more beginning at the end of the year. These organizations are not guaranteed provider status under the new legislation; all must apply to the Health Care Financing Administration (HCFA) in Baltimore.
"Whether [PACE] automatically expands probably depends on providers’ state interests, but the authority is there for that number of programs," says Christine Van Reenan, executive director of the National PACE Association (NPA) in Washington, DC.
Provider status requires 501(c)(3) nonprofit status, says Judith Baskins, RN, BSN, vice president of geriatric services for Richland Memorial Hospital, a PACE site based in Columbia, SC. Baskins also is president of NPA. Although providers don’t have to be Medicare-certified to apply for provider status, being granted the status should give them certification.
Some take on acute care later
Several sites are capitated for the Medicaid component alone as a transition to a time when they also will be responsible for the Medicare dollars, says Baskins. "The transitional phase gives the sites an opportunity to build census, build a service delivery system, and build a team before they become at risk for acute care, which is the biggest potential for risk and loss."
The length of the transition time depends on how well the sites are controlling their service utilization and costs.
When providers apply for provider status, some of the things they have to show include:
• capital;
• a center that’s already in operation;
• a center that’s serving patients;
• willingness to take on risk;
• financial solvency.
PACE is the replication of the fully integrated managed care system pioneered by On Lok Senior Health Services in San Francisco, and has functioned as a research and demonstration project since 1990. The system provides all Medicare, Medicaid, and community-based services, including home care, without copayments or limits.
"In theory, PACE is a capitated, community-based managed care system that is funded through Medicare and Medicaid dollars," says Baskins.
PACE enrollees are similar to the elderly who live in nursing homes. To be in the PACE program, they must meet nursing home eligibility criteria (a relatively small subset of the elderly population), be age 55 or older, and live within a defined geographical area that the PACE provider serves. (For more information on PACE enrollees, see box at left.)
PACE enrollees usually choose community living, but PACE also provides nursing home placement if necessary. PACE enrollees receive all health services through the program, including physician services, hospitalization, therapies, pharmaceuticals, and medical equipment.
An interdisciplinary team is core to the PACE model, serving as the gatekeeper and allocator of services. The team is based at each facility and is responsible for a certain defined number of patients. The team is generally composed of primary care physicians, nurses, social workers, nutritionists, physical therapists, occupational and speech therapists, and health and transportation workers.
How it’s working
Even without the limits on service, the program seems to be saving money. "Nationally we projected it saves as much as 15% of Medicare and Medicaid dollars. That varies from state to state," says Baskins.
"It’s saving costs by better managing patients, by being more preventive, by focusing on care needs, and by being able to design care around the needs of the individual, rather than to nurture the payer sources."
If individuals are not eligible for Medicaid because their income is too high or they don’t meet other financial criteria, then they would pay privately, says Van Reenan. "We have a small subset of the current enrolled population that pays privately, probably between 5% and 10%."
The following statistics demonstrate the PACE program’s reduction in enrollees’ use of inpatient services:
• PACE enrollees’ rate of hospital use is lower than that of the general Medicare over-65 population, which includes healthy elderly people (PACE enrollees averaged 1,983 days per 1,000 enrollees per year in 1996 vs. the general Medicare population’s 2,080 days).
• PACE enrollees have shorter hospital stays than the aged Medicare population as a whole 4.5 days vs. 6.6 days per 1996 preliminary figures.
• Although all PACE enrollees are certified to be eligible for more expensive nursing home care, only 5% to 6% resided in nursing homes at the end of 1996.
The growth of the program
How much the program will grow depends on the time frame, says Van Reenan.
"Right now the average size of the existing PACE program is around 300 to 350 patients per provider," she says. "That’s a relatively small program with a focus in a particular community."
In 1996, PACE sites served 4,844 enrollees. Total PACE census was 4,053 as of December 1996. Almost all enrollees stay in the program until death.
Most of the providers operating as sites in the PACE program are nonprofit, but HCFA also developed a for-profit demonstration for 10 sites. The project is required to report back to Congress in three or four years, says Baskins.
Since PACE provides all health care needs for its enrollees, most providers that have been interested in the program to date have been hospitals, health care systems, and community health centers.
What’s next
Now that PACE has been a successful research and demonstration project, it is in a transition period after being given provider status by the government. "HCFA has one year to promulgate the regulations," Baskins says. "The sites will continue to operate under the demonstration authority. How the regulatory process will be created and what it will look like is an unknown at this point.
"PACE is a good model. It’s where we’re going. It serves a very high-cost, high-user group. It’s been successful from a consumer perspective and from the perspective of Medicare and Medicaid."
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