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PACE and the Medicare+Choice risk-adjusted payment model.

H Temkin-Greener1, M R Meiners, L Gruenberg

  • 1Community Coalition for Long-Term Care, Inc., 10 Gibbs St., Suite 410, Rochester, NY 14604, USA.

Inquiry : a Journal of Medical Care Organization, Provision and Financing
|May 31, 2001
PubMed
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The Medicare principal inpatient diagnostic cost group (PIP-DCG) model would decrease payments to the Program of All-Inclusive Care for the Elderly (PACE) by 38%. This model inadequately captures the risks associated with functionally impaired seniors in PACE.

Area of Science:

  • Health Economics
  • Geriatric Care
  • Healthcare Policy

Background:

  • The Program of All-Inclusive Care for the Elderly (PACE) serves over 6,000 Medicare beneficiaries needing nursing home care.
  • PACE is positioned for expansion under the Balanced Budget Act of 1997.
  • Current Medicare payment models may not accurately reflect the costs of PACE's comprehensive care for functionally impaired seniors.

Purpose of the Study:

  • To evaluate the financial impact of applying the Medicare principal inpatient diagnostic cost group (PIP-DCG) payment model to the PACE program.
  • To assess the adequacy of the PIP-DCG model's risk adjustment for the PACE population.

Main Methods:

  • Analysis of the application of the PIP-DCG payment model to PACE program data.
  • Risk adjustment evaluation based on inpatient diagnoses versus functional impairments.

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Main Results:

  • The PIP-DCG model is projected to reduce Medicare payments to PACE by an average of 38%.
  • The PIP-DCG model's reliance on inpatient diagnoses does not sufficiently account for the complex health needs and functional impairments of PACE participants.

Conclusions:

  • Implementing the PIP-DCG model for PACE could lead to significant underfunding.
  • A payment model tailored to the unique needs of PACE participants, including functional status, is necessary for accurate risk adjustment and financial sustainability.