The 2009 Proposed Rule for Prospective ESRD Payment: Perspectives From a Not-for-Profit Small Dialysis Organization

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Conceptually, combining routine components of repetitive therapy into a single payment is rational. However, it can work only if the elements included and payments for them are reasonable. Sadly, as seen in the end-stage renal disease (ESRD) prospective payment system proposed by the Centers for Medicare & Medicaid Services (CMS), some parts of the new proposed rule are not reasonable, and critically, are not based on complete or accurate evidence. Some of the assumptions used to create the expanded bundle are not realistic, and too many adjustments may only serve to create expense and confusion rather than fairness. Under these proposed regulations, most small dialysis organizations are no longer viable.

Medicare legislation is about payments for care; in other words, about money. As a small, not-for-profit dialysis organization, Independent Dialysis Foundation (IDF) is about good dialysis patient care. But once again, as with every new Medicare rule, the dialogue must be about payment, not treatment methods, technology, or quality of care. Over the 36 years since Medicare has covered most ESRD care, payments have declined by two-thirds because of inflation without annual rate adjustment. Additional cuts accompanied the definition of the composite rate in 1983.

These constrained payments had an impact. Manufacturers and vendors have failed or left the ESRD sector as profits evaporated. Staff ratios were reduced, patient care technicians replaced nurses, dialyzers were reused for economy, and facility amenities shrank. Many facilities that were losing money were sold to large dialysis chains. Dialysis providers, fearing these changes would reduce the quality of care, studied their impact through the Institute of Medicine with no clear conclusion. We still remain unsure about the quality of care we provide, but we meet some standards, and we have become accustomed to providing dialysis care this way.

This proposed rule should bundle together only those services and items that are under the control of dialysis facilities. The proposed coverage for oral medications and laboratory services is often beyond our control. If every laboratory test ordered for a dialysis patient by a physician who receives a monthly capitation for dialysis care is included in the bundle, facilities are vulnerable to large charges for laboratory tests unrelated to kidney failure treatment. Nephrologists often do tests to assess nonrenal problems seen in dialysis patients. Further, it is common for a nephrologist to order laboratory tests requested by another physician so blood can be drawn during dialysis, sparing the patient another venipuncture and a trip to the laboratory. That convenience will end with this rule. The laboratory tests to be included should be explicitly defined, and other laboratory tests from blood drawn in dialysis should be covered separately.

Oral drugs are not limited to oral equivalents of dialysis-related parenteral drugs, such as erythropoeisis stimulating agents, iron preparations, vitamin D drugs, and antibiotics, but include phosphate binders, calcimimetics, and others specified, but may confuse pharmacies to include any prescription for a dialysis patient written by a nephrologist. Since nephrologists often write other prescriptions as a service to patients, allowing the patients to avoid additional physician encounters, facilities may be vulnerable to substantial unrelated charges.

More dangerous, the estimate of drug costs from Medicare Part D grossly underestimates what is now expended, as Medicare Part D reflects only about half of the drugs used by dialysis patients. Many patients have additional coverage from Medicaid, state programs, or other prescription coverage, or they simply pay out of pocket. Multiple reports have estimated that the average dialysis patient's drugs cost over $300 per month, and the cost is more for those with diabetes, who make up half of the prevalent population. The planned rate will not cover the drugs our patients need. What are we to do? Drugs included should be specified, as has been done, but the rate of payment should be realistic and fair.

The Congressional requirement that Medicare reduce costs by 2% is unreasonable and damaging in an already constrained field of medicine. CMS's assumption that there will be enough savings to reduce calculated payments by over 21% is neither rational nor substantiated. In fact, it is outrageous. The plan to reduce by an additional 3% the payment to facilities that skip the phase-in period and move directly to a bundled charge is not justified and is further damaging. Omitting the phase-in period is administratively simpler for CMS and for facilities. Congress wants to save money, but these cuts will harm patients. These reductions should be reconsidered and eliminated.

The numerous adjustments to individual patient payment might help in some cases, but they require information not usually available in dialysis. The complexity of individual rates may be handled to a degree by software, but more data entry will be needed and CMS will surely have trouble handling so much complexity. The added cost of this documentation and billing are mentioned nowhere. There should be fewer, clearer adjustments.

The rule suggests that promoting home dialysis is one of its goals, but it spreads training payments for home dialysis among all facilities rather than paying directly for training. That is not an incentive for facilities to train patients.

Additionally, the separate requirement that small organizations enter data individually into the CMS CROWNWeb system will require staff we neither have nor can afford. The direct batch data entry permitted for large dialysis organizations could be utilized by all dialysis organizations and most independent facilities. That would improve data quality and save a great deal of cost. It appears CMS has concluded it is better off if all dialysis is done by large organizations; these rules will help produce that.

This bundling plan came into being largely in an effort to reduce expenditures for erythropoiesis-stimulating agents (ESAs), but that has already happened in many facilities. The price of epoetin alfa is now very nearly equal to the Medicare payment for it except in the case of the largest organizations, and, for most, there is no financial benefit in using more. Additionally, current standards of practice now target a lower hemoglobin range, further reducing ESA dosing.

Dialysis teams are trying to deliver good and appropriate care to patients in the face of federal policy that often appears to be punitive. Since we are dependent upon Medicare coverage for so much of dialysis income, there is nowhere else to turn. There was a time when some large providers made large profits on Medicare rates, but those days are long past, and today's renal professionals are not those who profited then. Unfortunately, it appears we still face the vestiges of the distrust rising out of those times.

There is still time and opportunity to change these regulations and base them on more reasoned evidence. Such changes would increase cost, and would likely be resisted for that reason, but the current CMS proposal will constrain practice and reduce future charges in any case. Fairness requires this proposed rule be modified significantly.

If this policy remains as proposed, it well may drive small dialysis organizations out of business. When there are only 2 or 3 very large organizations remaining, some may consider that desirable. Those large organizations may be able to provide care at lower cost, but then it will be on their terms.

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Acknowledgements 

Dr Sadler is founder, President, and Chief Executive Officer of the Independent Dialysis Foundation.

Financial Disclosure: The author declares that he has no relevant financial interests.