Proposed Mandatory Payment Model for Dialysis Could Have Skilled Nursing Promise

The federal government on Wednesday unveiled a new proposed payment model for certain kidney-related conditions, and several providers in the space say it could have serious potential for skilled nursing operators.

Under the proposed End-Stage Renal Disease (ESRD) Treatment Choices (ETC) model, Medicare would expand coverage of care for kidney diseases and offer financial incentives for the provision of dialysis services in the home — which, for the purposes of the rule, would also include the skilled nursing setting.

“The government is looking at a skilled nursing facility as a home for this treatment,” Henry Kauftheil, chairman and co-founder of dialysis provider Dialyze Direct, told Skilled Nursing News.


Should it become permanent, the new model would indeed include a code that treats the SNF setting as a home, a Centers for Medicare & Medicaid Services (CMS) spokesperson confirmed to SNN.

Kyle Stone, general counsel at SNF-focused dialysis provider Concerto Renal Services, was in Washington, D.C. for presentations on the new rules Wednesday, and said he came away with the same conclusion — though he also emphasized that more details about the exact structure of the incentives and potential penalties remain forthcoming.

“Thankfully, it was reaffirmed that nursing home dialysis does fall under home, and all the incentives that will be borne from providing dialysis to patients at their homes will also translate to nursing home dialysis,” Stone said. “In that respect, the general winds are in our favor.”


Building on a foundation

The federal government already allows skilled nursing facility residents to receive “home” dialysis services, with interest in the field growing as the Patient-Driven Payment Model (PDPM) for nursing homes looms. Under that new structure, which takes effect October 1, operators will see their reimbursements more closely linked to resident acuity, with potential financial benefits for taking on residents who require dialysis care.

One nursing home in Illinois, for instance, projected $1 million in annual revenue gains from a new dialysis program. And Dialyze Direct is reporting a surge in interest in their services in the lead-up to PDPM. In recent months, a pair of national providers have announced pilot programs with the Neptune, N.J.-based home dialysis operator: Signature HealthCARE teamed up with Dialyze to roll out the services in two facilities, with an eye on more, while HCR ManorCare signed on with the provider for a total of four SNFs.

Though reimbursements do play a role in the dialysis calculus — especially considering the slim margins plaguing the industry — operators also pointed to resident comfort and the potential for capturing a larger market share through specialization.

“The main driver was trying to provide a better experience for our current patients, as well as the opportunity to offer a service that might be able to attract new patients that we haven’t been able to care for at all,” ManorCare assistant vice president Eric O’Neill told Skilled Nursing News.

In addition, in-home dialysis treatments at SNFs present an opportunity to keep residents in the facility and avoid potential rehospitalizations — and the attendant penalties from CMS under the Value-Based Purchasing (VBP) program and other models. Most dialysis treatments occur at a third-party treatment center, and the risks associated with transporting frail elderly residents to and from the clinic can be great.

“If something goes wrong, they go to the hospital, and the hospital penalizes the nursing home, even though the nursing home wasn’t involved,” Dialyze Direct COO Josh Rothenberg told SNN earlier this year.

‘Uniformly positive adjustment’

The proposed payment model will provide a “uniformly positive adjustment” on Medicare reimbursements for home-based dialysis services for the first three years of the model, according to CMS, with additional adjustments that could be either positive or negative depending on the rate of in-home and in-center dialysis.

CMS will select participants in the proposed mandatory ETC model — including facilities that care for end-stage renal disease patients and associated clinicians — in randomly-selected geographic areas, with the goal of covering 50% of adults who receive care for the disease.

Should CMS finalize the rule, it would take effect on New Year’s Day 2020 and extend through June 30, 2026. Once the proposal is formally entered into the Federal Register, all interested stakeholders will have a chance to provide feedback and suggestions for 60 days.

As part of the rule — and a related set of voluntary models for nephrologists — CMS would also expand coverage for treatment of chronic kidney disease (CKD), with the goal of preventing its progression into end-stage real disease. That factor, according to Stone and Concerto Renal Services CEO Shimmy Meystel, could have the largest impact on skilled nursing providers.

“There’s a lot of opportunity for CKD programs in nursing homes, but nobody wants to do it, because it doesn’t make money,” Meystel told SNN.

But that could change now that clinicians will have an incentive to provide those services in SNFs and other settings. Current rules allow Medicare beneficiaries with stage 4 CKD to receive six one-hour sessions, though that would evolve with the new models.

This expanded focus on CKD could thus encourage nursing homes to employ an on-site nephrologist and specialize in kidney care, a doubly beneficial niche given the increasing acuity incentives under PDPM.

“The program could be big, because if operators wanted to specialize in CKD programs, that could be a big pull for an operator,” Meystel said.

Macro-level changes

The proposed ESRD rule came as part of a larger package of kidney-focused initiatives from CMS and the Department of Health and Human Services (HHS), coinciding with a Wednesday executive order from President Trump. The sweeping document includes new incentives for potential kidney donors — such as child care support and reimbursement for lost pay — aimed at increasing the overall supply of organs available for transplant, as well as a variety of levers designed to shift dialysis services to the home.

“Crucially, our new system will ensure that more patients undergoing dialysis can do so from the comfort of their own home,” the president said during a Wednesday signing ceremony, according to a White House transcript. “And doing this from the home is a dramatic, long-overdue reform — something that people have been asking for for many, many years. It sometimes amazes me that it never got done.”

About 88% of all ESRD patients nationwide receive their dialysis care at dedicated centers, the government noted, while also seeing higher mortality and hospitalization rates than other Medicare beneficiaries.

“The way we currently pay for chronic kidney disease and kidney failure isn’t working well for patients,” CMS administrator Seema Verma said in a statement announcing the rules.

The new rules will additionally encourage transplants over dialysis treatment, with nephrologists potentially receiving bonus payments for successful procedures. In the nursing home space, however, most residents are ineligible for receiving donor organs, and Stone said he and other long-term care operators have received assurances that operators who deal with sicker patients won’t be penalized for offering appropriate alternatives.

That said, many questions about the model remain, including which specific Medicare beneficiaries will eventually fall under the mandatory model, as well as the exact amount of bonus payments that operators can receive. For the time being, Stone said he’ll focus on reading the rules and providing appropriate commentary to CMS in advance of potential finalization — repeatedly emphasizing that “the devil’s in the details.”

For now, at least, the nursing home dialysis world remains cautiously optimistic. Kauftheil, of Dialyze Direct, characterized the total package of moves as a kind of vindication, a sign that the federal government acknowledges the importance of the industry’s services.

Kauftheil and his team initially focused on the aged, vulnerable population to prove the potential for strong outcomes, and he believes the new rules will continue to attract SNF operators to the specialty — while also helping his company capture more business up and down the continuum.

“It’s also going to be great for those people who are just passing by the nursing home as a rehab, as a step-down — and then just going home, where we hope to continue serving them as home dialysis patients,” he said.

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