By William B. Hanlon III, Bill Watts, and Renee Rizzuti

The growing trend toward community-based, integrated care continues to gain momentum, and this trend may even be accelerating in the midst of the pandemic. One of the more recent developments in community-based care is the formation and expansion of Programs for All-Inclusive Care for the Elderly, or “PACE,” also known in the mid-Atlantic states as “LIFE,” or Living Independence for the Elderly.

PACE programs are designed to manage the complex medical, functional, and social needs of seniors who require nursing home-level care, with the substantial majority of participants being Medicaid and Medicare beneficiaries. The goal of these programs is to reduce the cost burden of unnecessary nursing home admissions while allowing participating seniors to receive appropriate care and services at home or in other lower-cost settings.

For PACE enrollees, who have complex healthcare needs, these programs offer a vital way to receive highly integrated care and daily support that reduces total costs of care while protecting seniors’ independence. According to the National PACE Association (“NPA”), states pay PACE programs on average 13 percent less than the cost of caring for a comparable population through other Medicaid services, including nursing homes and comparable community-based waiver programs. And PACE programs demonstrate an ability to reduce hospital readmission rates, resulting in further savings the total cost of care.

But PACE only exists in 31 states—and the limited reach of this program means many seniors who would otherwise qualify for services are unable to gain access. More than two-thirds of Medicaid-eligible seniors with complex care needs do not have access to PACE. Only eight PACE organizations have enrollment higher than 1,000; of these, three have enrollment higher than 2,000, and one has enrollment greater than 3,000.

As the need for PACE services rises, experts believe PACE is on the verge of significant expansion—presenting strong opportunity for home health providers and private equity investors.

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