All-inclusive elder care for aging at home: This nursing home alternative is on the rise

The modern PACE approach came into existence in 1973, when a doctor and social worker in the Chinatown district of San Francisco banded together to open On Lok, a community-based care and services center for seniors. Among other things, it provided hot meals and health care services to older people who lived at home rather than in a clinical setting. Through the rest of the decade, the daytime adult care center gained attention from lawmakers who helped secure grant funding for On Lok, which expanded into a second location.

In the 1980s, On Lok's board members went all in. They took out a loan against their own homes to secure enough money to demonstrate to the state their novel financial model for providing Medicare-funded out-of-home care to aging adults was effective. By 1997, Congress had passed legislation making PACE centers a permanent Medicare program and an optional program that state Medicaid programs could include.

Today, a vast majority of older adults would prefer to age at home. In an AARP survey of 3,000 adults over 50, 3 in 4 respondents said they'd rather age at home than in a facility. For some, that is a crucial factor in their longevity and quality of life.

Michael and Irene saw this firsthand when their grandmother became a PACE participant at WelbeHealth, which operates several centers in California and is headquartered in Menlo Park.

"It seemed like her mental state had changed. She was talking. She was laughing. It was night and day," Michael said in a testimonial, commenting on how his grandmother Wai, a Chinese immigrant who spoke limited English, had changed after transferring from a nursing home back into her home community in 2021. Wai passed away in 2023 at age 88.

Though their family expected the benefit of returning their grandmother to the social and cultural community she was most comfortable with, they hadn't anticipated how much the wraparound services—case managers, social workers, nutritionists—could make such a positive difference until after she began the program. Despite having high care needs, PACE participants can live in their communities for an additional four years typically, according to a study published in 2010.

Additionally, a study from the Department of Health and Human Services noted that the PACE program "stands out from our analysis as a consistently 'high performer,'" earning its reputation as the gold standard in community-based care for aging adults. This living arrangement helps patients avoid the high nursing care costs while still living independently and within their communities.

These care centers for aging adults appear in more communities nationwide each year. Since 2019, the number of PACE centers has grown almost 30% and enrollment has grown 50%, according to an ATI Advisory study.

Roughly 2 in 3 states now offer PACE center services to their populations, but there is more room for growth. No state has more than 30 PACE centers, and only 0.08% of adults over 55 are enrolled in the program. In 2024, Washington D.C., Kentucky, Delaware, North Dakota, and Pennsylvania had the most PACE facilities per one million residents 55 or older. Notably, there is still more opportunity to expand a program like this in the western states like Arizona, Utah, Idaho, Montana, and Wyoming.

A 2021 HHS report found that Americans eligible for Medicare and Medicaid who utilized PACE centers had lower hospitalization rates and less need for emergency department care compared to Medicare Advantage enrollees. This is not the only study that shows PACE centers effectively provide services that can lower the overall cost of care for communities by reducing the need for expensive, acute-care intervention.

Anyone 55 or older with Medicaid who can live safely at home independently can enroll at a PACE center nearby. According to AARP, most PACE users are 65 or older, and about half live with dementia. The typical PACE user is also dual-enrolled in Medicaid and Medicare. PACE's payment process is part of what sets the program apart from other forms of care. Instead of a fee-for-service model where health plans are billed per service provided, PACE takes a fixed payment per month of services provided.

Despite the centers' proliferation over the decades, there are challenges facing the PACE center ecosystem.

A Bipartisan Policy Center study published in late 2022 found barriers to the growth of new PACE centers that could serve the needs of an aging population. They include high premiums that can be unaffordable for Medicare recipients, a lack of public awareness about PACE centers and what they offer, administrative hurdles to opening new centers, federal rules about how the services can be marketed, and enrollment limits that bar high-need populations that could benefit from the services they offer.

Legislators are taking note. A bill proposed by a bipartisan group of senators this summer called the PACE Anytime Act would aim to improve the speed at which aging Americans can access care through PACE centers. Currently, they differ from nursing homes, hospice, and other forms of care for older populations in that applicants seeking care at PACE centers have to wait until the first of the month to enroll, but the bill would remove that limitation.

Several states are also undergoing trials, expansion, or establishing new PACE programs for their aging residents. Minnesota and South Dakota are considering starting PACE programs. Nevada is in the process of establishing its own program after using COVID-19 funding to experiment with the system to address the health needs of people ages 55 and older who need nursing facility-level care but can still live safely in their communities. Georgia's governor also signed a bill into law earlier this year creating the state's first PACE program.

Story editing by Carren Jao. Additional editing by Kelly Glass. Copy editing by Janina Lawrence. Photo selection by Clarese Moller.