Evaluating PACE: A Review of the Literature - Executive Summary


Arkadipta Ghosh, Cara Orfield and Robert Schmitz

Mathematica Policy Research

January 2014


The Program of All-Inclusive Care for the Elderly (PACE) provides coordinated acute and long-term care services to nursing home (NH) eligible seniors in the community. PACE is a Medicare managed care program and a Medicaid state plan option. Individuals who are 55 or older, certified by their state of residence as being eligible for NH level of care, and live in the service area of a PACE program are eligible to enroll in PACE. The underlying premise for Medicare and Medicaid financing of PACE is that these programs enable some frail elderly enrollees to remain in the community, increase enrollees' satisfaction with health care services and quality of care, and save money for both the Medicare and Medicaid programs.

Based on a comprehensive review of existing evaluations of PACE, this paper brings together available evidence on the effect of PACE on several key outcomes of interest--Medicare and Medicaid costs; hospital and NH utilization; quality of care, satisfaction and quality of life; and mortality. We summarize findings from past studies and assess their methodological approach. We include both published articles as well as research reports in this review and identify key themes that emerge from past findings when viewed in the light of their underlying strength of evidence. This review improves upon an earlier literature review (Galantowicz 2011) by utilizing stricter inclusion criteria and conducting a more detailed review of the studies, as well as a more rigorous assessment of the quality of evidence presented in each study.

Several key findings emerge from this literature review regarding the design and methodological approaches of prior PACE evaluations as well as on the effectiveness of PACE in controlling spending, reducing hospitalizations and NH use, and improving quality of care and satisfaction. These can be summarized as follows.

  • There are significant challenges in evaluating PACE, given the characteristics of the program and its beneficiaries, the most significant of such challenges being the identification of an appropriate comparison group.

  • With no studies using an experimental design for evaluation, none offers strong evidence on the effectiveness of PACE.

  • Most quasi-experimental studies of PACE fail to meet the standards of a rigorous evaluation. Only four of the 22 studies included in this review met our standards for offering "moderate to strong" evidence on the effects of PACE, and seven other studies could only be rated as offering "moderate" evidence, given their inability to establish baseline equivalence between the treatment and comparison groups. Half (11) of the reviewed studies received either "moderate to weak" (five studies) or "weak" (six studies) ratings.

  • The evidence from studies with the strongest design show that PACE has no significant effect on Medicare costs, but it is associated with significantly higher Medicaid costs, with the Medicaid spending gap between PACE and matched comparison enrollees decreasing over time. Therefore, based on currently available evidence in the literature, we conclude that PACE does not save costs for either program, and it raises overall cost through an increase in Medicaid expenditures. Prior findings on Medicare and Medicaid costs need to be updated, given changes to the Medicare capitation payment approach as well as variation in the Medicaid capitation rate calculations across states.

  • Evidence on the effect of PACE on the utilization of expensive acute and long-term care services is mixed--studies with the strongest design find PACE enrollees have fewer inpatient hospitalizations than their fee-for-service counterparts, but they appear to have higher rates of NH admission. None of the studies, however, differentiate between post-acute and long-term NH stays. The findings concerning hospitalizations are expected, given the program's emphasis on care coordination, but the NH findings are counterintuitive. It is possible that the higher rates of NH admission under PACE are a consequence of the substitution of short-term NH use for hospitalizations, although the literature provides no direct evidence on this front. Furthermore, if short-term nursing facility stays are being substituted for some hospitalizations under PACE, the reduction in hospitalizations is somewhat of an overstatement of the program's success in reducing the number of enrollees experiencing exacerbations of their health problems.

  • There is some evidence that PACE improves certain aspects of care quality--for example, those related to management of specific health issues such as pain--and that PACE enrollees have a lower mortality rate.

  • Although PACE participants are satisfied with their medical and personal care, there is insufficient evidence as to whether their satisfaction and quality of life are greater than what they would have experienced if not in PACE.

Overall, the only outcome for which we found strong evidence of favorable effects under PACE is inpatient hospitalizations. At the same time, evidence from prior studies suggests that PACE was associated with higher NH utilization and greater costs to Medicaid, which are clearly causes for concern. Given the possibility of the PACE plans substituting short-stay NH use for hospitalizations, investigating the differential effect of PACE on short-stay versus long-term NH utilization is a promising avenue for future research, especially given the lack of such distinction in PACE's effects on institutionalization in the existing literature.

Several studies included in this review have significant limitations in terms of external validity or the generalizability of their findings and in their continued relevance for assessing the current PACE model. These limitations arise due to study setting, small sample sizes, and study timing. Given the variation in program implementation and site characteristics across PACE sites, studies which make comparisons across a few PACE programs may have limited generalizability to the broader PACE population. Also, even if credible, the findings from prior evaluations looking at potential cost savings under PACE are likely to be outdated, given changes to the PACE financing structure over time, especially for Medicare capitation payments. Findings from studies included in this review are unlikely to be useful in assessing possible PACE expansion efforts or new care coordination and integration models being proposed for dually eligible beneficiaries, since the effect of a different program structure or organization cannot be predicted based on these results that apply to the PACE model existing at the time of each study. Also, the literature to date offers no evidence on whether a more flexible variant of PACE that allows enrollees to maintain ongoing relationships with their existing primary care providers would have the same effects on enrollees as the existing PACE model.