People enrolled in Medicare got good news recently. Their annual out-of-pocket costs for Part D prescription drug coverage will be capped at $2,000 next year. That should provide welcome relief to millions of older adults who worry about how they will afford health care now and in the longer term.
Unfortunately, not every person enrolled in Medicare is eligible for the $2,000 cap. A little-known penalty robs some people of the peace of mind that comes from a greater degree of health and financial security. Unlike all others enrolled in Medicare, people who participate in the “Program of All-Inclusive Care for the Elderly” (PACE) are required by federal law to enroll exclusively in the PACE Part D drug benefit. This drug plan costs up to 22 times more on average than the numerous, more affordable Part D plans available to every other person enrolled in Medicare on the open market.
Year in and year out, this highly consequential penalty prevents potentially millions of Medicare enrollees with complex medical and social needs from enrolling in PACE, a program that is particularly well-positioned to help. Congress must act now to ensure that every older adult can benefit from lower-cost prescription drugs.
Piloted in the 1970s and 80s and made law by Congress in the 1990s, the PACE program is an approach whose time has come. PACE is celebrated for its ability to allow older adults to age in place by providing high-quality home- and community-based care that’s coordinated among various health care and service providers. The COVID-19 pandemic greatly accelerated the shift towards home- and community-based care as an alternative to skilled nursing facilities. Older adults—particularly those with chronic and complex health needs—are demanding more community-based care options. PACE is one of the most effective ways to meet their needs.
Evidence shows that PACE participation limits hospitalizations and emergency department visits, addresses social isolation and depression, and improves peoples’ quality of life. People want to age in their own homes. Coincidentally, as candidate for president, Vice President Kamala Harris is proposing that Medicare cover costs for home health care, which is already the case through PACE.
Put simply, the PACE program works and could work for many more older adults. Congress must end the PACE Part D penalty to expand PACE enrollment to older adults who would benefit.
Legislation to eliminate the PACE Part D penalty has been introduced by Sen. Tom Carper (D-Del.) and Sen. Bill Cassidy (R-La.), along with Reps. Brad Wenstrup (R-Ohio) and Earl Blumenauer (D-Ore.). The bipartisan PACE Part D Choice Act (S.1703/H.R. 3549) is simple and noncontroversial. It does away with the mandate that PACE program participants with Medicare must enroll in the PACE Part D drug plan and instead allows them to purchase a more affordable Part D plan from the open market.
The legislation is expected to save older adults about $1,000 a month on prescription drug premiums. That would help level the Part D playing field, even more so because PACE’s Medicare enrollees are currently ineligible for the $2,000 out-of-pocket cap on Part D prescription spending that takes effect next year.
It’s common knowledge among health care and aging researchers that millions of Baby Boomers will soon develop multiple chronic and complex conditions requiring high-quality, coordinated, and age-friendly care. What’s lesser known is that more than three-quarters of adults aged 40 and over would prefer to receive necessary long-term care services in their home rather than in a facility.
Of the many pandemic-era lessons that can inform forward-looking changes to health care, we have learned that older adults need more flexible and affordable options for their health- and long-term care, especially if they have complex care needs.
The PACE Part D Choice Act is noncontroversial and will save older adults thousands a year, an incentive that will connect them with the high-quality care they deserve. If Congress is to better serve these constituents, it must do more to incentivize aging in place. Ending the PACE Part D penalty is a cost-effective solution that’s worthy of broad congressional support and must be enacted by the end of the year.
Shawn Bloom is a health care executive.
