New Medicare Payment Model to Incentivize At-Home Kidney Dialysis

Published February 12, 2020

The End-Stage Renal Disease Treatment Model (ETC) model was expected to begin January 1, 2020. The comment period for the rule ended September 16, 2019 but as of January 23, 2020, CMS had not issued its final rule which involved payment adjustments. “If finalized, we would provide information on the effected date of payment adjustments under the ETC Model in the final rule,” states CMS on its website.

The ETC rule and four voluntary payment models were originally proposed in a July 2019 executive order by President Trump, and could reduce Medicare spending. CMS spends $114 billion on kidney disease annually, which amounts to more than 20 percent of all fee-for-service dollars spent by Medicare.

During the comment period, Robert Neall, the secretary of health for the state of Maryland and Katie Wunerlich, executive director of the Maryland Health Services Cost Review Commission praised the ETC payment model because of its potential to save costs. Maryland stated ESRD accounts for 1.1 percent of the state’s fee-for-service Medicare population, but 8.2 percent of total expenditures. Medicare covers all patients with ESRD, regardless of age.

Tethered to Dialysis Centers 

Under the ETC model, ESRD facilities and clinicians would have some Medicare payments adjusted based on their home and transplant rates.  

At this stage, CMS is requiring only certain ESRD facilities in randomly selected geographic areas to participate in the payment model. Participation will cover approximately 50 percent of adult Medicare beneficiaries with ESRD across the county. CMS claims it hopes the ETC model will increase the use of home dialysis and rates of kidney and kidney-pancreas transplants. 

   According to the U.S. Government Accountability Office, about 88 percent of dialysis patients in 2016 used in-center dialysis and spent 12 hours per week receiving this treatment on average.  

Devon Herrick, health care economist and policy adviser to The Heartland Institute, which publishes Health Care News, says ESRD disproportionately affects the poor and minorities. It is the only disease in the United States that is automatically covered by Medicare, Herrick says.  

“As a result, it is cumbersome, prone to fraud and very inconvenient,” Herrick said. “People literally spend hours a day, often two or more days per week at a dialysis center. There they recline in threadbare recliners for hours on end while a dialysis machine spins, cleansing their blood of toxins. The current system does them a disservice.”

Encouraging At-Home Dialysis, Transplants

The advantages to undergoing dialysis at home include convenience to patients and lower costs, Herrick says.  

“The idea of treating ESRD patients in their own homes is far better. Machines that cost something like $25,000 could be used eight hours a day every night while patients sleep,” Herrick said. “This would be far more convenient and better for their health than eight hours a week at a dialysis center.”

Additionally, the fee-for-service structure of the ESRD Medicare payments reimburse ESRD providers when they provide more services, encouraging providers to prescribe dialysis over kidney transplants, which could extend a patient’s lifespan and save money.

According to the U.S. Renal Data System’s 2018 Annual Report, a year of hemodialysis treatment costs $90,971, whereas a kidney transplant costs $34, 780. A 1999 study in the New England Journal of Medicine found the long-term mortality rates for transplant patients is 48 to 82 percent lower than for those on dialysis.


Kelsey E. Hackem ([email protected]writes from Washington State.