ESRD Managed Care Demonstration: Financial Implications

By Dykstra, Dawn M.; Beronja, Nancy et al. | Health Care Financing Review, Summer 2003 | Go to article overview

ESRD Managed Care Demonstration: Financial Implications


Dykstra, Dawn M., Beronja, Nancy, Menges, Joel, Gaylin, Daniel S., Oppenheimer, Caitlin Carroll, Shapiro, Jennifer R., Wolfe, Robert A., Rubin, Robert J., Held, Philip J., Health Care Financing Review


INTRODUCTION

The intent of the ESRD demonstration was to determine whether an extension of an integrated, capitated system of care to ESRD beneficiaries would be operationally feasible, efficient, and able to produce outcomes comparable to the current FFS system. The demonstration began at three sites across the country: Health Options, Inc. (HOD, a subsidiary of Blue Cross[R]/Blue Shield[R] of Florida, based in Miami; Kaiser Permanente Southern California Region (Kaiser), based in Los Angeles; and Xantus Health Care Corporation, based in Nashville, Tennessee. The demonstration initially started in September 1996 and the sites began enrolling patients in 1998. Only the Kaiser and HOI sites remained operational for the duration of the demonstration, which stopped enrolling new patients in early 2001. By that time, Kaiser had enrolled a total of 1,649 beneficiaries and HOI had enrolled a total of 967 (including for both sites, those who later disenrolled or died).

Enrollment into the demonstration was strictly voluntary. At the start of enrollment for each site, adult chronic renal failure patients with Medicare primary insurance who were residents in the service area counties were indirectly recruited through marketing materials mailed by CMS. Subsequently, the sites were given opportunities to market directly to ESRD patients and staff at local dialysis facilities. Patients who were already enrolled in the Kaiser Medicare-risk health maintenance organization (HMO) plan were listed and randomized by CMS, and given the opportunity to join on a two-for-one basis (i.e., for every two new enrollees, Kaiser could enroll one of their existing managed care patients in the plan). (1) These Kaiser patients are referred to as rollover patients. Enrollment commenced in February and June 1998 for the California and Florida sites, respectively. Active recruitment and intake were continuous for at least 12 months at both sites, with enrollment continuing until the end of the 3-year period.

A detailed description of the demonstration, its evaluation, and findings regarding quality of life and patient satisfaction are reported elsewhere (The Lewin Group, and University Renal Research and Education Association, 2002). Like the findings regarding quality of life and patient satisfaction, analyses of clinical outcomes revealed that demonstration patients fared as well as, or in some cases better than, a representative sample of comparison FFS patients. Specifically, the mortality experience of demonstration patients was the same as Or better than comparison patients even after adjustment for patients' healthier status (although some unmeasured differences in health status may still have existed). Clinical indicators, such as anemia management, dialysis adequacy, and vascular access rates, also were the same as or better than the comparison patients (The Lewin Group, and University Renal Research and Education Association, 2002).

In addition to testing the ability of managed care organizations (MCOs) to provide care to ESRD beneficiaries of a quality at least comparable to that provided in the FFS system, the demonstration was also designed to test the economic implications and financial viability of capitated managed care for this chronically ill population. That is, once it is established that such a program can produce clinical results comparable to FFS, it is important to determine whether the program as currently designed t While the HOI had very few ESRD patients in its health plan prior to the demonstration, Kaiser had about 2,000 ESRD patients in its regular Medicare-risk plan at the outset, is financially sustainable. The financial evaluation sought to assess the financial impact of the demonstration from the perspectives of the three key stakeholders--the Federal Government, the sites, and the ESRD Medicare beneficiaries.

PERSPECTIVE

Federal Government

A fundamental policy question is what the demonstration patients would have cost CMS had they enrolled in the Medicare FFS system. …

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