Projected impact of the proposed "bundled" ESRD payment system on a small dialysis organization

Payment for outpatient hemodialysis services is currently made by the Centers for Medicare & Medicaid Services on a per-treatment basis using a partially "bundled" composite rate adjusted for geographic and patient characteristics, plus a separately billable portion for medications and services not included in the bundle. In response to concerns over rising costs of the End-Stage Renal Disease Program, and specifically the increasing use of erythropoiesis-stimulating agents, Congress has mandated a new, more inclusive prospective payment system, in which current composite rate services, separately billable medications, and dialysis-related laboratory services will be included in a single payment. It is expected that the so-called bundle will apply a geographic wage adjuster and patient-specific case-mix factors to a base rate to calculate a per-patient, per treatment payment unit. We have modeled the proposed bundle and entered clinical and financial data for 118 Medicare patients dialyzed at a suburban dialysis center in New York State during 2006. Under the proposed bundled system, we stand to lose as much as $118,000 per year in revenue, and we find the case-mix adjusters appear to be poor predictors of our actual costs. We conclude that the proposed bundle places the small dialysis provider at significant financial risk.