A Focus on the Program of All-Inclusive Care for the Elderly


Prior to the 2015 CMS decision, PACE operated for over 4 decades under non-profit ownership all while providing quality, comprehensive, coordinated care that was valued both by frail elders and their families.  During this time, PACE also proved itself to be a cost-effective program while serving its community dwelling and primarily dual eligible population (those who are eligible for both Medicare and Medicaid).

The ruling to allow for-profits to operate PACE was based on one study that showed that non-profits in the CMS demonstration program, outperformed for-profit PACE on many different measures of access to and quality of care (see Gonzalez, 2017 http://www.tandfonline.com/doi/full/10.1080/08959420.2017.1281092).  The study did not formally evaluate cost effectiveness by profit status. Despite the results of the study, CMS authorized for-profit ownership of PACE.  This one study came after several other PACE evaluations conducted since 1995 showed that the program was cost effective.

This raises the question—without any evidence that for-profits are capable of operating PACE at the same level of quality or cost effectiveness—why has the program been handed over to for-profit ownership? The justification thus far has been the expectation that for-profits will increase the number of individuals that PACE serves (see Archer, 2016 http://justcareusa.org/for-profit-pace-programs-cause-for-worry/).  For-profit ownership is expected to produce more PACE programs throughout the country.  This begs the question, however, could the model have spread and increased participation without allowing for-profit ownership?

The slow expansion of the PACE model should be viewed as a failure of public policy to fund the program and provide reasonable reimbursement rates via Medicare and Medicaid.  The cost to start a PACE program can be high initially, especially if a PACE center has to be newly constructed. However, these costs decline over time and studies have shown a cost savings to Medicare and Medicaid compared to other Home and Community Based Services and compared to care provided in nursing homes (Damons, 2001; Foster et al., 2007; Rylander, 2000; Weiland et al., 2013).  Another cost barrier is the low reimbursement rates set by CMS for this high acuity population.

Given the success of the PACE program under non-profits, a more logical approach to increasing the number of PACE programs would be to help with initial funding and to provide adequate reimbursement rates.  Instead, the future of PACE and the frail elderly that the program was initially intended to serve, is in the hands of proprietary organizations.

Read the full Journal article here.