Historically, Medicare patients with end-stage renal disease (ESRD) have been primarily covered by fee-for-service (FFS) Medicare. Through 2020, only those individuals already enrolled in a Medicare Advantage (MA) plan before they initiated dialysis were eligible for MA coverage. With the implementation of the 21^st Century Cures Act, all Medicare patients with ESRD became eligible to enroll in MA plans beginning in the 2021 open enrollment period. A prior Avalere analysis reported an increase in the percentage of Medicare beneficiaries with ESRD enrolled in MA from 22.7% to 30.3% in that initial 2021 enrollment period. MedPAC estimates that the proportion increased to 41% by the end of 2021. Research suggests mortality among ESRD patients from COVID-19 in 2020 was 40.5% compared to 25% among chronic kidney disease (CKD) patients. An Avalere analysis found that from January 2020 to December 2021, the total number of ESRD patients enrolled in FFS declined by 21%. The impact of the pandemic and the implementation of the 21st Century Cures Act likely explain this drop in total enrollment in FFS. While this trend of patients shifting from Medicare FFS to Medicare Advantage is expected to continue over the coming years, the Centers for Medicare & Medicaid Services (CMS) forecasts stabilization in approximately 4 years.

MA Plan Considerations for Increasing Enrollment of Patients with ESRD

With this enrollment growth, many MA organizations have reevaluated their care-management approaches with the goal of reducing financial risk for the costly and complex treatment of this disease. While MA plans are paid an adjusted rate to cover enrolled patients on dialysis, a previous Avalere analysis indicated that MA plans may be paid at rates below the actual costs paid by Medicare FFS. Further, studies have shown that MA organizations pay a higher per-dialysis treatment rate to dialysis facilities than Medicare FFS. Despite calls by certain stakeholders to modify the payment methodology to MA plans for enrollees with ESRD, CMS has not modified this risk-adjustment methodology. Most recently in the Calendar Year 2024 MA and Part D Advance Notice released in February 2023, CMS proposed to continue paying plans on a statewide basis, as opposed to a smaller geographic area.

For MA organizations, the potential underpayment for covering these beneficiaries, compounded with the higher reimbursement rates to dialysis providers, presents new challenges as enrollment for this population has grown in recent years. To allow MA organizations additional flexibility when contracting with dialysis organizations, CMS updated network adequacy standards by removing outpatient dialysis facilities from the types of providers that must meet time-and-distance requirements beginning in 2021.

Approaches to New and Innovative Partnerships

To offset some of the costs of providing care to patients with ESRD, MA plans have turned to partnerships with new and innovative kidney care management companies (e.g., Interwell Health, Somatus, Monogram Health, Strive). Through these partnerships, plans aim to provide high-touch care to both patients with ESRD and patients with CKD who have not initiated dialysis. To attempt to reduce the total cost of care, these organizations have focused on addressing existing barriers to care, including providing care coordination and care management services, offering in-home and remote care, supporting patient education, and conducting analytics aimed at earlier disease diagnosis.

MA plans and these care management organizations typically engage in value-based arrangements, though the terms of these contracts are highly variable as kidney care management companies have differentiated capabilities. For example, a third-party care management company could take on financial risk associated with patient management, in return for the opportunity to earn shared savings payments. Despite these entities’ recent entry into the kidney care landscape, they have established value-based and risk-bearing contracts with payer organizations. For example, Somatus recently expanded its care partnership with UnitedHealth Group to additional markets, and Monogram expanded its home-focused program with Cigna to all patients covered under Cigna MA plans.

Many of these partnerships are still in their early stages, and it remains unknown if these value-based arrangements will translate to meaningful improvements in care delivery and cost reduction. Importantly, this increased focus in care management and value-based care mirrors efforts created by the Center for Medicare & Medicaid Innovation through a series of mandatory and voluntary models seeking to facilitate better care and reduced costs for the treatment of these conditions. These models seek to propel increases in kidney transplant rates, home dialysis utilization, and other measures to drive higher-quality care at reduced costs to the Medicare program.

Looking Ahead

Avalere leverages deep expertise in policy, market access, data analytics, and quality disciplines to assess MA enrollment and broader kidney care trends. To learn more about the evolving kidney care environment and how Avalere can help your business drive access and continuity of care, connect with us.