After two strokes and a diabetes diagnosis, Sandi Hunt needed help.
She needed physical therapy. She needed rides to her doctors’ appointments. And she needed a way out of her isolation.
But as Hunt, 61, recovered in her hospital bed last year, she didn’t know where to turn.
The doctors said she should complete therapy within six months if she hoped to regain the mental and physical function she had lost. But one rehabilitation center wouldn’t admit her because her symptoms weren’t bad enough, and others had long waiting lists.
“I’m thinking, ‘This six-month window is going very quickly,’” said Hunt, who lives in Raytown with a Dutch shepherd named Mina.
Then Hunt found PACE KC, a nascent health care program for older adults who live in Jackson County and want to stay at home rather than moving to a nursing facility.
PACE KC, which Swope Health launched last year, is one of the country’s newest PACE programs. The Program of All-Inclusive Care for the Elderly, or PACE, is designed for people 55 and older who qualify for nursing home care. Most receive support from both Medicaid and Medicare, tax-funded health care programs.
By emphasizing preventive care and helping older people stay home longer, proponents contend that PACE can provide better health outcomes for less money than institutional care.
They see it as an important tool in an increasingly urgent effort to care for a growing population of aging adults, which surpassed 61 million this year, up from just under 56 million in 2020 and 35 million in 2000.
But obstacles, including the Trump administration’s plans to slash spending on Medicaid and other safety-net programs, could hinder PACE programs going forward.
How PACE works
PACE has roots stretching back five decades to San Francisco’s Chinatown community and a nonprofit that wanted to give long-term care to aging immigrants. That all-inclusive program, which emphasized helping seniors age at home, became a model for today’s PACE program.
By the 1980s, PACE was being tested in other parts of the country. In 1997 it was established as a provider type under Medicare and Medicaid. Today it is available in 33 states.
In exchange for a lump sum payment from Medicaid, Medicare or most often both, PACE providers handle every aspect of participants’ health care, including support services like transportation and home improvements.
“It really is an ideal way to provide care,” said Jeron Ravin, CEO of Swope Health, a nonprofit federally qualified health clinic with patients in Missouri and Kansas.
PACE provides primary care, dental and behavioral health services, medicine and transportation to and from appointments. The PACE day center offers games, exercise classes and companionship for participants. And PACE takes on other expenses participants may have to be safe at home.
“We are determining whether or not they need new carpet, or if there’s a need to extract mold from the home,” Ravin said. “Is the entry to the home OK to prevent falls? It is 100% our responsibility for all care needs.”
Ravin said Swope pushed the state of Missouri to reauthorize the PACE model because it was seeing so many older patients who needed support. Many people didn’t want to move into a nursing home or care facility. And even if they did want to, many couldn’t afford it or find an available spot.
An earlier version of PACE in Missouri ended in 2016 after federal regulators accused the St. Louis provider of skimping on patient care and other violations. But now, Missouri has three PACE providers, including PACE KC and providers in Springfield and St. Louis.
Kansas, where PACE has been around longer, also has three providers, with programs in central and northeastern parts of the state. Midland Care, based in Topeka, holds the PACE contract for Wyandotte and Leavenworth counties and Johnson, Miami and Franklin counties.
Despite good patient outcomes and steady growth since the COVID pandemic, PACE programs still have a relatively small share of the market caring for older adults. Nationwide, 183 PACE organizations care for 85,000 older Americans, while certified nursing facilities care for 1.2 million.
Slow start and new obstacles
Despite the fact that PACE has been around for five decades, it is still not well known or understood. That makes it a harder sell for some people who may be reluctant to trust one organization with all of their health care.
Backers said it often takes time for word to spread about new PACE programs and for slots to fill up.
“It’s because it is so different,” said Robert Greenwood, a spokesman for the National PACE Association. “It takes a while for the community to learn about the PACE program. And often, PACE programs’ largest number of referrals come from its enrollees and from its staff.”
That slow build is proving true for PACE KC. Just over a year in, the program is well under capacity, with 42 participants enrolled Aug. 1 in a program that has room for 330.
In 2024, PACE KC’s first year in operation, the program brought in $911,000 in patient care revenue — a fraction of Swope’s $44.8 million in total patient revenue — and reported a $3 million operating loss.
Before PACE KC even enrolled a patient, the program had already made steep upfront investments, including building a $15 million wellness center at 4141 Dr. Martin Luther King Jr. Blvd. and hiring an interdisciplinary staff to provide care and services.
Ravin said the big early investment and slow enrollment growth were anticipated and are typical for PACE programs.
“Most PACE programs, when they start … are looking at the first few years of losses as you build your census and participants,” he said.
PACE KC will grow as more people learn about it, he said.
What the organization wasn’t expecting, though, were Medicaid cuts, which could potentially eliminate health coverage for millions of people and decrease the reimbursement rates providers receive for care.
Beyond the potential loss of Medicaid coverage among PACE participants, Swope Health anticipates annual losses starting in the next two years of between $5 million and $12 million due to the federal cuts, Ravin said.
“We couldn’t have predicted … that the parent company — Swope Health — would be in really challenging financial times,” he said, “at the same time that we have the PACE program that we know we have to support (over) a long runway.”
The dually eligible sweet spot
Despite challenges, supporters remain bullish on the PACE model of care and its potential financial upside.
Providers get one bundled payment for each participant, so they have every incentive to keep costs down. Typically, states calculate rates by determining what the nursing home cost would be and discounting that by about 14%, according to reporting in Modern Healthcare.
That payment stays the same no matter the actual cost. Theoretically, this should discourage unnecessary or duplicative services and encourage less-expensive community-based alternatives to hospital or nursing home care.
The sweet spot, Ravin said, will be enrolling participants who are dually eligible for Medicaid and Medicare because that means a higher payment. About 80% of PACE participants nationally are dually eligible, according to the National PACE Association.
Rates vary by PACE agency and by state.
Under its contract with Missouri, PACE KC receives about $3,700 a month for participants who qualify for both Medicare and Medicaid. On top of that, Medicare pays an amount that varies based on a participant’s risk factors and medical needs. Those additional payments could range from $1,500 to $5,000, PACE KC said. For patients who get Medicaid only, the state pays PACE KC about $5,400 a month, according to the Department of Social Services.
Midland Care, a nonprofit organization in Topeka, gets about $9,000 a month for dual-eligible patients and about $7,000 for Medicaid-only patients, said Shawn Sullivan, Midland’s CEO.
Kansas has raised its PACE reimbursement rates in recent years, which helped Midland’s program grow to include 750 older Kansans. Midland reported revenue of $75 million in 2023, up from $45 million in 2020. And most of that growth came from PACE, Sullivan said. Midland also provides hospice care, home health and other services.
Kansas also increased the amount of income PACE participants are allowed to hang on to when they enroll in the program, which helped boost participation, Sullivan said.
“The state of Kansas has been very supportive of PACE,” he said, “and has worked with us to expand the program, to help our Medicaid rates be competitive and to increase them. And expand the program.”
Financial upside
That financial potential of PACE has not been lost on investors.
Today, 51 out of 186 PACE programs across the country are for-profit operations, according to the National PACE Association. Many are backed by private equity or venture capital investors.
In 2007, federal regulators began allowing for-profit companies to become PACE providers. They believed steep start-up costs associated with the program were curtailing growth. Many nonprofit owners couldn’t afford to expand at a pace that would meet demand.
The private sector bought in enthusiastically. A recent study from NORC, a research organization affiliated with the University of Chicago, found that between 2016 and 2022, the number of for-profit PACE programs increased 182% while the number of nonprofits grew 6%. For-profit PACE enrollment climbed 173%, while nonprofit enrollment grew by 44%.
It’s unclear how ownership type affects patient care. That’s something that needs to be studied, said Kristen Hayashi, an author of the NORC study.
“Yes, we want to make sure this model is expanded to those who need it,” Hayashi said. “At the same time we want to make sure (for-profit owners) are able to maintain the high quality of these programs.”
For now, PACE providers are keeping a close eye on federal budget plans. Access to Medicaid is key to the program’s finances.
InnovAge, a publicly traded Denver-based PACE provider, told investors during a third-quarter earnings call that the company had stepped up its efforts to lobby states and federal policy makers for continued support of PACE.
And Greenwood, of the National PACE Association, said that “it’s incumbent on us and our members to really communicate the value of PACE.”
His organization estimates that PACE programs on average cost 12% less than the cost of other Medicaid services, including nursing homes and home and community-based programs, when looking at comparable populations. And Medicare costs are about the same.
Studies have also shown that PACE can reduce hospital stays and improve patient satisfaction.
From her perspective, Hunt said, the story of PACE is nothing short of a miracle.
Since enrolling with PACE KC, her A1C levels — a measure of diabetes — have gone from dangerously high to almost normal. Hunt has regained movement and speech she lost in her strokes. With the help of a nutritionist she has transformed her diet. And she is no longer passing her days at home alone.
At the wellness center, she said, participants get to know each other.
“We laugh and we hear stories. People care about one another,” Hunt said. “It’s a community that I would not have had.”
If it went away, Hunt said, she would be devastated. So would many other older people who rely on this support. Losing PACE, Hunt said, “would be a death sentence to the elderly that don’t have funds and family and support system.”
This story was originally published by The Beacon, a fellow member of the KC Media Collective.
