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The Economics Of End Stage Renal Disease: A Case Study

1025 words - 4 pages

The purpose of this paper is to discuss healthcare financing in America, as it relates to a case study about End Stage Renal Disease (ESRD). I will discuss the major reimbursement mechanisms for ESRD. Additionally, I will provide the organization’s point of view about the economics of providing ESRD treatment. I will share options and potential trade-offs related to cost of treatment, quality of treatment, and access to treatment. Finally, I will discuss the ethical implications of resulting treatment options based on cost evaluation.
Reimbursement Mechanisms
In 1972, Medicare coverage for beneficiaries and individual under 65 years of age was spurred on by economic and political forecasts. The support for ESRD reimbursement was due to the belief that the kidney transplant would become a routine practice and dialysis would become more obsolete (Munn-Short, 2008). Unfortunately the expectation was not met, as in 2006 there were over 65,000 beneficiaries on dialysis and waiting for a kidney transplant. In 2003 the Medicare Modernization Act mandated the first revision to the reimbursement system since 1972; coverage was restructured and cost measures were implemented. (Munn-Short, 2008). This was due to the belief that the current reimbursement system promoted insufficient use of resources and over use of medications which were billed separately. This required that services billed separately by physicians and laboratories are to be bundled for each dialysis session. Bundling of services includes all laboratory tests, supplies, injectable medications, and the shifting the responsibility of oral medications coverage (that used to be covered under the Medicare part D) to the dialysis facilities (Wish, 2009). In addition to stronger requirements over reimbursement there is a focus for continued and improved quality of care incentives. In an attempt to defray the cost of services for dialysis facilities that care for individuals who require considerable more services beyond the standard, there is an incentive program to provide additional reimbursement when caring for these individuals.
Economics of Providing ESRD Treatment
Effective January 1, 2011, the revised ESRD prospective payment system was phased in. The facilities have two options: immediately convert for 100% of payments, or the option to phase-in over a period of four years (25% of payment based on new system and 75% based on old system). It is estimated that the reimbursement will decrease approximately $118,000 per year under the new system (Wish, 2009). Providing ESRD treatment for more individuals with decrease reimbursement will be a challenge for smaller dialysis facilities’ survival. 25% of patients in America receive dialysis at small dialysis organizations that serve patients who live in rural or inner city areas (Wish, 2009). Unfortunately these facilities are at the greatest financial risk for reducing services, staff, and or eventually closure; therefore reducing access of...

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