Case-mix adjustment for an expanded renal prospective payment system.

Area of Science:

• Health economics
• Nephrology
• Healthcare policy

Background:

• Medicare is evaluating prospective payment for a bundle of dialysis services.
• Case-mix adjustment is crucial for equitable payment under such a system.

Purpose of the Study:

• To assess limitations of case-mix adjustment for Medicare's potential dialysis services payment expansion.
• To model the impact of prospective payment on providers.

Main Methods:

• Developed exploratory models using patient characteristics to explain cost variations.
• Analyzed Medicare allowable charges per dialysis session.
• Simulated provider financial outcomes under prospective payment.

Main Results:

• Patient characteristics explained 11.8% of cost variation per dialysis session.
• Adding hematocrit and prior utilization improved model but may create adverse incentives.
• Individual provider financial gains/losses were significant, but systematic impacts across provider classes were modest.

Conclusions:

• Current patient data offers limited explanatory power for case-mix adjustment in bundled dialysis payments.
• Potential adverse incentives and variable provider impacts necessitate careful consideration for Medicare's payment reform.
• The overall financial impact across provider types may be less dramatic than for individual facilities.