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‘Are Nursing Homes Our Only Option?’ These Centers Offer Older Adults an Alternative.


April 11, 2024

PACE centers attract bipartisan interest, some state scrutiny.

George Raines, a white-haired man in a red track suit and matching University of Alabama ballcap, cracked jokes as physical therapist Brad Ellis led him through a series of exercises designed to strengthen his legs.

Raines, who is 79, pretended to be in pain, but his grin belied his tone of mock suffering. The men were in the therapy room at Ascension Living Alexian PACE in Chattanooga, Tennessee, where older clients spend the day getting medical care and other services.

“We have some spicy patients,” said Libba Llewellyn, an occupational therapist at the center. Raines had worn a hat with fake pigtail braids during the center’s Crazy Hat Day the week before, prompting everyone to say he looked like country singer Willie Nelson.

PACE (Program of All-Inclusive Care for the Elderly) centers provide government-funded medical care and social services to people older than 55 whose complex medical needs qualify them for nursing home care, but who can live at home with the right sort of help. Most PACE clients are enrolled in both Medicaid and Medicare, though a small percentage pay for the program through private insurance.

Nationally, PACE centers are owned by a variety of health care organizations, including nonprofits, for-profit companies, large health care systems and religious organizations. Once a state Medicaid program opts — either through legislation or a policy change — to cover PACE care, providers receive fixed monthly payments from Medicare and Medicaid (and in rare cases from private payers) for each enrolled client.

PACE has long flown under the national radar as an elder care option. But it’s recently attracted interest from lawmakers in states including Georgia, Illinois and Ohio because it can keep people at home and may cost less than nursing home care.

More large companies and health care systems, armed with capital and attracted by growing consumer and state interest, are opening PACE centers or buying existing ones from smaller nonprofits. But the explosive growth has come with challenges: Three years ago, California and Colorado investigated and later sanctioned one of the country’s largest for-profit PACE providers after finding it failed to provide services that should have been covered. And some studies have shown mixed results on the centers’ effectiveness.

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In 2016, a private equity-backed company called InnovAge became the country’s first for-profit PACE organization. It purchased nonprofit PACE programs in multiple states over the next few years, growing its enrollment numbers and its revenue.

But in 2021, the Colorado Department of Health Care Policy and Financing suspended all new enrollments at InnovAge’s six Colorado PACE centers after a state audit found that InnovAge Colorado “failed substantially” to provide its participants with medically necessary items and services that should have been covered. Meanwhile, the feds at the Centers for Medicare & Medicaid Services (CMS) were conducting their own investigation, and reached similar findings. Colorado Attorney General Phil Weiser, a Democrat, launched an investigation too.

Around the same time, CMS suspended enrollment at InnovAge’s PACE center in Sacramento, California. InnovAge’s shareholders also filed a lawsuit alleging the company violated federal securities laws by lying to investors about its finances and operations.

“On its face, PACE looks like a great thing, with people getting all-inclusive care in one place,” said Julie Goldsmith Reiser, an attorney for the plaintiffs and a partner at Washington, D.C.-based firm Cohen Milstein Sellers & Toll. “But what’s happening in some of these for-profit models is that people are having longer wait times to see physicians, there aren’t enough physicians willing to participate, and people slip through the cracks and have worse outcomes than if they had never participated at all.”

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