The Program of All-Inclusive Care for the Elderly (PACE) Payment System

The Program of All-Inclusive Care for the Elderly (PACE) provides Medicare and Medicaid services for people aged 55 and older who require a nursing-home level of care but can safely live in the community with supports. Because PACE is a small program, enrolling about 56,000 Medicare beneficiaries in 32 states in 2023, relatively little research has focused on the PACE payment system. The DUALS Act, currently under consideration in the Senate Finance Committee, would expand access to the PACE program to enrollees under 55 and make it more broadly available across states. However, the current approach to paying PACE programs for the Medicare services they provide is based on the Medicare Advantage (MA) payment benchmarks that were in place before the Affordable Care Act (ACA), which were overly generous. In addition, since for-profit PACE organizations have entered the program in recent years, private equity has taken an increasing interest in acquiring PACE programs. These facts suggest that a closer look at Medicare payments to PACE programs is warranted to ensure that PACE expansion does not lead to unnecessary Medicare spending.