A research letter published in the New England Journal of Medicine calls for careful consideration of the design and consequences of health disparity incentives in future value-based payment models.

The research letter delves into the End-Stage Renal Disease Treatment Choices Model. The Centers for Medicare and Medicaid Services (CMS) developed this pay-for-performance program to encourage greater use of home dialysis and kidney transplants for Medicare beneficiaries with end-stage kidney disease, while preserving or enhancing quality of care and reducing Medicare expenditures.

Patients receiving home dialysis and kidney transplants are generally considered to have a better quality of life compared to patients receiving conventional in-center dialysis. Individuals of any age with end-stage kidney disease are typically eligible for Medicare coverage for this condition.

The innovative payment model is one of the largest randomized evaluations of pay-for-performance ever conducted in the United States. It randomly assigned dialysis facilities and nephrologists in 30% of hospital referral regions in the country to receive financial incentives based on how often their patients received home dialysis, received a kidney transplant or were placed on a kidney transplant waitlist.

In 2021, the payment model’s inaugural year, dialysis facilities that disproportionately served patients with social risk factors experienced substantially higher rates of financial penalties. Subsequently, Medicare implemented an incentive to benefit those facilities treating disproportionately many individuals dually eligible for Medicare and Medicaid or receiving Medicare’s low-income subsidy to reduce disparities in access to home dialysis and kidney transplants.

The research letter notes that the introduction of this incentive did not narrow disparities in home dialysis, transplant and waitlisting, possibly due to social risk factors which were not considered in the incentive calculation.

However, the added incentive did reduce financial penalties among facilities that disproportionately serve patients who were Black, Hispanic, uninsured or Medicaid-covered, or living in the most socially disadvantaged neighborhoods.

“Major causes of end-stage kidney failure include diabetes, obesity and hypertension, all conditions which significantly impact individuals in disadvantaged communities throughout the course of their lives,” notes research letter co-author Rachel Patzer, Ph.D., MPH, president and chief executive officer of Regenstrief Institute and the Leonard Betley Professor of Surgery at the IU School of Medicine.

“It’s important that payment systems recognize the facilities that disproportionately serve patients in these communities, so that they are not unfairly penalized and can continue to help meet their patients’ needs.”