Dismembering PACE

In October 1999 Tom Bodenheimer, a progressive San Francisco community physician published a review article in the New England Journal of Medicine, presenting an historical overview of the Program of All-inclusive Care for the Elderly (PACE), a model of community-based long-term care for frail elders. Bodenheimer’s review of PACE was far from the first, there having been published at least 55 prior articles. But to have PACE reviewed in America’s most prestigious medical journal was a milestone.

To summarize PACE, this unique model serves disabled and frail elderly populations, mostly poor elders in urban environments from diverse ethnic communities. It uses adult day health centers for physical and occupational rehabilitation therapy, primary medical care (acute, chronic, preventive, plus specialty care and hospitalization), home support and home nursing care as needed, van transportation, social activities, various group and individual therapies, and other support services. Most services are provided at the day center location under the care planning role and guidance of a center-based interdisciplinary team which includes a physician, with a patient panel averaging 100, sometimes a nurse practitioner, RNs, social workers, therapists, day center and home care staff, dietitian, and transport representatives. Support staffing in PACE is, incredibly, about one staff person per two clients. Average age of participants is about 80 years and average time in the program about 5 years until death. Most program participants live out their lives and die in community settings and spend few days in hospitals or nursing homes.

Begun in 1979 by On Lok Senior Health Services in San Francisco’s Chinatown, the model grew to 11 programs nationwide in the 1980s and early 1990s and was finally mainstreamed by the 1997 Balanced Budget Act (BBA). The Health Care Financing Administration (HCFA) published regulations governing PACE (as required by Congress in the BBA) only in November 1999. Dually capitated, (by Medicare and Medicaid) PACE programs receive monthly payment allowances (like an HMO), which pays for all care. But PACE programs have controlled costs without implementing any blanket restrictions on covered therapeutic services, durable goods or pharma- ceuticals, as seen under Medicaid. Everything is covered and easily accessible on site, from medications to dental care to shopping assistance.

In the past two years, the number of PACE sites nationally has doubled to 25 agencies (encompassing over 80 teams and day centers). Though PACE has had outstanding reviews for quality and cost control, there is a growing array of obstacles that may sink PACE and, moreover, are indicative of the challenges to health care reform movements in the current U.S. environment.

PACE, which was designed and developed before the health market consolidation by managed care organizations began. It faces similar fiscal pressures: in particular, the need for utilization and cost control. This creates intrinsic pressure to limit services. But despite this pressure PACE, with service provider teams making all care decisions autonomously, has not rationed care. As a result PACE has prospered as an outstanding model of health care. Funded at 2.39 times the rate of the standard Medicare Plus option that many large insurers are offering, PACE demonstrated to Congress and the States that bundling acute, long-term, and preventive care into a coordinated team-based project, simultaneously controlled costs and improved quality and consumer satisfaction.

In its new provider status for 2000, PACE faces aggressive marketplace forces that have largely monopolized health care in the 1990s: large insurers with giant marketing budgets who have capitated millions of senior lives (without sufficient expansion of services), government regulators and regulations designed to limit the creaming of excessive profits, and false representations by these same forces. These elements are squeezing PACE in a vice-grip, for this environment is not compatible with PACE’s labor intensive day-to-day monitoring, its interdisciplinary team and day center-based approach to supporting the lives of the frail elderly.

In an effort to control inflationary pressures in market health care (remember that we were told that market competition would end the health care inflationary spiral) Congress directed HCFA to create new Medicare capitation cost controls. Currently, these planned controls include moving away from simple uniform capitation rates for the Medicare Plus option offered by many large Insurance Companies, as well as the nursing home eligible population that PACE serves, and toward disease-based diagnosis profiles to create variable-risk monthly capitation payment. Variable risk capitation is similar to the concept that insurance companies have used to vary auto insurance rates based upon higher accident rates and claims in some areas or to redline. To this date, HCFA has not incorporated global functional status (the level of physical and mental dependency and need for support) into this mix, though functional status is highly correlated with health service needs. But even if they do, a payment stratification process will result, driving health care reimbursement mechanics back toward an inflexible model like the Diagnosis Related Group (DRG) rates that hospitals have been required to use for Medicare payment over 25 years with the intent of limiting excess Medicare reimbursement. If superimposed upon PACE capitation rates, this approach could easily destroy this innovative model.

PACE teams create highly variable and creative care plans based on case-specific conditions. Even people with the same diagnoses, severity and co-morbidities (disease impacts) do not necessarily want, or need the same support and medical interventions. In PACE, individualized care planning by a professional interdisciplinary team that meets daily and amends services to clients frequently, replaces the principle of entitlement; except that everyone is entitled to the best care plan for their particular needs and to be involved in their own care planning.

This works efficiently because, with the intensity of their relationship to patients and families, most PACE care providers more easily understand when there is a mismatch between technological interventions and patient needs and desires. By more successfully tailoring care plans to individuals, PACE often lowers exorbitant end of life costs when there is nothing to be gained, no quality of life to be preserved. This frees funds to enhance both a supportive environment for frail elders in the later years of life and more medical care. The PACE physicians provide more regular primary care, preventive screening and chronic disease monitoring to their patients than anyone else can afford to give or to assure, without rationing, even seeing patients daily when appropriate.

Impacts of Market Forces

The negative impacts of market forces upon PACE beyond HCFA’s intervention with its new rate setting concerns include:

1. Yearly inflation increments in government capitation rates are not commensurate with real increasing costs. For example, labor costs for programs that rely heavily upon nursing assistants in the home and day health center environment for helping people with basic daily functions and monitoring, are rising dramatically (as well they should). Nevertheless, HCFA raised the Medicare capitation by only 2 percent in 1998 and in 1999. (The negative impact on staffing also affects nursing homes and home health agencies where quality of service has been under intense scrutiny and cannot improve without greater training and higher wages).

Likewise, recent inflation in pharmaceutical prices, and standard of care reliance upon ever more newer costly drugs (sometimes flooded onto the market with poorly proven efficacy and inadequate testing for side effects), cannot be controlled simply by well-managed utilization. Because of this latter problem, President Clinton’s proposal to include coverage of medications under Medicare could cause a fiscal crisis unless Congress were to simultaneously impose price controls on the pharmaceutical industry, an unlikely event.

2. As hospital closures, reorganizations, consolidations, and other market-derived instability (e.g. artificial staffing crises) create problems in the acute hospital setting, hospitalization becomes more dangerous for everyone, but more so for the frail and disabled. Length of stay for PACE patients—generally significantly lower than the total well Medicare population—is tending to increase due to poorer coordination of needed in-patient services.

Once stabilized, frail PACE patients are often managed more effectively and safely in the community because in hospitals they rapidly decompensate both physically and mentally even under good conditions. Geriatricians have observed that the elderly, and particularly the frail elderly, increased length of stay creates major risks including permanent loss of ambulation, protein deficiency and malnutrition, pressure (decubitus) ulcer formation, anemia, hospital acquired pneumonia and other, sometimes fatal, infections.

3. Sensing market pressure to compete for “market share” and to try and transition from a “boutique” serving 6,000 people nationally to a project serving a major proportion of the frail elderly, a premier PACE program, in 1999, asked for government approval to compete within the catchment area of a sister program. Catchment protection has been important to PACE because the disability level of the frail elderly creates major obstacles (experienced nationally) to their seeking out and finding programs for community based support. The guiding principles of Marie Louise Ansak, On Lok’s founder, had led HCFA and the States to “protect” PACE programs by providing distinct catchment areas to each approved program.

Should catchment area protection end, this will likely lead to the eating of one program by another, and may actually encourage competition by large insurers with vast marketing budgets, at no apparent benefit to recipients. And since each program provides its own unique spin and scope of services (overlaid on the basic model of care), such consolidation could have the negative effect of eliminating diversity and experimentation across the country, while reinforcing the impact of corporatization in health care.

4. In the professional practice realm, considerable interest within PACE has shifted from the complex problem of quality of life assessment (requiring a mix of qualitative and quantitative research) to evidence based, and thus medical/technical and hard data driven outcome measure assessments. Under the “evidence based medicine” rubric that is the current rage in medicine, both practice and research in PACE may move away from identifying and fortifying the hard to describe central strengths of this social-environmental-medical (public health type) model and toward a more fundamental reliance on one-dimensional disease based care. Pharmaceutical research dollars have recently begun to flow to PACE and may further drive this tendency, despite the fact that pharmaceuticals are a peripheral influence in the gestalt of this unique total care system.

5. Within PACE a trend has arisen toward “hospicizing” PACE—a growing focus of attention and research on making PACE a good place to die. PACE does provide hospice-type care when its clients are dying from chronic conditions. But, while the similarities between the caring and holistic approaches of hospice and PACE should not be overlooked, PACE’s greatest contribution is as a project that enhances quality of life and longevity for the frail. PACE achieves this by assuring a measure of autonomy, a full life, and extensive chronic care monitoring and therapies throughout the participants’ lifetime. Good end of life care is achieved if the focus on quality of life is maintained.

Ethical Challenge of Market Medicine

At the Center for Elders’ Independence (CEI, a PACE program since 1992), we are engaged in preliminary research (abstract presentation at the American Geriatrics Society meetings, May 2000) that supports results from an earlier HCFA-sponsored evaluation of longevity in PACE. The HCFA-sponsored ABT Associates assessment, based upon a two and one half year window, showed people living sigificantly longer and better quality lives in PACE compared with an equally frail Medicare group that declined entry into PACE. In agreement, the CEI data shows no significant increase in probability of dying over time in the program.

If PACE clients live longer, however, though they might cost less per year, overall costs might not decline. Such a conclusion is a likely concern for insurers irrespective of the value of enhanced quality and longevity of life. In the market context an early emphasis on hospice rather than therapeutic may provide a market-based contradiction with quality of life. This can be clearly demarcated in PACE because at any given moment in time the PACE physician and team frequently face an ethical choice in a particular patient over whether to try to sustain their life through aggressive therapy (which may involve frequent needle sticks for testing, intravenous fluids and antibiotics, cajoling to perform physical therapies, verbal pressure to eat and drink more etc.) or to support them through the dying process, not both.

Are PACE and the professional community prepared to resist a health care paradigm that would equate prolonged quality lifetime for the elderly with unacceptable costs, even when those costs are not excessive? Time may give the answer. But this question reflects the paradox lying at the heart of today’s market health care system reform crisis. The paradox (that good outcomes in quality and longevity of life and well managed and supportive health care, may be undermined by market forces and values) reflects a tyranny of financial values over human values. These values can decimate even a cost-effective health care model.

This crisis is reflected in contemporary politics as well. Thus, although many Democrats and Republicans have experienced, endorsed, and sponsored PACE legislatively, no prominent presidential candidate is likely to put forward a meaningful general health care initiative that will guarantee access, truly comprehensive care—integrating all types of health related services—nor to support any care system for all Americans that isn’t market driven.

Why is this true? The excuses are myriad but in truth such a reform would inevitably end the financial dominance of health care by the insurers, by market forces, which no candidate can afford to alienate. The major money managers in health care will, therefore, use the political process to block a system of accessible care for all in the U.S. Meanwhile, whole sub-fields of cost-benefit analysis such as pharmaco-economics have proliferated to look at the “costs per life saved” from various pathways of screening, diagnosis and care (e.g., mammography, occult blood screening, colonoscopies, Prostate Specific Antigen screening, etc). Though such analyses can serve to clarify the relative costs and benefits of implementing specified system-wide (and nation-wide) health screening policies, they are also used to justify rationing and limiting care.

These approaches are often applied inappropriately at the individual level where the unwise try to assign a variable dollar value to individual lives—whether based on social utility or other poorly conceived measuring sticks. For example, overly stringent cost-benefit parameters led to a 15-year effort to undermine the efficacy of simple population screening for stool occult blood that can detect early colon cancer. One argument against that test was the high cost of follow up colonoscopies on the proportion of people with positive tests for blood who would turn out not to have cancer. Because that argument held sway, tens of thousands of people died needlessly from colon cancer over that period because of the faulty recommendation. Over the last five years this baby with the bath water view was successfully defeated and early screening for colon cancer is again being promoted, as it should be. But the growing strength of the market in care quality decisions creates pressures that may well annihilate entire models of comprehensive care, like PACE.

Summing Up

PACE programs value life commensurate with the perceived capacity for joy, tranquility, autonomy and the wishes of their participants and families. As a model designed to support human dignity and autonomy, PACE is helping to restore “quality of life” to its rightful place as a principal criterion for what is good and comprehensive care for elders. But neither PACE nor other innovative models of care can survive in this U.S. health care environment governed by market forces. Even if they survive their positive content will be diluted, washed out.

Along with the public and the professional community, PACE is caught in this conundrum. In the U.S., we—both the public and the broad health community—may be close to accepting, in principle, that a unified financing mechanism for accessible continuous health care for all is the only way to provide a system of quality care; yet the problem of winning electoral campaigns to implement such a system, against highly financed campaigns distorting the message, is a major obstacle to progress.

PACE is yet another example that shows that comprehensive care and global financing work, contain costs reasonably, are humane and are affordable. But that doesn’t mean PACE or other fine models will necessarily survive without a revolution in health care.                                            Z