Avalere analysis finds that ESRD beneficiaries who could be aligned under the KCC model are significantly more likely to be younger and non-white compared to beneficiaries with stage 4 or 5 CKD, and their average monthly expenses are roughly 2.5 times higher. These key differences in the demographic characteristics and spending patterns between the CKD and ESRD populations eligible for alignment under the model will influence provider participants’ strategies and how they target interventions to manage beneficiary spending.

Background

CKD patients (stages 1–5) comprise 13% of the FFS Medicare population over the age of 65 and account for 24% of total spending, while Medicare beneficiaries with ESRD comprise 1% of the Medicare FFS population and account for 7% of total spending.^1,2 To address the outsized costs associated with these populations’ complex clinical needs, the CMMI introduced a new voluntary payment model focused on late-stage renal disease that will begin next year: the KCC model.³ This model replaces and builds on the prior Comprehensive ESRD Care model, which will end in March 2021.

The goals of the KCC model are to prevent or slow the progression of kidney failure for beneficiaries with stage 4 or stage 5 CKD, improve care management for beneficiaries with ESRD, and increase rates of home dialysis and kidney transplant. The core participants in the model will be nephrologists and nephrology practices, but they may partner with other clinical care providers including dialysis organizations and transplant centers. Under the model, participants will receive risk-adjusted, capitated payments for kidney care services, including an incentive for providing home dialysis, and may choose from a range of payment options that vary the level of financial risk up to full shared savings/shared loss on total cost of care. There is also a bonus payment for successful kidney transplants.

Beneficiary alignment is based on a combination of diagnosis, utilization, and demographic data (see Methodology below). Using Medicare Part A and Part B FFS claims data, Avalere simulated attribution to the KCC model and explored the characteristics of the attributed beneficiaries.

Results

In 2019, there were nearly 40 million Medicare FFS beneficiaries. Of those, Avalere identified 224,996 (0.6%) stage 4 and 5 CKD beneficiaries and 218,695 (0.5%) ESRD beneficiaries as meeting the criteria for attribution in the KCC model in 2019. These beneficiaries are responsible for 7% of total Medicare FFS spending.

Demographics

KCC-eligible ESRD beneficiaries include many younger Medicare beneficiaries, as ESRD is a qualifying condition for Medicare entitlement and those with ESRD are eligible for Medicare before the age of 65. Avalere found that 28% of KCC-eligible ESRD beneficiaries are under the age of 55 and 25.5% are between 55 and 65 (Figure 1). However, the primary pathway to Medicare entitlement is reaching age 65. As such, 86% of the Medicare FFS population is age 65 or older. Similar to the overall FFS Medicare population, 89% of KCC eligible CKD beneficiaries are 65 or older.

While the overall FFS Medicare population has more females than males (53% female compared to 47% male), just over half (51%) of KCC-eligible CKD beneficiaries are male and the majority of KCC-eligible ESRD beneficiaries are male (57% male). Over 80% of the CKD (82%) and ESRD (83%) beneficiaries eligible for KCC have at least 1 of the following chronic conditions: diabetes, heart failure, and atherosclerotic heart disease.

Like the overall FFS Medicare program, the KCC-eligible CKD population is over 75% White. The KCC-eligible ESRD population, however, is substantially more diverse (see Figure 2). Black and Hispanic FFS Medicare beneficiaries make up a disproportionate share of the KCC-eligible ESRD population compared to Medicare FFS overall.

Spending

In 2019, Medicare Parts A and B spending for KCC-eligible CKD beneficiaries was $2,657 per member per month (PMPM). Inpatient spending accounted for 41% of total PMPM expenditures, while hospital outpatient services and professional claims (provider fees for care delivered in outpatient settings such as physician offices, hospital outpatient clinics, and ambulatory surgical centers) each accounted for 22% of spending (Figure 3). For KCC-eligible ESRD beneficiaries, Medicare Parts A and B spending was $6,472 PMPM in 2019. Outpatient spending accounted for 50% of total PMPM expenditures, and inpatient spending accounted for 29% (Figure 3). In comparison, spending was $819 PMPM in 2019 for the average Medicare FFS beneficiary, with 34% and 21% of spending in inpatient hospital and outpatient settings, respectively.

Conclusion

The KCC model represents a novel approach to managing patients with stage 4 and 5 CKD and ESRD, creating incentives for care coordination, better education of treatment modalities, and appropriate alternatives to facility-based hemodialysis. The demographic profile of beneficiaries with CKD potentially attributed to the model is similar to that of the overall Medicare population, while the population of beneficiaries with ESRD is significantly younger, less white, and more male on average. In addition, the average monthly spending of ESRD beneficiaries is 2.5 times higher than late-stage CKD beneficiaries and roughly 8 times higher than the average Medicare beneficiary, with half of total spending concentrated in the outpatient setting due to reliance on facility-based dialysis services. Given this variation in patient demographic characteristics and spending patterns across the target beneficiary population, model participants should assess the unique needs of their patients with kidney disease to ensure success under the KCC-specific model payment mechanisms.

The KCC model was introduced as part of the Trump administration’s Advancing American Kidney Health initiative, and it is unclear how the Biden administration will seek to implement this model and the other components of this initiative. The current administration recently delayed the implementation of the model from April 1, 2021, to January 1, 2022. Avalere will continue to monitor and assess developments related to the model and the Biden administration’s policy efforts related to kidney health in the coming months.⁴

Methodology

To conduct this analysis, Avalere used 2018 and 2019 Medicare Part A and Part B FFS claims data obtained under a research data use agreement with the Centers for Medicare & Medicaid Services (CMS). With the benefit of access to administrative data, Avalere is able to model attribution, benchmarks, and financial performance for KCC participants. KCC-eligible beneficiaries were identified using 100% of Medicare Parts A and B FFS claims, and beneficiary characteristics and PMPM for the overall Medicare FFS beneficiaries were analyzed using a 20% random sample of FFS claims data.

Avalere identified beneficiaries eligible for attribution in the KCC based on criteria from the CMMI.⁵ Specifically, Avalere identified Medicare beneficiaries with either CKD stage 4 or 5 (defined with diagnosis codes of N18.4 or N18.5) or ESRD (at least 1 maintenance dialysis claim with any type of bill 72X, except for type of bill 72X with condition code 84). The sample was restricted to beneficiaries at least 18 years of age with no acute kidney disease.

For KCC eligibility, Avalere implemented the “2-touch rule,” requiring beneficiaries to have at least 2 visits with a nephrologist (identified by specialty code 39). For CKD the “2-touch rule” required beneficiaries have 2 evaluation and management codes within 365 days, and for ESRD the rule required 2 or more Monthly Capitation Payment (MCP) visits within a 90-day period.⁶

Total Medicare Part A and B spending included claim costs from all settings (inpatient, outpatient, professional, durable medical equipment, home health, skilled nursing facility, and hospice) for which Medicare was the primary payer. The months that a beneficiary was attributed in 2019 were tallied and used to create PMPM total cost amounts. Beneficiary demographic characteristics were linked to the claims from the Medicare enrollment summary files.

Notes

1. United States Renal Data System. 2020 USRDS Annual Data Report: Epidemiology of kidney disease in the United States. National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, MD, 2020: Figure 6.1
2. https://adr.usrds.org/2020/end-stage-renal-disease/9-healthcare-expenditures-for-persons-with-esrd/.
3. https://innovation.cms.gov/innovation-models/kidney-care-choices-kcc-model/.
4. The COVID-19 public health emergency, new policy changes, and existing unmet patient needs will pressure the evolving payer, provider, and reimbursement landscape for kidney care in 2021. Avalere Insight, February 18, 2021. https://avalere.com/insights/kidney-care-policy-market-shifts-in-light-of-new-and-old-challenges/.
5. Kidney Care Choices (KCC) Model Beneficiary Alignment Methodology Paper. November 17, 2020. Prepared for the CMS. Prepared by RTI International and IMPAQ International.
6. Under the KCC model, the CMS requires that a beneficiary have at least 2 visits with a nephrologist within the same KCE to be attributed to that KCE.