After 20 years of caring for families at Pueblo Community Health Center, Dr. Rona Knudsen embraces her role as InnovAge PACE’s Center Medical Director, helping vulnerable older adults in the community. <br />
PACE could expand amid possible nursing home closures: InnovAge CEO
October 02, 2023
The Denver-based company operates 17 PACE centers across Colorado, California, New Mexico, Virginia, and Pennsylvania. It is scheduled to open its first two PACE centers in Florida by the end of 2023 and hopes to open its first center in Kentucky and a third center in California within the next few years, according to InnovAge President and CEO Patrick Blair.
Earlier this month, the Centers for Medicare and Medicaid Services proposed a rule in which the nation's 15,000 nursing homes would have to provide a minimum of three hours of skilled nursing care per patient, per day. Nursing home industry groups say the mandate, if finalized, could lead to the closure of nursing homes or a reduction in occupancy. If that happens, it could pave the way for PACE programs to expand more aggressively, Blair said.
“I do think the supply of nursing home beds will be another catalyst for people becoming more aware of PACE as an alternative,” Blair said.
CMS launched PACE 33 years ago to help keep Medicare and Medicaid-dual eligible older adults who qualify for skilled nursing care in their homes and communities. PACE provides prescription drugs, meals, transportation and other services to participants in their homes. Enrollees can also go to neighborhood PACE centers for adult day services, medical care, dental care, laboratory services, recreation and other services. PACE providers receive capitation payments—or predictable, fixed upfront fees from CMS—for each enrollee.
The program has grown slowly over the past three decades due to high start-up costs, which can run anywhere from $10 million to $20 million per center. But more states began launching PACE or expanding it during the pandemic as nearly 580 nursing homes closed and the federal government provided approximately $350 billion in COVID-19 relief funds to support various home and community-based services, including PACE.
More than 70,000 enrollees in 32 states are enrolled in 154 programs run by for-profit and nonprofit operators nationwide. National PACE Association CEO Shawn Bloom said he projects the number of enrollees will reach 200,000 by 2028 as more states add the program. Illinois announced the launch of PACE last year, with eight centers slated to open in 2024. In May, Minnesota passed legislation to study the program and in June, Connecticut passed a law to launch PACE.
For 30-year-old InnovAge, the expansion of PACE offers opportunities to open more centers. But Blair said he is ensuring that InnovAge doesn’t grow too large too quickly.
In December 2021, CMS forced InnovAge to suspend enrollment of new members for more than a year at a half-dozen sites in Colorado and California after an agency audit found the company was not adequately providing services mandated under PACE. The suspension resulted in the ouster of former InnovAge CEO Maureen Hewitt, paused the company’s expansion plans in California and Kentucky and contributed to a net loss of $43.6 million for the 2023 fiscal year, which ended June 30.
Blair said the sanctions and the enrollment suspension led to a difficult period for InnovAge. He said as the company moves forward and grows, it is making sure to focus on delivering compliant care to all patients.
As InnovAge expands to new markets, it must also consider the availability of staff to ensure patients receive proper care; the cost of labor and real estate; and the cost of hospital care in a state or region, since PACE programs assume full risk for enrollees, he said.
“We have contracted rates with hospitals,” Blair said. “We want to know that they are good partners that we can work with. That makes our ability to more effectively manage quality and costs easier.”