Medicare Payment Variation for Kidney Transplantation: Implications for Episode-Based Bundled Payments

University Of Michigan At Ann Arbor, Ann Arbor MI

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Abstract

? DESCRIPTION (provided by applicant): The cost of treating Medicare beneficiaries with end-stage renal disease (ESRD) exceeds $30 billion annually. Rising costs have prompted Centers for Medicare & Medicaid Services (CMS) policymakers to test and evaluate new payment and delivery models that are specific to Medicare beneficiaries with ESRD, including bundled payments. While such initiatives have so far focused on dialysis, kidney transplantation may be candidate for payment reform because it is expensive, costs are growing and many large commercial payers have already implemented bundled payments. However, whether CMS should pursue episode-based bundled payments for kidney transplantation hinges on several key unknowns. First, the opportunity for savings from bundling depends on the magnitude of existing Medicare payment variation across transplant centers and whether this variation is warranted or unwarranted. Wide payment variation may actually be warranted if it mainly reflects differences in a transplant center's case- mix and/or its use of advanced processes of care. Second, it is largely unknown whether high- cost centers have better or worse transplantation outcomes. To address these specific knowledge gaps, we propose a study that evaluates comprehensively the variation in kidney transplantation costs and the association between costs and transplantation outcomes. In the first aim, we will examine variation in Medicare payments. Using national Medicare claims linked to a robust clinical registry (i.e., Scientific Registry of Transplant Recipients), we will identify patients who underwent kidney transplantation and their associated claims from the initial hospitalization through 90 days after discharge (i.e., an episode of care). We will first determine how much variation exists in per capita payments across all transplant centers, and the extent to which this variation can be explained by patient/donor characteristics and advanced processes of care (i.e., case-mix). We hypothesize that, by using the SRTR, we will reveal that a considerable amount of kidney transplantation payment variation is actually explained by case-mix. In our second aim, we will assess the association between case-mix adjusted episode payments and transplantation outcomes (i.e., long-term patient and graft survival). We posit that many high cost centers will prove to have better outcomes compared to low cost centers, after adjusting for case-mix using key variables from the SRTR. This study will provide immediately useful information for CMS policymakers and other stakeholders as they debate the merits of implementing episode-based bundled payments for kidney transplantation.