Private Equity and PACE

Providing reasonable care for the rising number of senior citizens continues to be issue of concern for our health care system. What constitutes providing adequate care differs depending on the situation; many senior citizens have expressed concern regarding their ability to stay in their homes and receive care versus moving to a nursing home in order to receive adequate health care under Medicare. In response to this issue, Medicare enacted a program that will pay to keep elderly and disabled citizens out of nursing homes by providing in home care specialist teams to treat the patient.

Program for All Inclusive Care

PACE, or the Program for All Inclusive Care, is a program for elderly adults who seek comprehensive medical and social services, wish to stay in their community, and in most situations are eligible for both Medicaid and Medicare. To be eligible, the individual must be 55 years of age or older, live in the area of a PACE organization, be eligible for nursing home care, and be able to live safely within the community. PACE is program administered by Medicare, but must be elected at the state level to provide the optional benefit to Medicaid beneficiaries. Once elected, the program will be the only source of Medicare and Medicaid benefits for the beneficiary, but is much more comprehensive.

What is unique in comparison to Medicare and Medicaid fee-for-service plans is that PACE is capped regarding financing, meaning that the providers under PACE can provide all the services needed for the elder adults versus those that will be reimbursed through Medicare or Medicaid. The focus in PACE is more on preventative care and maintaining the patient’s health, a more proactive approach that serves both the patient and government better in the end. One study found that the PACE program was over $4,000 cheaper annually than receiving Medicaid in a nursing home, however, the program has not received much traction due to some of the regulations for providing service.

The New Standard

In the past, only non-profits organizations were allowed to provide care under PACE, which were harder to come by. Recently, the rules for who can provide care were amended to now include for-profit organizations, which has sparked the interest of many technology companies and private equity firms to back them. The potential new market has started a new discussion for lowering the costs in of services, namely by using a variety of technology applications and devices to administer care, such as video calling with your doctor versus always receiving an in home visit.

The for profit organizations would receive the PACE program flat payment per month and then administer care to the patient, which includes not only arranging and paying for all of their doctors’ appointments, medications and hospitalizations, but also their daily needs including socialization, transportation and bathing. While critics see the potential for abuse by bringing organizations which can make money off of a more vulnerable population, it has been acknowledged by both critics and supporters that a new idea must surface to address how to care for the rapidly growing population of elderly.

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