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Diana Bradley, Staff Writer | November 17, 2011
From the November 2011 issue of HealthCare Business News magazine

During the past five years, the dialysis market business has grown 6 percent each year to $67.5 billion. In 2010, the global dialysis equipment market made up $8.6 billion of that amount and is projected to exceed $12 billion by 2017, according to recent reports by research firms GlobalData and Kalorama Information. The bulk of these revenues are derived from equipment providers acquiring smaller regional players in the dialysis care services segment. Global companies occupy a fraction of the dialysis market, with regional companies absorbing the remainder.

Unraveling bundled payments
Since 1983, Medicare has covered all beneficiaries in need of dialysis, spending about $77,000 annually per person. Between 2008 and 2009, dialysis Medicare spending increased 7 percent, totaling $9.2 billion and averaging $27,000 per beneficiary. Currently, 95 percent of dialysis patients are Medicare-covered and the health insurance system is the secondary payer for one-quarter of new dialysis patients insured by an employer group health plan at the time of ESRD diagnosis.

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This January, Centers for Medicare and Medicaid Services implemented a prospective payment system to broaden the dialysis payment bundle program -- designed to encourage more efficient and economical care by providers. A quality incentive program will be set up in 2012 and facilities that fail to meet the performance standard will receive up to a 2 percent payment rate reduction, under the Medicare Improvements for Patients and Providers Act. Over 80 percent of dialysis facilities opted for the new system, causing CMS to nix a four-year phase-in approach. Dialysis unit owners, private and public insurance companies, including CMS, are the primary beneficiaries under the new bundled payment system.

While the dialysis industry appears to embrace bundling, certain aspects of the payment methodology are getting flak as providers are receiving the same payment for dialysis services, regardless of whether they provide erythropoiesis-stimulating agents or not. A new proposal by CMS said the lower-level trigger point of 10 to administer ESAs should be eliminated. Some believe this gives dialysis centers extra incentive to under-treat patients and provide less care, and ultimately will lead to more hospitalizations and taxpayers footing unnecessary bills. Because of this, an estimated half of nephrologists are against the new payment system, according to a recent report by research group BioTrend.

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