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ESRD managed care demonstration: financial implications.

Dawn M Dykstra¹, Nancy Beronja, Joel Menges

¹University Renal Research and Education Association, 315 W. Huron, Suite 260, Ann Arbor, MI 48103, USA.

Health Care Financing Review

|November 25, 2003

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The end stage renal disease (ESRD) managed care demonstration increased Medicare costs compared to the fee-for-service (FFS) system. While patients gained significant financial benefits, the demonstration resulted in financial losses for healthcare providers.

Area of Science:

Health Economics
Public Health Policy
Nephrology

Background:

The Centers for Medicare & Medicaid Services (CMS) initiated a managed care demonstration for end stage renal disease (ESRD) patients in 1996.
This initiative aimed to evaluate the feasibility and financial implications of managed care models within the ESRD population.

Purpose of the Study:

To analyze the financial impact of the ESRD managed care demonstration.
To assess the economic effects on the Federal Government, participating healthcare sites, and Medicare beneficiaries with ESRD.

Main Methods:

Comparative financial analysis of Medicare costs for demonstration enrollees versus the traditional fee-for-service (FFS) system.
Evaluation of economic outcomes for healthcare providers (sites) and patients enrolled in the demonstration.

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Main Results:

Medicare expenditures were higher for demonstration enrollees than projected under the FFS system.
Healthcare sites incurred losses or minimal financial gains due to expanded benefit packages, including prescription drugs and eliminated patient cost-sharing.
ESRD beneficiaries experienced substantial annual financial advantages, averaging approximately $9,000.

Conclusions:

The ESRD managed care demonstration led to increased costs for Medicare.
While beneficial for patients financially, the demonstration model presented economic challenges for healthcare providers.
The study highlights the complex financial trade-offs in implementing managed care for ESRD patients.