Operations and Business Environment - Fresenius Medical Care

02. 3
Our Fiscal year
92
For a few years now, Fresenius Medical Care has been
involved in disease management under the name Renaissance
Health Care. We operate the largest DM program
for privately insured kidney patients in the U.S.
and develop solutions tailored to individuals’ needs.
We cared for about 4,000 patients by the end of 2006,
through national or regional contracts with private
health insurers. In addition, Renaissance Health Care
is certified by the National Committee of Quality
Assurance.
In the year under review, we acquired Health Management
Corporation as a new customer. Health Management
Corporation is the DM subsidiary of Wellpoint,
one of the largest private U.S. health insurers with
34 million members. In the future, we will take over the
treatment of patients with end-stage renal disease
(ESRD) from this insurer in the framework of DM.
Since January 2006, we have carried out a demonstration
project with ESRD patients on behalf of the Center
for Medicare and Medicaid Services (CMS) via our
subsidiary Fresenius Medical Care Health Plan (FMCHP).
The CMS oversees the U.S. public health insurance programs
Medicare and Medicaid. The project is a very important
step for Fresenius Medical Care, since about
85 % of all ESRD patients in the U.S. are covered by
public health insurance.
The demonstration project is scheduled to run for four
years, until December 2009. Fresenius Medical Care
receives a monthly flat fee from Medicare for each
patient registered in the project rather than being reimbursed
for every individual procedure (more information
can be found in the Reimbursement section
to follow).
FMCHP registers the patients in this innovative treatment
model and develops a healthcare program especially
geared to ESRD patients that combines the comprehensive
DM services with our high-quality UltraCare
treatment in our clinic network. The demonstration
project included about 850 patients by the end of 2006
and began in the regions of Philadelphia and Pittsburgh,
Pennsylvania; Dallas, Houston and San Antonio,
Texas; as well as Boston and Springfield, Massachusetts.
For 2007, we are planning to extend the demonstration
project to San Diego, California; Huntsville, Alabama;
Nashville, Tennessee and the state of Connecticut.
Further proceedings will be determined by the CMS
after the four-year project period ends in 2009. We
are convinced that this comprehensive treatment and
reimbursement concept will result in improved treatment
for our patients. It will lower healthcare costs and
enable dialysis companies such as Fresenius Medical
Care to create even more value. As a vertically integrated
dialysis care provider, we are well positioned to
profit from the future development of DM programs.
Reimbursement Structure
As mentioned, 85 % of American ESRD patients are
covered by public health insurance. Therefore, changes
to the reimbursement levels or reimbursement methods
of Medicare and Medicaid can have a significant
effect on the business of Fresenius Medical Care in
North America. Medicare and Medicaid are the American
healthcare programs managing the medical care of
the elderly and people with low incomes who do not
have private health insurance.
The following changes were the focus in 2006:
– A new reimbursement system was developed for
separately billable dialysis drugs. While previously
reimbursement had been based on the average
wholesale price (AWP), since January 2006 the average
sales price (ASP) plus 6 % has been the basis
for reimbursement.
– CMS launched a demonstration project to evaluate
the advantages and disadvantages of the holistic
treatment concept DM. For four years, two companies
– Fresenius Medical Care and DaVita – will
receive monthly flat fees per dialysis patient, a
switch from the traditional system of billing for
each procedure (additional details can be found
in the preceding Disease Management section).
Fresenius Medical Care 2006