Participants in a relatively small program that fully integrates medical care with a broad range of personal care and other services were less likely to need to visit emergency departments, be hospitalized, or even to die during the study period, compared to similar patients enrolled in Medicare Advantage plans.

The report, done by the consulting firm RTI International for the federal Department of Health and Human Services, studied a program called PACE (Program of All Inclusive Care for the Elderly). Most enrollees, known as dual eligibles, receive both Medicare and Medicaid. PACE is funded jointly by both programs and these participants pay no premiums. About one-fifth of participants are on Medicaid only, and a handful are enrolled just in Medicare.

RTI compared PACE with basic Medicare Advantage plans and two other forms of managed care, Fully-Integrated Dual Eligible Special Needs plans, called FIDE SNPs; and Dual Eligible Special Needs plans, known as D-SNPs.

Fewer Deaths

It found that in 2021, PACE participants were less likely to visit the ED, be hospitalized, or die than similar members of MA plans. It also found they were less likely to need other forms of institutional care, such as in skilled nursing facilities, though the evidence was weaker.

By contrast, participants in the two SNP models were more likely to be hospitalized or visit the ED than those enrolled in other MA plans. However, like those in PACE, they too were less likely to die.

2021 was a COVID-19 year so outcomes could be different today. But the new study results roughly tracked a similar HHS study of 2015 outcomes as well as several other studies.

How PACE Works

PACE aims to help people with health care and functional needs remain in their homes as they age. People may participate if they are 55 or older and otherwise would need institutional care. However, they must be able to safely remain at home with PACE services. Often, that means having a family caregiver who can work closely with the PACE staff.

The PACE model usually is built around an adult day program linked to an onsite medical clinic. PACE provides a wide range of services, including a network of primary care and specialty physicians, as well as dental, hearing, vision, and foot care, It provides a social worker and care manager, as well as in-home services such as skilled nursing, personal care, occupational and physical therapy, and needed medications. Those who need it can also get behavioral health and dementia care.

An early PACE-like program was created in San Francisco in the 1970s and the current national version has been around since the 1990s. Yet, its 200 sites in 33 states and the District of Columbia care for fewer than 100,000 participants. Most PACE programs are operated by non-profit organizations, though there are some for-profits as well.

Because the program is primarily for dual eligibles, it is run as a state Medicaid program, and states have very different attitudes about PACE. For example, in the mid-Atlantic region, Pennsylvania has 18 PACE programs while Maryland has just four (until recently it had only one), and West Virginia has none. Michigan has 15 while Indiana has seven.

Why Isn’t It Growing?

With growing evidence that PACE provides high-quality, cost-efficient care, why is the program still so small?

PACE programs are costly to set up. They require building out a medical site (which comes with substantial regulatory requirements) as well as hiring expensive staff, including physicians and nurses. The non-profits that operate most PACE sites don’t have that kind of money sitting around, and only a few lenders will finance these projects.

Looming funding cuts in the wake of Congress’s 2025 decision to cut Medicaid by $1 trillion could hit PACE hard. While the 2025 law does not explicitly target PACE, fewer Medicaid dollars for home-based care could hurt the program and make these projects seem even more difficult to sustain.

Then there is the problem of poorly allocated cost savings. Reducing ED visits and hospital stays is, of course, good for patients. And it can save significant money. But those savings all go to Medicare, and there is no way states can use them to lower their Medicaid share of PACE costs.

Some states also fear what is unkindly known as the “woodwork effect.”  The idea: Medicaid home and community-based programs such as PACE are so attractive that they encourage more low-income people to “come out of the woodwork” and enroll in Medicaid.  That, goes the theory, will cost states more money.

The evidence suggests helping people with physical and cognitive limitations stay home costs states less than the alternative, which is nursing home care. Yet, some states continue to resist.

PACE faces consumer resistance as well. Some prospective patients may be reluctant to enroll because they don’t want to give up their own physicians and use PACE’s own docs. The program’s fully-integrated system may provide better quality, better coordinated care but to some, choice trumps quality.

A Win/Win

The RTI study tells two important stories: First, plain vanilla Medicare Advantage plans can do a much better job caring for their members. Second, PACE models help show one way how.

Integrating medical treatment with supportive services not only benefits patients but has the potential to help reduce health care costs, a big priority when the nation faces a $2 trillion annual budget deficit. When programs such as PACE combine well-coordinated care with people’s ability to age at home, everybody wins.