Evaluation of the ESRD Managed Care Demonstration
            Caitlin Carroll Oppenh...
launched a demonstration program to                with ESRD can be very high; for instance,
study the experience of offer...
of coverage and the Beneficiary Improve-               of a demonstration, and must hold promise
ment and Protection Act o...
Table 1
        Essential Service Components of the End Stage Renal Disease (ESRD) Managed Care
prior to, the month of, and the month fol-             as pharmaceuticals, offered advantages in
lowing a transplant), and...
Blue Cross® Blue Shield® of Florida, based          Kaiser Site
in Miami, Florida; Kaiser Permanente
Southern California R...
Table 2
                                                                                               Structure of the En...
arrangements with three university hospitals                         ed. The care management team used a
using a case rate...
activities for the demonstration. Key com-             end of the demonstration in 2000, Kaiser
ponents of the program inc...
dedicated to the demonstration and draw-           meeting target hospitalization rates, along
ing on HOI staff in some in...
The nephrologist served as the primary              down (Dykstra et al., 2003), case man-
care physician and provided ref...
For reasons described later in this arti-       thereby less costly, patients to the demon-
cle, the Xantus demonstration ...
letters, open houses, and videos. In actual-           sons. Patients without supplemental insur-
ity, most of their marke...
Table 3—Continued
                                                                                     Services and Benefi...
Table 4
     Selected Characteristics for a Sample of Kaiser Permanente Southern California Region ESRD
Table 5
           Selected Characteristics for a Sample of Health Options, Inc., ESRD Managed Care
demonstration managers were optimistic                Kaiser Demonstration Challenge
about expanding into a larger service...
including involving community providers                            stration, and possibly patient satisfaction as
in demon...
patients were required to access such ser-          demonstration enrollment effective Novem-
vices in the traditional man...
Evaluation of the ESRD Managed Care Demonstration Operations
Evaluation of the ESRD Managed Care Demonstration Operations
Evaluation of the ESRD Managed Care Demonstration Operations
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Evaluation of the ESRD Managed Care Demonstration Operations


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Evaluation of the ESRD Managed Care Demonstration Operations

  1. 1. Evaluation of the ESRD Managed Care Demonstration Operations Caitlin Carroll Oppenheimer, M.P.H., Jennifer R. Shapiro, M.P.H., Nancy Beronja, M.S., Dawn M. Dykstra, Daniel S. Gaylin, M.P.A., Philip J. Held, Ph.D., and Robert J. Rubin, M.D. Individuals with end stage renal disease with ESRD, subject to Social Security (ESRD), most of whom are insured by requirements, are eligible for Medicare Medicare, are generally prohibited from regardless of age. ESRD patients, who suf- enrolling in Medicare managed care plans fer from kidney failure, need either dialysis (MCPs). CMS offered ESRD patients the (which artificially replaces the function of opportunity to participate in an ESRD the kidney) or a kidney transplant to sur- managed care demonstration mandated by vive. Both options are expensive and Congress. The demonstration tested require substantial health care and finan- whether managed care systems would be of cial resources. To ease the burden of this interest to ESRD patients and whether disease among ESRD patients and their these approaches would be operationally caregivers, about 30 years ago Congress feasible and efficient for treating ESRD extended Medicare to individuals with patients. This article examines the struc- ESRD. In addition to being the only out- ture, implementation, and operational out- right disease-specific form of Medicare comes of the three demonstration sites, entitlement, the Medicare ESRD program focusing on: the structure of these managed is unusual in that despite wide-scale move- care programs for ESRD patients, require- ment of other privately and many publicly ments needed to attract and enroll patients, insured populations into managed care and the challenges of introducing managed arrangements, the vast majority of ESRD care programs in the ESRD arena. patients receive care in the fee-for-service (FFS) environment, and are legally barred INTRODUCTION from enrolling in Medicare MCPs. Managed care’s popularity has soared in The ESRD population in the U.S. repre- recent decades due to its promise of sents the only outright disease-specific reduced health care costs and superior form of Medicare eligibility.1 All persons quality of care. It attempts to achieve these goals by emphasizing preventive care, 1 Technically, there is also another type of disease-specific requiring patients to receive care from a Medicare entitlement, which is the waived waiting period for the disabled if they have amyotrophic lateral sclerosis. network of participating providers, and Caitlin Carroll Oppenheimer and Daniel S. Gaylin are with the coordinating the care of patients with com- National Opinion Research Center. Jennifer R. Shapiro is with plex or chronic health conditions. Yet, the Centers for Medicare & Medicaid Services (CMS). Nancy Beronja is with The Lewin Group. Dawn M. Dykstra and Philip J. ESRD patients —whose health care is both Held are with University Renal Research and Education costly and complex—are barred from Association. Robert J. Rubin is with Georgetown University School of Medicine. The research in this article was funded choosing this system.2 In 1998, CMS under HCFA Contract Number 500-95-0059. The views expressed in this article are those of the authors and do not nec- 2 Under current law, patients enrolled in a health maintenance essarily reflect the views of National Opinion Research Center, organization (HMO) who develop ESRD are permitted to stay in CMS, The Lewin Group, University Renal Research and the MCP plan and patients with ESRD who are enrolled in an Education Association, or Georgetown University School of HMO that withdraws from the service area are permitted to join Medicine. another HMO. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 7
  2. 2. launched a demonstration program to with ESRD can be very high; for instance, study the experience of offering managed spending3 on hemodialysis (the most com- care options to Medicare ESRD beneficia- mon type of treatment for ESRD patients) ries. Simultaneously, an evaluation of the and associated care is more than $65,000 program was undertaken to evaluate the per patient annually (The Lewin Group, efficacy and cost of HMO participation for 2000). In aggregate, the ESRD program Medicare beneficiaries with ESRD. This has consumed a growing share of the evaluation compared the structure, process, Medicare budget, and program costs have and outcomes for patients enrolled in the continued to rise beyond policymakers’ demonstration sites with those of a similar expectations (Eggers, 2000). In 2000 alone, set of ESRD patients in the FFS sector. Medicare expenditures for ESRD amount- Results from the evaluation of clinical ed to $12.3 billion, representing 71 percent and financial outcomes of the demonstra- of total U.S. ESRD costs ($17.9 billion) tion are presented elsewhere (Dykstra et (U.S. Renal Data System, 2002). al., 2003; Pifer et al., 2003; Shapiro et al., The reasons behind the growth in ESRD 2003; The Lewin Group and the University program costs are similar to reasons Renal and Education Association, 2002). health care costs have increased generally. The purpose of this article is to describe An increasing number of people are diag- the operational outcomes of the demon- nosed with ESRD as the prevalence of stration with regard to three aspects: chronic diseases that lead to ESRD, such • What was the structure of these man- as diabetes and hypertension, continue to aged care programs for ESRD patients? rise (U.S. Renal Data System, 2002). The • What was required to attract and enroll ESRD community has also experienced a patients? disproportionate increase in the number of • What do these sites’ experiences tell us costlier patients (e.g., elderly patients or about the challenges of introducing man- those with comorbidities) (U.S. Renal Data aged care programs in the ESRD arena? System, 2002). The sites’ experiences provide a context Pharmaceutical costs have also played a for the clinical outcomes of the demonstra- role in the rising costs of the Medicare tion and, importantly, can help forecast the ESRD program. In 1989, Medicare autho- potential sustainability of ESRD managed rized coverage of recombinant erythropoi- care programs should the law change to etin (EPO) therapy for dialysis patients and open managed care as an option to EPO is now prescribed for the majority of Medicare ESRD patients. These experi- patients (Greer, Milan, and Eggers, 1999).4 ences also illuminate critical organizational The cost of immunosuppressive drugs, issues relevant to the entire ESRD commu- required by transplant recipients to avoid nity. graft rejection, has also contributed to ris- ing costs in the Medicare ESRD program. BACKGROUND ON THE ESRD Prior to 1993, Medicare covered immuno- POPULATION suppressive drugs for 12 months. Various legislative initiatives extended the duration From an initial count of about 7,000 3 Includesspending by Medicare as well as other payers. patients in 1972, the ESRD program today 4 Erythropoietin is a hormone produced by the kidney which stimulates bone marrow to make red-blood cells; with the loss of provides health insurance for 378,862 kidney function anemia is common among ESRD patients. EPO patients (U.S. Renal Data System, 2002). is a synthetically produced drug that has helped reduce the rates of anemia among dialysis patients (National Kidney The cost of treatment for individual patients Foundation, 2000a). 8 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  3. 3. of coverage and the Beneficiary Improve- of a demonstration, and must hold promise ment and Protection Act of 2000 (BIPA) for replicability on a national basis. Often, eliminated the time limitation for aged and Congress mandates the development and disabled transplant recipients who were implementation of specified demonstration Medicare eligible at the time of transplant. initiatives prior to enactment of full-scale ESRD patients have traditionally received program changes through legislation. their care in the FFS system, which many The ESRD managed care demonstration believe is characterized by a lack of atten- was initiated as a mechanism to test expand- tion on cost management and fragmented ed access to managed care systems for service provision. Many ESRD patients ESRD program beneficiaries. Congress orig- have numerous comorbidities along with inally barred ESRD patients from participa- their kidney failure (e.g., diabetes, heart tion in MCPs to address HMOs’ concerns disease), and could benefit from a more regarding the expense of ESRD enrollees; coordinated approach. Additionally, the the enrollment restriction has remained in FFS system poses challenges for systemat- place to protect ESRD patients because con- ic implementation of patient care guide- cern exists over the potential incentives lines to encourage best practices. In the under managed care to undertreat patients case of ESRD patients, examples of such with a chronic disease (Tax Equity and guidelines include vascular access (the Fiscal Responsibility Act of 1982; Omnibus means by which the patient’s blood stream Budget Reconciliation Act of 1993; Renal is connected to a dialysis machine) and Physicians Association and American anemia management. Despite these short- Society of Nephrology, 1995). In recent comings, the FFS system has been a salva- years, however, there have been a number of tion for thousands of ESRD patients, proposals to permit ESRD beneficiaries to enabling these patients to receive lifesav- enroll in HMOs under the same conditions ing health care services. as other Medicare beneficiaries, particularly since HMOs have had increasing experi- DEMONSTRATION FRAMEWORK ence with ESRD patients. Moreover, man- aged care offers certain advantages over One of the most important tools avail- FFS care, typically including additional ben- able to CMS in its quest to improve the efits (e.g., prescription drugs) and reduced quality and cost-effectiveness of the fragmentation and more coordination across Medicare Program is demonstration author- the range of services required by ESRD ity (Centers for Medicare & Medicaid patients (Brown et al., 1993). In addition, all Services, 2003a). CMS has the authority other Medicare beneficiaries—including under certain statutes to waive specific those with chronic illnesses other than provisions of the Medicare Program, thus ESRD—have the opportunity to choose allowing it to test alternative approaches to among health plan types on a voluntary health care deliver y and/or payment. basis. In response to consumer pressure and Demonstration initiatives can provide the the uncertainty surrounding what might basis for informed and rational program happen if ESRD beneficiaries were given the and policy decisions. Generally speaking, opportunity to choose an MCP, Congress demonstration initiatives must be budget mandated a demonstration project in 1993 to neutral, i.e., costs under the demonstration test whether ESRD patients could be suc- should not exceed the costs in the absence cessfully treated in a managed care setting. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 9
  4. 4. Table 1 Essential Service Components of the End Stage Renal Disease (ESRD) Managed Care Demonstration Programs: 1996 Service Integration and Case Management. Demonstration sites were required to invest in the structuring of care delivery in order to better coordinate services and improve outcomes of care and satisfaction for patients. Organizations were expected to provide all Medicare-covered health services, including kidney transplants, plus additional benefits, and to use a case manager in fully integrating these services at the level of the individual beneficiary. Basic functions of case managers include initial screening, assessment, care planning, service provision and/or referral, monitoring, and reassessment. Clinical Protocols. Demonstration sites were required to develop and implement clinical protocols for common clinical events. Protocols were to be used proactively in disease management rather than just reactively as a strategy for problem management. Extra Benefits. Demonstration sites were required to provide a benefit package that included all services covered by the sites' regular Medicare risk programs (which included coverage of Medicare coinsurance and deductibles and prescription drugs), plus additional services of special interest to ESRD patients (e.g., nutritional supplements). Expanded benefits were seen as a means to encourage voluntary enrollment in the capitated plan and to enhance the breadth, integration, and quality of delivered medical care. The costs of the extra, ESRD-specific benefits were intended to be covered by higher payments from Medicare than were paid to health maintenance organization risk contractors outside of the demonstration. SOURCE: Centers for Medicare & Medicaid Services ESRD Managed Care Evaluation. Specifically, the Omnibus Budget • Preventive and supportive interventions Reconciliation Act of 1993 required CMS to and more comprehensive benefit cover- conduct a social HMO (S/HMO) demon- age for ESRD patients. stration project for ESRD patients • Integrated administrative and financial (Omnibus Budget Reconciliation Act of arrangements among providers of ser- 1993). S/HMO demonstrations provide for vices to ESRD beneficiaries. the integration of health and social services • An ESRD payment and risk-adjustment under the direct financial management of a system that was an alternative to both provider of services. The intent was to see FFS and the current capitation payment whether extending an integrated system of for ESRD patients in HMOs. care to ESRD beneficiaries was operational- The elements that CMS required each ly feasible, efficient, and able to improve demonstration program to contain are patient outcomes compared to the current identified in Table 1. Demonstration sites FFS system (Cooper, Eggers, and were required to have year-round open Edington, 1997). Congress wished to deter- enrollment for eligible ESRD patients who mine whether it would be feasible to permit were served in the FFS system, including ESRD patients to enroll in managed care both dialysis patients and those with func- settings that were not only responsible for tioning kidney grafts who were still the total medical care of ESRD enrollees, Medicare eligible (e.g., within 3 years but also provided a specific case manage- since transplant). The demonstration sites ment function and additional benefits of were required to undertake active efforts particular interest to the ESRD population. to publicize the potential for demonstration The demonstration was intended to test enrollment to all ESRD patients in the ser- the feasibility and effectiveness of the fol- vice area and they were required to lowing: attempt to enroll at least 600 patients. • Permitting year-round enrollment and A key component of the demonstration disenrollment options for ESRD benefi- was to test the impact of risk-adjusted ciaries to enroll in participating HMOs. ESRD capitation rates. Enrollees were par- • ESRD-focused case management, with titioned into three discrete treatment sta- particular emphasis on whether out- tus categories: maintenance dialysis, a comes of care were improved. transplant episode (defined as 1 month 10 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  5. 5. prior to, the month of, and the month fol- as pharmaceuticals, offered advantages in lowing a transplant), and the post-trans- ESRD treatment. In short, the evaluation plant period of a functioning transplant. attempted to provide the answer to whether Rates for the maintenance dialysis and the new care delivery and payment struc- functioning transplant period were further tures resulted in similar or better quality adjusted for three age categories (under care than FFS, at equal or lower cost to the 20, 20-64, and 65 or over), and whether or government. not diabetes was the primary cause of Much of the evaluation entailed collec- ESRD. Demonstration payments were tion of patient-level clinical, outcomes, and updated annually based on the Medicare+ quality-of-life data as well as plan-level finan- Choice county update factors (typically cial data. However, the evaluation also cap- about 2 percent). Dykstra et al. (2003) tured qualitative information on the struc- describe the financial structure of the ture and operations of the demonstration demonstration in further detail. sites. This article provides descriptions of how the participating managed care organi- Demonstration Evaluation zations (MCOs) structured their programs at the outset of the demonstration, and Demonstration programs often set out to reviews the sites’ experiences operational- address far-reaching and ambitious goals izing the demonstration (including discus- only to hit numerous obstacles and pitfalls sion of some of challenges of implementa- along the way. CMS demonstrations have tion that have relevance beyond the demon- frequently encountered slow ramp-up and stration). The information presented herein enrollment, difficulties obtaining beneficia- is drawn from 15 site visits conducted ry buy-in, and limited ability to adequately between October 1997 and May 2002 by test the hypothesis within the short dura- evaluation team members from The Lewin tion of the initiative (typically 3-5 years) Group and University Renal Research and (Centers for Medicare & Medicaid Services, Education Association. 2003a). In an effort to both document obstacles DEMONSTRATION OPERATIONS and evaluate outcomes, an evaluation of the ESRD managed care demonstration The demonstration was initiated in began in August 1997, after the demonstra- September 1996 with a planning period at tion sites were selected by CMS. Its goals participating sites; patient enrollment were to determine how well the demon- began in 1998. All ESRD-eligible patients stration worked and to offer CMS guidance in the service area who had Medicare Part for the potential future implementation of a A and Part B coverage, and for whom managed care component to the ESRD Medicare was the primary payer, were eli- program. In particular, the evaluation gible for enrollment in the demonstration. assessed the degree to which managed Enrollment was allowed throughout the care approaches could be successfully demonstration period and the 3-year man- applied to ESRD. It analyzed differences in dated demonstration operations ended in costs, access, structure, process, and out- early 2001. comes of care between managed care and The Medicare ESRD demonstration was FFS ESRD patients. It also sought to deter- begun at three sites across the country: mine if covering additional services, such Health Options, Inc. (HOI), a subsidiary of HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 11
  6. 6. Blue Cross® Blue Shield® of Florida, based Kaiser Site in Miami, Florida; Kaiser Permanente Southern California Region (Kaiser), Of the three sites selected for participa- based in Los Angeles, California; and tion in the demonstration, Kaiser had the Xantus Health Care Corporation (Xantus), most well-established managed care pro- based in Nashville, Tennessee. Kaiser and gram with experience in treating ESRD HOI both met the enrollment goals with patients. In seeking participation in the Kaiser ultimately enrolling a total of 1,649 demonstration, Kaiser sought to contribute beneficiaries and HOI enrolling a total of to knowledge surrounding care manage- 967 beneficiaries (including, for both sites, ment for the chronically ill. those who later disenrolled or died). Kaiser is a large, closed-system MCO. Xantus terminated its demonstration pro- When the demonstration began, more than gram in early 2000 due to financial difficul- 2 million covered lives were enrolled in ties experienced in its other operating Kaiser. Of the 2 million, 168,000 enrollees units, having enrolled only 50 ESRD bene- were Medicare beneficiaries, of whom about ficiaries. Thus, this article primarily 2,000 had ESRD. Kaiser had been operating recounts the experiences of Kaiser and a Medicare risk plan, the Senior Advantage HOI. We also provide a brief summary of program, since 1987. the Xantus demonstration and review the Kaiser owns and operates the large reasons behind the demonstration pro- majority of medical service sites related to gram’s closure. providing care under the demonstration. At the time of application, Kaiser operated Demonstration Programs Structure 10 medical centers and more than 90 med- ical offices throughout Southern California. The three demonstration plans represent- The medical staff includes physicians, ed different models of care (Table 2). The nurses, and health educators, and the orga- Kaiser demonstration plan was a closed- nization has academic and residency affili- practice plan for specialist and inpatient care ations with the five medical schools in (i.e., providers enter an exclusive arrange- Southern California. Kaiser operates its ment with Kaiser, and Kaiser operates the own medical laboratory and more than 130 majority of facilities). At the outset, the pharmacies throughout the region. majority of outpatient dialysis services were Inpatient hospital services provided to provided under FFS provider contracts, demonstration patients were provided by although over the course of the demonstra- Kaiser hospitals and specialty care was tion, Kaiser built or acquired its own dialysis also provided using Kaiser’s own network centers. The HOI site had primarily FFS of specialists. contracts with the majority of its providers, To supplement the 25 nephrologists and with the exception of capitation arrange- other clinical staff in place for its Senior ments made with primary care nephrolo- Advantage program, Kaiser recruited an addi- gists and certain specialists. The Xantus tional 120 providers and 112 facilities to pro- program was a joint effort between an HMO vide for demonstration services. Transplant and a single-specialty physician practice. services were provided through contractual 12 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  7. 7. Table 2 Structure of the End Stage Renal Disease (ESRD) Managed Care Demonstration Sites: 1998-2001 Feature Kaiser1 HOI2 Xantus3 Primary Health Maintenance Organization Group Health Maintenance Organization Network Model Network Model Model ESRD Beneficiaries in Service Area 20,519 5,860 900 Start Date of Enrollment February 1, 1998 June 1, 1998 September 1, 1998 Total Enrollment (Gross) 1,649 967 50 Demonstration Service Area Los Angeles, Orange, Western San Palm Beach, Dade, and Broward counties. Davidson County. Bernadino, Western Riverside, and San Diego counties. Outpatient Dialysis Treatments and Mostly contracted facilities. Negotiated fee- All contracted facilities. Fee-for-service com- All contracted facilities. All inclusive per Ancillaries for-service: Kaiser and contracted facilities. parable to 100 percent of Medicare allow- treatment rate comparable with Medicare able charge. payment levels. Inpatient Hospital and Payment Mostly Kaiser hospitals, internal payment. All contracted hospitals, per diem rate. All contracted hospitals, per diem rate. Nephrologists: Outpatient/Inpatient Contract nephrologists in unit, Kaiser Community nephrologists as PCP and as Community nephrologists as PCP and as nephrologists as primary care physician inpatient physician. inpatient physician. (PCP) and inpatient physician. Nephrologist Payment Kaiser nephrologists on salary, risk-adjusted One capitated rate for outpatient and Comprehensive capitation. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 capitated rates for contract nephrologist. inpatient care. Transplant Services Contracted with University of California at Contracted with Jacksonville Methodist Contracted with Centennial Medical Los Angeles, University of California at Hospital (Jacksonville, Florida). Center and Saint Thomas Hospital both in San Diego, and Loma Linda University (in Nashville, Tennessee. Loma Linda, California). Paid on a case rate, adjusted for living or deceased (donor). Use of Case Managers and Team Make Up Case Managers: Yes. Team: M.D., R.N., Case Managers: Yes. Team: M.D., R.N., Case Managers: Yes. Team: M.D., R.N., M.S.W., R.D., pharmacist, and specialists. M.S.W., R.D., pharmacist, and specialists. M.S.W., and R.D. End of Data Collection August 2000 (manual); September 2001 August 2000 (manual); September 2001 January 2000 (manual). (electronic). (electronic). 1 Kaiser Permanente Southern California Region, Los Angeles, California. 2 Health Options, Inc., a subsidiary of Blue Cross® /Blue Shield®, based in Miami, Florida. 3 Xantus Health Care Corporation, based in Nashville, Tennessee. NOTES: M.D. is Doctor of Medicine. R.N. is Registered Nurse. M.S.W. is Master of Social Work. R.D. is Registered Dietician. SOURCES: Oppenheimer, C. C., and Gaylin, D.S., National Opinion Research Center, Shapiro, J. R., Centers for Medicare & Medicaid Services, Beronja, N., The Lewin Group, Dykstra, D. M., and Held, P.J., University Renal Research and Education Association, and Rubin, R. J., Georgetown University School of Medicine, 2003. 13
  8. 8. arrangements with three university hospitals ed. The care management team used a using a case rate, based on whether the pro- standardized care plan template to develop cedure involved a deceased or living donor. goals for each patient and help coordinate Payments to contracted providers were efforts among the team; quarterly meet- made on a capitated basis with adjustments ings were held to review patients’ care for age, diabetes, and graft status. Kaiser plans. also paid contracted nephrologists and Each demonstration patient was dialysis facilities a process-based incentive assigned a Kaiser nephrologist to serve as to compensate for additional care provided the clinical director of the management to demonstration patients. team, sometimes in addition to the During the demonstration period, Kaiser patient’s community nephrologist (if that moved to develop and operate dialysis ser- patient was receiving care in a non-Kaiser vices through a partnership with facility). In most cases, the Kaiser nephrol- Fresenius, a large dialysis facility chain. In ogist also served as the patient’s primary developing this new facility network, a care provider as well as the inpatient Kaiser nephrologist assumed the role of provider. The Kaiser nephrologist was medical director in each of the new facili- expected to see all demonstration patients ties. Physicians received monetary incen- at least quarterly. tives based on dialysis adequacy,5 quality Case managers were expected to be in assurance, serum albumin levels,6 and daily contact with the nephrologist and reductions in hospitalization rates. Kaiser’s coordinate the multidisciplinary team. expansion into ownership and operation of Responsibilities of the case managers dialysis facilities strained relationships included: (1) monitoring ESRD patient care with community providers who were con- and promoting quality improvement; (2) cerned about losing patients to these new coordinating and managing patient needs; Kaiser facilities. (3) providing early intervention, educating Kaiser developed its demonstration pro- patients, and encouraging prevention; (4) gram based on the pre-ESRD and ESRD collecting data on ESRD patient population care it was already providing to its current and conducting analyses; and (5) managing ESRD beneficiaries. The program was the care and cost of ESRD patients. based on a multidisciplinary team approach Caseloads of managers were adjusted for to patient-centered care management. three acuity levels of the patients. Each ESRD enrollee was assigned to a Finally, transplant coordinators were team including, at minimum, a nephrolo- also involved in patient care. These individ- gist, an ESRD case manager, a renal social uals provided case management for all worker, a dietitian, and a pharmacist; other transplant patients and worked to obtain relevant providers were included as need- transplants for qualified patients as quickly 5 Dialysis adequacy refers to measurements about the average as possible. The coordinator also provided dose of dialysis that patients receive. Dose is a function of patient education and long-term post-trans- patient characteristics (e.g., weight), the amount of time a patient spends on dialysis, and characteristics about the dialysis plant followup. process (e.g., size of the dialyzer, speed of blood flow). (Daugirdas and Ing, 1994) 6 Serum albumin is important marker of nutrition Kaiser Quality Improvement (Blumenkrantz et al., 1980) and is predictive of mortality (Leavey et al., 1998; Goldwasser et al., 1993). ESRD patients typ- ically have lower albumin levels compared to the non-ESRD pop- As with the general structure of the pro- ulation and clinical guidelines for ESRD care suggest routine gram, Kaiser used its pre-existing quality monitoring of albumin levels (National Kidney Foundation, 2000a). assurance program as the basis for such 14 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  9. 9. activities for the demonstration. Key com- end of the demonstration in 2000, Kaiser ponents of the program included physician had successfully achieved a subcutaneous and facility report cards, facility site inspec- administration rate of 67 percent. tions, quality-of-life questionnaire, quality Kaiser also had an aggressive program outcomes assessment tool, and vascular to ensure that fistulas were patients’ prima- access tracking tool. Kaiser developed a ry access sites. Three major kinds of vas- monthly Dialysis Center and Provider cular access dominate ESRD practice: arte- Report Card to monitor variables on patients, rial venous fistulas involve using a patients’ dialysis units, and attending nephrologists. own vein; synthetic grafts are placed using Outcomes were regularly monitored a synthetic tube implanted under the skin; against established standards. Kaiser used and catheters. Outcomes are superior for this report card data to identify patient out- fistulas though grafts are more common liers and the case managers worked with (U.S. Renal Data System, 2002; Young, providers to develop a plan of action. 2002). Specific guidelines were implement- Kaiser also implemented several drug- ed as part of a vascular access continuous or disease-specific quality initiatives. For quality improvement process. These guide- example, the plan implemented a review lines addressed triage, timelines for ser- system to monitor the usage of EPO for the vice provision, and access type. In 1999 demonstration patients as plan administra- Kaiser reported a primary fistula rate of 69 tors had noticed that some units were percent among new accesses placed. using particularly large quantities of EPO. Under the new initiative, medical justifica- HOI Site tion was required in order to receive the drug, and the Kaiser quality improvement In contrast to Kaiser’s group-model man- team monitored the dose patients received. aged care structure, HOI is a wholly owned Additionally, Kaiser worked closely with for-profit subsidiary of Blue Cross®/Blue providers to shift from intravenous to sub- Shield® of Florida that relies on contracts cutaneous administration of EPO. EPO is with an independent network of providers expensive and should be used as efficient- to provide patient care. Providers are paid ly as possible. The literature substantiates based on capitation, FFS, diagnosis-related that for the majority of dialysis patients, groups, and per-diem rates. At the time the subcutaneous administration of EPO is demonstration was initiated, HOI was the more effective, on average, by about 33 second largest HMO in southern Florida, percent. That is, the dose can be reduced with total enrollment nearing 300,000 cov- from three times a week, given intra- ered lives. When it applied for the demon- venously, to the same dose given only twice stration, HOI had been operational for 11 a week if given subcutaneous (National years, but it did not yet have an established Kidney Foundation, 2000b). Kaiser’s ESRD program. attempts to encourage subcutaneous admini- Advanced Renal Option (ARO) was the stration met with resistance from providers, demonstration program run by HOI; while many of whom suggested that patients did HOI operates throughout Florida, the orga- not tolerate subcutaneous administration nization limited demonstration operations well. Kaiser suggested that oversight was to Dade, Broward, and Palm Beach coun- needed to ensure that patients switched to ties. ARO was designed to operate as a sep- subcutaneous administration of EPO actu- arate program within HOI’s organization, ally continued to receive it that way. By the with a mixture of administrative staff being HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 15
  10. 10. dedicated to the demonstration and draw- meeting target hospitalization rates, along ing on HOI staff in some instances (e.g., with other targets such as 75 percent of marketing staff). patients receiving appropriate preventive HOI’s provider arrangements and con- services and 60 percent of patients partici- tracting for the demonstration were consis- pating in educational programs. The incen- tent with its traditional structure (Table 2). tive program was restructured with gov- When HOI applied for the demonstration, ernment approval; however the plan includ- its network of more than 2,800 physicians ed the requirement that the medical loss included 77 nephrologists. The network of ratio had to reach 90 percent before HOI participating nephrologists for the demon- would make physician payments.7 This stration consisted primarily of those clini- financial point was never reached, effective- cians with whom HOI contracted for ly eliminating HOI’s incentive program. nephrology services for all HOI enrollees HOI used established contracts with the prior to the demonstration. HOI had pre- 36 hospitals in the area to provide needed existing relationships with 51 dialysis units care for demonstration patients, with pay- in the target area and established demon- ment based on per diem rates. Transplant stration-specific contracts with at least sev- services were provided through a contract eral dozen of the dialysis facilities, relying with Jacksonville Methodist Hospital, on a contract with one of the major nation- located about 300 miles from HOI’s demon- al chains to secure the services of about 20 stration service area. units. As with the nephrology contracts, Access to non-nephrology specialists (e.g., HOI generally limited its network of dialy- vascular surgeons, cardiologists, etc.) by sis facilities to those with which the plan demonstration patients was gained through had existing contracts. Dialysis facilities HOI’s established network of providers. were selected based on where the nephrol- Some specialists in ARO’s network were paid ogists practiced. on a capitated basis while others were paid Nephrologists were compensated in the on an FFS basis. Additionally, part way form of a global capitation rate, based on through the demonstration, HOI contracted primary care services delivered in the with freestanding clinics to provide routine inpatient and outpatient settings, renal care vascular access services. and management of dialysis in both set- HOI also developed a multidisciplinary tings, and referral to other specialties. team approach to providing care. Each Dialysis units were paid on a negotiated team included a nephrologist, nurse practi- composite rate inclusive of equipment, sup- tioner, case manager, social worker, dietit- plies, labor, selected drugs, and medica- ian, facility nurse, technicians, radiologist, tions, similar to the way Medicare current- and a vascular surgeon. Additional special- ly pays for these services. ists that could have participated in a HOI intended to use incentive programs patient’s care plan included cardiologists with nephrologists and with dialysis facili- and endocrinologists. ties, though the structure of the initial 7 Medical loss ratio refers to the aggregate costs of medical ser- incentive program for nephrologists raised vices as a percentage of total HMO premium revenue, and is commonly used in the insurance industry as an index of how concerns at CMS about the potential nega- well payment levels to the HMO match up with the costs of deliv- ering the medical services covered by the health plan. In the tive impact on patients’ hospitalization. HMO industry, a medical loss ratio close to 85 percent is con- Specifically, the original incentive plan for sidered reasonable, with the remaining 15 percent or so of rev- enue available to cover administrative costs and profit (Dykstra nephrologists included bonus payments for et al., 2003). 16 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  11. 11. The nephrologist served as the primary down (Dykstra et al., 2003), case man- care physician and provided referrals, agers’ case loads increased to approxi- authorizations, and arrangements for spe- mately 70 patients. cialty and hospital care. The nephrologist was responsible for: (1) establishing a plan HOI Quality Assurance of care for all patients; (2) assessing trans- plant candidacy; (3) determining modality Although HOI had anticipated develop- and access type (when appropriate); (4) ing demonstration-specific quality assur- working with the patient to identify an ance activities, the basic operations of the appropriate rehabilitation plan; and (5) demonstration demanded all the resources determining dietary, nutritional, and phar- HOI allocated to the project, and HOI did maceutical prescriptions. not implement planned activities. The nurse practitioner’s role was to HOI did implement an initiative to iden- work with the nephrologist and serve as tify why drug costs were higher than the primary caregiver for both renal and expected in the early phase of the demon- non-renal services. It was anticipated that stration. Dialysis-related costs were slight- the nurse practitioner would see patients ly elevated due to high utilization of EPO in on a weekly basis and would be in a posi- certain practices. After an investigation tion to identify and treat potential problems into EPO use and implementation of a new early on. initiative, HOI was able to decrease EPO The case manager’s role was to coordi- use to more normal levels. Specifically, the nate all aspects of clinical and supportive new initiative was a review system for care. According to HOI’s job description, every instance that a physician prescribed the ESRD care manager was responsible more than a level determined potentially for “…evaluating and monitoring ESRD excessive by HOI. The review used clinical care services for quality, continuity, case guidelines to determine whether the pre- management intervention, timely reports, scribed dose was actually warranted, coordinating/managing meetings, and approving it for those extreme cases. patient education.” Additionally, the case However, if the high-dose prescription was manager focused the plan of care for each determined to be unnecessary, the clinic patient to “…continually improve the quali- was responsible for its cost. ty of renal patient care.” Upon enrollment in the demonstration, the case manager Xantus Site met with the patient at the dialysis facility and collaborated with the patient, family, A private, for-profit corporation char- and members of the health care team to tered by Tennessee, Xantus was an HMO develop the plan of care. The case manag- dedicated to serving the State’s Medicaid er also held quarterly meetings with population. In joining the demonstration, nephrologists, and participated in monthly Xantus sought to prove that a program of facility care management meetings at the care for ESRD patients could be developed dialysis facility. On average, each case from scratch, relying on a small, locally manager handled 50 patients. Toward the designed program. The Xantus site was end of the demonstration, when HOI distinguished from the other sites in that it resources for the demonstration were did not treat Medicare or ESRD patients strained and the program was winding prior to the demonstration. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 17
  12. 12. For reasons described later in this arti- thereby less costly, patients to the demon- cle, the Xantus demonstration site never stration. The service packages offered in hit its stride, enrolling only 50 patients each site and a review of marketing and prior to its early withdrawal from the pro- enrollment activities are described below, gram. Nevertheless, basic structures were and Shapiro et al. (2003) provide a detailed in place to provide care for its enrollees. description of the patients that chose to Specifically, all HMO management ser- enroll in the demonstration. vices (e.g., marketing, claims processing, The basic service package offered at and utilization management office func- demonstration locations was similar and is tion) were provided by Xantus. A for-profit summarized in Table 3. All sites eliminated network independent practice association co-insurance and deductibles on services model HMO, licensed to operate through- and offered coverage for prescription out Tennessee, Xantus operated through drugs, as well as provided nutritional sup- individual contracts with providers. For the plements at no cost to the enrollee. demonstration, Xantus had contracts with Consistent with the CMS requirements, all of the nephrologists in the region and the sites offered extra benefits beyond the nearly 20 dialysis facilities. The hospitals services offered in the traditional Medicare contracted for the demonstration were Program. The benefits were supposed to those hospitals in the demonstration ser- equal the additional 5 percent payment the vice area with existing Xantus contracts. sites were receiving above the 95 percent Similarly, non-nephrologist physicians rates paid to regular Medicare-risk con- were also among those with current tractors. Beyond the nutritional supple- Xantus contracts. Xantus also contracted ments and health education services, the with various other entities for the provision additional services offered at each site of ancillar y ser vices, including home were different. Kaiser covered dental ser- health, durable medical equipment, skilled vices, and eye care; and HOI provided nursing facilities, transportation, pharma- transportation to dialysis, home health ser- cy, and psychiatry. Transplantation was vices, and a rehabilitation program. Xantus available at two locations. covered home visits and educational semi- Nephrologists served as primary care nars and videotapes. providers, working with Xantus-employed case managers. The case managers visited Kaiser Enrollment and Marketing newly enrolled patients at their homes and met with patients at least bimonthly. Case Kaiser used a two-pronged marketing managers reportedly were successful at approach to attract patients to the demon- facilitating communication between patients stration. First, Kaiser contacted patients and nephrologists. directly to publicize the demonstration and highlight the enhanced benefits and ser- Attracting Patients to the vices they expected to be attractive to Demonstration patients. Second, they expanded provider contracting arrangements in order to One goal in evaluating the marketing expand the pool of beneficiaries who might and enrollment activities of demonstration be eligible to enroll in the demonstration sites is to determine whether programs without having to change nephrologists. sought to attract a favorable mix of patients, For all marketing activities Kaiser devel- encouraging comparatively healthier, and oped materials that included brochures, 18 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  13. 13. letters, open houses, and videos. In actual- sons. Patients without supplemental insur- ity, most of their marketing focused on ance and those who had recently lost their patients, reflecting in part the provider insurance were both likely to enroll in community’s ambivalence toward the the demonstration. Medi-Cal (California’s demonstration caused by concern that Medicaid Program) patients who had a patients who joined the demonstration cost share also saw some cost savings by would remain Kaiser patients at the con- joining the demonstration, although Medi- clusion of the program. Kaiser’s marketing Cal patients with no cost share tended not to patients was seen as essential in order to to enroll. As the demonstration proceeded, counteract these attitudes by the non- Kaiser reported that a reputation for high Kaiser provider community. As a result of quality of care became a factor in patients’ this intense outreach, marketing costs for reported decisions to enroll. the demonstration were significantly high- Kaiser was concerned about the initial er than anticipated (Dykstra et al., 2003). enrollment, which was lower than expected. Enrollment processes were in place by Discussions with patients and providers the time the first patients joined the revealed three main concerns about demonstration. To facilitate enrollment and enrolling in the demonstration: (1) what data collection, Kaiser had established a would happen to patients at the end of the database to track the enrollment issues demonstration; (2) concerns about partici- that influenced ESRD patients’ willingness pating in managed care, and (3) a lack of and ability to participate in the demonstra- knowledge about the demonstration tion. However, Kaiser reported that there among providers. Kaiser implemented sev- was a 45- to 60-day gap between the sub- eral steps to address patient concerns. mission of the enrollment application and These activities included developing addi- the start of service delivery. Much of this tional contracts with nephrologists that delay was caused by the process of eligibil- allowed patients to enroll in the demon- ity screening with CMS, as it was difficult stration without changing providers, pay- to determine when patients did not pay ing CMS to send out additional mailings to their Part B premiums, and therefore lost patients; distributing informational materi- eligibility for the demonstration. als to dialysis units, working with facility Enrollment of rollover patients—ESRD social workers to encourage demonstra- patients already in Kaiser’s existing man- tion referrals, and speeding up the contact- aged care plan that were otherwise eligible ing of rollover patients by using electronic for the demonstration—occurred once a files to track enrollment. These initiatives CMS-set minimum number of patients new to boost enrollment were successful. By to Kaiser through the demonstration pro- the end of the demonstration Kaiser had gram had enrolled. Kaiser sent a letter to enrolled 1,649 patients, 50 (3 percent) of its ESRD patients explaining the demon- whom disenrolled (including patients who stration to them and offering them partici- left the service area) before the end of the pation. For every two new demonstration demonstration, and another 243 died while patients Kaiser enrolled, it was allowed to in the demonstration. Table 4 provides enroll one rollover patient. demographic characteristics by modality Kaiser’s administrators reported the for the sample of Kaiser’s enrollees includ- impression that patients enrolled in the ed in the data collection effort for evalua- demonstration primarily for financial rea- tion. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 19
  14. 14. 20 Table 3 Services and Benefits Covered Beyond Medicare for the ESRD Managed Care Demonstration Sites: 1998-2001 Service/Benefit Kaiser1 HOI2 Xantus3 Coinsurance and Deductibles No copay for physician services (including No copay for physician services (including $70 monthly premium (roughly equivalent physicals and immunizations), inpatient annual physical and access to preventive to the monthly out-of-pocket coinsurance stays, skilled nursing facility (SNF) stay services). and deductibles paid by an average covered 100 days per period, emergency Medicare beneficiary). Medicaid would pay room services, therapies, home health, and the premium for dually eligible patients. lab tests. This premium was eliminated shortly after end stage renal disease (ESRD) demonstration startup. Prescription Drug Benefit No copay and no annual maximum. No copay for prescription drugs and Up to $780 per year; $10 copay per dialysis-related non-prescription drugs. prescription (copay was eliminated shortly after demonstration startup). Nutritional Supplements All renal-related vitamins, phosphate Provided free of charge in the dialysis unit. Selected nutritional supplements provided binders, iron supplementation and oral nutri- free of charge, delivered to dialysis unit or tional supplements provided free of charge; nephrologist’s office. IDPN covered with approval for medical necessity. Dental and Vision Care Routine dental cleaning and exam twice a Not offered. Not offered. year at no charge, routine eye care with $60 eye glass frame allowance (lenses free of charge), no copay. Transportation Benefit Not offered. Transport to and from dialysis if needed, as Unlimited transportation to and from dialysis determined by the social worker and case center and nephrologists’ office, based on manager. demonstrated need. Health Education Group and peer counseling, special health Programs available on a wide variety of Educational seminars and videotapes. education classes, wellness programs topics: diet, social support, renal disease specific to the ESRD population, provided management, care of vascular access, care free of charge. of peritoneal access, diabetes management, and hypertension management. Rehabilitation Program Not offered. Participation in a program of exercise, Not offered. occupational therapy, neurological rehabilitation, amputee rehabilitation, and referral to a renal employment program. Refer to footnotes at end of the table. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  15. 15. Table 3—Continued Services and Benefits Covered Beyond Medicare for the ESRD Managed Care Demonstration Sites: 1998-2001 Service/Benefit Kaiser1 HOI2 Xantus3 Home Health Services Nothing above Medicare covered services. Made available for post-surgical followup Home visits made available. for new or revised access sites, exit site catheter care, diabetic wound care, and other services as needed. Out-of-Area Coverage 4 Covered for up to 60 days per year out of Up to 30 days per year at an approved Full coverage of the benefits package plan. facility. when outside of the service area, subject to the health plan’s and CMS’ definitions of emergency and urgently needed services. 1 Kaiser Permanente Southern California Region, Los Angeles, California. 2 Health Options, Inc., a subsidiary of Blue Cross® /Blue Shield®, based in Miami, Florida. 3 Xantus Health Care Corporation, based in Nashville, Tennessee. 4 During the time period of the demonstration, coverage for out-of-area dialysis became a benefit that Medicare-risk plans were required to provide. NOTES: ESRD is end stage renal disease. IDPN is intradialytic parenteral nutrition. CMS is Centers for Medicare & Medicaid Services. SOURCES: Oppenheimer, C. C., and Gaylin, D.S., National Opinion Research Center, Shapiro, J. R., Centers for Medicare & Medicaid Services, Beronja, N., The Lewin Group, Dykstra, D. M., and Held, P.J., University Renal Research and Education Association, and Rubin, R. J., Georgetown University School of Medicine, 2003. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 21
  16. 16. Table 4 Selected Characteristics for a Sample of Kaiser Permanente Southern California Region ESRD Managed Care Demonstration Patients: 1999 Characteristic Peritoneal Dialysis Transplant Hemodialysis Rollover Hemodialysis Active Sample Size 82 62 211 470 Mean Age (Years) 49.4 47.6 61.6 56.2 Percent Other than White 48.8 31.1 41.4 38.0 Hispanic or Latino 17.1 30.6 20.9 29.8 Male 52.4 48.4 57.3 64.4 Cause of ESRD Diabetes 24.4 22.6 39.8 39.1 Glomerulonephritis 18.3 17.7 8.1 11.1 Hypertension 22.0 27.4 22.7 23.8 Other 12.2 9.7 8.1 11.5 Unknown/Missing 23.4 22.6 21.3 14.5 NOTES: ESRD is end stage renal disease. Hemodialysis Rollover patients were receiving care from Kaiser prior to the demonstration. Hemodialysis Active patients were newly enrolled in the Kaiser program. SOURCES: Oppenheimer, C. C., and Gaylin, D.S., National Opinion Research Center, Shapiro, J. R., Centers for Medicare & Medicaid Services, Beronja, N., The Lewin Group, Dykstra, D. M., and Held, P.J., University Renal Research and Education Association, and Rubin, R. J., Georgetown University School of Medicine, 2003. HOI Enrollment and Marketing HOI developed three mailings to send to all ESRD beneficiaries residing in the ser- HOI selected the target areas of Dade, vice area. The primary enrollment collec- Broward, and Palm Beach counties because tion instruments were an enrollment form of the size of the patient population in these and a toll-free enrollment line. The enroll- counties, as well as the population’s racial ment process was highly focused on pro- and socioeconomic diversity. HOI’s market- viding personal attention; for instance, fol- ing approach was based on educating lowup calls were provided even after a nephrologists in the area about the potential patient enrolled. benefits of the demonstration, and it was HOI changed its enrollment process to hoped that nephrologists, in turn, would counter problems that arose and to make encourage their patients to enroll. HOI uti- the process run more smoothly. At the lized a dedicated sales force to market the start of the demonstration, outdated crite- demonstration to providers and patients in ria used by CMS to determine patient eligi- the service area. This educational outreach bility resulted in the initial rejection of was based on networking among physicians, many eligible patients who wanted to direct mailing to providers, and in-person enroll in the demonstration. HOI respond- meetings with groups of providers. In addi- ed to this problem by working with CMS’ tion to efforts aimed at nephrologists, HOI regional and national offices on streamlin- launched educational meetings with poten- ing the eligibility determination process, tial patients and marketed the program which, although successful in terms of through the Florida ESRD patient newsletter. streamlining the enrollment process, At the start of the demonstration, HOI caused HOI to expend more resources modeled its enrollment processes for the than had expected. demonstration on its existing programs. At the beginning of the demonstration, Specifically, enrollment was handled by HOI’s HOI enrolled patients based on self-report- telemarketing unit, which was experienced in ed Medicare eligibility. However, they managed care. Additional training was pro- found that some of these patients were vided to staff to ensure that they were pre- determined by CMS to be ineligible for the pared to handle demonstration-related issues. program. In order to minimize financial 22 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  17. 17. Table 5 Selected Characteristics for a Sample of Health Options, Inc., ESRD Managed Care Demonstration Patients: 1999 Characteristic Peritoneal Dialysis Transplant Hemodialysis Sample Size 27 13 594 Mean Age (Years) 51.9 45.3 60.4 Percent Other than White 29.6 45.5 48.1 Hispanic or Latino 11.1 7.7 24.8 Male 48.1 84.6 62.5 Cause of ESRD Diabetes 14.8 15.4 31.6 Glomerulonephritis 11.1 15.4 10.6 Hypertension 25.9 15.4 24.8 Other 7.4 7.7 8.2 Unknown/Missing 40.7 46.2 24.8 NOTE: ESRD is end stage renal disease. SOURCES: Oppenheimer, C. C., and Gaylin, D.S., National Opinion Research Center, Shapiro, J. R., Centers for Medicare & Medicaid Services, Beronja, N., The Lewin Group, Dykstra, D. M., and Held, P.J., University Renal Research and Education Association, and Rubin, R. J., Georgetown University School of Medicine, 2003. risk, HOI began enrolling patients only regularly visit the Miami region. The care after their eligibility status had been veri- managers also discussed patients’ con- fied through Medicare and the patient was cerns about what was to happen at the end determined to be in the CMS data system. of the demonstration and assured patients Similar to Kaiser, initial enrollment at HOI that they would be able to enroll in HOI was also slower than anticipated. Patients after the demonstration concluded. cited the following reasons for not wanting In November 2000, HOI closed its enroll- to join the demonstration: (1) not wanting to ment period for new patients as part of the change physician or dialysis unit, (2) fear of wind-down process of the demonstration. managed care and participating in a demon- They enrolled 967 patients in the demon- stration project, (3) physicians’ active dis- stration program, 118 (12 percent) of whom couragement against joining, (4) concern disenrolled (including patients that moved about giving up supplemental health insur- out of the service area), and another 170 ance, and (5) questions about insurance cov- died while in the demonstration. Table 5 pro- erage after the demonstration ended. HOI vides demographic characteristics by modal- addressed some of these patient concerns ity for the sample of HOI enrollees included early in the enrollment process. For in the data collection for the evaluation. instance, they addressed questions about supplemental insurance by telling patients to Xantus Enrollment and Marketing keep their supplemental insurance for a few months in case they did not like the demon- Initially, Xantus marketed the demon- stration and wanted to disenroll. HOI also stration program through multiple direct worked on options to guarantee supplemen- mailings to eligible patients. In addition, tal insurance through Florida Blue Xantus representatives set up information Cross®/Blue Shield® for patients who disen- booths at dialysis centers to promote rolled at the end of the demonstration. enrollment in the demonstration. Xantus In response to patient concerns about began service delivery in September 1998. the distance to the transplant center in In the first 8 months of the program, Jacksonville, HOI implemented a program Xantus enrolled a total of 26 patients in the to have the hospital transplant surgeon restricted five-county service area. Although HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 23
  18. 18. demonstration managers were optimistic Kaiser Demonstration Challenge about expanding into a larger service area, they experienced significant delays in Relationship with Providers obtaining an expanded Medicare-risk con- tract. In order to increase enrollment, the During the initial stages of the demon- demonstration site eliminated the $70 stration, reaction to the demonstration pro- monthly premium and the copayments for gram from the non-Kaiser provider com- prescriptions. The site believed that these munity, including both physicians and changes positively affected enrollment lev- dialysis units, was fairly negative. Both els. By the time enrollment at the Xantus nephrologists and facilities were con- demonstration site was frozen in cerned that Kaiser would use the demon- November 1999, a total of 50 patients had stration to expand its market share result- enrolled in the program. ing in a loss in revenue for both categories of providers. At the time of demonstration IMPLICATIONS FOR FUTURE ESRD startup, the non-Kaiser dialysis units were MANAGED CARE PROGRAMS particularly concerned because of Kaiser’s partnership with Fresenius in which In assessing what can be learned from Kaiser opened new dialysis facilities. Non- the demonstration experiences, in terms of Kaiser nephrologists were also concerned operational outcomes, that may be relevant about disruptions in the continuity of care for future organizations, three questions due to difficulty communicating routine can be explored: patient updates with Kaiser nephrologists. • Can MCOs create relationships with Nevertheless, both nephrologists and nephrologists and dialysis facilities that facilities acknowledged to the evaluation are clinically, fiscally, and logistically fea- team Kaiser’s reputation for providing sible and enticing? high-quality care and reported that they • Is managed care attractive to ESRD would maintain a neutral stance about the patients? demonstration when asked by their • Can the MCOs succeed financially? patients for advice about participating in Each of the demonstration sites faced the demonstration. However, according to challenges contracting with providers, and Pifer et al. (2003), compared to HOI, a the underlying issues are likely to be faced lower proportion of Kaiser patients report- again should MCOs be allowed to develop ed that they enrolled in the demonstration managed care programs for ESRD patients on the recommendation of their physician. in the near future. Kaiser faced negative Over time, community nephrologists attitudes initially about the demonstration and contract dialysis units exhibited a by community physicians and dialysis facil- more positive attitude toward the demon- ities, and HOI and Xantus experienced dif- stration. In interviews conducted by the ficult, and ultimately unresolvable, negotia- evaluation team, providers reported that tions with the providers they expected to Kaiser made substantial efforts in their contract with for significant service lines. communications with community providers, 24 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4
  19. 19. including involving community providers stration, and possibly patient satisfaction as in demonstration service delivery-related well. HOI experienced a larger number of issues through special committees and the disenrollees from the demonstration than provision of quality monitoring reports. did Kaiser. Many metropolitan areas have a Kaiser care managers also made efforts to single transplant center, which may put strengthen relationships with the commu- some MCPs at a disadvantage in negotiat- nity providers. Further, comfort with ing for services that meet geographic prox- Kaiser increased on the part of contracted imity requirements. providers when providers did not experi- ence a substantial decline in patient vol- Xantus Demonstration Challenge ume due to enrollment in the demonstra- tion. Contracting with Nephrologists HOI Demonstration Challenge The Xantus demonstration plan as pro- posed to CMS was based on a partnership Contracting with a Transplant Provider with and model of care institutionalized by the largest single nephrology practice in At the time that HOI submitted its pro- the region representing more than 60 per- posal to CMS for the demonstration, the cent of patients and 75 percent of nephrol- HMO had a tentative agreement with ogists. Shortly after winning the demon- Jackson Memorial Hospital in Miami to stration contract, difficult negotiations provide transplant services. However, sub- resulted in dissolution of the partnership sequent contract negotiations, which last- between the two groups. This change ed more than a year, proved exceedingly required Xantus to remodel their demon- difficult and ultimately the two organiza- stration program. tions could not come to a financial agree- One key change was that Xantus estab- ment. The failure to contract with the only lished contracts with all nephrologists in transplant center local to the demonstra- the service region instead of just nephrolo- tion counties forced HOI to contract with gists in the large nephrology group prac- Jacksonville Methodist Hospital, 300 miles tice. Thus, the program looked more like a away.8 Nephrologists expressed concern network model than originally anticipated that most patients would not be willing to (the original plan looked more like a travel to Jacksonville for a transplant. hybrid between staff model for nephrolo- To address the issue of distance between gy, case management, and primary care the contracted transplant center and services, and network model for other ser- demonstration enrollees, halfway through vices). Another change was that Xantus the demonstration HOI arranged for the hired case managers (originally it was transplant surgeon to spend time each planned that the case managers would be month in Miami to conduct pre-transplant hired, managed, and compensated by the workups. The clinical consequences of this large nephrology group practice). This arrangement are currently being analyzed. arrangement failed to create the hoped-for It is reasonable to assume that this aspect close, day-to-day working relationship of the demonstration program affected between the case manager and nephrolo- HOI’s patient recruitment to the demon- gists. It was also originally planned that the 8 HOI’s contract with Jacksonville Methodist Hospital to provide group practice would hire social workers transplant services required approval by CMS. Future analyses and dieticians; instead, demonstration will investigate access to transplantation in the demonstration. HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4 25
  20. 20. patients were required to access such ser- demonstration enrollment effective Novem- vices in the traditional manner through ber 1, 1999. By mutual agreement between their dialysis facility. Finally, with the loss Xantus and CMS, the demonstration at this of the partnership with the large group site was discontinued as of April 1, 2000. practice, the site lost much of its manage- The residual 44 demonstration enrollees ment-level ESRD expertise and its primary were notified March 1, 2000, and received planned referral source (the group prac- assistance from Xantus staff, dialysis facility tice had over 600 patients and Xantus social workers, State Department of assumed that most of these patients would Commerce and Insurance staff, the ESRD enroll at the encouragement of their physi- network, and the CMS regional office in cian). obtaining secondary coverage to supple- Two additional issues significantly ment Medicare. affected Xantus’ ability to maintain a demonstration program. The first was the WILL ESRD PATIENTS ENROLL IN requirement that Xantus obtain a MANAGED CARE? Medicare-risk contract, and the second was the financial health of the larger One goal in conducting the demonstra- Xantus Corporation. Xantus won the tion evaluation was to determine whether demonstration contract prior to obtaining a ESRD patients are willing to participate in Medicare-risk contract. Only after the managed care and whether enrolling award was made and the contract was patients are representative of the underly- signed did CMS clarify that Xantus needed ing population. The two sites that complet- to acquire such a contract in order to pro- ed the demonstration proved that ESRD vide demonstration services. Therefore, patients are indeed willing to trade some before Xantus could begin providing freedom of choice in health care for demonstration services, it was necessary increased access to pharmaceuticals and for the plan to invest considerable resources reduced copayments. For a separate pre- and time into obtaining the Medicare-risk sentation and discussion of the patient contract. One outcome of this effort was characteristics willing to enroll in the that Xantus was able to obtain their risk demonstration, refer to Shapiro et contract for a service region of only five al.(2003). As shown, patients who enrolled counties as opposed to the 40 county in this demonstration were not representa- region proposed for the demonstration. tive of the typical ESRD patient; they tended Thus, the demonstration was also limited to be younger and healthier. Additionally, to operating in the five-county area. This demonstration disenrollees spent more change reduced the estimated eligible time in the hospital during the program number of demonstration patients from compared to continuous enrollees, indicat- 1,400 to 842. ing that selection effects continued to The Xantus demonstration program was appear even after initial enrollment. able to develop a new network of physi- Another evaluation finding was that patient cians and succeeded in obtaining the satisfaction with the demonstration was required Medicare-risk contract, however, generally quite high (Pifer et al., 2003). It is due to financial difficulties in the organiza- worth noting that HOI, using the network tion’s other business lines, Tennessee model, appeared to have an easier time placed Xantus, as a whole, under receiver- recruiting patients than Kaiser during the ship, and CMS placed a freeze on ESRD early days of the demonstration, which 26 HEALTH CARE FINANCING REVIEW/Summer 2003/Volume 24, Number 4