NN&I - July 2010
Renal Economics 24 Nephrology News & Issues July 2010Subscribe to our free eNewsletter at www.nephronline.com The changing tide in ESRD careBy John D. Sullivan, PhD Dr. Sullivan is a principal with Sullivan and Associates, a health care consulting firm, and an associate professor at Boston University. Introduction The End-Stage Renal Disease Program has gone through many changes since receiving federal funding in 1973. The Medicare entitlement was supposed to be an example of universal health care, and while many would argue that it has saved thousands of lives, it never lived up to its expectations of rehabilitating patients. From a financial perspective, the program's underachievement makes perfect sense. The patient population has changed significantly, suffering from a variety of clinical conditions that make treatment difficult, challeng -ing, and extremely complex. Because the disease, by its very definition, is end-stage, it is expensive to provide continual high quality care. Likewise, no real focus at the payer level has been made in the prevention of ESRD. Diabetes and hypertension still run undiagnosed (the jury is still out on whether health care reform will change that by insuring more people), and while more attention has been paid to identifying chronic kidney disease earlier, the primary focus for universal health care is to prevent or reduce the number of expensive treatments. In six months, the renal community will step into a new payment system, brought on by a government that is trying to fix the mistakes of universal access past. Medicare will put forth a new strategy that will tighten pay-ments under a bundled system with the combined pressures of tying payment to quality. Although a new payment policy for Medicare, bundled payments have existed for years. Commercial car -riers, such as Kaiser Healthcare, have used these negotiated "all inclusive" rates to limit ancillary charges. The difference, however, is that these other third party payers have also tradition -ally reimbursed, even under a bun- dle, at significantly higher rates than Medicare for the identical service. Since implementation of any govern -ment policy is long and drawn out, it is difficult to ascertain where the bundle will actually settleand how expensive the quality measures will be to imple-ment and maintain. Providers remain on the sidelines wondering if the busi-ness of dialysis will be worthwhile when the final bundle is revealed. Evolution of the bundle In the 1970s through the 1990s, the dialysis service industry was really at its peak. The government had stepped in to provide care for this population that had been essentially pushed to the side of the road with little or no access to this life-saving treatment. De novo development was rapid and nephrolo -gists were turned into businessmen and women as physician-owned clinics were encouraged. A provision in the law extending the clinic as part of the nephrologist's practice. From Medicare's perspective, the underlying problem was that the pro-jected need was always understated. It was believed that the expense of the program would decrease as technol-ogy would evolve to provide access to better more efficient care, combined with an increase in kidney transplants. Of course, transplants did increase, as did outcomes, but organ dona-tions remain flat with an expanding wait list. Complicating matters was an increase in hypertension and diabetes in American society. Combine this with the aging population and the number of ESRD patients will ultimately lead to faster patient growth than the industry has experienced in its first 40 years of existence. Once the government understood the differences in regional reimburse - 80% 60% 40% 20% 0% 1995 2009ETable 1. Market share for the 10 largest dialysis providers 2000 2001 2002 2003 2004 2005 2006 2007 2008E RenalEconomics_13.indd 24 6/16/10 6:43:23 PM
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