Cost of Kidney Failure Next in CMS' Crosshairs With New ACO Model

Taking aim at payment models for patients on dialysis is the latest attempt to target high-cost areas of Medicare spending.

Patients with kidney failure—also known as end-stage renal disease—are small in number but costly to treat. So CMS has made this group, about 600,000 Americans, the next target in its quest to trim the rate of hospital readmissions, according to a statement.

In 2012, kidney failure patients requiring dialysis accounted for 1.1% of the Medicare population but 5.6% of its spending—a situation that cried out for a new payment model. More than a year ago, CMS called for applications for dialysis centers to take part in a new accountable care organization (ACO) model that organizes the many specialists and touches with the healthcare system these patients experience.

Yesterday, CMS unveiled the model and a list of 13 dialysis centers that will take part. The model, known as Comprehensive ESRD Care or CEC, calls on the provider groups who treat kidney failure patients to share risk for their treatment, and to achieve savings through better coordinated care. It’s based on successes in existing ACOs. According to CMS, “This model will encourage dialysis providers to think beyond their traditional roles in care delivery and support beneficiaries as they provide patient-centered care that will address beneficiaries’ health needs in and out of the dialysis facility.”

The model seeks different financial arrangements with dialysis centers based on their size; groups owning 200 or more facilities will be eligible for shared savings but must take on shared risk. Those with fewer than 200 facilities can pursue shared savings but will not be liable for shared losses.

Kidney failure is the latest target area for CMS, which faces aggressive goals to make more Medicare payments subject to value-based models. Federal officials are going after procedures and treatment areas where the cost of care consumes a larger share of Medicare spending than the population would suggest, as well as common procedures that consume large shares of the budget. In August, for example, CMS issued a proposal to bundle payments for hip and knee replacements, which account for 400,000 procedures a year at a cost of $7 billion just for hospitalization.

Managing renal risk was among the presentations at the most recent live meeting of the ACO and Emerging Healthcare Coalition meeting in San Diego, California. The Coalition is an initiative of The American Journal of Managed Care to help heatlh systems learn more about changing payment models. To review materials from that presentation and to become part of the Coalition, visit http://www.ajmc.com/acocoalition. The Coalition’s next meeting will be October 15-16, 2015, in Palm Harbor, Florida.