NN&I - July 2010
Renal Economics 28 Nephrology News & Issues July 2010Subscribe to our free eNewsletter at www.nephronline.com What is more significant however, is the title of the GAO report, which is "CMS should monitor access to and quality of dialysis care promptly after implementation of new bundled pay -ment system." The title suggests that either Medicare doesn't trust clinicians to prescribe adequate care due to profit reduction, or that the bundle will be sufficiently low enough to economical -ly force such action by some providers. The latter is unlikely. The United States government has provided access to dialysis for 40 years, and forcing providers completely out of business is improbable. However, it does support the ongoing trend of the consolidation of independents and big chain dialysis (see Table 1, page 24). Survival in a bundled world There is no doubt that the large dial-ysis players have a significant advan-tage under a bundled payment system. All of the quality control measures the government is requiring of providers are already in place at the largest two chains or if not, can quickly be imple-mented. Fresenius and DaVita also have the ability to access both the credit and equity markets, given their current fis-cal strength. Small and medium-sized provid-ers have a different challenge. They only have access to the debt markets to fund expansion and maintenance. Given the bailouts in the United States and Europe, will these providers have access to this capital going forward if the credit supply continues to be strained? But whether a small, medium, or large dialysis provider, there are chal -lenges ahead. 1. Under a bundled payment, what is the payer really paying for? In other words, once the bundled payment is received, how does the revenue get allocated? Tracking per treatment rev -enue will be difficult and the ability to measure financial performance will be confusing, at best. 2. Under the joint venture model, will nephrologists be conflicted over offering their patients the best possible treatment vs. the clinic's bottom line? This is not to imply that physicians will reduce drug therapies to existing Medicare patients. However, the new policy does provide the incentive to economize on care. The more efficient the bundled payment is managed, the better the bottom line for both provider and their physician partners. 3. As with times past, the ability to survive, regardless of where the bun-dled rate falls, will depend on third party payer contracts. Medicare-only facilities do not break even now, regardless of the average EPO dose or how efficient the clinic staffing may be. Providers pass the underfunded Medicare treatment losses along to the commercial carriers. Wherever the bundle lands, the same will continue to be true. If history is any indication of what will happen under the new system, one should assume that out -side revenue pressure would increase along with efforts to expand market share that includes third-party payer contracts. Conclusion There is no doubt that dialysis care will continue to grow, with new clinics being needed to meet the demand of the baby boomers. The question will be how the bundle will treat all provider types, and how the private sector will respond. Be prepared for 2011. References1. United Network for Organ Sharing. www.unos. org 2. United States Government Accountability Office. Report to Congressional Requesters. End-Stage Renal Disease. CMS should monitor access to and quality of dialysis care promptly after implementa-tion of new bundled payment system. March 2010. GAO-10-295 -800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E Total dialysis patients Patients treated by 10 largest renal providers RenalEconomics_15.indd 28 6/17/10 3:01:12 PM
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