---
type: claim
domain: health
description: "PACE's primary value is avoiding long-term nursing home placement while maintaining or improving quality, not generating cost savings"
confidence: likely
source: "ASPE/HHS 2014 PACE evaluation showing significantly lower nursing home utilization across all measures"
created: 2026-03-10
last_evaluated: 2026-03-10
depends_on: ["pace-restructures-costs-from-acute-to-chronic-spending-without-reducing-total-expenditure-challenging-prevention-saves-money-narrative"]
challenged_by: []
sourced_from:
- inbox/archive/health/2014-00-00-aspe-pace-effect-costs-nursing-home-mortality.md
---

# PACE averts long-term institutionalization through integrated community-based care, not cost reduction

PACE's primary value proposition is not economic but clinical and social: it keeps nursing-home-eligible seniors in the community while maintaining or improving quality of care. The ASPE/HHS evaluation found significantly lower nursing home utilization among PACE enrollees across all measured outcomes compared to matched comparison groups (nursing home entrants and HCBS waiver enrollees).

## How PACE Restructures Institutional Care

The program provides fully integrated medical, social, and psychiatric care under a single capitated payment, replacing fragmented fee-for-service billing. This integration enables PACE to use nursing homes strategically—shorter stays, often in lieu of hospital admissions—rather than as the default long-term placement pathway.

The evidence suggests PACE may use nursing homes differently than traditional care: as acute care alternatives rather than chronic residential settings. The key achievement is avoiding permanent institutionalization, which aligns with patient preferences for aging in place and with the epidemiological reality that social isolation and loss of community connection are independent mortality risk factors.

## Quality Signals Beyond Location

Some evidence indicates lower mortality rates among PACE enrollees, suggesting quality improvements beyond just the location of care. However, study design limitations (potential selection bias—PACE enrollees may differ systematically from those who enter nursing homes or use HCBS waivers in unmeasured ways) mean this finding is suggestive rather than definitive.

## Evidence

- ASPE/HHS 2014 evaluation: significantly lower nursing home utilization across ALL measured outcomes
- PACE may use nursing homes for short stays in lieu of hospital admissions (care substitution, not elimination)
- Some evidence of lower mortality rates (quality signal, but vulnerable to selection bias)
- Study covered 8 states, 250+ enrollees during 2006-2008
- Matched comparison groups: nursing home entrants AND HCBS waiver enrollees


### Additional Evidence (extend)
*Source: 2021-02-00-pmc-japan-ltci-past-present-future | Added: 2026-03-15 | Extractor: anthropic/claude-sonnet-4.5*

Japan's LTCI provides a national-scale comparison point for PACE's integrated care model. LTCI offers both facility-based and home-based care chosen by beneficiaries, integrating medical care with welfare services across 7 care level tiers. As of 2015, the system served 5+ million beneficiaries (17% of 65+ population) — compared to PACE's 90,000 enrollees in the US. If the US had equivalent coverage, that would represent ~11.4 million people. Japan's experience demonstrates that integrated care delivery can operate at national scale through mandatory insurance, though financial sustainability under extreme aging demographics (28.4% elderly, rising to 40%) remains an ongoing challenge requiring premium and copayment adjustments.


### Additional Evidence (confirm)
*Source: [[2025-03-17-norc-pace-market-assessment-for-profit-expansion]] | Added: 2026-03-16*

2025 data shows PACE serves 80,815 enrollees across 198 programs in 33 states, with most fully integrated capitated model taking 100% responsibility for nursing-home-eligible patients. The report confirms PACE's value proposition is community-based care delivery for complex patients, not cost reduction. However, it adds critical context: nearly half of enrollees are served by just 10 parent organizations, and over half are concentrated in 3 states (CA, NY, PA), indicating the model works but faces severe scaling constraints that prevent national replication.

---

Relevant Notes:
- [[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]]
- [[medical care explains only 10-20 percent of health outcomes because behavioral social and genetic factors dominate as four independent methodologies confirm]]
- [[social isolation costs Medicare 7 billion annually and carries mortality risk equivalent to smoking 15 cigarettes per day making loneliness a clinical condition not a personal problem]]

Topics:
- health/_map
