Understanding the ETC Model

The ETC Model began in January 2021 and uses financial bonuses and penalties to increase home dialysis and kidney transplant.

The end-stage renal disease (ESRD) Treatment Choices (ETC) Model emerged from the Advancing American Kidney Health Initiative to help encourage greater use of home dialysis and kidney transplants. The ETC Model is a mandatory payment model that, like all models, seeks to both reduce costs and either maintain or improve quality indicators. Both dialysis facilities and nephrology clinicians managing dialysis patients were assigned to be ETC Participants based on their location, with approximately 30% of the United States randomized into the ETC model based on hospital referral region. The ETC Model began in January 2021 and uses financial bonuses and penalties to increase home dialysis and kidney transplant. In 2024, facilities that perform highly can get an extra 7% added to the bundled rate for dialysis while facilities that perform poorly can lose 9% of their bundled payment. For 2025, this is an up to 8% bonus and an up to 10% penalty. The potential bonuses for managing clinicians are similar, while the potential penalty is slightly less extreme, at -8% in 2025 and -9% in 2025 until the end of the model in June 2026. Of importance, only Medicare fee-for-service and not Medicare Advantage beneficiaries are included in the model.

The ETC model has two additional very notable features. One is that home dialysis and transplant achievement score thresholds are stratified by socioeconomic status. This is most marked for the home dialysis achievement measure, where facilities and clinicians caring for populations where at least half of the patients receive either the Medicare low income subsidy or are dual eligible for Medicare and Medicaid have far lower home dialysis achievement thresholds. This reflects that individuals with greater poverty may have home environments that make home dialysis less feasible. A second notable feature is the built-in expectation that, with each passing year, more patients will be placed on the kidney transplant waitlist and more patients will perform home dialysis, with the achievement thresholds rising by 10% annually. These annual multipliers mean that, regardless of population trends, 40% more people need to meet these achievement thresholds in 2025 as did in 2021 in order to succeed in the model. 

Importantly, the ETC model should not be viewed in isolation. Other programs emerged from the Advancing American Kidney Health Initiative, including the voluntary Kidney Care Choices models and transplant system reform. These initiatives also need to be viewed in the context of the COVID-19 pandemic, which revealed critical vulnerabilities in the health care system, including in the delivery of kidney care, while subjecting clinicians and providers to severe economic stress.

In February 2024, ASN wrote to the Center for Medicare and Medicaid Innovation (CMMI) highlighting areas of concern that ASN had with the ETC model and asked CMMI to reconsider some elements of the ETC for the remaining years of the program. In this letter, ASN asked CMMI to undertake “additional rulemaking on the ETC Model to address concerns about the model’s design and evaluation methodology as well as implications of the performance targets in the remaining years of the model.” ASN suggested that CMMI should “view the ETC Model in the broader context of kidney care in the United States”, highlighting that this “is a time of great change and tremendous stress on the kidney care system.” ASN explained numerous stress factors influencing performance within the model, ranging from the explosive growth of Medicare Advantage to inflation and workforce shortage issues all in the broader context of impacts from the COVID-19 pandemic. While ASN had numerous recommendations, paramount among these was the society urging CMMI to mitigate penalties in the upcoming severe penalty phase.

ASN urges CMMI to:   

1. Mitigate penalties in the ETC Model to avoid further disadvantaging under resourced dialysis units and exacerbating disparities
a. Remove the 10 percent “stretch goal” achievement threshold escalators to mitigate penalties in the ETC Model, given improvements in both ETC and non-ETC regions
b. Maintain the benchmarks at the Measurement Year (MY) 6 targets as the “peak”

2. Reopen voluntary models to new applications, starting January 1, 2025 
a. Revisit KCF and KCEs to make these models more feasible for small and   medium sized practices 
b. Incorporate data from MA patients (even if not included in cost data) to improve numerators and denominators in performance calculations and comparison efforts

3. Address confounding of model results due to both Medicare Advantage and/or KCC beneficiaries
a. Incorporate data from MA beneficiaries (even if not included in payment adjustments) to increase the denominator sizes and give facilities credit for patients that switch to MA and/or participate in additional value-based models
b. Conduct sensitivity analyses stratified by participation in MA, KCC, and other value-based models to understand potential directional impacts from non-ETC-based VBC programs

4. Give ETC participants appropriate credit for a kidney transplant given that this is the optimal therapy for many people with kidney failure
a. Credit preemptive transplant to clinicians while also robustly crediting living donation kidney transplants for those who have already initiated dialysis for both clinicians and facilities
b. Apply the KCC definition for successful transplant (a transplant that does not require dialysis, after excluding potential delayed graft function)
c. Continue both numerator and denominator credit in performance calculations even if the beneficiary transitions away from Medicare fee-for-service (FFS) coverage while the beneficiary has a functioning transplant 
d. Explore a composite measure that includes not only patients who are waitlisted but also patients who receive a transplant 

5. Increase home dialysis resources beyond the dialysis facilities 
a. Use a regional data adjuster for home dialysis rates to account for region-wide investments in home dialysis, such as improved in-hospital PD care, as well as minimize the impact of unaffiliated PD-only facilities on other facilities participating in the model (ASN originally recommended that unaffiliated PD-only facilities be excluded from the model)
b. Use any savings in ETC to improve resources for home dialysis in non-home settings, such as investing in PD Centers of Excellence at nursing homes and LTACHs so that PD patients who require rehabilitation are not forced to transition to hemodialysis

ASN is continuing to advocate for improvements in the model and will update ASN members on the outcomes of these efforts.