The 21st Century Cures Act: How MA Organizations Should Prepare for Important Changes to ESRD Beneficiary Eligibility

September 11, 2020

Robert Badal, Cofounder & Chief Revenue Officer, Strive Health

Signed into law in December of 2016, the 21st Century Cures Act aims to accelerate the discovery, development and delivery of modern patient care.

Although the act was signed nearly four years ago, key provisions that enable end-stage renal disease (ESRD) beneficiaries to enroll in Medicare Advantage (MA) plans, regardless of their previous coverage, are set to become effective at the end of 2020. Below, we discuss how these changes will impact MA plan quality and costs, as well as key steps that MA leaders should take to ensure they are prepared.

Changes to ESRD Beneficiary Eligibility Will Significantly Increase Financial Risk.

ESRD is an advanced state of chronic kidney disease in which beneficiaries require ongoing dialysis treatments or a kidney transplant to stay alive. It is a significant condition that can be highly complex and costly to manage. Prior to the changes introduced by the 21st Century Cures Act, ESRD beneficiaries could only obtain MA coverage under limited circumstances. For example, a beneficiary could remain enrolled in an MA plan if their ESRD diagnosis occurred after enrolling in the plan, or if an ESRD-SNP was available in the area.

Now, ESRD beneficiaries can select a MA plan during open enrollment, regardless of previous coverage, beginning in plan year 2021. This will reshape the MA landscape in several ways.

MA plans and entities taking risk on MA populations will see an influx of ESRD members

According to industry experts, changes in eligibility could triple enrollment of ESRD beneficiaries for MA plans starting in 2021. By 2022, 41% of total patients on dialysis are predicted to be enrolled in MA plans (compared to 14% in 2018).

Strive Health partners with leading MA plans and medical groups to offer kidney disease care services that improve member health outcomes and generate savings on total cost of care. In working with our partners to project the effects of the 21st Century Cures Act, many anticipate that their MA ESRD population will increase by as much as 3-5x over the next several years. This influx will significantly change the profile of MA plans’ enrolled populations and require specialized planning and management.

MA plan per-member costs will significantly increase.

ESRD beneficiaries have disproportionately higher medical costs than the average MA plan member. An analysis from USRDS shows that the average per member per year cost for Medicare ESRD members is steadily increasing. The latest data shows the average per–member per-year cost as >$90,000 for hemodialysis and $78,000 for peritoneal dialysis in 2016, which is significantly higher than that of the average Medicare beneficiary.

While ESRD beneficiaries only represent 0.65% of MA enrollees today, they make up approximately 5% of all MA spend. Considering the rate at which ESRD enrollment in MA plans is expected to increase and the average cost of care per member, MA organizations will be faced with a growing cost burden that will require specialized attention.

Medical management will become increasingly complex.

ESRD beneficiaries typically have multiple comorbid conditions, which result in higher healthcare costs and more complex patient care. According to Wakely, the average ESRD medical loss ratio is about 112% (compared to the average non-ESRD/non-Hospice MLR of 86.6%). This suggests that the current ESRD payment model fails to cover claim expenses, and complexity of care is an important factor in the gap. As ESRD enrollment increases, MA organizations will need to consider specialized complex care programs for ESRD in order to continue to meet their MLR targets.

MA Organizations Should Follow Three Steps to Prepare for the Increased Financial Risk from ESRD Enrollment.

Savvy MA leaders will understand the scope and magnitude of changes driven by the 21st Century Cures Act and take proactive steps to manage them. Below, we outline three key steps MA leaders can take to prepare.

Forecast how ESRD membership will change as a result of the 21st Century Cures Act.

MA organization leaders should have a deep understanding of the 21st Century Cures Act and work with their actuarial teams to incorporate appropriate measures into their economic modeling. To start, MA plans need to understand their universe of Medicare beneficiaries within their service area and estimate what percentage of those beneficiaries are likely to enroll in their plans.

Strive developed a proprietary ESRD MA Enrollment Forecasting Tool to determine the number of Medicare fee–for-service ESRD beneficiaries in a given plan’s service area. Access our tool to forecast how many incremental ESRD members could potentially join your plan and predict timing of expected membership growth based on your market share and number of patients likely to switch from Medicare fee-for-service to MA.

Engage in value-based contracts with local kidney care providers to manage ESRD risk.

ESRD is complex and often treated by a mix of primary care physicians, nephrologists and several other specialists (depending on the profile of comorbidities). Because of this complexity, it is important for MA plans to partner and integrate with care providers who directly manage their ESRD beneficiaries.

Value-based contracts in particular help payors align their incentives with the provider community. They offer a few key benefits: risk sharing between the payor and provider, increased patient engagement with high quality providers in their network, and alignment among the provider community around key quality performance metrics for ESRD care.

Partner with an organization that specializes in value-based care for kidney disease.

Partnering with a specialized organization may seem like a heavy upfront investment, but MA organizations can see significant returns through cost savings and improved patient care with the right partnership. For medical groups with financial risk, primary care physicians often manage ESRD beneficiaries with four or more comorbidities. Both the patients and physicians can benefit from additional specialized support for ESRD. A specialized provider may provide predictive analytics, care management expertise, and high-quality care resources that might not otherwise be available.

Strive Helps MA Organizations Navigate ESRD Member Quality and Costs.

The 21st Century Cures Act will have significant implications for MA organizations, especially when it comes to financial risk from ESRD beneficiaries. To help MA leaders begin to navigate these changes, Strive created an ESRD MA Enrollment Forecasting Tool to determine the number of Medicare fee-for-service ESRD patients in a plan’s service area. Use the tool to forecast the number of ESRD beneficiaries who could potentially join your plan and predict timing of expected membership growth based on your market share and number of beneficiaries likely to switch from Medicare fee–for–service to MA.

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