Viewpoint

Integration of CKD and ESRD reimbursement: How to learn from the past, adapt to the future

Saying the payment system for the Medicare ESRD Program is “outdated” and “has some of the worst incentives in American health care,” HHS Secretary Alex M. Azar II announced at the National Kidney Foundation’s Annual Patient Summit that the agency is developing new models that encourage a shift from paying for sick patients to one that focuses on improving outcomes, including use of more home dialysis, expanding financial incentives and access to organs for kidney transplantation, and a push for earlier detection and treatment of kidney disease.1

Payment and clinical care models that provide a seamless approach in caring for patients with chronic kidney disease progressing to ESRD and/or transplantation has its challenges. Current health care policies create insurance benefits and payment silos between original Fee-For-Service (FFS) Medicare and “other” insurances for patients with late-stage CKD. Of those in the United States, 15% are uninsured; 12% have Medicare; and 73% of patients with CKD have other insurances.2 These include FFS Medicaid, Managed Care Medicaid, Medicare Advantage, employer-based coverage, Accountability Care Act individual coverage, Veteran Affairs and Indian Health Services. Most patients with CKD, in stages 4 and stages 5, do not have Medicare coverage.

Gary Cellini

The 2018 U.S. Renal Data System Annual Report indicates that 11.6% of patients with CKD with a GFR of less than 30 mL/min/1.73 m2 or an albumin creatine ratio greater than 300 mg/g had original FFS Medicare coverage.3

Remove insurance silos

If HHS wants to build a new payment model that brings CKD and ESRD together, it must first eliminate the insurance payment silos. These exist even though Medicaid and Medicare are both government payers. A good example is the placement of a fistula. Low insurance payments before Medicare eligibility limit fistula placement for uninsured and Medicaid beneficiaries.4 The Centers for Medicare and Medicaid Innovation’s (CMMI) State Dual Eligible Demonstration is attempting to address this issue and others, but the numbers of beneficiaries in the demonstration have been small and the opt-out rate back to FFS original Medicare has been high.5 Considering 30% to 40% of dialysis patients are dual eligible, this Medicaid-to-Medicare transition could be fertile ground for HHS. A problem is the trend toward Medicaid Managed Care. Instead of one State Medicaid agency, we have multiple Medicaid Managed Care plans.

In addition, employers switch health plans, in some cases annually, to reduce costs. Then when the patient starts dialysis, original Medicare is the secondary payer for the 30- month coordination period. This effectively reduces the employer’s long-term financial risk. In fewer than 30 months, with an average coordination period of 18 months, the patient switches to original Medicare as primary coverage. Why would employer health plans invest in a patient’s CKD care when there is a high probability the patient’s employer is going to switch health insurers?

Lastly, the changes in building a CKD-ESRD payment model do not offer any guarantees that primary care physicians and overloaded nephrologists would be willing to cooperate and coordinate care. HHS would also have to create a payment model for CKD care that would keep both the PCP and the nephrologist engaged.

Historical look and what is needed today

In the final evaluation of a previous CKD to ESRD demonstration, the CMS Care Management for High Cost Beneficiaries (2006 to 2009), RTI International cited:

“Based on extensive qualitative and quantitative analysis of performance, we find that the program had no success improving key processes of care or beneficiary experience with care, self-management, or functional status, reducing acute care utilization or reducing mortality, or increasing use of the Medicare hospice benefit. Although per beneficiary per month costs rose slower in the original and refresh intervention groups relative to the comparison groups, statistically significant savings were not achieved.”6

There were many reasons for the lack of statistically significant savings in this demonstration, including a guaranteed saving rate of first 5% to CMS and the exclusive use of claims data and the inability at the time to access the ICD-9 585 codes to identify late-stage CKD beneficiaries. In addition, the average age of the CKD Medicare population attributed to the demonstration was 75 years old. Probably the most important fact is that 2% of the beneficiaries identified and attributed to the demonstration were in stages 4 and 5, 40% in stage 3, 28% in stage 2 and 40% in stage 1.

Any new HHS initiative needs to attribute only Medicare beneficiaries in CKD stage 4 and 5. Today, this is possible with access to biomarkers and the ICD-10 CKD renal codes. In addition, new tools in development, such as artificial intelligence, will enable identification of patients with Medicare and other insurances at high risk for transitioning to dialysis in 12 to 18 months.

The CMMI State Dual Eligible Demonstration (Medicare & Medicaid benefit coordination and payment) and previously with the CMS ESRD Disease Management Demonstration (2006 to 2010) are both examples of integrating and coordinating insurance benefits and care management between insurance payer silos. In the latter demonstration, DaVita and Fresenius Medical Care were both awarded the demonstration, with the condition of state licensing to assume full financial responsibility.7 Both DaVita and FMC sought out health plan partners to fulfill this requirement. DaVita partnered with SCAN Health Plan, and FMC partnered with Sterling Life Insurance and American Progressive Life & Health. Both dialysis companies were able to successfully retain FFS Medicaid as a secondary payer to their Medicare Advantage Plans in this successful CMS demonstration. It is conceivable that HHS will do the same and require other insurance partners for patients in stage 4 and 5 CKD.

Role of home dialysis

“It’s also more appealing for a dialysis company to add patients to a center where one machine can accommodate multiple patients than it is to provide new services to each patient at home. But that isn’t providing the care patients deserve, and we have the power within HHS to test out significant payment changes to boost home dialysis,” Azar said at the Patient Summit.

How will HHS create a plan that incentivizes providers with big investments in bricks and mortar, dialysis machines and dialysis center joint ventures to send more patients home?

Currently, financial incentives driven by dialysis companies’ competition, market share, existing in-center capacity, nephrologist joint ventures and medical directorships prolong the time the patients receive dialysis and lower the quality of care by encouraging in-center dialysis treatments over transplantation, home dialysis and conserving dialysis. The result today is an in-center dialysis patient placement rate of 88%.

The article titled “Peritoneal dialysis growth in the U.S. encounters unexpected hurdles” published in February 2017 and endorsed by the chief medical officers of the 13 largest dialysis providers, said the reasons for underutilization of PD are multifactorial, in part related to a lack of physician training, provider infrastructure issues and unanticipated financial incentive that favor use of in-center dialysis.8

HHS can address this by focusing on payment changes. The simple answer is something we have heard for years and is gaining momentum: a payment system that transforms FFS, volume-based reimbursement for CKD, ESRD and transplantation to a global, value-based systems in which providers are responsible for both clinical and financial outcomes. The pace of this disruption will only increase as payers, including Medicare, Medicaid and employer-based systems, pass financial risk to providers. Though not impossible, the difficulty will be for HHS to encourage integration between Medicare with other insurances and the assumption of financial risk by providers in new demonstrations and legislations. Connecting the insurance silos will be a critical success factor for HHS to consider in its new payment models.

Disclosure: Cellini reports no relevant financial disclosures.

Saying the payment system for the Medicare ESRD Program is “outdated” and “has some of the worst incentives in American health care,” HHS Secretary Alex M. Azar II announced at the National Kidney Foundation’s Annual Patient Summit that the agency is developing new models that encourage a shift from paying for sick patients to one that focuses on improving outcomes, including use of more home dialysis, expanding financial incentives and access to organs for kidney transplantation, and a push for earlier detection and treatment of kidney disease.1

Payment and clinical care models that provide a seamless approach in caring for patients with chronic kidney disease progressing to ESRD and/or transplantation has its challenges. Current health care policies create insurance benefits and payment silos between original Fee-For-Service (FFS) Medicare and “other” insurances for patients with late-stage CKD. Of those in the United States, 15% are uninsured; 12% have Medicare; and 73% of patients with CKD have other insurances.2 These include FFS Medicaid, Managed Care Medicaid, Medicare Advantage, employer-based coverage, Accountability Care Act individual coverage, Veteran Affairs and Indian Health Services. Most patients with CKD, in stages 4 and stages 5, do not have Medicare coverage.

Gary Cellini

The 2018 U.S. Renal Data System Annual Report indicates that 11.6% of patients with CKD with a GFR of less than 30 mL/min/1.73 m2 or an albumin creatine ratio greater than 300 mg/g had original FFS Medicare coverage.3

Remove insurance silos

If HHS wants to build a new payment model that brings CKD and ESRD together, it must first eliminate the insurance payment silos. These exist even though Medicaid and Medicare are both government payers. A good example is the placement of a fistula. Low insurance payments before Medicare eligibility limit fistula placement for uninsured and Medicaid beneficiaries.4 The Centers for Medicare and Medicaid Innovation’s (CMMI) State Dual Eligible Demonstration is attempting to address this issue and others, but the numbers of beneficiaries in the demonstration have been small and the opt-out rate back to FFS original Medicare has been high.5 Considering 30% to 40% of dialysis patients are dual eligible, this Medicaid-to-Medicare transition could be fertile ground for HHS. A problem is the trend toward Medicaid Managed Care. Instead of one State Medicaid agency, we have multiple Medicaid Managed Care plans.

In addition, employers switch health plans, in some cases annually, to reduce costs. Then when the patient starts dialysis, original Medicare is the secondary payer for the 30- month coordination period. This effectively reduces the employer’s long-term financial risk. In fewer than 30 months, with an average coordination period of 18 months, the patient switches to original Medicare as primary coverage. Why would employer health plans invest in a patient’s CKD care when there is a high probability the patient’s employer is going to switch health insurers?

Lastly, the changes in building a CKD-ESRD payment model do not offer any guarantees that primary care physicians and overloaded nephrologists would be willing to cooperate and coordinate care. HHS would also have to create a payment model for CKD care that would keep both the PCP and the nephrologist engaged.

PAGE BREAK

Historical look and what is needed today

In the final evaluation of a previous CKD to ESRD demonstration, the CMS Care Management for High Cost Beneficiaries (2006 to 2009), RTI International cited:

“Based on extensive qualitative and quantitative analysis of performance, we find that the program had no success improving key processes of care or beneficiary experience with care, self-management, or functional status, reducing acute care utilization or reducing mortality, or increasing use of the Medicare hospice benefit. Although per beneficiary per month costs rose slower in the original and refresh intervention groups relative to the comparison groups, statistically significant savings were not achieved.”6

There were many reasons for the lack of statistically significant savings in this demonstration, including a guaranteed saving rate of first 5% to CMS and the exclusive use of claims data and the inability at the time to access the ICD-9 585 codes to identify late-stage CKD beneficiaries. In addition, the average age of the CKD Medicare population attributed to the demonstration was 75 years old. Probably the most important fact is that 2% of the beneficiaries identified and attributed to the demonstration were in stages 4 and 5, 40% in stage 3, 28% in stage 2 and 40% in stage 1.

Any new HHS initiative needs to attribute only Medicare beneficiaries in CKD stage 4 and 5. Today, this is possible with access to biomarkers and the ICD-10 CKD renal codes. In addition, new tools in development, such as artificial intelligence, will enable identification of patients with Medicare and other insurances at high risk for transitioning to dialysis in 12 to 18 months.

The CMMI State Dual Eligible Demonstration (Medicare & Medicaid benefit coordination and payment) and previously with the CMS ESRD Disease Management Demonstration (2006 to 2010) are both examples of integrating and coordinating insurance benefits and care management between insurance payer silos. In the latter demonstration, DaVita and Fresenius Medical Care were both awarded the demonstration, with the condition of state licensing to assume full financial responsibility.7 Both DaVita and FMC sought out health plan partners to fulfill this requirement. DaVita partnered with SCAN Health Plan, and FMC partnered with Sterling Life Insurance and American Progressive Life & Health. Both dialysis companies were able to successfully retain FFS Medicaid as a secondary payer to their Medicare Advantage Plans in this successful CMS demonstration. It is conceivable that HHS will do the same and require other insurance partners for patients in stage 4 and 5 CKD.

PAGE BREAK

Role of home dialysis

“It’s also more appealing for a dialysis company to add patients to a center where one machine can accommodate multiple patients than it is to provide new services to each patient at home. But that isn’t providing the care patients deserve, and we have the power within HHS to test out significant payment changes to boost home dialysis,” Azar said at the Patient Summit.

How will HHS create a plan that incentivizes providers with big investments in bricks and mortar, dialysis machines and dialysis center joint ventures to send more patients home?

Currently, financial incentives driven by dialysis companies’ competition, market share, existing in-center capacity, nephrologist joint ventures and medical directorships prolong the time the patients receive dialysis and lower the quality of care by encouraging in-center dialysis treatments over transplantation, home dialysis and conserving dialysis. The result today is an in-center dialysis patient placement rate of 88%.

The article titled “Peritoneal dialysis growth in the U.S. encounters unexpected hurdles” published in February 2017 and endorsed by the chief medical officers of the 13 largest dialysis providers, said the reasons for underutilization of PD are multifactorial, in part related to a lack of physician training, provider infrastructure issues and unanticipated financial incentive that favor use of in-center dialysis.8

HHS can address this by focusing on payment changes. The simple answer is something we have heard for years and is gaining momentum: a payment system that transforms FFS, volume-based reimbursement for CKD, ESRD and transplantation to a global, value-based systems in which providers are responsible for both clinical and financial outcomes. The pace of this disruption will only increase as payers, including Medicare, Medicaid and employer-based systems, pass financial risk to providers. Though not impossible, the difficulty will be for HHS to encourage integration between Medicare with other insurances and the assumption of financial risk by providers in new demonstrations and legislations. Connecting the insurance silos will be a critical success factor for HHS to consider in its new payment models.

Disclosure: Cellini reports no relevant financial disclosures.