Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. The Program of All-Inclusive Care for the Elderly (PACE)


The Program of All-Inclusive Care for the Elderly--authorized by the Balanced Budget Act of 1997 (BBA-97)--is a capitated program that features a comprehensive service delivery system that integrates Medicare and Medicaid financing. The BBA-97 established the PACE model of care as a permanent method for organizing service delivery within the Medicare program, and enables states to provide PACE services to Medicaid beneficiaries. Participants must be at least 55 years old, eligible for Medicare or Medicaid or both, and certified as meeting a state’s nursing home level-of-care criteria. For most participants, the comprehensive service package permits them to continue living at home rather than be admitted to an institution.

In 2009, 72 PACE programs were operating in 30 states. The State Plan must include PACE as a Medicaid benefit before the state and the Secretary of HHS can enter into program agreements with PACE providers. Participants must be at least 55 years old, live in the PACE service area, and be certified as eligible for nursing home care by the appropriate state agency. The PACE program becomes the sole source of services for persons dually eligible for Medicare and Medicaid who choose to enroll.

An interdisciplinary team, consisting of professional and paraprofessional staff, assesses participants’ needs, develops service plans, and delivers all services (including primary and acute health care services, home and community services, and when necessary, nursing facility services). Financing for these services is integrated to promote a seamless system of care. PACE programs provide social and medical services primarily in an adult day health center, supplemented by in-home and other services in accordance with participants’ needs. The PACE service package must include all Medicare and Medicaid covered services, and other services determined necessary by the interdisciplinary team for the care of the PACE participant. (See Chapter 8 for more information about the PACE program and other Medicaid managed care options.)

This brief overview of Medicaid’s statutory, regulatory, and other policy provisions related to home and community services provides a context for more detailed discussions in the chapters to come. Some of the institutional bias that remains in the program can be changed only by Congressional amendment of Medicaid law (e.g., changing home and community-based services from an optional to a mandatory benefit). But numerous provisions give state policymakers considerable freedom in designing their home and community service system to fit their state’s particular needs. They have the option, in particular, to eliminate use of more restrictive financial criteria for waiver services than for institutional care. They also have considerable flexibility to create consumer-responsive systems that facilitate home and community living.

In the next several decades, as already noted, the U.S. population will age dramatically. Even if disability rates among older persons decline, more people will need long-term care services than at any other time in our nation’s history. Institutional care is costly. Given the projected demand for long-term care, it is advisable for states to continue working to create comprehensive long-term care service systems that will enable people with disabilities and/or chronic health conditions--whatever their age or the severity of their condition--to live in their homes and community settings rather than in institutions.

The Medicaid program can be the centerpiece of such a system--allowing states numerous options to provide home and community services that keep costs under control at the same time that they enable people of all ages with disabilities and/or chronic health conditions to retain their independence and dignity.

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