The Medicare Payment Advisory Commission (MedPAC) wants to better align the payment system for the program that coordinates care for dual-eligibles – beneficiaries eligible for both Medicare and Medicaid with the Medicare Advantage payment system.
MedPAC has endorsed recommendations to improve enrollment, quality data and the payment method for dual eligibles using the Program of All-Inclusive Care for the Elderly (PACE).
Currently, the PACE program provides frail individuals age 55 and older, who are still in their homes, with comprehensive medical and social services that are coordinated and provided by an interdisciplinary team of professionals in the community. The services are generally delivered through a day-care program and facility.
[See also: HHS rolls out three initiatives to reduce costs of dual eligibles; States battle Medicaid spending increases.]
The program offers an alternative for such beneficiaries from having to enter nursing homes and long-term care, said Christina Aguiar, the lead MedPAC analyst on the issue. PACE providers offer a fully integrated model of care, yet enrollment in the program is small and slow.
The recommendations are designed "to accurately pay PACE providers for the beneficiaries they enroll, support for growth of this program by expanding enrollment and to pay all integrated programs for dual eligible beneficiaries from the same payment system," she said at the Nov. 3 MedPAC meeting.
According to a recent evaluation of the program, PACE enrollees have significantly lower rates of hospitalization and nursing home use compared with beneficiaries who were eligible for PACE but did not enroll, she said.
PACE providers, who operate 77 sites in 28 states serving 21,000 enrollees, receive a capitated payment from both Medicare and Medicaid for dual eligibles. Each state determines their method for the Medicaid payment. MedPAC is involved only with Medicare aspects of the program.
The commissioners unanimously approved proposals that remove some requirements that interfere with incentives to coordinate and manage care and will instead allow for opportunities for potential cost savings. The options may be able "to broaden participation in PACE at the margins both for the number of enrollees and more PACE organizations created," said Glenn Hackbarth, MedPAC chairman and an independent consultant.
There are inherent limits to how far this model can grow. "It is never going to be a solution for all our challenges with dual eligibles," he said, but it is part.
Katherine Baicker, MedPAC member and health economics professor at Harvard School of Public Health, said it is critical to focus attention on PACE, even with the small number of beneficiaries enrolled. "It is important that we spend more time on this population and other dual populations because they are potentially very high spenders," she said.
Bruce Stuart, another MedPAC member and professor and researcher at the University of Maryland School of Pharmacy, said solutions for managing care for expensive dual eligible beneficiaries "will come from investing in these more holistic programs, but at some point we have to understand where the return on investment is."
Among the changes the members approved, PACE providers' rates will be based on the Medicare Advantage system for setting benchmarks and quality bonuses by 2015. It also revises the Medicare Advantage risk adjustment system to better forecast risk because it under-predicts costs for complex patients that PACE providers serve.
For 2012, Medicare is on track to spend 17 percent more for PACE enrollees than it would for these beneficiaries if they were to remain in fee for service, Aguiar said. However, these revisions will "reduce Medicare spending on PACE and better align it with fee-for-service funding levels," she said.
The changes will also allow PACE providers to participate in Medicare Advantage quality bonus programs and make the "repayment for PACE more consistent with Special Need Plans (SNP)-based integrated care programs," Aguiar said.
As a result of the changes, Medicare would decrease spending on PACE by less than $1 billion over five years as a result of the changes, she said.
Among the other changes, the advisory commission endorsed elimination of the age limitation so that beneficiaries who are younger than 55 years and certified for nursing home use, can take advantage of the program.
PACE providers will also be able to receive pro-rated capitation payments for beneficiaries who enroll after the first of the month and to benefit from outlier protection policies during the first three years of their program to help defray potentially exceptionally high acute care costs from Medicare beneficiaries.
Once Medicare establishes specific quality measures to evaluate PACE providers than what is currently reported, PACE providers will be able to take part in the Medicare Advantage quality bonus program.