---
type: source
title: "Effect of PACE on Costs, Nursing Home Admissions, and Mortality: 2006-2011 (ASPE/HHS)"
author: "ASPE (Assistant Secretary for Planning and Evaluation), HHS"
url: https://aspe.hhs.gov/reports/effect-pace-costs-nursing-home-admissions-mortality-2006-2011-0
date: 2014-01-01
domain: health
secondary_domains: []
format: report
status: processed
priority: medium
tags: [pace, capitated-care, nursing-home, cost-effectiveness, mortality, outcomes-evidence]
processed_by: vida
processed_date: 2026-03-10
claims_extracted: ["pace-restructures-costs-from-acute-to-chronic-spending-without-reducing-total-expenditure-challenging-prevention-saves-money-narrative.md", "pace-demonstrates-integrated-care-averts-institutionalization-through-community-based-delivery-not-cost-reduction.md"]
enrichments_applied: ["the healthcare attractor state is a prevention-first system where aligned payment continuous monitoring and AI-augmented care delivery create a flywheel that profits from health rather than sickness.md", "value-based care transitions stall at the payment boundary because 60 percent of payments touch value metrics but only 14 percent bear full risk.md"]
extraction_model: "anthropic/claude-sonnet-4.5"
extraction_notes: "Extracted two related claims about PACE's cost restructuring (not reduction) and institutionalization avoidance. Primary insight: PACE challenges the 'prevention saves money' narrative by showing integrated care redistributes costs rather than eliminating them. The value is quality/preference (community vs. institution), not economics. Flagged enrichments for healthcare attractor state (challenge) and value-based care payment boundary (extension). This is honest evidence that complicates prevention-first economics while supporting prevention-first outcomes."
---

## Content

### Cost Findings

- PACE Medicare capitation rates essentially equivalent to FFS costs EXCEPT:
  - First 6 months after enrollment: **significantly lower Medicare costs** under PACE
  - Medicaid costs under PACE: **significantly higher** than FFS Medicaid
- Net effect: roughly cost-neutral for Medicare, cost-additive for Medicaid
- This challenges the "PACE saves money" narrative — it redistributes costs, doesn't eliminate them

### Nursing Home Utilization

- PACE enrollees had **significantly lower nursing home utilization** vs. matched comparison group
- Large negative differences on ALL nursing home utilization outcomes
- PACE may use nursing homes in lieu of hospital admissions (shorter stays)
- Key achievement: avoids long-term institutionalization

### Mortality

- Some evidence of **lower mortality rate** among PACE enrollees
- Quality of care improvements in certain dimensions
- The mortality finding is suggestive but not definitive given study design limitations

### Study Design

- 8 states with 250+ new PACE enrollees during 2006-2008
- Matched comparison group: nursing home entrants AND HCBS waiver enrollees
- Limitations: selection bias (PACE enrollees may differ from comparison group in unmeasured ways)

### What PACE Actually Does

- Keeps nursing-home-eligible seniors in the community
- Provides fully integrated medical + social + psychiatric care
- Single capitated payment replaces fragmented FFS billing
- The value is in averted institutionalization, not cost savings

## Agent Notes
**Why this matters:** PACE's evidence base is more nuanced than advocates claim. It doesn't clearly save money — it shifts the locus of care from institutions to community at roughly similar total cost. The value proposition is quality/preference (people prefer home), not economics (it's not cheaper in total). This complicates the attractor state thesis if you define the attractor by cost efficiency rather than outcome quality.
**What surprised me:** PACE costs MORE for Medicaid even as it costs less for Medicare in the first 6 months. This suggests PACE provides MORE comprehensive care (higher Medicaid cost) while avoiding expensive acute episodes (lower Medicare cost). The cost isn't eliminated — it's restructured from acute to chronic care spending.
**KB connections:** [[the healthcare attractor state is a prevention-first system where aligned payment continuous monitoring and AI-augmented care delivery create a flywheel that profits from health rather than sickness]]
**Extraction hints:** Claim about PACE demonstrating that full integration changes WHERE costs fall (acute vs. chronic, institutional vs. community) rather than reducing total costs — challenging the assumption that prevention-first care is inherently cheaper.

## Curator Notes
PRIMARY CONNECTION: [[the healthcare attractor state is a prevention-first system where aligned payment continuous monitoring and AI-augmented care delivery create a flywheel that profits from health rather than sickness]]
WHY ARCHIVED: Honest evidence that complicates the "prevention saves money" narrative. PACE works, but not primarily through cost reduction.
EXTRACTION HINT: The cost-restructuring (not cost-reduction) finding is the most honest and extractable insight.


## Key Facts
- PACE study covered 8 states with 250+ new enrollees during 2006-2008
- Comparison groups: nursing home entrants AND HCBS waiver enrollees
- Medicare costs significantly lower only in first 6 months after PACE enrollment
- Medicaid costs significantly higher under PACE than FFS Medicaid
- Nursing home utilization significantly lower across ALL measures for PACE enrollees
