What is an ESCO?

What is an ESCO?

On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (ACA). Among other things, the ACA led to the establishment of the CMS Innovation Center (CMMI).1 CMMI was created to design, implement, and test new and innovative healthcare payment models that improve care, lower costs, and better align payment systems to support patient-centered practices. In its 2018 Report to Congress, CMMI highlighted 36 models that the Innovations Center is currently testing.2 This group includes the Comprehensive ESRD Care (CEC) model.3

The CEC model is one of only two specialty-specific models underway within CMMI. Launched in October 2015, the CEC model evaluates new ways to improve care for Medicare beneficiaries with end stage renal disease (ESRD).4 The CEC model started with 13 ESRD seamless care organizations (ESCOs) and, in January 2017, 24 additional ESCOs were added to the model. The program began as a three-year demonstration with an option for two additional years. CMMI has exercised that option and the program is expected to run through the end of 2020. Today, Fresenius Medical Care North America operates 23 of the existing 36 ESCOs, providing care to almost 50,000 Medicare ESRD beneficiaries.

The ESCO functions like a Pioneer accountable care organization (ACO) for patients with dialysis-dependent ESRD. Within a partnership between nephrologists and dialysis providers, ESCO participants work collaboratively to improve the care for ESRD patients aligned to the ESCO. CMMI created geographic restrictions that limit the size of each ESCO. ESCOs operated by Fresenius Medical Care North America vary in size, ranging from approximately 700 to 4,000 Medicare ESRD beneficiaries. CMMI has created specific alignment criteria that define which patients are attributed to an ESCO. These alignment criteria include:

  • Enrolled in Medicare Parts A and B
  • Medicare is primary payor
  • Not enrolled in a Medicare Advantage Plan, cost plan, or other non-Medicare Advantage Medicare managed care plan
  • Not affiliated with an existing shared savings program
  • At least 18 years of age and reside in the US
  • Has not received a kidney transplant in the previous 12 months
  • Receive dialysis treatment at an ESCO clinic
  • Receive at least 50 percent of annual dialysis services in the ESCO's market area

A financial baseline is established for each ESCO by examining local historic claims experience. The claims experience is risk adjusted and then modified by applying a national trend factor. The resulting baseline effectively becomes the ESCO's financial target. If during the performance year, the total cost of care is less than the financial benchmark, the ESCO can share the savings generated with the Centers for Medicare & Medicaid Services (CMS). However, if the total cost of care during the performance year exceeds the baseline, the ESCO may be required to pay part of those losses to CMS.

As a value based program, success in the ESCO is not just about the cost of care. The ESCO is accountable for both quality and the cost of care for aligned beneficiaries. CMMI has established quality metrics that are scored each year within every ESCO. In order to participate in shared savings, every ESCO is required to achieve a minimum quality score. An ESCO could generate millions of dollars in shared savings but if the minimum quality threshold is not exceeded, the ESCO will not keep any of those savings. The ESCO quality score not only serves as a threshold that determines eligibility for shared savings, it also directly influences how much of the savings (losses) an ESCO will receive from (pay to) CMS.

The CEC Model provides the ESCOs with a series of waivers that allow the ESCO to test various approaches to care that are not available within the existing transactional fee-for-service environment. Fresenius Medical Care North America has leveraged those waivers in several innovative ways. Using the care coordination waiver, Fresenius Medical Care North America has created an ESRD-specific transition of care (TOC) service that can be delivered within the venue of care that's most convenient for the patient and the nephrology provider. The TOC service has measurably reduced the 30-day readmission rate for patients aligned with a Fresenius Medical Care North America ESCO. More recently, Fresenius Medical Care North America has explored the recently launched ESCO telehealth waiver and is evaluating a host of services that could potentially improve the quality of care and patient outcomes while reducing the cost of care for the patients we serve.

In performance year 1, all 13 participants in the program generated savings for CMS.5 Within CMMI, universal success in year 1 is uncommon. While performance in subsequent years remains to be determined, CMMI has made it clear that it intends to build on the success of the ESCO program. It is widely anticipated that in 2019, CMMI will announce plans for a second renal-specific model of care.

Although the ESCO program is not perfect, in collaboration with our nephrology practice partners, we have learned a lot during this early leg of the value based care journey.  As the largest participant in the ESCO program, in conjunction with our nephrology partners, Fresenius Medical Care North America is well positioned to succeed in the next CMMI renal model of care.


  1. Centers for Medicare & Medicaid Services. "About the CMS Innovation Center." Accessed June 3, 2019. https://innovation.cms.gov/About/.
  2. Centers for Medicare & Medicaid Services. "2018 Report to Congress." Accessed June 3, 2019.
  3. Centers for Medicare & Medicaid Services. "Comprehensive ESRD Care Model." Accessed June 3, 2019.
  4. Fresenius Kidney Care. "Chronic Kidney Disease Stage 5—End Stage Renal Disease." Accessed June 3, 2019.
  5. Centers for Medicare & Medicaid Services. "Medicare Comprehensive End Stage Renal Disease Care Model Performance Year 1 (Oct 2015–Dec 2016) Results." Accessed June 3, 2019.

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