Effect of PACE on Costs, Nursing Home Admissions, and Mortality: 2006-2011. ABSTRACT

03/01/2015

Purpose of the Study. We examine the effects of the Program of All-Inclusive Care for the Elderly (PACE) on Medicare and Medicaid expenditures, use of nursing home (NH) services, and mortality.

Design and Methods. The study was limited to PACE programs in the eight states that had at least 250 new PACE enrollees during 2006-2008 and had at least 3,000 new enrollees in home and community-based services (HCBS) 1915(c) waiver programs for aged and disabled individuals over the same period. We used a matched comparison group design for the study where new enrollees in PACE during 2006-2008 in those states were matched to two different comparison groups composed of: (1) Medicare beneficiaries who are either new recipients of HCBS waiver services or new NH entrants in the same year that the new PACE enrollee entered that program; and (2) Medicare beneficiaries who are new recipients of HCBS waiver services alone. We used a nearest neighbor matching algorithm based on propensity score estimation--implemented separately for each of the eight states--to create the two matched comparison samples.

Results. Using the matched comparison group comprised of both HCBS waiver enrollees and NH entrants, actual monthly capitated Medicare expenditures for PACE enrollees during successive six-month intervals were mostly similar to the predicted expenditures they would have incurred had they been in fee-for-service (FFS) Medicare, with significant differences in only a few periods. Actual capitated Medicaid expenditures on PACE enrollees, however, significantly exceeded predicted expenditures in all intervals, with the magnitude of the difference remaining stable over time. State-specific findings uncovered several differences in the Medicaid expenditure findings, such as a large and positive Medicaid spending gap in California that increased over time, a smaller positive spending gap in Massachusetts that decreased over time, and finally, significantly lower Medicaid spending under PACE in New York. Using a matched comparison group comprised of HCBS waiver enrollees alone, results were broadly similar, but the estimated gap in expenditures, with higher actual payments under PACE, was larger, especially for Medicaid payments.

PACE enrollees experienced significantly better outcomes, as measured by mortality and long-term NH stays, than the comparison group. PACE enrollees had a significantly lower mortality rate than enrollees in the matched comparison group comprised of both HCBS waiver enrollees and NH entrants, and also had lower mortality, though with smaller differences, when compared to a matched comparison group comprised of HCBS waiver enrollees alone. However, the mortality findings could be affected by unobserved differences in health and functional status between the groups and need to be interpreted with caution. For the NH utilization outcomes, our primary analysis compared PACE enrollees against the matched comparison group comprised of HCBS waiver enrollees alone, and the results suggest that PACE enrollees were more likely to use a NH, although the proportion of days in the NH was similar across PACE and matched HCBS waiver enrollees, as was the likelihood of being in a NH for at least 30 days. PACE enrollees were significantly less likely to be in a NH for at least 90 days compared to matched waiver enrollees in a particular interval, although the cumulative rates of being in a NH for at least 90 days was similar across PACE and matched HCBS enrollees across intervals. Compared to the matched comparison group comprised of both NH entrants and HCBS waiver enrollees, PACE enrollees, expectedly, had significantly lower utilization of NH services with large, negative differences on all NH utilization outcomes.

Implications. Our findings on Medicare and Medicaid expenditures and on mortality across all eight states are similar to results from prior studies. However, state-specific findings on Medicaid expenditures differ across states, for example, we find significantly lower Medicaid spending under PACE in New York. The findings for NH utilization go beyond what has been studied in the past, and suggest that although PACE enrollees were more likely to be admitted to a NH, their NH use tended to be limited in duration, with PACE enrollees being less likely than the comparison group to have a stay of 90 days or longer in any interval. However, PACE and matched HCBS enrollees had similar cumulative rates of long-term NH stay across intervals, suggesting greater overlap across intervals among HCBS enrollees who experience long-term NH stays.

These findings, taken together, suggest that the PACE program delivers strongly favorable results from enrollees' perspective, with increased longevity and less institutionalization. However, at the capitation rates prevailing during the study period, PACE does not generate savings to Medicare (except during the first six months after enrollment) compared to what Medicare FFS costs would have been, and actually increases Medicaid costs compared to what would have been incurred. However, the wide differences across states suggest that if states hold the line on Medicaid capitation rates for a few years, they may be able to bring them below the escalating FFS costs and generate net savings.

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