Reforming medicare's dialysis payment policies: implications for patients with secondary hyperparathyroidism

To demonstrate how expanding services covered by a "bundled payment" can also expand variation in the costs of treating patients under the bundle, using the Medicare dialysis program as an example.

Observational claims-based study of 197,332 Medicare hemodialysis beneficiaries enrolled for at least one quarter during 2006-2008.

We estimated how resource utilization (all health services, dialysis-related services, and medications) changes with intensity of secondary hyperparathyroidism (sHPT) treatment.

Using Medicare claims, a patient-quarter level dataset was constructed, including a measure of sHPT treatment intensity.

Under the existing, narrow dialysis bundle, utilization of covered services is relatively constant across treatment intensity groups; under a broader bundle, it rises more rapidly with treatment intensity.

The broader Medicare dialysis bundle reimburses providers uniformly, even though patients treated more intensively for sHPT cost more to treat. Absent any payment adjustments or efforts to ensure quality, this flat payment schedule may encourage providers to avoid high-intensity patients or reduce their treatment intensity. The first incentive harms efficiency. The second may improve or worsen efficiency, depending on whether it reduces appropriate or inappropriate treatment.