Average Dialysis Facility Could Face Steep Penalty Under ETC Model

Dialysis facilities required to participate in Medicare’s End-Stage Renal Disease Treatment Choices (ETC) model had a lower prevalence of transplantation waitlisting, living donor transplantation, and peritoneal dialysis use prior to joining the alternative payment model, according to a new study.

Specifically, compared to control facilities, ETC-assigned facilities had a 9 percent lower prevalence of living donor transplantation, 12 percent lower prevalence of waitlisting, and 4 percent lower prevalence of peritoneal dialysis treatment use.

“These findings have implications for evaluations of the ETC model’s impact and for dialysis facility payments under ETC,” researchers stated in the study.

The study also found that ETC-assigned dialysis facilities not only had a lower prevalence of transplantation and transplantation waitlisting, but they were 14 percent more likely than control facilities to be owned by the second largest dialysis organization and 37 percent less likely to be for-profit and independent.

Compared to control facilities, ETC-assigned facilities also treated 34 percent fewer Hispanic patients and were located in communities with median household incomes that were 4 percent lower on average.

The ETC model aims to increase kidney transplantation rates and use of home dialysis versus conventional in-center dialysis using value-based bonuses and penalties. Medicare made the alternative payment and care delivery model mandatory for dialysis facilities operating in certain regions. The ETC model covers 30 percent of US hospital referral regions.

The mandatory nature of the model coupled with the value-based incentive payments makes the ETC model “the largest randomized trial of payment reform in US history and is unprecedented as a potential source of robust evidence on the impact of payment reforms on care outcomes,” according to researchers.

They also noted that the ETC model is among the first Medicare alternative payment and care delivery models to include structural components that address health equity.

However, imbalances in baseline characteristics of ETC-assigned and control dialysis facilities could create bias in interferences of the ETC model’s impact, the study indicated.

“In the context of randomized trial studies, researchers commonly assume that the treated and control groups are, on average, similar with respect to any characteristics that may affect outcomes. However, in any one experiment, important participant characteristics, including baseline outcomes and key covariates, may be unbalanced and lead to biased inferences,” researchers wrote in the study.

“If ETC evaluators do not adequately account for the baseline differences we observed, they could underestimate the model’s impact: for example, they could conclude that the ETC model was associated with a small decrease in transplant wait-listing when ETC-assigned facilities may have actually increased their patients’ placement on transplant waiting lists as much as or more than control facilities,” they continued.

Additionally, the average ETC-assigned facility is disproportionately likely to receive a value-based penalty considering Medicare plans to adjust payments to the facilities based on living donor transplantation, transplantation waitlisting, and home dialysis use, the study suggested.

“The ETC model does not randomize patients to facilities (or facilities to communities); therefore, having a robust risk adjustment protocol remains essential to adhere to the CMS Innovation Center’s updated strategic objectives and avoid penalizing facilities that serve disproportionately socially vulnerable populations,” researchers wrote.

Part of CMS Innovation Center’s new strategic objectives includes advancing health equity.

CMS plans to age-adjust transplantation rates and stratify dialysis facilities by the proportion of dual-eligible patients they treat or who receive Medicare’s low-income subsidy. However, researchers called for future analysis of the association between social risk factors and low transplant rates and home dialysis use.

Researchers also advised CMS to maintain the ETC model’s “randomization procedure’s experimental nature while accounting for preintervention imbalances.”

“The first is to report—alongside the main, unadjusted findings—the results of sensitivity analyses that adjust for differences between ETC-assigned and control facilities in (1) baseline values of the outcome measures or (2) select covariates potentially correlated with the outcomes and with ETC assignment, including community-level median household income,” they suggested.

“The second is to stratify ETC-assigned and control facilities by these characteristics and report outcomes within strata. The latter approach aligns with how Medicare has adjusted for differences in social risk factors between incentivized and benchmark facilities under other Centers for Medicare & Medicaid (CMS) Innovation payment models,” they continued.

The ETC Model went into effect in January. Dialysis facilities required to participate in the model could face penalties of up to 10 percent of their Medicare reimbursement by 2027.