Modeling Medicare Costs of PACE Populations

Historically, Medicare has paid PACE providers a monthly capitated rate equal to 95 percent of the site's county AAPCC multiplied by a PACE-specific frailty adjuster of 2.39. The Balanced Budget Act of 1997 makes PACE a permanent provider category and mandates that future Medicare payments be based upon the rate structure of the Medicare+Choice payment system, adjusted for the comparative frailty of PACE enrollees and other factors deemed to be appropriate by the Secretary of Health and Human Services. This study revisits the calculation of the PACE frailty adjuster and explores the effect of risk adjustment on that frailty adjuster.