Hospices Navigate Regulatory, Financial Concerns to Launch PACE Programs

Hospices are increasingly launching Programs for All-Inclusive Care of the Elderly (PACE) programs to engage patients further upstream. Offering PACE services can also position hospice providers for participation in emerging value-based payment models such as Primary Care First and direct contracting.

PACE programs depict a comprehensive approach to care for participants who meet certain eligibility criteria, mainly to seniors who have significant medical and non-medical needs to help them age in place and avoid the hospital or nursing homes. Most PACE participants are dually eligible for both Medicare and Medicaid, according to the U.S. Centers for Medicare & Medicaid Services (CMS).

PACE providers receive monthly Medicare and Medicaid capitated payments for each enrollee. PACE programs are also Part D providers that are responsible for their patients’ medications and pharmacy services. More than 135 PACE programs operate across roughly 31 states nationwide, serving approximately 57,000 seniors, according to Dorothy Ginsberg, senior PACE consultant for CareVention HealthCare Consulting.


“PACE is an opportunity for your organization to add another offering, in terms of home and community-based services, to what you already may be doing,” said Ginsberg during a recent webinar.

“It will help, because we have a growing aging population and this is a wonderful part of the continuum of care.”

The aging population in the United States has surged in recent years. An estimated 49.2 million adults were 65 and older in 2016 based on American Community Survey, according to a 2018 U.S. Census Bureau report. This number is projected to climb throughout Northern America, including the United States, representing 21.4% of the continent. The swelling aging population has driven demand for serious illness and end-of-life care.


Hospices nationwide have been diversifying their services to establish relationships with patients further upstream in the course of their illnesses. Service diversification is also an avenue for hospices hoping to capitalize on value-based payment models, with a growing number of providers offering PACE, home-based primary care and palliative care. These and similar programs will be essential for those considering direct contracting or Primary Care First.

The direct contracting models launched April 1. Participating hospices take on total responsibility for a patient’s care, before they enter the last six months of life. This allows providers to stretch beyond the confines of the Medicare Hospice Benefit, according to Ginsberg.

“PACE programs provide services that are needed and they may not be paid services that Medicare or Medicaid would normally pay for,” Ginsberg said. “The focus of PACE is on preventative and proactive care, trying to avoid ER visits, hospitalizations and the slow down any of that decline in chronic illness. There aren’t any benefit limitations. It’s entirely up to the interdisciplinary team to determine what services are needed and to authorize them.”

A hospice’s interdisciplinary team will be vital when developing a PACE program, which requires that staff assess each patient upon admission and develop a care plan. Teams will need to include a range of services many hospices already provide such as social work and psychosocial support, physician and nursing care, as well as therapies. PACE allows hospices to offer services to address social determinants of health, such as homemaking, transportation, home modification and others.

Hospices considering a PACE program will need to determine whether their service region is a designated area and seek a state license before moving on to federal approval.

Demographics in a hospice’s service area are key, according to Samantha Black, executive director of TRU PACE, a program of Colorado-based hospice and palliative care provider TRU Community Care.

“It’s very dependent upon what your population looks like, how far you’re ready to go, and with what you can reasonably serve,” Black said. “The state will have to approve that. That is where you start. Then you have to send to CMS a [Notice of Intent (NOI)] to apply to let them know that you plan to do that.”

In addition to regulatory hurdles, hospices have financial considerations as they begin their PACE programs. Hospices have to invest money, time and staff to establish a facility to provide PACE services. Providers can share costs and staff between their PACE and hospice programs as they are getting their new service off the ground.

Sharing staff and operational system resources is one way that hospices can help defray start-up costs, according to Black.

“Just like a lot of hospice programs, PACE can take your breath away. It sounds like a really good idea and it also sounds daunting,” said Black. “Not only just the planning part, but also financially. There are opportunities in terms of sharing resources with your hospice program upfront that make it a little more doable.”

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