Economic impact of case-mix adjusting the dialysis composite rate

The Medicare program reimburses dialysis providers a flat rate for a bundle of services that comprise the basic dialysis treatment. This payment system is being modified to incorporate case-mix adjustment for age and body size, which have been shown to influence dialysis costs. This study simulated the economic impact of the recently issued Medicare rule on case-mix adjustment by estimating the variation in payments across patients, facilities, and broad classes of facilities. Case-mix adjustment results in considerable patient-level variation in payments ($12.99 SD in case-mix adjusted payments). The variation across dialysis facilities is smaller but still economically significant ($3.77 SD). However, there was little evidence that particular classes of facilities (e.g., ownership, chain membership, size) will be substantially advantaged or disadvantaged by case-mix adjustment. There do seem to be modest changes in the regional distribution of payments.