American Journal of Kidney Diseases
Volume 57, Issue 4 , Pages 553-555, April 2011

The 2011 ESRD Prospective Payment System and the Survival of an Endangered Species: The Perspective of a Not-for-Profit Medium-Sized Dialysis Organization

  • Douglas S. Johnson, MD

      Affiliations

    • Dialysis Clinic Inc, Nashville, Tennessee
    • Corresponding Author InformationAddress correspondence to Douglas S. Johnson, MD, Dialysis Clinic Inc, 1633 Church St, Ste 500, Nashville, TN 37203
    • ,
  • Klemens B. Meyer, MD

      Affiliations

    • Tufts Medical Center, Boston, Massachusetts
    • ,
  • H. Keith Johnson, MD

      Affiliations

    • Dialysis Clinic Inc, Nashville, Tennessee

published online 18 February 2011.

Article Outline

 

The new dialysis care bundle introduced by the US Centers for Medicare & Medicaid Services (CMS) in January 2011 attempts to control the total cost of the Medicare End-Stage Renal Disease (ESRD) program. It revises the original dialysis bundle in response to changes in care during the past 3 decades. By adding drugs and tests that had been reimbursed separately, it changes incentives to providers. The 2011 bundle got some things right, but it also has several very worrisome features.

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What the 2011 Bundle Got Right 

The authors of the 2011 bundle were responsive to extensive public comments. They set an adequate base rate for dialysis reimbursement, and the bundle promotes home treatment by both increasing reimbursement and reinstating reimbursement for training, which the proposed rule had eliminated. The bundle reflects attention to patients' interests by allowing dialysis facilities to obtain blood samples for tests ordered to treat problems unrelated to kidney failure without incurring the expense of those tests.

Most importantly, the bundle now includes tests used to assess and drugs used to treat the complications of kidney failure. The incentive to test and treat, possibly to overtest and overtreat, has been replaced by an incentive to assess and treat anemia and mineral-bone disease as economically as possible. The risk now will be undertreatment. In deciding which tests and treatments for infection to include in the bundle, its authors made a sensible distinction between infections related to dialysis access, which may be regarded as complications of kidney failure treatment, and those representing presumably unrelated intercurrent illness, such as pneumonia. Finally, the 2011 bundle has the potential to stimulate a wave of comparative effectiveness research regarding the treatment of anemia and bone disease. There is a greater financial incentive for such studies than when erythropoietin, parenteral iron, and vitamin D analogues were reimbursed separately.

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What the 2011 Bundle Got Wrong 

A Quality Incentive Program (QIP) accompanies the 2011 bundle. The QIP will reduce payment to a facility if hemoglobin values are too high or too low or urea reduction ratios (URRs) are too low. This is not, in truth, an incentive program: the only incentive is to avoid punishment. Additionally, there is no redistribution of revenue from poorly performing to high-performing facilities. The program thus decreases Medicare funding of the ESRD program beyond the 2% mandated by the Medicare Improvements for Patients and Providers Act of 2008.1

In addition, in evaluating anemia management, the QIP takes as its baseline data collected in 2007 for each facility and 2008 for the national standard, before treatment practices had fully adjusted to the implications of CHOIR (Correction of Hemoglobin and Outcomes in Renal Insufficiency) and CREATE (Cardiovascular Risk Reduction by Early Anemia Treatment With Epoetin Beta), and before TREAT (Trial to Reduce Cardiovascular Events With Aranesp Therapy) recruitment had concluded. Although it is wise to worry about undertreatment of anemia under the bundle, the practices of 2007 and 2008 do not represent the current standard of anemia care. In collecting values for URR rather than for Kt/V urea, the QIP fails to use the most comprehensive available indicator of dialysis dose, and it takes into account neither residual kidney function nor frequency of hemodialysis treatment. The proposed regulation also does not implement safeguards to ensure appropriate and standardized collection of samples for hemoglobin measurement (before hemodialysis) or for hemodialysis dose measurement (postdialysis sample at decreased blood flow).

We are concerned about the impact of the proposed QIP on small facilities: a single patient with a low hemoglobin value or a low URR could decrease the facility reimbursement rate. At Dialysis Clinic Inc (DCI), we found that at 56% of the facilities that failed the criterion for hemoglobin level <10 g/dL, only 1 or 2 patients did not meet the criterion. Similarly, at 41% of facilities failing the URR criterion, only 1 or 2 patients did not meet that criterion. In response to concerns expressed in comments, the CMS will apply the QIP requirements to only facilities with at least 11 “cases.” However, this provision does not adequately protect small facilities: at an 11-patient clinic, 1 patient with a hemoglobin level <10 g/dL would contribute 9% of cases, and the clinic would receive a score of 0 of 10 for the hemoglobin criterion. We again strongly recommend that the CMS revise the QIP to not penalize facilities in which only 1 or 2 patients fail to meet a clinical criterion.

Although the 2011 bundle does not offer positive rewards for high quality, it rewards economies of scale. It not only includes laboratory services, but also requires providers to provide certain drugs previously covered by Medicare Part D, report comorbid conditions every month, and provide additional information to establish that a patient is an “outlier.” Larger providers can operate their own laboratories and pharmacies and spread the cost of meeting the requirements of the bundle over many patients and centers; smaller providers must contract for pharmaceutical and laboratory services and must allocate the expense of a reporting system over fewer patients. Small providers also may not have the resources necessary to identify outliers, with the consequence that the provision that was designed to protect them actually harms them because they will lose the 1% of reimbursement that has been removed from the dialysis system to pay for outliers.

The 2011 bundle does not adequately protect the interests of not-for-profit dialysis providers, all of which are midsized or small organizations or individual facilities. In the environment of the 2011 bundle, large providers, which are able to obtain medical supplies at a discount and provide national services with economies of scale, will gain further advantage in the ESRD marketplace. The 2 largest for-profit dialysis organizations in particular receive discounts that no other provider can achieve. Even the largest not-for-profit dialysis provider, with 13,600 patients and annual erythropoietin purchases approaching $100,000,000, does not have a direct contract with Amgen. Thus, the very largest organizations purchase the most expensive element of the bundle at lower cost than their smaller competitors.

US Renal Data System (USRDS) data show a not-for-profit organization to be the only provider with standardized mortality and hospitalization ratios consistently and significantly better than the national average.2, 3, 4, 5, 6 This care also is provided at a lower cost to Medicare than treatments by large for-profit entities.5, 6, 7 Recent independent multivariable analysis of USRDS data has confirmed the survival and hospitalization differences and shown them to be clinically meaningful in magnitude.8, 9 These are but the latest in a series of studies suggesting that the outcomes of not-for-profit dialysis really are distinguishable from those of for-profit dialysis.10, 11, 12, 13, 14

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Questions About the 2014 Bundle 

In 2014, the CMS is expected to expand the dialysis care bundle to include phosphorus binders and calcimimetics. If adequately funded, this change could improve dialysis patient care, but if the CMS takes the opportunity to extract additional cost savings, expansion of the bundle could threaten the survival of the few remaining small and not-for-profit providers. Furthermore, underfunding could lead providers to limit both patients' oral medication choices and the infrastructure to provide oral medications.

The CMS originally had proposed that the 2011 bundle include $14 to cover both the oral equivalents of intravenous medications, previously separately reimbursable, and medications given by mouth only. Providers have offered varying estimates of their cost for oral medications. Although these estimates cover a wide range, all providers agree that the proposed reimbursement for oral medications grossly underestimated actual expense. In 2007, oral medications would have cost DCI $36.77 per treatment, and in 2008, $38.17. The CMS's proposed $14 per treatment for all medications would have caused DCI to lose >$32 million in 2007 and >$34 million in 2009. The General Accounting Office is evaluating the feasibility of including oral medications in the 2014 bundle. However, we believe that the true cost of oral medications in clinical practice should be estimated by conducting a demonstration project. We strongly recommend that such a demonstration project include evaluation of the expense to both large and small providers and both for-profit and not-for-profit providers.

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Conclusion 

Not-for-profit dialysis facilities have set the standard for quality in the United States. Although several medium-sized not-for-profit dialysis organizations will survive the 2011 bundle, many smaller organizations and independent facilities will not; an inadvertent result of payment reform will be further erosion of not-for-profit care. We urge Congress to take cognizance of the importance of not-for-profit dialysis and urge the CMS to consider it in planning the 2014 bundle. There is a public interest in preserving not-for-profit health care.

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Acknowledgements 

The data reported here have been supplied by the USRDS. The interpretation and reporting of these data are the responsibility of the author(s) and in no way should be seen as an official policy or interpretation of the US government.

Financial Disclosure: Drs Johnson and Johnson are employees of DCI. Dr Meyer is a medical director of a DCI unit.

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References 

  1. Medicare Improvements for Patients and Providers Act of 2008. Medicare, Provisions Relating to Part B, Other Payment and Coverage Improvements. Pub L No. 110-275, §153(a) (2008).
  2. US Renal Data System. USRDS 2006 Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. vol 2. In: Bethesda, MD: National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases; 2006;p. 202;http://www.usrds.org/adr.htmAccessed January 4, 2011
  3. US Renal Data System. USRDS 2007 Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. vol 2 In: Bethesda, MD: National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases; 2007;p. 220–221http://www.usrds.org/adr.htmAccessed January 4, 2011
  4. US Renal Data System. USRDS 2008 Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. vol 2 In: Bethesda, MD: National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases; 2008;p. 172;http://www.usrds.org/adr.htmAccessed January 4, 2011
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  6. US Renal Data System. USRDS 2010 Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. vol 2 In: Bethesda, MD: National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases; 2010;p. 360–364http://www.usrds.org/adr.htmAccessed January 4, 2011
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 Originally published online February 18, 2011.

 This article is part of a series in the April 2011 issue of AJKD that explores the 2011 final rule for the Medicare ESRD prospective payment system.

PII: S0272-6386(11)00038-2

doi:10.1053/j.ajkd.2011.01.010

American Journal of Kidney Diseases
Volume 57, Issue 4 , Pages 553-555, April 2011

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