NY Times: PACE Changes Worry Critics

As more private equity moves into a Medicare program designed to help American seniors age in place, worries are mounting among critics who believe the work should be left exclusively to non-profits using government funds, The New York Times reported.

The program in question is the Program of All-Inclusive Care for the Elderly (PACE), a federal government initiative that provides frail, older Americans with medical and social supports to help them successfully live at home, rather than in skilled nursing facilities. In keeping seniors out of skilled nursing facilities, PACE is expected to save Medicaid and Medicare millions of dollars, the Times noted.

When PACE was first created, only nonprofits could take part in the program. Then, last year, Centers for Medicare & Medicaid Services (CMS) decided that for-profits may also be able to meet the program’s qualifying criteria—and that a profit motive could promote the program’s accelerated expansion nationwide.

Since the change-up, various for-profits have entered the fray, with some even converting from their former non-profit status to take advantage of hefty profit margins.

Denver-based InnovAge is one of those formerly nonprofit companies that made the switch, albeit controversially, to the for-profit world. InnovAge is planning to aggressively expand PACE throughout Colorado with the support of private equity money, The New York Times reported.

InnovAge actually received the largest investment in a PACE business since for-profits were allowed to participate in the program, according to the Times, when private equity firm Welsh, Carson, Anderson & Stowe provided InnovAge with $196 million in backing.

That kind of money is new to PACE, Julie Reiskin, executive director of the Colorado Cross-Disability Coalition, told the Times. The nonprofit organization advocates for Americans with disabilities, many of whom are eligible for PACE.

“For years we were pariahs, and no one wanted anything to do with us,” Reiskin said. “Now that there’s money involved, everyone is all interested.”

A consensus seems to have been reached that the PACE program is in need of “fresh momentum,” the Times reported. Some are concerned, though, that for-profits will taint the program’s reputation in the same way some for-profits damaged trust in skilled nursing and hospice care.

Similarly, critics are wary of some Silicon Valley entrepreneurs who are advocating for a higher dependence on video calls, as opposed to in-person doctor visits.

On the flip side, Silicon Valley money may be able to help PACE overcome challenges in ways nonprofits couldn’t. On average, it takes as much as $12 million just to get a new center off the ground—a great deal of money for the majority of nonprofits, but relatively little in the technology world, the Times reported.

Still, there are reservations about involving anyone and everyone in the program.

“I’m not wild about every knucklehead running around trying to do PACE,” Thomas Scully, former Medicare administrator under President George W. Bush, told the Times. “I would rather keep it below the radar.”

Written by Mary Kate Nelson