Impact of the Prospective Payment System (PPS) on Home Hemodialysis

Impact of the Prospective Payment System (PPS) on Home Hemodialysis

The vast majority of patients with end stage renal disease (ESRD) undergoing dialysis receive this care through a Medicare entitlement enacted in 1972. Up until 2011, payment for dialysis treatments included one payment for the basic treatment itself, including all of the associated costs, and a separate payment for injectable medications (primarily erythropoietin, vitamin D, and iron) and some laboratory tests. In January 2011 the Prospective Payment System (PPS)—sometimes called “the bundle”—approach to payment was initiated, so-called because the basic payment plus the payment for injectable medications (and some laboratory tests) were bundled together into a single payment. In addition, the provisions of the PPS included withholding 2 percent of the bundled payment, which could be earned back if dialysis facilities met certain quality outcomes. The PPS applied to patients independent of dialysis modality or site of care, so included home hemodialysis (HHD) patients, although the quality metric related to dialysis adequacy was not included for such patients who were receiving more than three treatments per week.

When the PPS was implemented there was a measurable increase in the number of patients selecting peritoneal dialysis (PD) as a dialytic modality. While there are many factors that led to this occurrence, it was clear that total costs of care for PD patients were lower than for in-center hemodialysis (ICHD) patients, and the PPS further incentivized PD since the weekly payment was the same for PD and ICHD, but the costs for PD were lower. A similar increase in growth of HHD has not been seen, however, and the PPS does not favorably reward placement of patients on this form of therapy. It should be noted that the current PPS payment level is not sufficient to pay for the costs of dialysis, thus necessitating cost shifting from patients with other forms of insurance in order to maintain viability of dialysis facilities.

There is currently a lack of granular data on the costs of HHD training, including retraining and “futile” training for patients who switch out of the therapy in the first 3 to 6 months. In addition, the lack of a payment policy by Medicare to cover the costs of more frequent dialysis makes it challenging to provide more than three treatments, even at home. If the clinical value of more frequent dialysis can be convincingly demonstrated, and patients live longer, are healthier and remain out of the hospital, have an enhanced experience of their treatments, and a better quality of life, the imperative will be on the kidney care community to convince Medicare to: 1) reimburse for the additional treatments under the current fee-for-service system, or 2) move more rapidly to the value-based fully bundled or capitated system where the up-front costs of providing more treatments are more than offset by savings in keeping patients healthier.



Tennankore KK, et al. Survival and hospitalization for intensive home hemodialysis compared with kidney transplantation. J Am Soc Nephrol. doi:10.1681/ASN.2013111180.