Value Based Payment

Mandatory Medicare ESRD model to launch in January 2021

September 21, 2020 1:25 pm
  • A new, mandatory Medicare ERSD model will require one-third of kidney-care clinicians to join.
  • The model will offer bonuses, payment cuts and rate increases for related services.
  • Medicare is projected to save $23 million over 5 1/2 years through improved outcomes.

Designated clinicians, who altogether treat 30% of Medicare end-stage renal disease (ESRD) patients, will be required to join a mandatory bundled payment model starting Jan. 1.

The ESRD Treatment Choices (ETC) model aims to improve or maintain the quality of care and reduce Medicare spending for patients with chronic kidney disease.

CMS estimated the model will save $23 million over 5 1/2 years. Medicare fee for service spends $114 billion a year, or about 20% of its budget, on beneficiaries with kidney disease. More than 100,000 American begin dialysis to treat ESRD each year, and one in five die within a year.

“This new payment model helps address a broken set of incentives that have prevented far too many Americans from benefiting from enjoying the better lives that could come with more convenient dialysis options or the possibility of a transplant,” said HHS Secretary Alex Azar.

Details of the new model

The model, which aims to encourage increased use of home dialysis and transplantation for Medicare ESRD patients, includes:

  • Monthly capitation payments to ESRD facilities and to managing clinicians for each adult ESRD beneficiary
  • Bonus payments for home-based dialysis and services during the first three years of the model
  • Bonuses and cuts based on rates of home dialysis, transplant waitlists and living-donor transplants
  • Increased payments for new renal dialysis drugs and biological products
  • Updates to transplant center requirements to allow more organ transplants
  • A transitional add-on payment adjustment to encourage the development of new and innovative equipment and supplies that would give beneficiaries more dialysis treatment options
  • Expanded scope of reimbursable expenses incurred by living organ donors to include lost wages and child-care and elder-care expenses
  • Relief from requirements that limit which types of providers can perform kidney disease education (KDE) for the KDE benefit, to allow additional types of practitioners to furnish this service and to permit the service to be furnished to beneficiaries with stage 5 chronic kidney disease as well as certain beneficiaries with ESRD

Selecting who will be required to participate

Participation will be mandatory for facilities and clinicians in “randomly selected” geographic areas, which are listed on a CMS webpage. In those areas, some clinicians and facilities with low volumes of adult ESRD beneficiaries will be excluded.

CMS blamed a lack of beneficiary education for encouraging in-center hemodialysis as the default treatment for ESRD patients.

“This value-based payment model will encourage participating care providers to invest in and build their home dialysis programs, allowing patients to receive care in the comfort and safety of their home,” a CMS press release states.

The model also incentivizes transplantation by financially rewarding ESRD facilities and clinicians based on their transplant rates, calculated as the sum of the transplant waitlist rate and the living-donor transplant rate. 

“Both of these modalities, home dialysis and transplantation, have support among health care providers and patients as preferable alternatives to in-center hemodialysis, but utilization has been less than in other developed nations,” a CMS fact sheet states.

In 2017 only 29.6% of ESRD patients had a functioning transplanted kidney, and only 2.8% received a transplant before needing to start dialysis.

The National Kidney Foundation hailed the new model for its expected ability to increase patient access to kidney transplants and home dialysis, “which are essential steps toward improving patient centric kidney care.”

“Kidney transplant is the gold standard treatment for kidney failure for most patients, providing better health outcomes, an improved quality of life, and cost savings when compared to dialysis,” the group said in a written statement. “Home dialysis can also provide a patient with more freedom and flexibility to live life on their own terms. Although kidney transplant and home dialysis are preferred by most patients, both are underutilized.”


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