Program of All-Inclusive Care for the Elderly (PACE): History and FAQ

The PACE model was developed to address the needs of long-term care clients, providers, and payers.

The Program of All-Inclusive Care for the Elderly (PACE) is a benefit program for older adults. It has "capitated benefits," meaning there is a fixed amount of money per patient and per unit of time.

This budget was authorized by the Balanced Budget Act of 1997 (BBA). The program features a comprehensive service delivery system and integrates with Medicare and Medicaid financing.

History of the PACE Program

The PACE program was modeled on the system of acute and long-term care services developed by On Lok Senior Health Services in San Francisco, California.

The model was tested through Health Care Finance Administration (HCFA) demonstration projects that began in the mid-1980s.

Who Benefits From the PACE Program?

Typically, PACE benefits older adults facing medical issues and their informal caregivers. It also helps home health care providers and other medical staff make sure individuals have the care they need.

Most PACE participants are 70+ years old and have numerous medical conditions. Many of these are chronic conditions.

For most participants, the comprehensive service package lets them continue living at home while receiving services. This is ideal for many participants rather than being institutionalized in a nursing home or assisted living facility.

It is intended to help maintain their quality of life, continue their activities of daily living, and support their care needs in their own community. In about 5% of cases, they may be in assisted living or nursing homes — which PACE pays for.

PACE Cooperation With Medicare and Medicaid

Capitated financing allows providers to deliver all the services participants need. Otherwise, they would be limited to services reimbursable under the Medicare and Medicaid fee-for-service systems.

The BBA established the PACE model of care as a permanent entity within the Medicare program. It enables states to provide PACE services to Medicaid beneficiaries as a state option.

The state plan must include PACE as an optional Medicaid benefit. This must happen before the state and the Secretary of the Department of Health and Human Services (DHHS) can enter into program agreements with PACE providers.

Once approved, the PACE program becomes the sole source of services for Medicare and Medicaid eligible enrollees.

Limits To Growth of the PACE Program

Some states choose to limit the annual growth of the PACE program. The law does allow for priority processing and special consideration of applications for:

  • Existing PACE demonstration sites
  • Entities that applied to operate a PACE demonstration project on or before May 1, 1997

Medical Professionals and Staff Working with PACE

The program requires an interdisciplinary team consisting of professional and paraprofessional staff. They will need to:

  • Assess participants' needs
  • Develop care plans
  • Deliver all services (including acute care services and nursing facility services when necessary)

These teams and services are integrated for a seamless provision of total care.

Types of Care In the PACE Program

PACE programs provide social and medical services primarily in adult day centers and health centers. This is supplemented by in-home and referral services according to the participant's needs.

The PACE service package must include:

  • All Medicare and Medicaid-covered services
  • Other necessary services set by the multidisciplinary team

Who Is Paid for the PACE Program?

PACE providers receive monthly Medicare and Medicaid capitation payments for each eligible enrollee.

Medicare-eligible participants, who are not eligible for Medicaid, pay monthly premiums. These are equal to the Medicaid capitation amount. They do not pay:

  • Deductibles
  • Coinsurance
  • Other type of Medicare or Medicaid cost-sharing applies

PACE providers assume the full financial risk for participants' care — without limits on amount, duration, or scope of services.

What Is a PACE Organization?

A PACE organization is a not-for-profit private or public entity that is primarily engaged in providing PACE services.

The following characteristics also apply to a PACE organization. It must:

  • Have a governing board that includes community representation
  • Be able to provide the complete service package regardless of frequency or duration of services
  • Have a physical site to provide adult day care services
  • Have a defined service area
  • Have safeguards against conflict of interest
  • Have demonstrated fiscal soundness
  • Have a formal Participant Bill of Rights

Who Qualifies As a PACE Participant?

To qualify as a PACE participant, you must be:

  • Age 55 or older (though typically the participants are 70+)
  • Meet a nursing facility level of care
  • Live in the PACE service area

You may need to be certified as eligible for nursing home care by the appropriate state agency.

How Do Participants Enroll?

Enrollment in the PACE program is voluntary. If a participant meets the eligibility requirements and elects PACE, an enrollment agreement is signed.

This contains information such as:

  • Participant demographic data
  • Description of benefits
  • Program effective date
  • Explanation of policy regarding premiums, emergency care, etc.

Enrollment continues as long as desired by the PACE participant. It continues regardless of changes to health status. The program ends with:

  • Death
  • Voluntary disenrollment
  • Involuntary disenrollment

What Services Are Provided Through PACE?

PACE services include all Medicare and Medicaid services.

At a minimum, there are essential services that a PACE organization must provide in their PACE center:

  1. Social work/social services
  2. Cleaning and chore services
  3. Prescription drugs
  4. Nursing facility services
  5. Primary care services
  6. Restorative and physical therapies
  7. Personal care
  8. Supportive services for families and caregivers
  9. Nutritional counseling
  10. Recreational therapy
  11. Occupational therapy
  12. Daily meals
  13. Activities and exercise
  14. Dental care
  15. Vision and hearing care, including glasses and hearing aids
  16. Podiatry and orthotics
  17. Transportation services
  18. Medical equipment like wheelchairs, walkers, and oxygen

Where Do Participants Receive Services?

The service delivery settings include an adult day health center, home, and inpatient facilities.

Who Participates in the Multidisciplinary Team at the PACE Center?

At a minimum, the multidisciplinary team is composed of a:

  • Primary care physician
  • Nurse
  • Social worker
  • Physical therapist
  • Occupational therapist
  • Recreational therapist or activity coordinator
  • Dietitian
  • PACE center supervisor
  • Home care liaison
  • Health workers/aids or their representatives
  • Drivers or their representatives

How Is Reimbursement Handled Under the PACE Program?

Under the Medicare program, the monthly capitation rate paid by HCFA to the PACE provider equals the Adjusted Per Capita Cost (AAPCC). This is calculated by HCFA for HMO reimbursement with adjustment for frailty factors.

Under the Medicaid program, the monthly capitation rate is negotiated between the PACE provider and the State Medicaid Agency. It is specified in the contract between them. The capitation rate is fixed during the contract year regardless of changes in the participant's health status. The rates are considered payment in full.

How Can I Find a PACE Program Near Me?

You can search participating states and areas on the National PACE Association website. If you are facing issues with the program, financing, or getting the help you need, you may want to talk with an older adult law attorney near you

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