The Service Line

CMS just proposed raising the Medicare payment rate for dialysis treatments above $299 for the first time, while rewriting how facilities get paid extra for new drugs and home training. On June 26, 2026, the Centers for Medicare and Medicaid Services (CMS) published its Calendar Year (CY) 2027 End Stage Renal Disease (ESRD) Prospective Payment System (PPS) proposed rule in the Federal Register. The rule proposes raising the ESRD PPS base rate to $299.55 per treatment, which CMS projects will increase total payments to freestanding and hospital based dialysis facilities by about 1.1 percent overall. The proposal also raises the home and self dialysis training add on payment, makes technical changes to the transitional drug add on payment adjustment (TDAPA) and creates a new post TDAPA add on payment category, and adjusts the low volume and pediatric payment add ons. On quality, CMS wants to retire the Hypercalcemia reporting measure in favor of a new Chronic Hyperphosphatemia clinical measure starting CY2029 and update the risk adjustment baseline on the bloodstream infection measure. Comments close August 24, 2026. Confidence: High on the published figures, Medium on whether the 1.1 percent aggregate increase survives unchanged to the final rule, which CMS has revised in past cycles. Sources: Calendar Year (CY) 2027 End-Stage Renal Disease (ESRD) Prospective Payment System Proposed Rule, CMS, Medicare Program; CY 2027 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System, Federal Register.

Reimbursement

Kidney Care Choices practices that counted on a $15,000 bonus for every successful transplant just lost it, a cut value based nephrology groups need to model before deciding whether to re-up for 2027. The Center for Medicare and Medicaid Innovation (CMMI) announced May 28, 2025 that it would keep the Kidney Care Choices (KCC) Model running through December 31, 2027, but only after citing roughly $304 million in model wide net losses. Starting Performance Year (PY) 2026, transplants no longer earn the previous $15,000 per beneficiary bonus that Kidney Care First practices and Kidney Care Entities received in installments over three years. CMMI also cut the quarterly capitation payment KCC participants receive for chronic kidney disease (CKD) beneficiaries by 50 percent to bring it closer to fee for service levels, and added a 1 percent discount to both Global and Professional risk participants’ benchmarks. For nephrology groups weighing whether to stay in KCC past 2027 or shift alignment toward Medicare Shared Savings Program accountable care organizations instead, the transplant bonus elimination removes one of the model’s clearest upside levers just as it demands deeper risk taking. Confidence: High, confirmed against CMS’s PY2026 model documentation. Sources: CMS Updates Kidney Care Choices Model, Jones Day, CMMI Extends Kidney Care Choices, But Lowers Some Payments, Healthcare Innovation.

Enforcement

A California vascular access physician who put one Medicare patient through roughly 42 stents and another through 16 atherectomies just agreed to pay $6.73 million, the latest case in an enforcement pattern every dialysis access center should recognize. The Department of Justice announced May 8, 2026 that Dr. Feliciano Serrano and his practice, Serrano Kidney and Vascular Access Center in Huntington Park, California, would pay $6.73 million ($6.51 million to the federal government, $229,000 to the state) to settle False Claims Act allegations. Prosecutors alleged that between 2016 and 2024, Serrano performed medically unnecessary dialysis access interventions, including angioplasty and stent placement, on at least 18 patients on a routine surveillance schedule rather than in response to documented complications, and separately performed unnecessary peripheral artery disease interventions on at least 17 more patients from 2019 to 2024. The whistleblower, Lincoln Analytics Inc., will collect roughly $976,000. The case follows the same theory that produced DaVita’s $34 million kickback settlement in 2024: that dialysis access procedures are the single most audited line item in the vertical once procedure volume per patient outruns clinical justification. Confidence: High on the settlement terms, Medium on how broadly the Department of Justice intends to extend this theory beyond solo and small group vascular access practices. Sources: Vascular Practice and Physician Agree to Pay More Than $6.73M to Settle False Claims Act Allegations of Unnecessary Vascular Interventional Procedures, Department of Justice, Huntington Park Medical Practice and Doctor to Pay Over $6.7 Million to Settle Allegations of Billing Medicare for Unnecessary Procedures, edhat.

Who’s Buying

US dialysis facilities are now closing faster than they are opening for the first time this decade, and the closures are landing hardest on rural, smaller, and dual eligible heavy clinics. A study published May 26, 2026 using CMS claims data and the United States Renal Data System (USRDS) found the national ratio of dialysis facility openings to closures fell from 8.9 in 2018 to just 0.8 in 2024, when only 56 new facilities opened against 74 that closed. Closed facilities were disproportionately rural (11.2 percent of rural facilities closed versus 9.3 percent of urban ones), concentrated in the Midwest, smaller (a median of 58 patients versus 112 at facilities that stayed open), and served a higher share of dual Medicare-Medicaid eligible patients. The trend is playing out on the ground in Tuskegee, Alabama, where Fresenius Kidney Care agreed on March 18, 2026 to delay closing Macon County’s only dialysis center, which serves roughly 50 patients, to May 17 after US Representative Shomari Figures intervened. Independent and smaller operators are exiting the business at the same time capital keeps flowing into the value based kidney care layer that sits on top of the two dominant chains, DaVita and Fresenius Kidney Care. Confidence: High on the USRDS figures, Medium on how much of the closure wave reflects deliberate chain consolidation versus genuine facility level financial distress. Sources: Dialysis facility closures outpaced openings in 2024, Healio, Closure of Macon County’s only dialysis center delayed, WSFA.

Clinical Policy

A large new meta-analysis confirms GLP-1 drugs meaningfully slow kidney disease, but not by stopping it outright, and Medicare just handed hospitals a bigger transplant incentive at the same moment it stripped an equivalent bonus from the nephrology practices that refer patients to them. A systematic review and meta-analysis of 19 randomized controlled trials covering 90,882 patients, published in Nephrology Dialysis Transplantation, found GLP-1 receptor agonists reduced composite renal outcomes by 19 percent and slowed the rate of kidney function decline by 12 percent, alongside a 14 percent reduction in all cause mortality, but found no statistically significant reduction in progression to outright kidney failure. That combination, real slowing plus a mortality benefit but no proof of averting dialysis altogether, lines up with DaVita telling investors GLP-1s have so far been a net neutral to positive volume story: patients living longer spend more time as dialysis patients rather than skipping dialysis entirely, one reason the chain raised rather than cut its 2026 volume guidance. Separately, CMS’s mandatory Increasing Organ Transplant Access (IOTA) Model enters its second performance year on July 1, 2026, and nearly doubles the maximum upside incentive payment participating hospitals can earn per kidney transplant, from $8,000 to $15,000, even as the companion Kidney Care Choices Model strips the identical $15,000 transplant bonus from the nephrology practices that generate those referrals. Confidence: High on the meta-analysis figures and the IOTA payment mechanics, Medium on how much of DaVita’s volume framing holds if longer term kidney failure data shifts. Sources: The effect of GLP-1 receptor agonists on renal outcomes: a systematic review and meta-analysis, Nephrology Dialysis Transplantation, Medicare Program; Alternative Payment Model Updates and the Increasing Organ Transplant Access (IOTA) Model, Federal Register, DaVita earnings up next: Can value-based care sustain momentum?, Investing.com.

The Operator Metric

1.8 billion dollars. That is what investors valued Strive Health at less than a year ago, and it is the benchmark every nephrology group fielding a call from a value based kidney care enabler should measure its own alignment offer against. Strive Health closed a $550 million Series D round on September 10, 2025, split between $300 million in equity led by New Enterprise Associates with CVS Health Ventures, CapitalG, Echo Health Ventures, Town Hall Ventures, Redpoint, and BlackRock affiliated funds participating, plus $250 million in debt financing, pushing its valuation to $1.8 billion. The company now works with more than 6,500 providers across all 50 states covering upwards of 145,000 patients with kidney disease. With Monogram Health, InterWell Health, Somatus, Evergreen Nephrology, and Healthmap Solutions all competing for the same nephrologist alignment deals, an independent nephrology practice weighing an alignment offer this year should treat the multiple and structure behind that $1.8 billion number, not an older cycle’s terms, as its opening reference point at the negotiating table. Confidence: High on Strive’s raise terms, Low on current comparable valuations for its privately held competitors. Sources: Strive Health lands $550M capital raise at $1.8B valuation, Fierce Healthcare, Strive Health Secures $550M to Expand AI-Powered Kidney Care Platform, HLTH.