A Different RTA Causing Headaches for Nephrologists in Value-Based Care

Katherine Kwon Katherine Kwon, MD, FASN, is a regional medical director for Panoramic Health, a value-based care company, as well as a private practice nephrologist at Lake Michigan Nephrology, St. Joseph, MI.

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As 2023 wound to a close, nephrologists and their value-based care partners participating in the Comprehensive Kidney Care Contracting (CKCC) model found themselves anxiously awaiting an announcement from the Center for Medicare and Medicaid Innovation (CMMI) about the Retrospective Trend Adjustment (RTA). Having set their budgets well over 1 year ago, based on their population's benchmark cost of care, nephrologists may find their margins significantly smaller than anticipated. This could turn an expected profit into a loss, and since the CKCC is a multi-year model, participants could choose to exit if they do not see a path to financial success.

A value-based care program starts with the assumption that Medicare can project how much it expects to spend for a given patient, based on a patient's past claims. This estimate forms the benchmark for a CKCC model's patient population. If the CKCC can deliver care for less than the benchmark, while preserving clinical quality, CKCC partners can keep a portion of the savings that they generated. They also need to cover their operating expenses from their savings share—the salaries and infrastructure investments that are not directly compensated by claims. Shared savings are delivered approximately 10 months after year's close, so the CKCC partners must invest capital for many months in anticipation of receiving shared savings.

The CKCC benchmark was set based on claims from 2017 to 2019. To account for market changes between then and 2022, the first year of the CKCC model, the Centers for Medicare & Medicaid Services (CMS) used the US per capita cost model to forecast changes in health care expenditures. However, if the forecast is inaccurate, the benchmark may be set either too high or too low. To cover this possibility, there is a look back after the end of each model year. This look back is the RTA, which compares the actual cost of care with the predicted cost of care (Figure 1).

Figure 1
Figure 1

Shared savings fall by 80% following RTA

Citation: Kidney News 16, 1

Health care expenditures for 2022 came in lower than forecasted, so the RTA is expected to reduce the benchmark. This shrinks the margin of performance and reduces the money available as shared savings. It is a hard pill to swallow alongside the rising costs of labor and capital financing that have been a challenge over the past year.

Large swings in the performance margin make it more difficult to succeed financially in CKCC. CMMI is charged with developing new payment models that reduce costs to taxpayers while preserving health care quality. However, since many doctors operate in a for-profit environment, the payment models must also be viable from a business standpoint. CKCC is nephrology's second attempt to execute value-based care addressing the unique needs of our patient population. Hopefully, we can partner with the CMMI to develop a better way to care for people living with kidney diseases.

Opinions expressed in this article are those of Dr. Kwon alone.