The Program for All Inclusive Care for the Elderly (PACE) is a program which serves frail elderly in the community under a capitated financing arrangement, primarily under sponsorship from the Medicaid and Medicare Programs.

As you know, Medicaid is a program which is jointly sponsored by federal and state governments and is the leading financier of long-term care services. Medicare is administered by the federal government and primarily supports acute health care services such as physician and hospital care.

One of the greatest challenges that we as a nation face in developing services to meet the growing elderly population is breaking through the traditional service and financing barriers which have occurred in the evolution of Medicaid and Medicare. While we at the state level are not in any way responsible for Medicare expenditures, there is a very strong relationship between these two programs at the client and service delivery level.

The PACE model, which was originally developed in San Francisco by the On Lok Program, is now being replicated in over 60 organizations across the nation. Here in Virginia, Sentara Health System has been the first organization to initiate such a program which is entitled Sentara Senior Community Care, and there are a few other organizations which have expressed an interest.

House Bill 1130 of the 1996 session requested the Joint Commission on Health Care, in cooperation with the Department of Medical Assistance Services and the Bureau of Insurance of the State Corporation Commission, to conduct a study of the following issues: (1) determine whether the exemptions established by HB 1130 should be continued in existing or modified form beyond July 1, 1997; and (2) identify an appropriate state regulatory policy for pre-PACE and PACE Projects which may provide coverage for individuals who are not eligible for Medicaid.

We worked closely with the Department of Medical Assistance Services, the Bureau of Insurance and Sentara during the course of this study and determined that it is appropriate to establish a legislative foundation for this program. This proposal is currently being drafted for introduction to the 1997 General Assembly.

I would like to thank the Department of Medical Assistance Services for their assistance in drafting this document and staff from both the Department of Medical Assistance Services and the Bureau of Insurance, as well a the Division of Legislative Services, for assistance with drafting the legislation.

Our review process on this topic included an initial briefing which you will find in the body of this report followed by a public comment period during which time interested parties forwarded written commends to us on the report. In many cases, the public comments, which are provided at the end of this report, provided additional insight into the various topics covered in this study.