BACKGROUND In 2011, a new prospective payment system will be instituted for Medicare payments for dialysis.  Payments will be calculated per session.  It is unclear how long-acting medications will fare under this new system, i.e., if patients are administered a monthly medication and then miss subsequent sessions, how will this impact revenue?  OBJECTIVES: Model reimbursement for one long-acting drug under the proposed bundled payment system from the provider perspective. METHODS: We assumed that there would be one set of case mix adjusters (CMAs) and outlier payment for all currently separately billables; that monthly drugs are truly administered only once per month; and that all payments are made in full, i.e., all 20% co-pays are made in full.  We included 3 levels of drug utilization (for one drug) and 3 levels of other resource utilization, each ranging from 33% below to 33% above the current mean reported by CMS.  We included 4 levels of rebates ranging from 0% to 50%. We examined 16 different CMAs, ranging from 0.6 to 3.6 in increments of 0.2.  We varied the number of dialysis sessions in a month from 1 to 13. This 3 x 3 x 4 x 16 x 13 matrix produced 7488 solutions.  RESULTS: The model showed providers will incur losses when a patient receives a full drug dose in 1 session and misses all subsequent sessions, unless manufacturers provide significant rebates/price reductions.  Losses occur even at 50% discounts when CMAs fall below 0.80.  Greatest losses do not always occur when there is only 1 session in a month, but can occur at 2 to 7 sessions (J-shaped curve). CONCLUSIONS: Losses on long-acting medications will occur, but can be mitigated and in some cases eliminated through manufacturer pricing discounts.  However, the relationship between component costs, CMA and session number are non-linear.