PACE Origins in California

In a one-room office, in 1971, Dr. William L. Gee and social worker Marie-Louise Ansak started a long-term care revolution in San Francisco. They sought to keep seniors with chronic illnesses and disabilities out of nursing homes by serving them in their homes and communities. Their vision resulted in the establishment of On Lok and the creation of PACE.

On Lok opened one of the nation’s first adult day centers in 1973, began receiving Medicaid reimbursement for adult day services in 1974, and expanded to include in-home services and other support services in 1975. Enclosed is a timeline of key events shaping the development of the PACE model and the launch of PACE replication efforts.

1979  On Lok received a federal grant to test a Medicare-funded model of consolidated medical care and social support of nursing home-eligible seniors.

1983  On Lok was authorized to conduct a three-year Medicare and Medicaid waiver demonstration project testing capitated financing covering all primary, acute, and long-term care services for individuals requiring a nursing home level of care.

1986  On Lok received a one-year grant from the Robert Wood Johnson Foundation to test the feasibility of replicating the model of care and financing that On Lok had created nationwide. Federal legislation authorized waivers for up to 10 organizations replicating the On Lok model.

1987  On Lok launched the national replication of PACE in other states, with multi-year funding from the Robert Wood Johnson Foundation and the John A. Hartford Foundation.

1989  AB 1601, authorizing the then California Department of Health Services to contract for up to 5 PACE demonstration projects to establish the authority for the California PACE replication effort.

1990  The first national PACE replication sites established PACE operations under Medicare and Medicaid waivers similar to On Lok.

1992  SB 1708, exempting California PACE providers from state requirements related to Health Maintenance Organizations due to their compliance with comparable federal and state PACE regulatory requirements.

          The Center for Elders’ Independence of Oakland and Sutter Senior Care of Sacramento joined the PACE demonstration program.

1994  The National PACE Association was formed as the first PACE replication sites completed three-year waiver demonstration projects.

1996  AltaMed transitioned an adult day health care center into a PACE demonstration site: Senior BuenaCare PACE, in Los Angeles.

1997  The federal Balanced Budget Act of 1997 established PACE as a permanent

provider type under Medicare and a state option under Medicaid.

1998  AB 2583, expanding the number of authorized PACE sites in California from 5 to 10.

In 1999, federal Interim PACE regulations were released to implement PACE as a provider type. Organizations that established PACE programs under waivers were required to transition into permanent provider status. Challenges arose as federal regulatory requirements overlapped with state requirements. Also, St. Paul’s Senior Services faced an 8-year struggle to establish a PACE program in San Diego. When paired with regulatory logjams the other PACE organizations faced, the need for statewide policy collaboration became clear.

With funding from the California Endowment, in 2004, the “Regulatory Integration Project to Mainstream PACE” gathered PACE providers with federal and state regulators to streamline the regulatory process for PACE and to address duplicative and conflicting regulatory requirements. A 2007 reorganization within the Department of Health Care Services created the Long-Term Care Division, aligning oversight of PACE with other home and community-based services programs.

During these early years, pivotal legislation in California impacting PACE included the following.

2003  AB 798, establishing PACE as an optional Medi-Cal benefit and making PACE a permanent provider in California.

2005  AB 847, allowing the Departments of Health Services, Social Services, and Aging to grant exemptions to PACE organizations from conflicting or inappropriate licensing requirements applicable to clinics, residential care facilities for the elderly, and home health agencies.

2006  AB 1807, establishing PACE Medi-Cal reimbursement rates at a level of no less than 90 percent of equivalent fee-for-service Medi-Cal costs for a comparable population.


History of CalPACE


CalPACE was formed in 2007 as the nation’s first state PACE trade association to solve problems facing PACE providers and the seniors they serve. California’s four PACE organizations of that time – AltaMed, The Center for Elders’ Independence, On Lok, and Sutter Senior Care with St. Paul’s Senior Services, an organization applying to be a PACE provider – founded CalPACE.

At that time, new PACE provider applicants and existing PACE programs faced costly and extreme delays in the state’s processing of applications. Enrolling seniors in all the California’s PACE programs took months due to delays in completing nursing home level of care determinations.

From the beginning, CalPACE has built camaraderie while bringing PACE voices together to change the policy environment for PACE providers in California. Now, it takes approximately 18-months to site a new PACE facility, PACE enrollment takes five business days, and there are no caps on PACE growth. Our key milestones as an association are summarized below.

2007  CalPACE incorporated as a 501(c)(6) in August. On Lok hosted CalPACE in its San Francisco offices and served as staff, with its CEO Bob Edmondson named the association’s first Executive Director and Board of Directors’ Chair.

2008  St. Paul’s PACE Reasner Center opened, meeting California’s cap under AB 1601, of 1991, authorizing DHS to contract with up to 5 PACE organizations.

2011  Peter Hansel named CEO of CalPACE, which establishes a new headquarters, in Sacramento.

          AB 574 signed into law, increasing the number of authorized PACE contracts from 10 to 15.

2012  SB 1008 signed into law, establishing PACE as an enrollment option in the Coordinated Care Initiative, including Cal MediConnect, the state’s dual demonstration project providing integrated care options for beneficiaries eligible for both Medicare and Medicaid.

          The Department of Health Care Services (DHCS) streamlines the PACE level of care review process, reducing enrollment in PACE to 5 business days.

2013  Caps on PACE enrollment removed through a California State Plan Amendment with the Centers for Medicare and Medicaid Services.

2014  SB 870 signed into law, increasing PACE Medi-Cal reimbursement rates to a level no less than 95 percent of fee-for-service equivalent costs for a comparable population.

2015  California PACE provider organizations grow to 10. Enrollment surpasses 5,000.

2016  SB 833 – the PACE Modernization Act – signed into law, changed the rate-setting methodology for PACE organizations, eliminated the cap on the number of PACE programs in law, allowed for profit PACE organizations, and directed DHCS to work with feds to create regulatory flexibilities.

2017  30 PACE centers and alternative care sites serve California.

2019  40 PACE centers and alternative care sites serve California.

          AB 1128 signed into law, transferring oversight and regulation of primary care clinics, adult day health centers, and home health agencies serving PACE from the Department of Public Health to the Department of Health Care Services.

2020  California PACE provider organizations grow to 15. Enrollment surpasses 10,000. 50 PACE centers and alternative care sites serve California.

          California PACE providers are among the first to vaccinate seniors for COVID-19. Vaccination rates for many providers exceeded 85%, a level unmatched in the Medi-Cal program.

          DHCS grants PACE providers operational flexibility during the COVID-19 public health emergency. Enrollment was simplified and telehealth authorized to ease routine communication between seniors and doctors. Additionally, staff were retrained and redeployed from PACE centers into the homes of seniors for care, helping them overcome isolation while social distancing. These flexibilities fueled care innovations enabling PACE organizations to keep COVID-19 infection rates low. Compared to nursing home residents, seniors enrolled in PACE were over 73% less likely to contract COVID-19.

2021  California PACE provider organizations grow to 20. 60 PACE centers and alternative care sites serve California.

          California releases The Master Plan for Aging, following CalPACE’s participation as a member of the Stakeholder Advisory Committee.

          AB 133 signed into law, increasing PACE awareness and access by requiring PACE, as part of the implementation of the state’s CalAIM initiative, to be presented to Medi-Cal beneficiaries as a Medi-Cal managed care enrollment option and included in all enrollment materials and outreach and enrollment assistance programs.

          DHCS’ Home and Community-Based Services Spending Plan of federal American Rescue Plan Act funding makes PACE eligible for training and stipend funds and one-time incentive payments for direct care workers and clinical workforce training grants.

2022  70 PACE centers and alternative care sites serve California. Enrollment surpasses 17,000.

          DHCS’ plan to unwind key regulatory flexibilities in place during COVID-19, preserves the ability of PACE providers to use telehealth as an alternative to face-to-face interactions, place participants in facilities outside of approved service areas, when necessary, use brokers for marketing, and receive direct referrals from hospital and facility discharge planners.

          SB 184 signed into law, allowing PACE organizations to use video telehealth to conduct assessments for eligibility for enrollment in PACE.

           Peter Hansel, the first CEO of CalPACE, announces his retirement. The CalPACE Board of Directors selects Val Sheehan as the next CalPACE CEO.

2023  Implementation begins of CalAIM provisions requiring PACE to be presented as a managed care enrollment option to beneficiaries who must enroll in managed care.

           4 new PACE organizations are expected to begin operations in California.