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A Better Way to Grow Old: The Pace Model

By: Laurie Larson
SeniorJournal.com, August 8, 2002

Grace rarely spoke or made eye contact with anyone at the nursing home. Barely able to walk, she sat and stared blankly most of the day. She was so apathetic, one of her doctors thought anti-depressants should be added to her regimen of multiple medications. Then one day, a nurse told her she was being taken home. A van picked her up, and a home health care aide tucked her in for the night. The van driver said he would return in the morning to pick her up.

"Am I going back tomorrow?" Grace asked anxiously. "No, you're going to a new day care center, and you'll come back home tomorrow night," he said. The home health aide said she would return early in the morning to help her bathe and dress.

A few months later a neighbor saw Grace headed out to the waiting van. She scarcely recognized her. She walked well with a cane, her hair was styled, and she had a sparkle in her eye. She told Grace she looked wonderful. "Oh, thank you," Grace beamed. "I've stopped taking all those medications, so I walk better now." She waved back to her neighbor as the driver helped her in. "Don't wait up for me," she laughed, "we've got bingo tonight."

Does this sound like age reversal? In some cases, it might be. It is the PACE program, the "Program of All-Inclusive Care for the Elderly," and it's changing the quality of life for thousands of seniors across the country.

The idea for PACE began in San Francisco's Chinatown in the early 1970s. Asian families preferred to have their elders live at home but were worried about their safety during the day. An area social worker proposed a British concept, transporting seniors to a community center during the day and returning them home at night. The center they opened in 1973 was called, "On Lok," which means "peaceful happy abode" in Cantonese.

Providing "one-stop" comprehensive health and social services for its clients, the On Lok program was the model that inspired a Medicare and Medicaid demonstration program option called PACE in 1987. The National PACE Association (NPA) was formed in 1994, and in 1997, the Balanced Budget Act legislated PACE to be considered on a state-by-state basis as a permanent Medicaid waiver provider.

PACE programs represent a three-way partnership among providers, the state, and the federal government. PACE is a fully capitated managed care program, in which the Centers for Medicare and Medicaid Services (CMS) pays the Medicare capitation and each state establishes and pays the Medicaid capitation. These capitated payments are combined and given to PACE providers, creating a flexible funding pool for all primary, acute, and long-term care services. Typically, one-third of payment comes from Medicare and two-thirds from Medicaid. Today there are 26 PACE programs in 15 states with 40 more sites exploring program options.

"Hospitals that have a need to serve their community holistically should look at PACE," says Robert Greenwood, director of public affairs for the National PACE Association. "Hospitals take for granted that care will be fragmented, but PACE provides flexibility and freedom to think outside the box."

All PACE centers include adult day care that comprises nursing, physical, occupational and recreational therapies, meals, nutritional counseling, and personal care. A PACE-employed physician oversees all primary care. A dentist, audiologist, optometrist, podiatrist, and speech therapist may also be on staff. All prescription and non-prescription medications are paid for by PACE, and home health care is coordinated from the site, as well as social services, respite care, and hospital and nursing home care when necessary.

"Traditional reimbursement is more inpatient based, but [PACE] is a key to shifting incentives," Greenwood says. "Providers are paid to provide preventive services. The more they're able to replace inpatient care with preventive care, the better their margins. It helps to balance the mixed incentives of the traditional fee-for-service system."

To qualify for PACE, a person must be age 55 or older, live in a state that has approved the PACE option to Medicaid, and be certified by the state to need nursing home-level care. The typical PACE enrollee is around 80 years old, has more than seven medical conditions, and is limited in several daily living activities. Almost half of PACE participants have dementia. Despite this, however, 90 percent of enrollees are able to continue living in the community.

An interdisciplinary team--comprising a physician, social worker, nutritionist, nurse, home health aide, occupational therapist, physical therapist, and van driver, among others--meets every morning to monitor the health status of all enrollees.

"The team brings the perspectives of their disciplines and [interaction with] the individual in different settings," Greenwood explains. "All the information is brought to the table at the same time, [so] the care plan can be changed daily." The team also reviews inpatient utilization on a regular basis to monitor how well they are doing at keeping participants out of the hospital, or at least admitted for shorter stays.

PACE centers limit the number of enrollees to between 150 and 200 per center so that the team can stay on top of their clients' health care status for a truly preventive approach.

Greenwood says PACE appeals immediately to providers. "Hospital [caregivers] have told me over and over that PACE allows them to care for older people in the ways they prefer," Greenwood says. "They don't have to refer them out of their care, and they don't have to follow reimbursement regulations."

How is PACE working in the field? Look at these examples.

Senior Health Partners

Senior Health Partners in New York City is one of the newest PACE programs, celebrating its first anniversary this past June. Although federal Medicare approval is still pending, New York approved the PACE model as a Medicaid waiver program in 1997. It is a three-way partnership among Mt. Sinai Hospital, the Jewish Home and Hospital, and the Metropolitan Council on Jewish Poverty, a home health agency that provides low-income housing. The Jewish Home comprises three nursing homes, home care, housing, transportation, and assisted living, among other services.

Patricia Levinson, a Mt. Sinai and Senior Health Partners trustee says, "It's important to remember that all at the table are equal. Each partner brings value. You have to look at contentious issues and talk them through . . . if you keep your eyes on the prize, you get there." She believes the three entities bring a tremendous combined "savvy and know-how" from their long affiliation with each other, and she can't see how Mt. Sinai could have failed to embrace the PACE model. "As the first [U.S.] academic medical center to establish an autonomous geriatric department, PACE addresses all parts of our mission," Levinson says.

Creating an independent Senior Health Partners board, the three organizations put legal and banking structures in place, found a day care center location, and did all the paperwork necessary to be licensed as an "appropriate care center" by the state. Mt. Sinai and the Jewish Home put forward most of the $1.6 million needed before Senior Health Partners could became operational. Christine Klotz, president and CEO of Senior Health Partners for the past three years, says the same amount is needed to hold them until they break even, which she estimates will take about 18 more months.

"Mt. Sinai has one of the strongest geriatric teaching programs in the country; the Jewish Home is one of the largest long-term care entities [in the area]; and PACE is leading edge for elder health care. How could they not be connected to a PACE site?" Klotz says. "If they are going to say they are health leaders in geriatric care, they have to be connected to this model."

PACE's more open reimbursement structure allows for preventive care that traditional care doesn't, such as putting grab bars in clients' homes to prevent falls, Klotz says, or installing air conditioning to make summer more comfortable for those with congestive heart failure. "There's no way to do that in a traditional care model," she points out. "You see people who would be in a nursing home without us--some even come out of nursing homes and return to their apartments and their familiar things." Klotz has also noticed how previously homebound seniors have blossomed since coming to the day care center. "It creates a new community. You see people brighten up, care about what they look like . . . they have a reason to get up in the morning again."

Levinson agrees. “I can't think of anything happier than people being able to stay in their homes. Their needs are met, and it frees [long term care] beds for other people."

Providence Elderplace

Sponsored by the Sisters of Providence as part of the Providence Health System in Seattle, Providence Elderplace in Portland, Ore., sees its work as particularly well-suited to the Catholic mission.

"The Sisters of Providence are committed to the frail, low-income elderly," explains Don Keister, director of the Elderplace PACE program. "I think this model of care creates the best opportunity to create care plans that meet [individual] needs . . . and since all funding comes through us, we can be more attentive to individual care needs and not worry how to finance each piece."

Providence Elderplace started as a PACE demonstration site in 1987 and became a fully capitated model in 1990. It comprises four "health and social centers," as they are called, has 500 enrollees and operates two residential care facilities totaling 144 beds, attached to social centers.

Keister says caregivers appreciate that they don't have to worry about who will pay for whatever services they deem necessary, and they don't have to decide on care options based on reimbursement. Having 20 or so team members making those decisions is a truly collaborative operation, he adds.

"There is richer, broader participation," he says. "Deliberating key issues takes longer, but the buy-in is broader and there is a variety of perspectives. . . I think this model of care attracts people who like a team approach."

Managing staff from all the different disciplines is Keister's job. Although he has had to learn how to oversee primary care, home care, day care facilities, transportation, rehabilitation, and more, he does not come unarmed. With a background in public case management, he brings much-needed understanding of the complexities of maneuvering through the Medicare and Medicaid systems.

"[As a PACE director] you need a thorough understanding of the care environment in the community, nursing home alternatives, case care management--and you need a relationship with state Medicaid agencies. That's been valuable to me now," Keister says. He recommends that PACE directors have solid medical, long term care, and/or public aid knowledge, as well as an understanding of the issues involved with the chronically ill elderly.

Elderplace has the numbers to prove it has figured it out, however. Keister says its costs are significantly lower than comparative acute care/hospitalization utilization rates or skilled nursing facility rates. "We can provide a richer array of preventive services instead," he says. For example, since occupational and physical therapy are included in the Elderplace program, they can be provided daily, improving seniors' strength and mobility, rather than going through a traditional approval process after a fall or similar injury has already occurred.

Vital to any PACE effort, Keister believes, is a committed leader, and Sister Karen Dufault, chair of Providence Health System, has been that leader for Elderplace.

"[PACE] has been her vision since she saw the On Lok program," Keister says. "I think it always takes someone who has a strong vision about a new model of care to be a champion." Dufault was the administrator at Providence Portland Medical Center when she saw the On Lok program.

"It has proven to be very challenging, but worthwhile," Dufault says. "The dignity of each person is respected and their independence maximized." As a faith-based organization, these values have particular meaning for PACE staff and administration she believes, along with a focus on holistic body/mind/spirit medicine. In that spirit, Elderplace also offers acupuncture and reiki as part of its health care package.

As much as Elderplace has achieved, however, there's much more that can be done. Even with 500 enrollees, there remain 15,000 to 20,000 eligible people in the area, Keister says. "It's not the easiest model to explain to people," he says. "Most decide to enroll when they are in a place of transition, when a significant event [such as a debilitating illness or injury] triggers the need for making choices."

Palmetto Seniorcare

Like Elderplace, Palmetto Seniorcare in Columbia, S.C., formed in 1988, was one of the first PACE demonstration sites. Started by Palmetto Richland Memorial Hospital, the program currently comprises five community centers within a 1,700 square-mile service area, and 90 percent of its 375 enrollees are transported to those centers daily. Eighty-five percent of enrollees live with their families, characteristic of the area's multigenerational, primarily African-American, rural population.

"It's a nursing home without walls that cares for people wherever they are," says Judy Baskins who heads Palmetto Seniorcare as director of geriatric health services at Palmetto Health Alliance. She also chairs the National Pace Association board. "PACE can figure out where problems are in the community and fill those gaps," Baskins says. "It 's a true managed care model."

Not-for-profit Palmetto Richland Memorial, formerly a public hospital, was inspired to look into PACE based on the number of elderly it was seeing in its emergency department for primary care and the shortage of long-term care beds. The former chief operating officer, Kester Freeman, heard about the On Lok model and went to see it. Freeman has been Palmetto Richland's CEO for the past ten years, and his leadership and board support have been key, Baskins says.

"Frankly, we were awed by On Lok--and it's been a miraculous program for us," Freeman says. . . . We couldn't stand by and not pursue it." He says PACE has "dramatically improved our image at the hospital--average Medicare length of stay is eight to ten days, and ours is two and a half." Emergency room visits have dropped drastically as well, he says.

The hospital worked with the state health department and a local home health care program and made Palmetto Seniorcare a hospital program, which it still is. With the University of South Carolina School of Medicine closely tied to the health system, students on geriatric fellowships rotate through the PACE program--a particular value, Baskins believes.

"Sixty percent of [most physicians'] practices will be geriatric," she says. "Learning how to treat [seniors] in their home environment, rather than in a nursing home, is important."

Like all PACE programs, members of the interdisciplinary team meet every morning in the five centers to discuss their clients' health status. Centers typically see 120 to 125 clients a day, but may treat 200 or so, including those who do not come to the center. With such intense coordination of care, the ongoing benefits are "subtle" Baskins says, but clear--including an almost universal reduction in the number of medications clients take. Prescriptions have been cut to two or three a day as opposed to the dozen medications some had been taking before PACE, because their various doctors "weren't talking to each other," Freeman says. Clients' alertness and mobility have improved as a result.

Baskins ascribes these results to assigning one physician per 100 enrollees. "It's good, old-fashioned medical care," she says. "Our doctors make house calls."

Palmetto Seniorcare is one of six sites in the country that also invites interested providers to come tour its program. "We believe in 'each one teach one'--that is a philosophy shared by all the original demonstration sites," Baskins says. "There is something so beneficial in [PACE] staff recognizing that what they do is worth sharing--they take great pride in their work."

Even with their long-standing tradition however, they still have to keep proving themselves where funding is concerned.

"One of the biggest reality doses is that you are not only administering a long-term care needs program, you have to fight for funding and stay on top of state and federal funding--it's a big political issue. . . . It's easy to lose your piece of the pie," Baskins says. Freeman agrees.

"It's not been easy. The clinical side is wonderful, but finding the people to pay for it, to sustain it, has been challenging," he admits. "Every year we have to convince [the state] to fund [PACE]. Someone threatens to cut it every year, so we go fight for it." He says his argument is, "If these patients weren't with us they'd be in a nursing home or at home with no care. Long-term they'll end up in an ER--probably mine--all that makes very little sense. This is a cost-effective and humane way to care for these people."

How to Start

Dufault recommends that hospitals that want to look into PACE begin by learning as much as they can about the model and investigating whether a market exists in their community. "Identify the needs of your local frail elderly--are there already programs in place that help them? If so, don't start something new," she says. Site visits to PACE models are as valuable as assessing needs--and this is a key time for board involvement, Greenwood says.

"Because they are entrusted with the long-term, the board needs to look at PACE in terms of what's in the best interests of the community and the best interests of the organization--what will it do to the organizational culture, how does it fit with mission, vision, and the future role of the organization," he says.

Hospitals should take a good look at their referral sources, seeing who helps elderly patients when they are discharged and unable to return home.

"Anytime there is a dramatic change in some [senior's] life, that is the time, he or she might use PACE," Greenwood says. "Hospital discharge planners are key referral sources--and find out if other hospitals would make referrals [to a PACE-type program] too. As many sources as you can get [participating] the better." He also recommends talking to local agencies on aging, long term care providers, retirement housing organizations, "wherever people are needing services to stay in the community." Hospitals should also analyze which of their own departments could benefit from a PACE program.

Next, Greenwood recommends deciding who the appropriate PACE program director should be--typically a medical director is the best person to spearhead the effort. He or she can usually coordinate services with other professionals, knows the referral connections, and can "see where the market is going," he says.

As Palmetto Seniorcare has experienced, funding is one of the biggest challenges facing PACE, Greenwood says, because as a "service delivery system," it is hard to project costs and revenues.

Providers should find out if their state has previously approved PACE as a Medicaid waiver. If so, even though they must still submit an application through the state to CMS, the infrastructure is in place, and processing should be streamlined. If their state has not approved a PACE program previously, providers must submit the first application for that state--and expect processing to take longer. Greenwood recommends going to the NPA Web site (see "Picking Up on PACE," page 13) to learn how to proceed. Providers should also see if they are included in a list of states that actually want to start PACE programs and are looking for providers to "open the territory."

"Every state Medicaid program is different. The key is to have a relationship with [your state's] Medicaid [administrators] so that they believe in it," Freeman says. "They tend to be mission-driven too--these are their clients. If you prove that you can care better and more cost-effectively for their patients, why wouldn't they want that?"

Greenwood cautions that any PACE financial model needs to plan to operate in the red while it builds its census.

"It depends on the providers and the market how fast and how many people you enroll," Greenwood says. "Ask yourself if you can identify a population right off the bat that you already help. For example, is there a waiting list [at your hospital] for nursing home placement?" Usually around 90 participants are needed for a PACE program to break even, Greenwood says. Still, even with marketing and an existing "pool" of potential clients, PACE enrollment seems to expand best through word of mouth.

"Our clients are our best advertisers," says Levinson. "Their word-of-mouth is telling our story."

As a veteran of the program, as well as its national board chair, Baskins would like to see PACE "go from concept to market more quickly." She describes the need for programs like PACE to educate the American public to think about long term care earlier as "social marketing." She explains, "American culture doesn't deal [well] with aging." She thinks states need the same type of change in perspective, "looking at long-term care strategies from a a public policy perspective." That shift in thinking may sound difficult but the way PACE works gets clearer every day.

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