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Medicare payments for outpatient dialysis

July 8, 2011 in Medicare | 1 comment

Today I will review how Medicare treats patients with end-stage renal disease (ESRD), relying largely on data from MedPAC’s 2011 Report to Congress.

In 2009, about 340,000 dialysis beneficiaries were covered by fee-for-service (FFS) Medicare. Compared with all Medicare beneficiaries, dialysis FFS beneficiaries are disproportionately younger and African American. Ninety two percent of there beneficiaries receive dialysis in freestanding facilities.  The two largest dialysis organizations provide the majority of care to Medicare beneficiaries.

Although most dialysis patients are Medicare covered, (95%) Medicare is the secondary payer for about one-quarter of new dialysis patients who are insured by an employer group health plan (EGHP) at the time they are diagnosed with ESRD. If an EGHP covers a beneficiary at the time of ESRD diagnosis, it is the primary payer for the first 33 months of care (as long as the individual maintains the EGHP coverage).

In 2009, Medicare spending for dialysis services, including dialysis drugs, totaled about $9.2 billion, an increase of 7 percent compared with 2008. These expenditures averaged about $27,000 per beneficiary.

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Investigative Journalism: Medicare’s ESRD Program

November 10, 2010 in Medicare | 1 comment

Today, I will review an excellent piece of investigative journalism on Medicare’s end-stage renal disease (ESRD) program.  The program provides free access to medical care for patients with kidney disease.  Some highlights of these ProPublica report include the following:

Program Inception

“…the new program would help about 11,000 Americans, just for starters. For a modest initial price tag of $135 million, it would cover not only their dialysis and transplants, but all of their medical needs. Some consider it the closest that the United States has come to socialized medicine.

Now, almost four decades later, a program once envisioned as a model for a national health care system has evolved into a hulking monster. Taxpayers spend more than $20 billion a year to care for those on dialysis — about $77,000 per patient, more, by some accounts, than any other nation. Yet the United States continues to have one of the industrialized world’s highest mortality rates for dialysis care. Even taking into account differences in patient characteristics, studies suggest that if our system performed as well as Italy’s, or France’s, or Japan’s, thousands fewer patients would die each year. ”

Report Findings

  • Patients commonly receive treatment in settings that are unsanitary and prone to perilous lapses in care.
  • Regulators have few tools and little will to enforce quality standards…CMS can demand that facilities submit correction plans, but it cannot fine violators as it can nursing homes.
  • Industry consolidation has left patients with fewer choices of provider.  Two corporate chains that dominate the dialysis-care system are consistently profitable, together making about $2 billion in operating profits a year.
  • The government has withheld critical data about clinics’ performance from patients, the very people who need it most.

Italian Alternative

“Italy has one of the lowest mortality rates for dialysis care — about one in nine patients dies each year, compared with one in five here. Yet Italy spends about one-third less than we do per patient.” However, the article also notes that patients in Italy tend to start dialysis in better overall health. Thus, higher U.S. mortality rates may be due to the fact that American who receive dialysis treatment have more advanced kidney disease than their Italian counterparts.

“Regional health authorities pay more per treatment than Medicare – roughly 50 percent more… But per-patient costs are lower because Italy’s indirect expenses, particularly for hospitalization, are smaller and because coverage includes drugs as well as dialysis. A 2004 study found that Italian patients got half the average dose of Epogen given to U.S. patients…”

The Healthcare Economist’s Take

The ESRD program represents a poor balance between access, cost and quality. To much effort has been focused on increasing access and not enough directed towards reducing cost or improving quality.

For instance, from the patient’s perspective, the access to care is amazing. Patient do not pay for any treatment. This access, however, comes at a price. Quality is poor due to a limited choice of providers.  Increasing reimbursement rates would allow for entry into the dialysis market, but with the tradeoff of increased cost. Further, the $20 billion price tag may be unsustainable in the coming years.

Taking an international perspective, systems that allow unlimited access often incorporate significant restrictions on care and/or significant quality monitoring. In the UK, where there is little cost-sharing on the patient side, the government plays a more active role in rationing and regulating the health care sector.  Other countries thought to have socialized medicine, such as France, do less rationing, but higher levels of cost sharing curb patient demand for unnecessary services.  Allowing for balance billing could allow for superior providers to charge Medicare patients additional fees in return for higher quality services. The Medicare ESRD program does not ration care, neither of these and as a consequence, has become a financial sink hole.

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ESRD Quality Monitoring Initiative

October 7, 2010 in Medicare, P4P, Quality, Uncategorized | No comments

All patients with end stage renal disease (ESRD) are eligible for Medicare regardless of their age.  In 1972, the Social Security Act extended all Medicare Part A and Part B benefits to individuals with ESRD (of any age) who are entitled to receive Social Security benefits. ESRD beneficiaries now account for 1% of Medicare enrollment. This post review the types of services ESRD Medicare beneficiaries receive and how Medicare pays providers for these services.  Today, however, I will review Medicare efforts to improve the quality of care ESRD beneficiaries receive.  You can find an overview of the ESRD Quality Improvement Program (QIP) here.

Timeline

  • 1972. the Social Security Act extends all Medicare Part A and Part B benefits to individuals with ESRD (of any age) who are entitled to receive Social Security benefits. ESRD beneficiaries account for 1% of Medicare enrollment.
  • 1978. ESRD Amendments require the formation of ESRD Network Organizations to support the ESRD program. CMS currently contracts with 18 ESRD networks.
  • 1994. The Core Indicators Project was established to improve the care of patients with ESRD.  The Core Indicators included measures related to anemia management, adequacy of hemodialysis, nutritional status and blood pressure control
  • 1999 (Mar). ESRD CIP was merged with the ESRD Clinical Performance Measures.
  • 2000 (Jan). Section 4558(b) of the Balanced Budget Act of 1997 required CMS to develop and implement a method to measure and report
    the quality of renal dialysis services furnished under the Medicare program. To implement this legislation, CMS developed the ESRD Clinical Performance Measures (CPM) Project based on the National Kidney Foundation’s Dialysis Outcome Quality Initiative (NKF–DOQI) Clinical Practice Guidelines.
  • 2001 (Jan). Medicare launched Dialysis Facility Compare based on the Nursing Home Compare website. The quality measures initially reported on DFC were measures of anemia control, adequacy of hemodialysis treatment and patient survival. Medicare claims data were used to calculate the anemia management and hemodialysis
    adequacy rates, and administrative data were used to determine patient survival rates.
  • 2008 (Apr). The updated ESRD Conditions for Coverage final rule, which contains revised requirements that dialysis providers and facilities must meet in order to be approved by Medicare and receive payment. As part of the revised requirements, dialysis providers and facilities are each required to implement their own quality assessment and performance improvement program. The CPMs were updated to include 26 measures from the areas of anemia management; hemodialysis adequacy; peritoneal dialysis adequacy; mineral metabolism; vascular access; patient education/perception of care/quality of life; and patient survival.
  • 2008 (Jul). Section 153(c) of the Medicare Improvements for Patients and Providers Act (MIPPA) requires that Medicare implement a quality incentive program (QIP)
  • 2009 (Feb). Medicare began implementing the CROWNWeb system to electronically collect information on about patients, facilities, providers, and clinical data to support the CPM Project.
  • 2009 (Sep). Medicare decides to begin paying ESRD providers based on a prospective payment system (PPS) beginning in 2011.

Where are we now?  Medicare will begin paying dialysis providers through a PPS beginning in 2011.  This will give providers an incentive to provider services more cost effectively, but also potentially will give them an incentive to decrease the quality of care.  To ensure that ESRD beneficiaries receive the same quality of services under PPS as under a FFS, Medicare developed the QIP.  Below, I review the QIP in more detail.

Quality Incentive Program

The QIP requires Medicare to establish an ESRD quality program using the following steps:

  1. Select measures;
  2. Establish the performance standards that apply to the individual measures;
  3. Specify a performance period with respect to a year;
  4. Develop a methodology for assessing the total performance of each provider and facility based on the performance standards with respect to the measures for a performance period; and
  5. Apply an appropriate payment reduction to providers and facilities that do not meet or exceed the established total performance score.

Medicare has already chose quality measures for the initial year.  Data from the following three measures will be submitted to CMS via ESRD claims.

  • Percentage of Medicare patients with an average Hemoglobin <10.0 g/dL (2%);
  • Percentage of Medicare patients with an average Hemoglobin >12.0 g/dL (26%); and
  • Percentage of Medicare patients with an average Urea Reduction Ratio (URR) >65 percent (96%).

The numbers in parentheses represent the national performance rates for all dialysis providers and facilities based on 2008 data from the Dialysis Compare website.  Providers receive a score between 0-10 based on their performance on each measure.  Medicare has recently proposed a scoring method which subtracts 2 points for every 1 percentage point the provider falls below the initial performance standard (e.g., if the initial performance standard for a particular provider or facility for the Hemoglobin>12 g/dL is set as the 2008 national average rate (26%), then if that provider/facility had 28% of Medicare patients with hemoglobin levels>12 g/dL during 2010, the provider/facility would receive 6 points for its performance on the measure as 28% is 2 percentage points below the performance standard). The provider’s total score could be weighted evenly across all three scores.  Alternatively, some have proposed weighting the Hemoglobin <10.0 g/dL at 50% of the score and the other two quality measures at 25% of the provider’s score to put more weight on avoiding low hemoglobin levels.

Payment will be based on the provider’s score.  THe proposed payment reduction scale is as follows:

  • 26-30 points: 0.0%
  • 21-25 points: -0.5%
  • 16-20 points: -1.0%
  • 11-15 points: -1.5%
  • 0-10 points: -2.0%

In the future, Medicare will consider expanding the QIP program to include additional measures.  Quality measures considered include:  Kt/V, vascular access rates, bone and mineral metabolism, and access infection rates.

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