But the bundled rate came under fire last year from the Government Accountability Office for relying on 2007 data on the use of anti-anemia drugs. Nephrologists have been using less of the expensive agents because of patient safety concerns. As a result, the GAO estimated that the CMS would have saved at least $650 million in 2011 if the bundled-payment rate had accurately reflected the sharply reduced use of drugs like Epogen.
The CMS is now working to rebase the payments, and the agency in July proposed a 9.4% cut to 2014 rates. The rebased rate would mean a cut of nearly $30 from the previously planned $246 payment per visit for next year. HHS is supposed to issue a final rule by Nov. 1.
But lobbyists for DaVita and Fresenius have mounted an intense lobbying campaign to block the rate cut, and more than 200 House members signed a letter last month asking the CMS to reconsider the cut. They argue that the cut would strain margins, hurt providers in rural and low-income communities, and put some providers out of business.
Fresenius did not respond to a request for comment for this article.
The integration issues with HealthCare Partners and the proposed reimbursement cut have taken some of the steam out of DaVita's stock price. But the company announced good news in May when it revealed that it had entered into an agreement with Berkshire Hathaway that could pave the way for the Warren Buffett-lead holding company to increase its 14.2% stake to 25%. Analysts saw the move as a vote of confidence.
Thiry said that while the acquisition of HealthCare Partners might drive more referrals to DaVita's dialysis centers, that isn't the point of the merger. The goal is more strategic—preparing for a time when DaVita will be expected not only to provide dialysis but help keep nephrology patients out of the hospital and manage their other chronic conditions.
DaVita has been on the frontlines of pushing to extend the Medicare ACO program to end-stage renal disease. That would expand the current Medicare bundled-payment model for ESRD to cover a wider spectrum of their care, with the aim of improving quality of care and reducing costs.
In February, the CMS Innovation Center introduced the Comprehensive ESRD Care Initiative, a Medicare shared-savings program for end-stage renal disease, built around ESRD Seamless Care Organizations, or ESCOs. The program would be similar to current Medicare ACOs, allowing providers to receive a percentage of Medicare's savings if they meet budget and quality-of care-targets, or else face a financial loss if they fail to meet the targets.
But Thiry said DaVita hasn't yet decided whether to participate partly because of concerns about the payment methodology.
Among his concerns is that participating in a shared-savings program requires major investment on the front end, both financially and in terms of deploying company talent. Moreover, the ESCO guidelines state that the CMS plans to “rebase” payments in the fourth and fifth years, using data from the first three program years. In other words, he argued, the CMS is moving the goalposts, potentially making it harder for program participants to achieve savings.
“It becomes impossible to make the kind of investment to add value,” Thiry said.