Bundled Payment Systems: Is the ESRD Program a Model or Does it Not Go Far Enough?

Ezekiel Emanuel is the oldest of three brothers, his younger brother Rahm is Mayor of Chicago and Ari is an agent in Hollywood.  Ezekiel is a physician, a bioethicist who has recently devoted his career to public policy.  He has been writing a series of editorials in the New York Times that outline his view of the current state of healthcare in the U.S. and approaches to addressing the disparities in access to care, the lack of health insurance for millions and, the real elephant in the room, the growing population of patients with multiple chronic conditions that is driving the overall expenditures on healthcare toward 18 percent of the gross domestic product (GDP).

It is this latter group that is most concerning. Representing 10percent of the population, these patients consume nearly two-thirds of all healthcare dollars.  One of the solutions suggested by Dr. Emanuel is to “bundle” payments to providers.  As he explains:  “…The idea is to force all of a patient’s care providers to work together.  They have a strong incentive to eliminate unnecessary tests and treatments and use less expensive implants, drugs and devices that don’t compromise quality, and to prevent infections and other complications that could land the patient back in the hospital…[This is] even more important…for patients with chronic illnesses…these conditions have clear, widely accepted clinical guidelines…that could form the basis for bundled payment…”

This should all sound familiar to nephrologists.  Patients with ESRD comprise less than one percent of all Medicare patients but account for nearly eight percent of all Medicare costs.  Payment for dialysis care has been bundled since nearly the inception of the program and recent changes in the reimbursement system have extended the bundle to include injectable medications, and an expanded list of laboratory tests.  If one closely examines the overall costs of dialysis patient care, however, it is clear that the current bundled payment does nothing to address the most important driver of overall costs- hospitalizations.  In fact, hospitalizations and rehospitalizations account for over 40% of the total costs of care for dialysis patients.  So does this mean that Dr. Emanuel’s concept is wrong – that bundled payments for the chronically ill are not effective in controlling costs and driving higher quality care?

Clearly the devil is in the details.  The current bundled payment system for dialysis services, by focusing on what is “dialysis-related” is inadequate to test the Emanuel hypothesis.  In fact, the renal community has already proven that bundling payments can drive better outcomes and constrain costs of care.  The recently completed CMS Demonstration Project clearly showed that by fully bundling payment to the provider, enabling the provider to invest in holistic, integrated and coordinated care to improve patient health and avoid unnecessary hospitalizations, a true win-win is created.  Patients have better outcomes and the healthcare system costs are constrained.  The most recent movement in healthcare toward ACOs is an acknowledgment by policy makers and providers that bundling payment and creating aligned incentives make sense for patients and the overall system.  Unfortunately, efforts by the renal community to persuade CMS to allow ACOs with attribution of patients because of the presence with kidney disease did not prevail, and there is great concern that our patients will be lost in a general ACO.  We hope that the Centers for Medicare and Medicaid Innovation will be more willing to allow us to build on the great success we have shown in demonstration projects in order to benefit the lives of many more of our patients.

As Thomas Edison said:  “The doctor of the future will give no medicine but will interest his patients in the care of the human frame, in diet and in the cause and prevention of disease.”  Nearly a century later politicians and patients are demanding a true health care system rather than a sick care system, and for those with patients with kidney disease, it is time we stepped up and provided just such an approach.

I look forward to your comments, until next time.

Striving to bring quality to life,
Allen R. Nissenson, MD

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