The Effect of PACE on Costs, Nursing Home Admissions, and Mortality: 2006-2011
We improve upon prior studies of the Program of All-Inclusive Care for the Elderly (PACE) by using multiple matched comparison group strategies, examining both aggregate and state-specific impacts on costs, and distinguishing between the effect of PACE on short-term versus long-term nursing home stays.
Design and Methods
One of the challenges in evaluating PACE is defining an appropriate comparison group. We focus on eight states with sufficient enrollment in PACE and Home and Community Based Services (HCBS) 1915(c) waiver programs for aged and disabled individuals over 2006 – 2008. To address concerns that many or most beneficiaries enrolling in PACE would have entered a nursing home in the absence of the program, new PACE enrollees are matched to two different comparison groups composed of—(1) Medicare beneficiaries who are either new recipients of HCBS waiver services or new nursing home entrants in the same year that new PACE enrollees entered that program; and (2) Medicare beneficiaries who are new recipients of HCBS waiver services alone. We use a nearest neighbor matching algorithm based on propensity score estimation to create the matched comparison samples.
Using multivariate analysis, we examine per beneficiary, per month Medicare, Medicaid, and total expenditures over successive 6-month intervals from sample entry during 2006 – 2011. We examine cumulative mortality rates, and compare PACE and both matched comparison groups on any use of nursing home services, proportion of days in a nursing home, likelihood of being in a nursing home for at least 30 days and for at least 90 days, and the cumulative risk of being in a nursing home for at least 90 days over successive 6-month intervals from sample entry. We also test the sensitivity of our results to alternative sample restrictions and exclusion criteria.
Results
Across all eight states, PACE capitation rates were essentially equivalent to what enrollees would have cost Medicare had they been in fee-for-service (FFS), but Medicaid capitation payments were significantly higher than what that program would likely have paid under FFS. There were significant differences across states in the Medicaid spending gap that ranged from large positive to negative. Results were similar using either comparison group, but the estimated Medicaid spending gap was larger using matched waiver enrollees alone. PACE enrollees experienced significantly lower mortality than matched comparison group members. Our findings for nursing home utilization suggest that PACE may be using nursing homes in lieu of hospital admissions in some cases, or to shorten hospital stays, but enables enrollees to avoid long-term nursing home stays.
Conclusions
Although PACE did not generate savings to Medicare and actually increased Medicaid costs, it delivered strongly favorable results from enrollees’ perspective—with increased longevity and less institutionalization The use of multiple comparison groups, exploration of state-specific impacts, and a range of sensitivity tests allow us to draw more robust conclusions from methodological and policy perspectives and delineate possible sources and direction of bias in our findings. Our analysis of nursing home utilization goes beyond what has been studied in the past.