The 2011 ESRD Prospective Payment System and the Survival of an Endangered Species: The Perspective of a Not-for-Profit Medium-Sized Dialysis Organization

Does One Size Fit All With the Effects of Payment Reform? Dialysis Facility Payer Mix and Anemia Management Under the Expanded Medicare Prospective Payment System

BACKGROUND

The effects of Medicare payment reforms aiming to improve the efficiency and quality of care by establishing greater financial accountability for providers may vary based on the extent and types of other coverage for their patient populations. Providers who are more resource constrained due to a less favorable payer mix face greater financial risks under such reforms. The impact of the expanded Medicare dialysis prospective payment system (PPS) on quality of care in independent dialysis facilities may vary based on the extent of higher payments from private insurers available for managing increased risks.

OBJECTIVES

To evaluate whether anemia outcomes for dialysis patients in independent facilities differ under the Medicare PPS based on facility payer mix.

DESIGN

We examined changes in anemia outcomes for 122,641 Medicare dialysis patients in 921 independent facilities during 2009-2014 among facilities with differing levels of employer insurance (EI). We performed similar analyses of facilities affiliated with large dialysis organizations, whose practices were not expected to change based on facility-specific payer mix.

RESULTS

Among independent facilities, similar modeled trends in low hemoglobin for all 3 facility EI groups in 2009-2010 were followed by increased low hemoglobin during 2012-2014 for facilities with lower EI (P<0.01). Post-PPS standardized blood transfusion ratios were 9% higher for lower EI versus higher EI independent facilities (P<0.01). Among large dialysis organizations facilities, there was no divergence in low hemoglobin by payer mix under the PPS.

CONCLUSIONS

There is evidence of poorer quality of care for anemia under the PPS in independent facilities with lower versus higher EI. Provider responses to payment reform may vary based on attributes such as payer mix that could have implications for health disparities.

Market Competition and Health Outcomes in Hemodialysis

OBJECTIVE

To examine whether market competition is associated with improved health outcomes in hemodialysis.

DATA SOURCES

Secondary analysis of data from a national dialysis registry between 2001 and 2011.

STUDY DESIGN

We conducted one- and two-part linear regression models, using each hospital service area (HSA) as its own control, to examine the independent associations among market concentration and health outcomes.

DATA COLLECTION

We selected cohorts of patients receiving in-center hemodialysis in the United States at the start of each calendar year. We used information about dialysis facility ownership and the location where patients received dialysis to measure an index of market concentration-the Hirschman-Herfindahl Index (HHI)-for HSA and year, which ranges from near zero (perfect competition) to one (monopoly).

PRINCIPAL FINDINGS

An average reduction in HHI by 0.2 (one standard deviation in 2011) was associated with 2.9 fewer hospitalizations per 100 patient-years (95 percent CI, 0.4 to 5.4). If these findings were generalized to the entire in-center hemodialysis population, this would translate to 8,100 (95 percent CI 1,200 to 15,000) fewer hospitalizations in 2011. There was no association between change in market competition and mortality.

CONCLUSIONS

Market competition in dialysis may lead to improved health outcomes.

Consolidation in the Dialysis Industry, Patient Choice, and Local Market Competition

The Medicare program insures >80% of patients with ESRD in the United States. An emphasis on reducing outpatient dialysis costs has motivated consolidation among dialysis providers, with two for-profit corporations now providing dialysis for >70% of patients. It is unknown whether industry consolidation has affected patients' ability to choose among competing dialysis providers. We identified patients receiving in-center hemodialysis at the start of 2001 and 2011 from the national ESRD registry and ascertained dialysis facility ownership. For each hospital service area, we determined the maximum distance within which 90% of patients traveled to receive dialysis in 2001. We compared the numbers of competing dialysis providers within that same distance between 2001 and 2011. Additionally, we examined the Herfindahl-Hirschman Index, a metric of market concentration ranging from near zero (perfect competition) to one (monopoly) for each hospital service area. Between 2001 and 2011, the number of different uniquely owned competing providers decreased 8%. However, increased facility entry into markets to meet rising demand for care offset the effect of provider consolidation on the number of choices available to patients. The number of dialysis facilities in the United States increased by 54%, and patients experienced an average 10% increase in the number of competing proximate facilities from which they could choose to receive dialysis (P<0.001). Local markets were highly concentrated in both 2001 and 2011 (mean Herfindahl-Hirschman Index =0.46; SD=0.2 for both years), but overall market concentration did not materially change. In summary, a decade of consolidation in the United States dialysis industry did not (on average) limit patient choice or result in more concentrated local markets. However, because dialysis markets remained highly concentrated, it will be important to understand whether market competition affects prices paid by private insurers, access to dialysis care, quality of care, and associated health outcomes.

Managing oral phosphate binder medication expenditures within the Medicare bundled end-stage renal disease prospective payment system: economic implications for large U.S. dialysis organizations

BACKGROUND

From January 2016, payment for oral-only renal medications (including phosphate binders and cinacalcet) was expected to be included in the new Medicare bundled end-stage renal disease (ESRD) prospective payment system (PPS). The implementation of the ESRD PPS has generated concern within the nephrology community because of the potential for inadequate funding and the impact on patient quality of care.

OBJECTIVE

To estimate the potential economic impact of the new Medicare bundled ESRD PPS reimbursement from the perspective of a large dialysis organization in the United States.

METHODS

We developed an interactive budget impact model to evaluate the potential economic implications of Medicare payment changes to large dialysis organizations treating patients with ESRD who are receiving phosphate binders. In this analysis, we focused on the budget impact of the intended 2016 integration of oral renal drugs, specifically oral phosphate binders, into the PPS. We also utilized the model to explore the budgetary impact of a variety of potential shifts in phosphate binder market shares under the bundled PPS from 2013 to 2016.

RESULTS

The base model predicts that phosphate binder costs will increase to $34.48 per dialysis session in 2016, with estimated U.S. total costs for phosphate binders of over $682 million. Based on these estimates, a projected Medicare PPS $33.44 reimbursement rate for coverage of all oral-only renal medications (i.e., phosphate binders and cinacalcet) would be insufficient to cover these costs. A potential renal drugs and services budget shortfall for large dialysis organizations of almost $346 million was projected.

CONCLUSIONS

Our findings suggest that large dialysis organizations will be challenged to manage phosphate binder expenditures within the planned Medicare bundled rate structure. As a result, large dialysis organizations may have to make treatment choices in light of potential inadequate funding, which could have important implications for the quality of care for patients with ESRD.