CMS Administrator Thomas Scully today unveiled a demonstration program that will let dialysis providers select from two new delivery and financing models for providing care to Medicare patients with end-stage renal disease.
Medicare spends $16 billion annually to care for 350,000 patients receiving kidney dialysis at about 4,200 clinics nationwide.
One choice under the four-year, voluntary demonstration will be a bundled fee-for-service option wherein participants will be required to provide core dialysis treatment as well as ancillary services under a bundled Medicare rate. The rate will pay for outpatient dialysis as well as most routine drugs and lab tests provided during dialysis.
Medicare currently pays about $125 per core dialysis treatment for a service MedPAC estimates costs providers $141. But the $60 per treatment typically charged for ancillary services is an inflated rate used to make up for the core treatment losses, Scully says. The dialysis business in general earns only a 1.4% margin, he says.
"Currently, we have a wacky set of circumstances in the dialysis setting," Scully says. "I believe this program will provide the right incentives."
The second option will partner qualified dialysis facilities with managed care companies to create mini-HMOs. The organization will be paid a capitated rate to provide all Medicare services to the beneficiary, taking care of dialysis as well as coordinating other medical care. To prevent cherry-picking of healthier patients, payment will be based on Medicare comprehensive risk-adjusted rates created for this demonstration.
Dialysis centers now send sick or injured patients to a hospital because they have no incentive to take care of them, Scully says. He calls the managed care option a logical development, because dialysis centers are the only places where patients typically see a nephrologist, nurse or other provider at least three times a week.
"This intuitively makes a lot of sense," Scully says. "The doctor still remains in charge of the patient's care. With the assistance of qualified staff and appropriate incentives for quality, we can assist organizations in producing even better care for these patients."
Those incentives include a 5% holdback that will be rewarded based on how participating dialysis providers measure and report performance on five quality measures: adequacy, anemia management, bone disease, nutrition and vascular access. For each measure met, one-half of 1% will be earned if the provider meets the threshold, and the other half will be paid when the provider shows improvement on that measure.
Additional details about the demonstration, qualified applicants and a request for proposals will be published in the June 4 Federal Register. Applications are due to CMS by August 28. More information is available on the CMS Web site.