Table 2.

The legislative genesis of a Medicare-funded bundled reimbursement program, balancing quality metrics with cost containment and presaging current CMS initiatives for shared risk and public reporting

YearPolicy/EventQuality MonitoringFinancial ImplicationsIncentivized Effect
1972Medicare Parts A and B benefits extended to individuals with ESRD (of any age) entitled to receive Social Security benefitsN/ACost underestimated at $75 million for the first year and $250 million over initial 4 yrOutpatient dialysis becomes widely available in the United States to virtually all individuals with kidney failure
1983Initial composite rate payment establishedN/AReimburses routine dialysis services at approximately $130/session and allows for additional separately billable itemsIncreasing outpatient dialysis availability nationwide
1989Epoetin approved for use in ESRDN/AReimbursed by CMS as a separately billable item at $40 per dose with an additional $30 payment for ≥10,000 unitsGreater use of epoetin by not-for-profit versus for-profit providers (7)
1991Epoetin reimbursement changed to reflect actual useN/AUltimately approximately $10 per 1000 unitsGreater use of epoetin by for-profit versus not-for-profit providers (8); epoetin becomes a revenue generator with charges approaching $2 billion by 2006 (9)
1994–1999Balanced Budget Act of 1997 requires measuring and reporting quality of renal dialysis servicesESRD CIP and ESRD CPM project established; these similar ventures merge in 1999NoneNone, given the absence of reimbursement implications and public reporting
2001Dialysis Facility Compare launchedPublicly reports dialysis facility-specific performance measures including anemia control, dialysis adequacy, and survivalNoneIncentivizes meeting the publicly reported measures
2003–2008MMA (2003) proposes and MIPPA (2008) legislates an expanded bundle for “renal dialysis services: to include drugs, laboratory tests, and other commonly furnished items”MIPPA mandates creation of a QIP that must include but is not limited to an anemia and a dialysis adequacy metricBurgeoning costs of separately billable services, most notably epoetin, to be included in capped bundled feeImplementation began January 1, 2011
2011ESRD PPS enacted, with automatic 2% reduction in CMS reimbursementESRD QIP enacted, penalizing 0%–2% of dialysis facility income for failure to meet anemia and dialysis adequacy targets; QIP performance to be publicly reportedShifts much but not all financial risk for costliest patients to the dialysis facilitiesAnticipated substantial reduction in use of separately billable items, particularly epoetin, financially incentivized over meeting QIP targets
LDOs post strong earnings for the first bundled year
  • CMS, Centers for Medicare and Medicaid Services; MMA, Medicare Modernization Act of 2003; MIPPA, Medicare Improvements for Patients and Providers Act of 2008; QIP, Quality Incentive Program; PPS, Prospective Payment System; CIP, Core Indicators Project; CPM, clinical performance measures; LDO, large dialysis organization.