The economics of end-stage renal disease

Economics of End-Stage Renal Disease

Major Reimbursement Mechanisms

health care delivery system has made vast changes throughout the history of its system of managed care. The majority of reimbursement spending is facilitated by the federal government and by the states via Medicare and Medicaid. These programs provide for some of the Long-Term Care services received by the geriatric population. The government programs of Medicare and Medicaid cover approximately 60% of LTC spending with private out-of-pocket payment providing approximately 33% (no reimbursement), and private health insurance coverage < 5% of LTC spending (Kovner, Knickman, Jonas).

In 2005, state operated Medicaid programs provided coverage for 44% of all nursing home expenditures (Catlin, Cowan, Heffler, Washington & National Expenditure Accounts Team, 2007). (Kovner, Knickman, Jonas) Individuals may qualify for Supplemental Security Income program benefits if they spend down their assets and qualify for Medicaid. Medicaid will then cover nursing home care for disabled individuals 65 and above within income limits 3x's the $623 monthly limit (Kovner, Knickman, Jonas)

Home health care under Medicaid coverage is mandatory under federal guidelines if ordered by a physician for individuals deemed eligible to receive skilled nursing services (Kovner, Knickman, Jonas). Reimbursement under Medicaid for these services is 100% of cost when receiving the covered from social security. Medicaid does reimburse a high percentage without the social security benefit coverage.

Therefore, the major mechanism for reimbursement for end stage renal care and for long-term care is the government. Specifically, insurance coverage received along with any benefits from social security are additional reimbursement providers along with state and federal government coverage via Medicaid and Medicare, respectively.

The economics of providing ESRD treatment from the organizational POV

From the organizational point-of-view, the economics of providing End Stage Renal Disease ESRD treatment is a net-positive economically speaking. Given the range of services and reimbursement provided for coverage of services provided by the organization, ESRD cases provide their organization with 100% reimbursement. Coverage includes the type of care found with geriatric patients receiving long-term care such as the activities of daily living or ADL's.

ESRD is covered by Medicaid and Medicare for reimbursement of all costs associated with care and for almost all ESRD patients, the Social Security coverage will also be received ensuring the patient pays zero out-of-pocket. Specifically, the variable costs for ESRD are a function of the variance from the mean cost of care for ESRD patients. The deviation for any one patient would equal the variance from the mean and therefore the variable cost function.

The fixed cost function for ESRD patients is ostensibly the same for all other patients. Therefore, a patient with a condition that does not receive full reimbursement for long-term care services creates more billing pressure on the organization to ensure the costs for services will be paid in full. ESRD patients provide the full fixed cost payment due to the full reimbursement for their care. Long-term care facilities would like to have 100% ESRD patients however, such a patient load does require skilled workers in numbers to care for these especially demanding patients.

ESRD includes the ADL's and care specific to kidney cleaning and functioning, such as dialysis treatment either at home or at an outpatient facility. Additionally, some patients are brought in as in-patients at the hospital for ESRD treatment and some patients are admitted and remain admitted at a hospital until discharged. These patients either receive home care treatment, receive treatment at an outpatient facility, or are admitted to a long-term care facility.

Patient options & trade-offs related to cost, quality, and access to treatment

The patient has somewhat limited options as a function of the cost, quality, and access to health care. Largely, the options are dependent on the nature of health care services required by the patient. Additionally, the options are specific to the type of insurance coverage (if any) the patient is insured to receive.

For ESRD patients, the options available include Medicare & Medicaid coverage, which for ESRD will generally include Social Security Income benefits due to the End Stage Renal Disease provision. Nursing homes are not inexpensive facilities of institutionalized care. The cost of a nursing home can run into the thousands per month and if there is no coverage for services, patients are likely to pay out of pocket for services with no reimbursement.

Medicare/Medicaid coverage enables the least cost to the patient but provides potentially the lowest quality care with reasonable access to care. Private health care coverage is very expensive yet provides ostensibly the highest quality of care with limited access to care. However, the wealthy tend to have home care services, where health care specialists arrive onsite at the patient's residence to provide treatment.