One of the biggest challenges in any health care system is offering a payment model that puts both large and small providers on a level playing field. Nowhere is that more evident than in the growing pains seen with the Centers for Medicare & Medicaid Services' proposed five-year Comprehensive ESRD Care Model demonstration. Originally expected to launch in January, the agency has delayed the project because of only a handful of applications. Most of that disinterest has come from small, independent providers who cite the cost of building the infrastructure to participate, restrictions on who can partner in the ESRD Seamless Care Organizations that must be formed, and the financial risk that providers would need to take. Savings in providing care would be shared with Medicare, but higher costs would have to be covered by the ESCO.

CMS' Innovation Center (CMMI) reviewed feedback from the renal community and released a revised application on April 15. Over the next three months, the National Renal Administrators Association (, through the Renal Services Exchange ( is offering a series of webinars detailing the changes in the revised application and important details of the demonstration for small dialysis providers. “This is the type of educational service that the NRAA/RSE wants to package and deliver to ESRD providers needing that intensive level of detailing and examples so that they can compete in future ESRD structures,” said NRAA president Wayne Evancoe.

NN&I interviewed two main speakers in the webinars, Diane Wish, RN, MBA, of the Centers for Dialysis Care in Cleveland, and Doug Johnson, MD, vice chair of the board of directors for Dialysis Clinic Inc. about the changes in the proposal and the importance of the demonstration to providers. Wish, with close to 1,900 ESRD patients in her dialysis program, and Johnson, representing more than 14,000 patients at DCI, offer perspectives on the renal ACO model from both small- and larger dialysis providers, and plan on submitting a total of four applications for the five-year project.

NN&I: Give us a summary of how this revised application process benefits the renal community, from both a small provider and large provider viewpoint.

Diane Wish, RN, MBA: There are many significant improvements in the revised RFA for the non-LDO providers. The biggest one is the elimination of financial downside risk. This was a major issue for most non-LDOs and especially for the nephrologists. Other changes included: 

  • The elimination of the rebasing of the estimated cost per patient after three years into the demonstration. This was important because it would have reduced estimated savings achieved by providers during the demonstration.
  • Nephrologists may now participate as a partner in the ESRD Seamless Care Organization even if they are a joint venture partner with a dialysis provider or are employed by a dialysis entity.
  • CMS is now allowing multiple non-LDOs to aggregate patients to help meet the 350 patient minimum for the ESCO eligibility requirements. The ability to aggregate providers is a benefit; however, one needs to be careful about who you partner with since the cost for providing patient care, the savings and quality outcomes will be combined.
  • Non-LDOs also have more time to submit their applications. The RFA was published April 15 and the deadline to submit it to CMS is September 15. CMS assured us during a open door forum call on April 24 that even though the non-LDO applications can be submitted later (LDOs much complete their applications by June 23), all applications will be evaluated together before CMS begins the demonstration in 2015.

Overall the improvements for the non-LDOs are substantial and addressed the concerns we expressed to CMS about the original RFA.

Doug Johnson, MD: The changes in the financial arrangements for track 1 do not change DCI’s perspective on the ESCO—we fully supported the prior ESCO and plan to re-submit the three applications that we submitted back in August 2013.

From our perspective, the more providers that care for patients, the more opportunities there are for different innovative approaches to improve patient care. This is especially true for the ESCO. We appreciate that CMS made substantial changes to allow more non-LDO providers to participate in the ESCO.

To me, the most important change was allowing aggregation, since aggregation allows providers to participate, even if they do not provide care for 350 Medicare primary patients. Back when the original minimum number was 500 patients, we looked at the number of providers that could possibly participate and found maybe 12 would qualify. With aggregation, any independent provider interested in implementing innovative strategies to improve overall care for patients on dialysis can submit an application.

We also appreciative that CMS allowed non-LDO providers extra time to submit the application. We know from our own experience that it takes time to find partners for the ESCO and put together an application. By allowing non-LDOs to have more time to complete the application, I expect that CMS will see a larger number of applications from non-LDOs.

Finally, more non-LDO providers should be able to participate, now that the financial model for non-LDOs has been changed so that they now have no downside risk. In my conversations with non-LDOs over the last year, the most-voiced concern was that they might need pay back money to CMS if they fail to show savings under the demonstration. Many providers correctly noted that they already had downside risk, since they must pay for the cost of new interventions. Without the risk of downside loss, I hope that non-LDOs that are implementing innovative strategies to improve patient care will submit an application so that they have the potential for CMS to provide at least partial support for these interventions if they are successful in decreasing the cost of care.

NN&I: Is the elimination of the rebasing equally important for small and large dialysis providers? Explain briefly how this would have worked under the original application, and the application changes.

Wish: In the initial RFA after the first three years of the ESCO, CMMI planned to re-establish the baseline for the next two optional years. While CMMI said that they planned to add back the savings that was earned, the provider community was still very nervous about what the revised number would be. Taking away the added risk and uncertainty eliminated another barrier from the first RFA.

Johnson: In my opinion, the elimination of rebasing is especially important for small providers. As a mid-sized provider, DCI has more resources to devote to integrated care than smaller providers. With the new change, it should be easier for smaller providers to invest in developing a new model of care for the ESCO and not need to worry about losing part of their potential financial return after three years.

NN&I: Eliminating the downside risk for small providers sounds like a victory, but will this eliminate some of the shared savings?

Wish: I think it was a game changer for many SDO and nephrologists; however there is “no free lunch.” For example, if the operating costs for a non-LDO ESCO were $1.3 million a year, a provider who opted for Track 2 in the original RFA could receive 70% of the shared savings and would need to save around $1.9 million to break even. However the provider now needs to save $2.6 million to break even by our estimations. I think a non-LDO should have the option of joining the LDO track and accept downside risk.

NN&I: What do you see as the advantages of CMS' decision to offer almost 2 1/2 extra months to small providers to submit their application?

Wish: SDOs have limited resources to devote the time required to develop different models of care, talk with the various stakeholders, draft the legal documents, etc. I am pleased that CMMI listened to the SDOs about the need to have adequate time. The NRAA and RSE began providing information to the membership in early 2014 about the ESCOs so that they could begin their planning prior to the publication of the revised RFA. However they will still need until September for completion of a well-thought-out application.  

NN&I: Overall, do you think this revised application will generate more interest in the renal community?

Wish: I think it definitely will. While it is not perfect, it did remove the major barriers. The improvements to the RFA and the predictability of the Medicare reimbursement for the next five years should reduce the fear that many providers and nephrologists had initially. The renal community needs to thank CMMI for listening and responding.

Johnson: Absolutely.  In my opinion, CMS listened to the renal community and made changes to the RFA to make it more attractive for all types of providers. From the perspective of DCI, we plan on submitting three ESCO applications. I expect that other LDOs will also submit a number of applications. In the next few months, we will be working with non-LDOs and discussing our experiences with integrated care and the ESCO application with the hope that more independent providers will apply.

I expect that a number of applications will be submitted by non-LDOs now that CMS has made the model for non-LDOs more attractive. If I were a provider deciding on whether or not to submit an application, I would assume that the ESCO is moving forward. CMS has clearly signaled that the general structure of the ESCO is the structure for the future of care for patients on dialysis. As a friend of mine recently stated – “You want to participate in the ESCO because you want a seat at the table. If you do not have a seat at the table, you may be on the menu.”

The webinar series is called “Roadmap to the Future of Integrated Kidney Care,” and the third session will be held Tuesday, April 29. The webinars continue weekly through July 15. They are free through May 6; the last 10 webinars require NRAA membership. Slides and replays of the program are made available on the NRAA website.

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