New Payment Models Have Shifted Control to Nephrologists

Author : Strive Health

Historically, the majority of nephrologist reimbursement has come from treating and managing dialysis patients. While an important aspect of patient care, this imbalance has tethered nephrologists’ revenue to their relationships with dialysis organizations through Medical Director Agreements, monthly capitated payments (i.e., dialysis rounding reimbursements), and dialysis facility joint ventures. As the dialysis industry consolidated, a small number of LDOs assumed outsized negotiating power in their relationships with nephrologists.

This dynamic worked its way into legacy value-based kidney care models, such as CMS’ Comprehensive ESRD Care Model (or “ESCO Model”), which launched in 2015. The model was available to nephrologists but required partnership with a dialysis organization in order to participate. Because the ESCO Model was focused on dialysis organizations, nephrologists were left out of solution design and not incentivized to evolve or transform their practices. Interdisciplinary resources, coordinated workflows, and data-driven patient management were largely developed and overseen by LDOs, with limited physician engagement.

Additionally, the model was limited to dialysis patients and assigned patients based on their dialysis facility, not their nephrologist. These structural limitations reinforced imbalanced industry dynamics and led to lackluster results for the ESCO Model, which, while a step in the right direction, achieved only modest quality improvements and less than a 1% reduction in costs in its latest performance year.


Building on learnings from the ESCO Model and the healthcare industry overall, new value-based payment models such as CKCC, KCF, and ETC have flipped the script and placed nephrologists back at the center of value-based kidney care.

An Avalere analysis of ACO data shows that physician-led entities generate 7x better results than their non-physician-led counterparts. Further, CMS explicitly stated in its request for applications that one of its goals for CKCC and KCF compared to the ESCO Model is “empowering nephrologists to take the lead in coordinating care for beneficiaries across the care spectrum.”

Structurally, CKCC and KCF assign patients based on their nephrologist, and nephrologists choose to participate in these models on their own terms without needing to partner with a dialysis organization. This puts more control and independence in nephrologists’ hands when choosing if and how to participate in new payment models.

CKCC and KCF include not only ESRD patients, but also CKD patients, which enables nephrologists to access new financial incentives by managing the full continuum of care, not only dialysis care. This empowers nephrologists to achieve cost savings across the entire patient journey, unlocking significantly greater savings opportunities than simply managing patients after they have already transitioned to dialysis (see Figure 1).

Figure 1. Cost savings opportunities across the care continuum. Note: USRDS analysis of Medicare patients

These changes set the stage for CKCC and KCF participants to generate significantly better results than legacy dialysis-focused models. Several past demonstrations that have included both CKD and ESRD patients have generated >10% cost reduction in total cost of care and >40% reduction in hospitalizations, which is over 10x stronger performance than the ESCO Model.

CKCC and KCF also include capitated payments to nephrologists for managing their CKD patients, which in many cases increases their CKD-related reimbursements. And commercial payor programs have followed suit by structuring their own value-based payment models that empower nephrologists and incentivize upstream CKD patient management.

These structural innovations put nephrologists back in control of how they participate and succeed in value-based payment models. New financial incentives for CKD management lessen their dependence on ESRD revenue and unlock more balanced revenue streams. Also, nephrologists now have more power to diversify their relationships outside of dialysis organizations. They can now partner with innovative specialized value-based kidney care companies while maintaining their dialysis partnerships with LDOs, who may be less equipped and less incentivized to focus on upstream CKD care and value-based models.

“The practice of nephrology is experiencing a renaissance, as value-based payment models and balanced revenue streams dot the landscape of care delivery. The opportunity to partner with innovative companies who specialize in value-based care has given nephrologists the needed levers to finally align their patient care with (value-based) goals.”

– Stephen Clyne, D.O., Sr. Nephrologist, Michigan Kidney Consultants

Overall, new payment models have empowered nephrologists in an unprecedented way. To optimize patient care and maximize financial incentives, nephrologists need new capabilities in value-based management and CKD care management, and now they are in control of how to access these capabilities and apply them toward success in value-based care.


The new payment models introduced by the CMS are indicative of an industry shift toward value-based care. Strive Health partners with nephrologists, health systems, payors, and medical groups to create integrated solutions that make effective value-based kidney care a reality.

Our partnerships include solutions to support you and your patients transition to value-based kidney care.  To talk more about value-based care options, complete our contact form and we will reach out.

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