Executive Summary: The ESRD Treatment Choices Model and the Future of Kidney Care

Sep 24, 2020 | 2 months ago
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Ben Kuhn, Head of Provider Solutions, Strive Health

On September 19, 2020, CMS released its final rule for the ESRD Treatment Choices (ETC) model. ETC is the mandatory model that was created as part of the 2019 Advancing American Kidney Health executive order and announced in parallel with the Kidney Care Choices (KCC) voluntary models. The final rule covers nearly a third of kidney care providers in the country. Although the model was first announced last year, details were not confirmed until a 900+ page final rule was released last week.

Here, we provide an executive summary of the ETC model and discuss its implications for nephrologists and dialysis facilities throughout the country.

What is the ETC model and who does it impact?

The ETC model is a seven-year Medicare program that runs from January 1, 2021 through 2027. Under ETC, CMS will adjust Medicare fee-for-service reimbursements to participating dialysis facilities, nephrologists and other kidney care clinicians, such as nurse practitioners.

ETC was initially announced as part of the Advancing American Kidney Health executive order, which intends to prevent kidney failure, promote use of alternative dialysis modalities, and increase kidney transplants. The ETC model is run out of the innovation center at CMS (CMMI). While CMMI has introduced voluntary models aimed at kidney health in the past, such as the Comprehensive ESRD Care (CEC) model and CKCC, ETC is the first-ever kidney care model that requires mandatory participation.

CMS selected 30% of the nation’s hospital referral regions (HRRs) for the program and requires that all Medicare-enrolled dialysis facilities and nephrologists in those regions participate.

How will dialysis and nephrologist reimbursement change as a result of the ETC model? 

Under the model, CMS will adjust Medicare fee-for-service reimbursements based on home dialysis and transplant rates. Adjusted payments include the Medicare ESRD PPS (per treatment) reimbursement for dialysis facilities and MCP (per patient per month) reimbursement for nephrologists.

The model begins with a 3% positive adjustment applied to all home dialysis claims in 2021 and increases in risk on a yearly basis. By 2026, CMS will apply up to a 10% downward adjustment and 8% upward adjustment on all applicable dialysis facility claims, and up to a 9% downward adjustment and 8% upward adjustment on all applicable nephrologist claims.

There are two adjustment types: Home Dialysis Payment Adjustment (HDPA), which is an upward adjustment to only home dialysis claims, and Performance Payment Adjustment (PPA), which is an upward or downward adjustment to all applicable claims. The HDPA tapers off after three years, while the PPA ramps up in risk on a yearly basis, building to maximum upside and downside risk in 2026 and 2027. This approach is in line with CMMI’s philosophy of starting providers in “upside only” arrangements, then graduating them to upside-and-downside risk arrangements over time.

To maximize their payment adjustments, dialysis facilities and nephrologists must outperform against benchmarks that are set for home dialysis and kidney transplant rates. The benchmarks are determined based on the performance of comparable geographies that are not participating in the ETC model, as well as providers’ own historical performance.

With a potential 10% downward adjustment and 8% upward adjustment for dialysis facilities (a 18% total swing), and a potential 9% downward adjustment and 8% upward adjustment for nephrologists (a 17% total swing), ETC represents meaningful stakes for providers. Using the example of a nephrologist managing a panel of 50 Medicare fee-for-service patients, total reimbursement can decrease by up to $13,500 or increase by up to $10,800 (a $24,300 total swing) simply based on ETC performance.

What does the ETC model mean for the future of kidney care?

CMS is keen to introduce kidney-centric models due to the high spend of the disease. While ESRD accounts for less than 1% of the Medicare population, it makes up over 7% of Medicare expenditures. ETC is the latest example of CMS’ commitment to move kidney care into value-based models that emphasize pathways with lower costs and better outcomes, such as home dialysis and transplant.

Importantly, ETC is complementary to the KCC voluntary models, and participants can be involved with both models simultaneously. With ETC and KCC emphasizing home dialysis and transplant, expect more nephrology practices to either make big investments in new technology, care team resources, and workflows or to partner with specialized value-based kidney care companies that have already made these investments in order to succeed.

Commercial payors are also likely to follow CMS’ lead and adopt similar reimbursement structures that emphasize upstream patient management, home dialysis, and transplant. Nephrologists who participate in multiple value-based care arrangements through CMS and/or commercial payors can apply the same infrastructure toward all their value-based care efforts.

Overall, ETC is another big indication of an aggressive movement toward value-based kidney care. Now, the spotlight is on upstream patient management, home dialysis, and transplant in an unprecedented way. Expect ETC to be one of multiple large-scale initiatives that will drive fundamental change in how kidney care is delivered and reimbursed.

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