Practical Lessons for Delivering Integrated Services in a Changing Environment: The PACE Model

A new look at a pioneering provider of comprehensive care. The Program of AllInclusive Care for the Elderly, or PACE, is the fully integrated managed care system pioneered by On Lok Senior Health Services in San Francisco (Ansak, 1990). Replicated nationwide as a Healthcare Financing Administation (HCFA) demonstration program PACE became a permanent provider of comprehensive medical and long-term-care services to the frail elderly with the passage of the Balanced Budget Act of 1997 (US. Congress, I997). PACE now is a permanent provider under Medicare and a state option under Medicaid. The goals of PACE are to maximize each enrollee's autonomy and continued community residence and to provide quality care at lower cost to Medicare, Medicaid, and private-pay enrollees relative to their payments in the traditional system. From the perspective of the HCFA, the goal is to reduce the fragmentation of services and effectively integrate acute and long-term care into a "single, seamless system" (Vladeck, I996). In PACE, preventive and rehabilitative services are emphasized to stabilize chronic conditions and avoid or decrease complications of disease, thereby enhancing life. Services, including primary care, social work, and restorative therapy, are provided in the PACE center, at home, in the hospital, and in the nursing home. PACE includes specialty and ancillary medical services as well as community-based long-termcare services such as transportation, meals, and personal care. According to White (I998), PACE is the only program to date targeted solely to frail and impaired elders in which providers assume full financial risk. TARGET POPULATION PACE enrolls frail older people exclusively. To enter the program, a person must be at least 55 years old and be certified by the state as eligible for nursing home care. When compared to other elderly populations, PACE enrollees are most similar to nursing home residents and, according to the most recent program statistics (Clark, I998) have the following characteristics: On average PACE enrollees are 8o years old; about 3o percent are 85 or older. On average, PACE enrollees are dependent in three activities of daily living. More than two-thirds of PACE enrollees suffer from mental disorders including dementia and depression. Nationally, PACE serves an ethnically diverse group of participants-45 percent Caucasian, 26 percent African American, 15 percent Hispanic, I2 percent Asian/Pacific Islander, and 2 percent other (Clark, I998). The racial and ethnic distribution of each program reflects its particular community. SERVICE DELIVERY AND FINANCING APPROACH PACE completely integrates services and financing for both acute and long-term care and, by doing so, is a fully integrated managed care system for the frail elderly. The PACE service delivery system is comprehensive, uses an interdisciplinary team for assessment and treatment, and integrates primary and specialty medical care with long-term-care services. PACE delivers services beyond the usual Medicare and Medicaid benefits, based on individual need. PACE receives monthly capitation payments from Medicare, Medicaid, and individuals (participants who are financially ineligible for Medicaid pay that portion of the monthly fee themselves). Medicare bases its payment on the adjusted (for geographic location) average per capita cost (AAPcc) methodology used to reimburse Medicare health maintenance organizations (HMos). For PACE, the county per capita cost is multiplied by a single adjustment factor of 2.39 to reflect the frailty of PACE enrollees. In I998, the monthly Medicare capitation payment to PACE programs ranged from $877 to $1,775. The Medicare rate-setting methodology assumes a 5 percent savings for Medicare, although research to date suggests substantially higher savings attributable to PACE (Clark, 1998; White, I998; Gruenberg, Rumishiskaya, and Kaganova, I993). …