October 22, 2003 - The University Renal Research and Education Association (URREA) will evaluate the impact of enrolling patients with end-stage renal disease (ESRD) in disease management systems. Press release from URREA.

The ESRD Disease Management Demonstration, to be evaluated by URREA, will feature two distinct payment models: a capitation payment system and a fee-for-service system.

June 28, 2003 - On May 12, 2003 HHS Secretary Tommy Thompson sent a report to Congress entitled, "Toward a Bundled Outpatient Medicare End Stage Renal Disease Prospective Payment System." It is now available (Phase I Report) on the Centers for Medicare and Medicaid Services (CMS) web site.

The 63-page WORD� document has been downloaded and unzipped by RenalWEB.

In other news, the date of submission of applications for the End-Stage Renal Disease (ESRD) Disease Management Demonstration is being extended 30 days (until October 2, 2003). Notice from the Federal Register.

Questions & Answers - This document provides responses to frequently asked questions about the demonstration that CMS has received to date or has anticipated in advance.

June 16, 2003 - The new ESRD disease management demonstration project is seeking bids for organizations to treat end-stage renal disease patients through two payment options. The first would pay a flat rate higher than the current rate for outpatient dialysis but would require organizations to cover all the costs of routine drugs and lab tests under that bundled payment. A second option would pay a capitated rate to health plans to provide all Medicare-covered services to enrolled patients, even care not related to dialysis. Story from American Medical News.

June 5, 2003 - The Centers for Medicare and Medicaid Services (CMS) has updated its information page on the End-Stage Renal Disease (ESRD) Disease Management Demonstration.

The Federal Register notice is also available:

End stage renal disease disease management demonstration - Text or PDF formats

May 30, 2003 - HHS Secretary Tommy G. Thompson yesterday announced plans for a new demonstration program to develop new approaches to improve care for Medicare beneficiaries with end-stage renal disease (ESRD). The new disease-management program will allow organizations experienced with treating ESRD patients to develop financing and delivery approaches to better meet the needs of beneficiaries with this disease. Press release from HHS.

A notice soliciting applications from organizations interested in the new demonstration will be published in the June 4 Federal Register. Applications are due August 28.

More information on the End-Stage Renal Disease (ESRD) Disease Management Demonstration is available on the CMS web site.

May 14, 2003 - On May 12, 2003 HHS Secretary Tommy Thompson sent a report to Congress entitled, "Toward a Bundled Outpatient Medicare End Stage Renal Disease Prospective Payment System." It will be available on the Centers for Medicare and Medicaid Services (CMS) web site within two weeks.

The 63-page report ends with this conclusion:

"It has been almost 20 years since the ESRD composite payment rates were first implemented. Although it has the distinction of being CMS�s first PPS, the ESRD composite payment system is limited in that it only covers routine maintenance dialysis services. For reasons presented in this report, the composite payment system needs to be updated and revised to include separately billable ESRD services, a conclusion with which both MEDPAC and the Congress agree.

In this Report to Congress we have presented an overview of the ESRD composite payment system and its limitations. Consistent with the statutory directive set forth in section 422 of BIPA, we described some of the more important issues that must be addressed before an expanded or bundled ESRD PPS can be implemented. CMS�s Phase I or feasibility phase research to develop a bundled payment system reveals that currently available data sources appear to be sufficient to develop an expanded ESRD PPS, and that case mix may be an important factor in risk adjusting any developed prospective payments. However, further study to evaluate the potential significance of case mix in a bundled PPS is necessary. Monitoring quality of care and patient outcomes will be essential in any revised ESRD PPS in order to ensure that these vulnerable Medicare patients are not adversely impacted by a bundled PPS�s financial incentives. Although there will be many challenges, we do not anticipate that the problems encountered under Phase II will be any more difficult than those which CMS has previously encountered and overcome in its development of PPSs for other types of providers.

The last section of the report described CMS�s development of an ESRD composite rate input price index or market basket. Because the framework of a case-mix adjusted bundled payment system has yet to be developed, the construction of a bundled ESRD market basket must be deferred, but the methodology will be similar to that described in connection with the composite rate market basket. Similarly, the structure for evaluating the non-market basket or discretionary adjustment factors for the ESRD composite rate needs to be specifically developed, although recent trends in the rate of increase in ESRD composite rate costs suggest that the net effect of these factors is zero.

CMS has already initiated Phase II of its research effort. That phase will involve further development of the patient and facility specific analytical files, and the eventual formulation of bundled ESRD payment options. The outcome of our research, of course, remains uncertain. Whether a bundled case mix adjusted ESRD PPS ultimately can be developed remains to be seen. However, we look forward to working with representatives from providers, patients, and other interested parties as our research progresses to attempt to achieve this objective."

On May 9th, CMS updated the End-Stage Renal Disease (ESRD) Managed Care Demonstration Project (DP) information on its web site.


May 3, 2003 - Kaiser Permanente has released information stemming from its participation in the Centers for Medicare and Medicaid Services' (CMS/HCFA) End-Stage Renal Disease (ESRD) Managed Care Demonstration Project. News item from Business Wire.

"The independent scientific evaluation is clear. Medicare ESRD patients who joined Kaiser Permanente showed a 31 percent reduction in mortality rates," said Peter Crooks, M.D., Physician Director for the Southern California Kaiser Permanente site.

March 12, 2003 - The long awaited report on the Centers for Medicare and Medicaid Services' (CMS/HCFA) End-Stage Renal Disease (ESRD) Managed Care Demonstration Project (DP) has been released, but not yet to the CMS web site.

Reports were released last week on two demonstration projects that tested new approaches for providing care to patients with special needs under capitated payment models. The End-Stage Renal Disease (ESRD) demonstration enrolled patients with end-stage renal failure, who are currently prohibited from enrolling in managed care plans after the onset of kidney failure. Three ESRD demonstration sites offered benefits important to dialysis and transplant patients, such as no copayments on pharmaceuticals, nutritional supplements, free transportation to the dialysis facility, dental care, and rehabilitative and preventive care.

The following information was extracted from the Executive Summary of these reports:

EVALUATION RESULTS FROM THE ESRD MANAGED CARE DEMONSTRATION

Background

ESRD, or total kidney failure is fatal, unless the person is treated by dialysis, which artificially replaces the functions of the kidney, or kidney transplantation. Even with treatment, the health status of ESRD patients is diminished: the average hemodialysis patient spends approximately 14 days in the hospital and is prescribed about eight medications per year. Year-at-risk spending for all medical care (not just Medicare covered services) is more than $65,000 per hemodialysis patient. In the 1972 Amendments to the Social Security Act (P.L. 92-603, Section 2991), Congress extended full Medicare coverage to persons with ESRD, subject to minimal Social Security requirements, regardless of their age.

Under the Tax Equity and Fiscal Responsibility Act of 1982, Medicare beneficiaries with ESRD are not permitted to enroll in HMOs unless they were enrolled in an HMO prior to the onset of ESRD. The Omnibus Budget Reconciliation Act of 1993, as one of the modifications in the S/HMO section, required CMS to conduct a managed care demonstration project for end-stage renal disease patients. In 1996 CMS launched the ESRD Managed Care Demonstration to study the experience of offering a managed care option to Medicare ESRD patients. The intent was to see whether extension of an integrated system of care to ESRD beneficiaries was operationally feasible, efficient, and, most importantly, able to produce health outcomes as good as the current fee-for-service (FFS) system.

The demonstration was intended to test the feasibility and effectiveness of the following:

• Permitting year-round enrollment and disenrollment options for ESRD beneficiaries to enroll in participating HMOs;
  
  
• ESRD-focused case management, with particular emphasis on improved outcomes of care;
  
  
• Preventive and supportive interventions and more comprehensive benefit coverage for ESRD patients; and,
  
  
• An ESRD payment and risk adjustment method specific to ESRD patients that, among other factors, incorporated cause of renal failure and treatment modality (dialysis or transplant).

The evaluation of the demonstration assessed many quality of care indicators, process measures and final outcomes for patients with comparison groups from randomly selected facilities and patients in the same state. The findings in the Report to Congress are summarized below.

Findings

Enrollee Characteristics:

• Beneficiaries who enrolled in the demonstration were younger, more likely to be male, of white race and had fewer co-morbid conditions, especially cardiovascular diseases.

Quality of Care and Outcome Indicators:

• Demonstration patients� survival was the same as or better than comparison patients, even after adjustment for demonstration patients� healthier status (although some unmeasured differences in health status may still exist).
  
  
• Hospitalization levels, after adjustment for patient differences, were similar in the demonstration and comparison groups.
  
  
• Clinical indicators in the demonstration patients, such as anemia management, dialysis adequacy, and vascular access rates, were the same as or better than comparison patients.
  
  
• Access to transplantation (as defined by being listed on a transplant waiting list and by likelihood of receiving a transplant) among beneficiaries at the Florida demonstration site (where the contracted transplant provider was 300 miles away) was substantially lower than such access among fee-for-service patients. The California site, which contracted with three local transplant centers, had transplantation rates indistinguishable from the comparison patients.

Patient Satisfaction and Quality of Care:

• Satisfaction levels with providers were high among patients in both Demonstration and FFS groups. However, demonstration patients indicated higher satisfaction with health plan benefits.
  
  
• When contrasted with patients in the comparison groups, demonstration patients experienced some improvement in quality of life, particularly in mental well being.

Costs:

• Government expenditures for demonstration patients were higher than expenditures would have been if they had remained in FFS Medicare. The demonstrations� risk adjustment formula did not adequately compensate for the younger and healthier enrollees.
  
  
• Demonstration sites experienced financial losses (HOI) or only small gains (Kaiser). This finding should be viewed in the context of the rich benefit packages available in 1995 that the sites maintained throughout the demonstration.
  
  
• Medicare beneficiaries who enrolled reported much lower out-of-pocket medical expenses than under traditional FFS Medicare.

Conclusions:

Qualitatively, compared to ESRD beneficiaries in traditional FFS Medicare, the evaluation suggests that enrolling ESRD beneficiaries in the demonstration plans produced results similar to those that other studies have found from enrolling aged or disabled beneficiaries in M+C plans. First, younger, more male, and healthier patients chose to enroll. Quality of care and patient outcomes were similar to, and occasionally better than, FFS comparison groups after adjustment for differences in demographic characteristics and health status factors. Medicare payments to both the demonstration and M+C plans were higher than payments to FFS providers would have been because the younger and healthier enrollees required less medical care than the average comparison group beneficiary. Finally, both demonstration and Medicare M+C enrollees report satisfaction with access to care and quality of care under their plan. Demonstration patients report lower out of pocket expenses than under traditional FFS Medicare.

August 8, 2001 - The Centers for Medicare and Medicaid Services (CMS/HCFA) End-Stage Renal Disease (ESRD) Managed Care Demonstration Project (DP) has been concluded and the ESRD/dialysis community is awaiting the final report. This is an important step in moving to a more comprehensive approach for the care of dialysis patients. Currently, nearly all dialysis providers are paid on a per-dialysis-treatment basis. This reimbursement system provides few or no financial rewards for maximizing patients' overall health and well-being. The current system focuses on a few blood work tests, URR and Hct, to determine "quality of care". Moving to a managed care or disease management system for dialysis patients could provide strong financial incentives for healthcare providers to optimize all aspects of dialysis patients' health.

Here is the ESRD Managed Care Demonstration Project web page from the CMS/HCFA web site.

February 12, 2001

There is a growing trend of dissatisfaction, expressed both by patients and their care givers, with the current approach to dialysis patient care. At the present time, most dialysis centers are simply reimbursed a set fee on a per treatment basis. In terms of economic incentives, the more cheaply the treatment can be delivered, the better. By restructuring the economic reward system, Renal Disease Management could bring fundamental, positive changes to patient care in the dialysis facilities.

Instead of the insurance company, HMO, or government paying all the different physicians, hospitals, and clinics involved in the patient's care separately, the payer would instead pay one negotiated lump sum to a disease management organization to cover all of the patient's health care costs for a year. This amount would be between $60,000 and $80,000, depending on the patient's age and "pre-existing" conditions. Dialysis treatments only make up 30-40% of the total healthcare costs of an ESRD patient. Under this system, the disease management company has strong financial incentives to keep the patients as healthy as possible.

Simply put, if the patient's care is managed well and the patient stays healthy and has few complications, the disease management company will only have to pay for the dialysis treatments, routine medications, and preventative care. The healthier the patients is, the more of the lump sum payment the disease managment company gets to keep.

If the patient's care is poorly managed and/or delivered and the patient is frequently hospitalized and has many complications, the disease management company will have to pay all those associated costs/services and will likely lose money on that patient.

Under renal disease management, the economic rewards for dialysis patient care are no longer derived solely from providing dialysis treatments as cheaply as possible, but instead are maximized by focusing on comprehensive and preventative health care. For the first time, it makes economic sense to employ practitioners who follow patients through all aspects of their care. It also makes economic sense to spend on preventative health care and staff training in order to avoid the higher costs associated with crises and serious complications.

Home hemodialysis treatments or even daily home hemodialysis would likely be encouraged under a reimbursement systems based on renal disease management. Under current US law, there are few financial incentives to create home hemodialysis programs.

Here is an important article that appeared in a recent issue of Dialysis and Transplantation:

"Disease Management for ESRD: The Time Has Come"
by Theodore I. Steinman, MD; John Dickmeyer, MD; William D. Mattern, MD; Allen R. Nissenson, MD; Thomas F. Parker, MD

One of the reasons for the consolidation of dialysis clinics under companies like Fresenius Medical Care, DaVita, Renal Care Group and others has been to anticipate a change in federal reimbursement to a renal disease management approach. Listed below are some of the renal disease management divisions that have been established:

Baxter's renal disease management division is RMS Disease Management. (link is no longer available)

One of Fresenius Medical Care's renal disease management divisions is Optimal Renal Care. It partners with payers who have ESRD patients in their plans.

Another Fresenius Medical Care renal disease management division is Renaissance Health Care, Inc., a specialty managed care company for people with end stage renal disease (ESRD). Renaissance is a partnership of nephrologists and FMC North America.

[This message has been edited by Gary Peterson (edited 11-24-2003).]