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CMS Reverses on PACE Proposal

Press Release

Location: Washington, DC

A Medicare-sponsored program designed to provide all-inclusive health care for seniors, while allowing them to remain independent in their own homes, will be spared and protected despite original plans by the Centers for Medicare & Medicaid Services (CMS) to rewrite the rules and thereby gut the program.

Rep. Chris Smith, co-chair of the Alzheimer's Disease Task Force, who led a bipartisan effort to persuade the federal government to withdraw its proposal, hailed the reversal as a win for seniors across the country and particularly in New Jersey. CMS announced its reversal this week.

"This announcement is a win for the seniors across the Fourth District who participate in one of New Jersey's four PACE programs," said Smith. "The proposal to cut Medicare payments for patients suffering from dementia would have seriously threatened the sustainability of these important programs. Now, PACE programs can continue to provide critical services for some of our nation's most frail and vulnerable seniors."

In a letter dated March 20, 2013, Smith, Alzheimer's Task Force co-chair Ed Markey and 23 additional members of Congress urged CMS to maintain the current payment program for senior who participate in the Program of All-Inclusive Care for the Elderly (PACE). In their letter the members stated:

"As Members of Congress concerned about protecting health care services for patients with Alzheimer's and other dementias, we believe that failing to take a dementia diagnosis into account could result in CMS significantly underestimating the cost of treating our highest risk and most frail Medicare beneficiaries… Ignoring the additional costs and risks associated with dementia patients could threaten the ability of MA Special Needs Plans (SNPs) and PACE programs to provide health coverage and quality, innovative services to this vulnerable population."

"LIFE St. Francis and all PACE programs across the nation thank Congressman Smith for his leadership and strong support," said Jill Viggiano, RN, MS, Executive Director, LIFE St. Francis, which cares for seniors from Mercer and Burlington counties. "We are grateful to have a champion and strong advocate in Rep. Smith. Had CMS not made the decision to continue to pay PACE program as it does currently, it would have forced LIFE St. Francis and other programs across the country to reevaluate whether we could continue our programs providing our senior clients with the high quality care they receive today."

Under CMS' original Advance Notice of changes for 2014, the agency sought to exclude dementia as a factor in comparing the cost of treating one type of patient to the cost of treating other types of patients. This is commonly called the "risk adjustment." As a result, health care providers treating large numbers of patients suffering from dementia would have seen sharp reductions in their payments--jeopardizing access to care.

"Approximately half of the patients enrolled in PACE programs have a diagnosis of dementia and these individuals have significantly higher costs than individuals who do not," said Smith. "I am pleased that CMS recognized PACE as a high-quality, cost-effective program that provides truly integrated services to individuals with complex medical and long-term care needs and reversed course."

Specifically, Smith's letter expressed concerns about CMS' Advance Notice of Methodological Changes for CY 2014 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and the 2014 Call Letter. There are over 90 PACE program operations in 30 states, including four in New Jersey. The notice would have led to a reduction in Medicare payments to these organizations by an average of 10 percent.

CMS' announcement stated that it "will continue to use the same risk adjustment model for PACE in 2014 that it used in 2012 and 2013. Accordingly, the model will continue to include the dementia condition categories."

St. Francis Medical Center, the New Jersey Department of Health and Senior Services and the Centers for Medicare and Medicaid Services (CMS), worked together to activate LIFE in 2009. LIFE today serves about 200 seniors and is located on the Hamilton-Trenton border, serving the residents of all of Mercer County and portions of northern Burlington County. There are now three other PACE locations in New Jersey--Camden, Vineland and Jersey City. Smith is working to expand PACE presence in N.J.

Smith had worked with officials from St. Francis since 2007 to assist the hospital in joining the federal program that enables nursing home-eligible seniors to obtain all inclusive care, without having to move into a nursing home facility. PACE is funded through Medicare and Medicaid. Smith voted to create the program in 1997.

Using a team of doctors, nurses, physical therapists and other health experts, the LIFE pro­gram manages all the care of the patient for a set fee paid by Medicare and Medicaid, but also assumes full risk for whatever care is necessary. Patients can be brought into the center during the week for continuous monitoring. The center will also provide meals and recreation. Most importantly, members of the LIFE team will provide health care at the person's home, including meals-to-go. St. Francis and other New Jersey PACE/LIFE providers hope to open new facilities to help meet the exploding need. Candidates must meet four main criteria. They must: be age 55 and up; live in the hospital's service area; require a nursing home level of care, and; be physically able to live safely in their home.

For more information about PACE, visit the National PACE Association's website at or its fact sheet about the program, or the Medicare website at

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