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How Kidney Care Choices impacts your revenue

January 9, 2020

In our work within nephrology care we have now seen over 5 million patient records, which total over 45 million patient-years worth of real world evidence data. Having the privilege to work with this incredible data set, which combines EHR records, claims data, and treatment data, has allowed us to build up a unique understanding of nephrology care. We decided to put this data to use, examining the impact of the KCC models on nephrology revenue.

Under the new CMS Kidney Care Choices (KCC) models, clinic and dialysis unit based Fee for Service (FFS) revenue for Chronic Kidney Disease (CKD) and End Stage Renal Disease (ESRD), will be zeroed out in favor of a value based upfront payment. The Quarterly Capitated Payment (QCP) is for CKD patients at stages 4 and 5 and the Adjusted Monthly Capitated Payment (AMCP) is for patients with ESRD. The QCP will replace payment for several different outpatient Evaluation and Management (E/M) codes as well as other care management codes. While the AMCP replaces the current Monthly Capitated Payment (MCP) reimbursement for dialysis care beneficiaries. The new structure is designed to significantly simplify payments and provide greater opportunity to provide care for CKD management in the hope of driving improved care outcomes. 

Eagle eyed observers will have noticed that the AMCP will reimburse at the current MCP rate for managing an in-center dialysis beneficiary with 2-3 visits during the month. So practices who bill a majority of their patients at 4+ visits during the month will see a dip in revenue for assigned dialysis care beneficiaries. This has a few practices worried about their revenue under the new model’s structure. 

Given that the capitated payment system means no longer being reimbursed for individual appointments or visits with a patient, the number of times you currently see patients in the clinic/unit will have significant impact on whether you might stand to gain or lose from the new system. We thought that it would be a useful exercise to examine the numbers in closer detail to model how revenue for a typical nephrology practice might change under the new models.   

Current revenue (baseline): 

Estimated current annual revenue received for CKD patients under the FFS service structure is provided in Table 1 below. The table estimates average annual medicare FFS revenue for various levels of decline to ESRD. A population of 500 CKD patients is assumed as this corresponds to the threshold of patients required to participate in the Kidney Care Care First Model. We have chosen to use the E/M 4 Established Office CPT code (99214) as this is the code most frequently billed for CKD care appointments. The Medicare allowable reimbursement rate for 99214 is $108.13 under the 2020 Medicare fee schedule.

Table 1. Estimated current Medicare FFS revenue for CKD 4-5 patients

It is worth noting that the utilization pattern of other E/M codes is highly variable from practice to practice. Among all the CKD QCP-covered codes, Chronic Care Management Services (99490) was the most frequently billed code by nephrologists, according to the most recent available Medicare utilization data (2017). Overall, E/M codes other than 992xx appear to contribute only a small fraction to nephrologist revenue currently, so we will omit the other codes for the sake of keeping the calculation simple. We will be keeping a close eye on Medicare utilization data as it becomes available.

For dialysis care beneficiaries we have calculated MCP revenue based on 200 ESRD patients, with 80% of patients being billed at four or more visits a month and 20% of patients billing at 2-3 visits during the month (a typical ratio, based on what we see in the data). See Table 2 for a breakdown in dialysis revenue.  

Table 2. Estimated current Medicate FFS revenue for ESRD patients

This gives the practice a revenue of $248,681 for CKD care and $671,530 for ESRD care (when including the patient copays), bringing the combined CKD E/M and ESRD MCP revenue from the fee-for-service model to $920,211.

Revenue under KCC models:

Now let's compare how the same population would reimburse under the new KCC model. See Table 3. The QCP and AMCP is set at $242.90. 

Table 3. Estimated revenue under KCC models for CKD and ESRD patients

It's clear to see that the new models offer a substantial increase in practice revenue for this population.

In fact, it’s a healthy $191,299 more (a 22% increase). Even with a higher appointment cadence for CKD beneficiaries, revenue could still substantially increase over the existing system. 

Value based payment adjustments

The good news doesn’t stop there! Under the Kidney Care First payment model, practices can increase their QCP and AMCP by as much as 30% based on their assessed quality as a Performance-Based Adjustment (PBA).

Although the exact calculations for the PBA are yet-to-be-determined we ran some numbers to see how a practice could boost its revenue further by delivering the best in quality outcomes. Participating practices can be placed into one of eight PBA performance levels. 

The PBA is broken down into two categories, the Relative Performance component and Continuous Improvement component. Your practice will be compared across a variety of utilization measures relative to other practices to calculate the Relative Performance adjustment which ranges from a potential 20% increase in the ACP and AMCP to a maximum 20% reduction in QCP and AMC. That 20% decrease number has a few people worried - to be placed into the lowest performance level (Group 8) a participating practice must fall in the bottom quarter of all nephrology practices (participating and non-participating) and have failed to pass a Quality Gateway, a set of quality measures, with performance thresholds, designated to reflect appropriate clinical care and patient experience for the affected population. The Continuous Improvement rate will kick in at Performance Year 2 (2022) and will be based on comparing your practice’s performance on the utilization measures to a previous 6-month period.

Table 4 shows how much practices could make at the various quality thresholds.

Table 4. Comparison of revenue at different quality performance levels

Table 4 clearly shows that even at conservative performance levels, practices could still come out with a positive increase in their revenue. 

Conclusion

The new KCC models are radically altering the way nephrology care is reimbursed. The KCC models were specifically designed to incentivize late-stage CKD care by shifting the resources from the unproven MCP dialysis payment system to much needed upstream CKD care. The KCC model should free up physicians from currently seeing dialysis patients 4 times a month in order to receive the maximum current MCP and allow them to spend more time with CKD patients, which in return is better incentivized through the QCP and PBA. Practices are further incentivized to adjust CKD management through a series of benefits enhancements and waivers, you can read more about how this might benefit you in our post on Exploring Benefits Enhancements in Kidney Care Choices

Importantly, significant gains are possible, but it will require a careful understanding of the population under management, the impactable cost savings and achievable quality improvements. Practices worried about the drop in ESRD care revenue should understand that if they can increase quality levels they can maintain their revenue for ESRD patients while significantly boosting expected revenue for managing their late-stage CKD patients. While a number of nephrology groups we have spoken to are worried about the potential impact to revenue, we think that these new models offer a substantial upside. The best performing practices could see a large increase in revenue. However, to achieve these stellar results will require fresh approaches to care. 

pulseData’s risk prediction algorithms and population management platform facilitate a data driven approach to care. We create precise algorithms that can be matched to individual care workflows to help drive optimal dialysis starts, increase home dialysis usage and avoid acute admissions. If you are interested in learning more about how we can help please email info@pulsedata.io.

We are excited about the future of nephrology care and believe that with these new funding models, we will finally have a reimbursement incentive that supports renal disease treatment and not one reliant on dialysis provision.

pulseData partners with nephrology groups and care organizations to accelerate adoption of value-based payment models to bring data-driven optimal care delivery using our AI-powered care coordination platform. Contact us for more information! info@pulsedata.io


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