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New CMS Payment Model Presents Potential Ethical Conflicts of Interest

By Susan Eymann, MS14 Mar 2018

In 2013, Medicare spent nearly $33 billion to care for persons with end-stage renal disease (ESRD). Dialysis patients are hospitalized nearly twice per year on an average and spend about 11 days in the hospital per year. Such hospitalizations account for about 40% of Medicare expenditures for dialysis patients. Moreover, Medicare’s medium per-patient cost for the last 30 days of life was $20,731 in 2013.


The high costs of care for ESRD patients has led to creation of a new CMS payment model based on creation of accountable care organizations (ACOs) called ESRD Seamless Care Organizations (ESCOs). ESCOs are partnerships in which dialysis facility owners, nephrologists, and others are challenged to explore new ways to provide enhanced services for dialysis beneficiaries and particularly, to reduce the number of their hospitalizations.

ESCOs stand to gain or lose financially depending on clinical outcomes and performance, and on total health care costs incurred by their patients. Nephrologists are increasingly recognizing the value of conservative management without dialysis for some CKD patients and that palliative care and hospice may be in the best interests of patients, particularly elderly patients. However, serious ethical conflicts could arise when decisions about avoiding or stopping dialysis are made to enhance the financial success of dialysis facility owners and other ESCO investors rather than the individual needs of a patient.

In addition, companies that own dialysis units are reaching out to non-dialysis CKD patients to provide education and other services. This expanded role of end-stage renal disease providers could create an ethical conflict of interest if an ESCO company’s employees, rather than a patient’s nephrologist or other physician, attempts to guide a CKD patient with high hospitalization risks to conservative CKD management or hospice, rather than to dialysis in order to save nearly $50,000 a year in hospitalization costs.

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