PACE: Is This the Future of Long-Term Care?

The alternate site leader is gaining respect as a model of long-term care change - and new opportunities for nursing homes

At the most recent National PAGE Association Spring Policy Conference, former HCFA administrator Bruce Vladeck posed an interesting question for his audience: Are Programs of All inclusive Care for the Elderly (PACE) the breakthrough model that will revolutionize the way we care for frail older adults in the 21st century? Or are they nice boutique programs with some interesting features that perhaps might influence "mainstream" long-term care providers?

While Vladeck concluded that the odds were stacked against any revolution in long-term care, he expressed hope that the aging baby-boom population would provide an opportunity to drastically change the way care for older Americans is organized, paid for and delivered.

A PACE program uses care coordination and capitated financing to provide a full range of preventive, primary, acute and long-term care services across a variety of settings with the goal of enabling frail older individuals to live as independently as possible. Developing one could be a way healthcare organizations can prepare themselves to meet the healthcare needs and consumer demands of the 21St century. And nursing homes, which on the surface would appear to lose out on census in such an arrangement, needn't feel left out.

James Introne, president of Loretto Health System, maintains that implementing the PACE program in Syracuse, New York, is having a revolutionary effect on his long-term care organization. Syracuse is a community that has experienced a growing aging demographic similar to what America as a whole will experience in the future. Introne observes, "For decades our nursing home has been at the center of our organization. Everything we have done, from developing affordable senior housing to community services, has been with the goal of extending our nursing home into the community. With PACE, our thinking has totally changed. We are now planning to build PACE sites throughout Syracuse. Instead of a continuum of care, PACE is becoming the central hub of our organization. In the future, our housing, home care, nursing home and other programs will provide settings and services that enable us to serve our PACE participants in the most appropriate environment."

Introne says that because the emphasis of PACE is the coordination of preventive, primary, acute and long-term care across all settings, the system is no longer fragmented for PACE participants. "From support of informal caregiving in the community to nursing home placement, PACE allows us to leverage our existing facilities and expertise to serve many more people than we could under the traditional fee-for-service system."

PACE Background

How did this futuristic concept evolve? The PACE model of care was created in the early 1970s in an effort to help the Chinese-American community in San Francisco care for its elders in community settings. For these families the option of placing frail elderly family members in a nursing home was not a culturally acceptable solution. To meet this community need, On Lok Senior Services ("On Lok" is Cantonese for "peaceful happy abode") created an innovative way to offer a comprehensive array of medical supervision, physical and occupational therapies, nutrition, transportation, respite care, socialization and other needed services.

"One key to the success of PACE is that it emphasizes continuous assessment and aggressive prevention strategies that are free to be employed in the best interest of the individual, without the restrictions of fee-for-service reimbursement," says Shawn Bloom, executive director of the National PACE Association. "By combining flat capitated payments from Medicare, Medicaid and, to a limited extent, private-pay sources, the PACE model delivers services in a manner that would not otherwise even be imaginable and does so in a way consistent with consumer preferences."

"The key to making PACE work financially is keeping hospitalizations and nursing home admittance to a minimum by making sure people get the preventive and primary care they need to stay as healthy as possible," says Judy Baskins, vice-president of Geriatric Services at Palmetto Richland Memorial Hospital, the PACE program in Columbia, South Carolina, "which is exactly what the client also wants. That, in a nutshell, is the beauty of PACE."

To qualify for the PACE benefit, a person must be 55 years of age or older, live in a PACE service area and be certified by the state to need nursing-home-level care. The typical PACE participant is indeed very similar to the average nursing home resident. On average, she is 80 years old, has 7.9 medical conditions and is limited in approximately three activities of daily living (ADLs). Forty-nine percent of PACE participants have been diagnosed with dementia. Nevertheless, PACE has demonstrated that it can successfully provide care that allows extremely frail elders to continue living in the community. Despite their high level of care needs, research has shown that more than 90% of PACE participants are able to do so.

John R. Burton, MD, director for Geriatric Medicine & Gerontology for Johns Hopkins Bayview Medical Center, became interested in developing a PACE program because it reflected a holistic approach that allowed providers to move the focus away from the hospital and to the individual. And he adds, pragmatically, "PACE allowed us to do many of the things we were doing anyway--home care, adult day, transportation, social work, interdisciplinary teams--and actually get paid for it."

PACE incorporates four innovative components that enable the program to respond to the care needs of each individual participant:

Interdisciplinary teams. Each morning, care planning teams--comprised of physicians, nurse practitioners, nurses, social workers, therapists, van drivers and aides--meet to exchange information and solve problems as the conditions and needs of PACE participants change.

A recent Institute of Medicine report and other studies have highlighted the value of interdisciplinary teams in the delivery of healthcare and social services. Through interdisciplinary teams, not only are the viewpoints of various disciplines brought together, but information gained through interaction with the PACE participant over time and in different settings can be shared. The team approach allows much more information to be available at the critical points decisions are being made.

Access to primary care. Often frail older adults have multiple chronic conditions that require ongoing medical management. A recent study found that as the number of chronic conditions increased, the number of doctors and specialists that older adults required increased even faster. This often puts older adults who have slight changes in their health status at increased risk for experiencing adverse consequences resulting from the interaction of these conditions. Because PACE participants have regular contact with the same primary care professionals who know them well, changes in health status can be proactively and comprehensively addressed.

Transportation. The transportation system enables participants to live as independently as possible in the community while having access to the supportive services, medical specialists, therapies and other medical care they need. Transportation staff are also represented on the care planning team. They visit the participant's home and are trained to note changes there, as well as in the participant's ability to transition from her home to the van.

Flat capitated payment arrangements. The PACE model has been successful in making capitated payment arrangements work to the benefit of participants, providers and payers. (Capitated payment is a flat rate per member per month.) For a fixed rate, PAGE provides a comprehensive set of services that are specifically tailored to the needs of each PAGE participant regardless of reimbursement source. This allows for considerable flexibility. For example, through case management and care coordination across disciplines, the PACE care team might decide to help alleviate a participant's asthma by purchasing an air conditioner for her home. This might be a more cost-effective solution and offer a higher quality of life than prescribing costly medications or continually hospitalizing the individual when she has asthmatic attacks-which would be the only possible interventions under fee-for-service Medicare.

PACE Expansion

Although the PACE model represents a radical change in the way healthcare is organized, paid for and delivered, one of the strengths of the model is that once the focus shifts from reimbursement to coordinating care, PACE makes sense from the perspective of the provider, the government and frail elderly individuals and their families.

"Providers are attracted to PACE because it allows them to practice in the way they know they ought to," Baskins says. "Governments support it, once they understand it, because it saves them budget dollars and moves the emphasis away from institutional care. Frail elders and their families want it because it provides them with choices.

"Money is the number one barrier to PACE expansion," adds Baskins, who, besides heading one of the technical assistance programs that help providers create new PACE programs, is also the president of the National PACE Association board. Baskins explains that lenders and health systems are accustomed to investing in buildings and equipment and have a harder time thinking about investing in developing a system of care and services.

"Creating a PACE program is not as straightforward as building a traditional healthcare organization," he explains. "We don't have architects that will draw up blueprints for you or accountants with detailed business models. That is why we created the PACE Expansion Initiative."

The PACE Expansion Initiative (PEI) is a three-year program funded by The Robert Wood Johnson Foundation and the New-York-based John A. Hartford Foundation. Now that Congress has granted PACE programs permanent provider status as a Medicare benefit and as a voluntary state option under Medicaid-a milestone in PACE acceptance-the grant's goal is to increase the number of elders who benefit from PACE. To do that, an increased number of providers must develop PACE programs and a greater number of states must envision PACE as a critical component of their long-term care systems.

"One of our primary goals under PEI is to help PACE reach a critical mass where it can move into the mainstream of care of older persons," the National PACE Association's Bloom says. The association is creating a blueprint for developing a PACE program and documenting operational best practices to help new PACE programs get off the ground. "By breaking the start-up process down into steps, we are able to develop resources that support an organization through each phase of development," Bloom says. "Organizations today don't have to start by reinventing the wheel, the way the original PACE programs developed. We are working to make the process much more predictable."

Bloom emphasizes, though, that the PACE model is far from being a cookie-cutter program. "PACE programs will always be much more organic and flexible than an institutionally based care system. What works in New York City might not work in Cleveland. What works for a hospital-based sponsor might not work for a nursing-home-based sponsor. The way the core elements of PACE are put together can be very different, depending on the community's needs and what already exists in the community. This flexibility is consistent with the philosophy of PACE."

Meanwhile, the recent Olmstead decision by the U.S. Supreme Court and the changing expectations of consumers are leading many state governments and healthcare providers to be more interested in community-based healthcare options like PACE. "What is clear," comments Bloom, "is that in order to serve the needs of the baby-boom generation, who are currently beginning to help their parents make long-term care choices, we need to be more serious about providing preventive interventions and developing better and more cost-effective ways of supporting people and informal care-giving in the community."

Formal caregivers, such as long-term care facilities, have a stake in this, too. "For years," says Baskins, "I have heard providers complain about the process of government financing of long-term care and the system fragmentation it causes. The PACE model solves those problems and rewards providers for coordinating preventive, primary, acute and long-term care across all settings. That's just what we have always said we wanted to be able to do. Now that the model exists, it is up to us providers to step up to the plate and implement it."

Robert Greenwood is director of public affairs for the National PACE Association, Alexandria, Virginia. For more information on the functions or initiation of a PACE program, contact the National PACE Association at [phone].