Growing ESRD Enrollment Prompts MA Plans to Form Value-Based Arrangements

Beneficiaries with end-stage renal disease (ESRD) are increasingly shifting from Medicare fee-for-service (FFS) to Medicare Advantage, leading more Medicare Advantage plans to form value-based arrangements with kidney care management companies, according to Avalere.

Beneficiaries with ESRD have typically received coverage through Medicare FFS because only those already enrolled in a Medicare Advantage plan before initiating dialysis were eligible for the private program through 2020.

A provision under the 21st Century Cures Act that went into effect on January 1, 2021, made all Medicare beneficiaries with ESRD eligible to enroll in Medicare Advantage plans.

In the 2021 open enrollment period, the share of Medicare beneficiaries with ESRD enrolled in Medicare Advantage increased from 22.7 percent to 30.3 percent, a previous analysis from Avalere found. According to MedPAC, the share increased to 41 percent by the end of 2021.

Avalere also found that, between January 2020 and December 2021, the total number of ESRD patients enrolled in FFS fell by 21 percent.

As enrollment grows, Medicare Advantage plans have aimed to reduce financial risk for ESRD treatments to combat reimbursement hurdles.

A previous Avalere analysis found that Medicare Advantage plans may be paid rates for dialysis that are lower than the actual costs paid by Medicare FFS. In addition, research has shown that Medicare Advantage organizations pay a higher per-dialysis treatment rate to dialysis facilities than Medicare FFS.

In the 2024 Medicare Advantage and Part D Advance Notice, CMS proposed to continue paying plans on a statewide basis despite stakeholder urges to modify the payment methodology.

Medicare Advantage organizations have started to partner with kidney care management companies to withstand the underpayments for covering beneficiaries with ESRD coupled with the high reimbursement rates they provide to dialysis facilities.

In 2021, CMS updated network adequacy standards and removed outpatient dialysis facilities from the provider types that must meet time-and-distance requirements to allow Medicare Advantage plans more flexibility when partnering with dialysis organizations.

The partnerships allow Medicare Advantage plans to provide care to patients with ESRD and chronic kidney disease (CKD) who have not initiated dialysis. By providing care coordination and care management services, offering in-home and remote care, and promoting patient education, the organizations help reduce the total cost of care for ESRD and CKD patients.

The collaborations between Medicare Advantage plans and kidney care organizations are typically value-based arrangements. Organizations may have various capabilities, such as the ability to take on financial risk associated with patient management in exchange for earning shared savings payments.

UnitedHealth Group currently partners with kidney care management company Somatus, and Cigna works with Monogram Health to offer an in-home program.

Most value-based arrangements are relatively new, and plans don’t know if they will lead to meaningful improvements in care delivery and cost reduction. However, the arrangements reflect CMS goals to boost value-based care for ESRD treatment.

The Center for Medicare and Medicaid Innovation has launched mandatory and voluntary value-based models to improve care and reduce costs by boosting kidney transplant rates and home dialysis utilization.

However, past research found that one of the value-based models, the End-Stage Renal Disease Treatment Choice model, did not effectively increase home dialysis rates.