The Program of All-Inclusive Care for the Elderly (PACE) model was ahead of its time. Created close to a half century ago, it fits extremely well with the health care issues that seniors are facing in 2021.
There are currently 140 PACE programs operating 272 PACE centers across the U.S., serving 55,000 total participants, according to the National Pace Association. Players within the PACE industry believe, however, that the number of participants could – and should – be much larger than that moving forward.
The model’s performance over the last year and a half is reason to believe that growth may become a reality, which would be beneficial to both PACE operators themselves as well as the providers they work with, such as home-based care agencies.
“PACE is really about trying to care for people in an all-inclusive way, as a community option,” Dr. Robert Schreiber, the vice president and medical director of the PACE organization Summit ElderCare, said recently during the Home Health Care News FUTURE conference. “There are many reasons why it hasn’t scaled, … but I think we’re seeing it now because PACE has performed amazingly well.”
Based in Worcester, Massachusetts, Summit ElderCare is a PACE program that is owned by the insurance plan Fallon Health. Overall, it serves about 1,2000 participants, and its average budget is around $100 million annually.
In order to be a PACE participant, an individual generally has to be over the age of 55 while being dually eligible for Medicare and Medicaid. An alternative for nursing-home eligible patients, PACE is normally run out of communities, using a group of different providers to provide holistic care for participants.
While there are 55,000 PACE participants across 30 states, there are around 2 million Americans – if not more – who could qualify for the program, leaving the penetration rate at less than 3%.
“The outcomes are really second to none,” Schreiber said. “And it has resulted in states opening up programs.”
Not only are states that had placed restrictions on PACE programs during the COVID-19 crisis allowing centers to open up again, but states with PACE deserts are also looking to fill gaps in care through these programs, in part because the model presented itself as a better alternative to facility-based care during the public health emergency.
“I’m not saying this was nirvana; there were still a lot of challenges,” Schreiber said. “It’s a very similar workforce, for instance, but we were able to figure it out … because we had to. There was no place for individuals to go from the hospital when they had COVID because nursing homes were not taking people. They didn’t have staff, they didn’t have PPE. So we just met people where they were, and if they didn’t have the resources, we tried to provide them. And it really did make a difference.”
Sen. Bob Casey, a Democrat from Pennsylvania and chairman of the Senate Special Committee on Aging, introduced the “PACE Plus Act” in April, which would aim to expand access to PACE across the country.
“We should advance policies that make it possible for people to choose to age in place, as so many people wish to do,” Casey recently told HHCN.
The PACE plus Act, if enacted, would allow for the creation of new PACE programs in more states and PACE deserts – and the expansion of current ones – through federal grants. It would also offer incentives for non-PACE states to take up the model.
The profitability of PACE
What makes the concept of PACE sensical in 2021 is not just that it’s an alternative to facility- or institutional-level care. It’s inherently value-based, which is where the U.S. health care system is heading.
“I do believe we’re getting to the point where value-based care is moving at lightning speed,” Schreiber said. “And so I see where the states are going, they’re trying to transfer the risk and the budgetary limitations into provider groups. So those groups that are able and willing to take the risk – especially with the dual population – [stand to benefit].”
It also makes sense from the provider side, given that investment in PACE tends to yield robust margins.
“I look at this as a population-based model,” Schreiber said. “And we’re taking care of the most costly population – the 1% that’s driving 10% to 15% of the Medicare and Medicaid dollar. And I think what we’re seeing is that if this is done right, if you can do this all together and take total risk, but get coordination and engage the individual and their family, what we’ve found is that it’s incredibly profitable.”
The profit occurs, Schreiber explained, by focusing on the specific needs and goals of participants. Providing the care that’s best for the patient ends up being best for the provider, and that results in great returns on investment.
The average margin monthly per member is over $1,000, Schreiber said. Currently, home-based care accounts for at least 12% of Summit’s spend right now, a number that could potentially rise in the future, but is still significant in the meantime.
Venture capital is also paying more attention to PACE than it ever has, if it ever did at all prior to COVID-19, Schreiber said.
“There are significant opportunities,” he said. “So those that want to go at risk, there’s opportunities to share profit.”
Outside of Summit ElderCare, InnovAge (Nasdaq: INNV) – the largest PACE organization – is an example of the power of the business model. The Denver-based company went public through a $350 million IPO earlier this year and remains bullish on expansion.
“We continue to see positive federal and state legislative activity at levels we have not seen in recent memory,” InnovAge CEO Maureen Hewitt said on the company’s Q4 earnings call in September. “This is a very encouraging sign for PACE, as interest in the program is at an all-time high.”
PACE is highly regulated, but not in a way that is hindersome to providers acting in good faith.
In the end, PACE participants end up being far more satisfied with their care, on average, than others in the health care system, Schreiber said.
“It’s not just about the money, it’s really about the care and about what matters to the individual,” he said. “I think that’s the piece that has to be done and can’t be forgotten. So as more organizations are now getting into PACE, and there are many health plans and provider groups that are thinking of starting PACE programs, you really have to focus on the care, but you have to do it right.”
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