On September 15, 2009 the Centers for Medicare and Medicaid Services (CMS) released their proposed bundled payment structure.  This is the new payment system, passed into law in July 2008, that said dialysis services and medications will be paid to dialysis providers in one lump payment often referred to as “the bundle”.  This new payment system will be phased in over 3 years beginning January 2011 and fully implemented by 2014.  DPC sent a letter to CMS prior to the proposed rule asking CMS to consider patients’ choice and flexibility in receiving their treatments. 

In the proposed rule two important recommendations DPC sent to CMS were accepted.  The new payment system will continue to pay providers for each dialysis treatment given (this is often referred to as the “per treatment model”) and it would also allow for patients to obtain more treatments per week with medical justification. These are both great wins for dialysis patients.  Initially CMS had considered paying providers for a set number of treatments weekly or monthly, which could have made dialyzing at another clinic while traveling difficult for patients. 

While there are many changes to the payment system that could be good for patients there are some areas where the impact to patient care will need to be closely monitored to ensure the new bundled payment does not pose harm to patients’ care and choice in treatment. Given that the new payment will result in dialysis providers making changes to how they provide care, the aspects of how patient care will be impacted will depend on how easy and affordable it will be for dialysis providers to offer the wide range of services and medications that patients have access to now.  The areas that could pose some concern to patient care are:

Out of pocket expenses: Medicare Part B always has and will continue to pay only 80% of dialysis costs, leaving patients to either get secondary insurance or pay the remaining 20% out of pocket.  Anytime Medicare increases the amount of money they pay for patients’ treatments, the cost of the patients’ responsibility goes up.  With more services being brought into the bundle that are currently paid for separately, patients may see an increase in their share of costs.

• Currently, patients do not have to pay 20% for lab tests. Labs are paid for 100% by Medicare.  However, the proposed bundled payment includes the costs of lab tests, and since the bundle is only paid by Medicare at 80%, patients would be responsible for paying a portion of these labs.  
• Additionally, the dialysis medications patients take at home are currently paid for by Medicare Part D.  In the bundled payment, these drugs will be paid for by Medicare Part B.  It is unknown precisely how this will impact patients out of pocket expenses.
  • It does increase the dollar amount of patients’ 20% share of dialysis costs not paid for by Medicare Part B.  
  •  However, moving dialysis drugs to Medicare Part B may also keep some patients from reaching the Medicare Part D “donut hole”. 
  • If a patient still reaches the donut hole due to other medication costs, they may remain in that hole longer than they otherwise would have if their dialysis medications were still covered by Part D.
  • If a patient qualifies for a Low Income Subsidy (LIS), which helps pay for prescription drugs, this subsidy would no longer help pay for those drugs that have been moved into the bundled payment. The LIS would still cover non-dialysis drugs.
• It is worth noting that most patients have either private insurance or Medicaid and do not have to pay the 20% share of dialysis costs out of pocket, but for those who do, the increased cost due to the bundling of services could pose an additional financial hardship.  Also, some secondary insurance plans and state Medicaid programs may not be willing or able to pay the increased 20% share with the addition of services they did not have to pay for previously. If Medicaid or other secondary insurance did not pay for the increases it would reduce the amount dialysis providers get reimbursed for the services they provide to patients.

Access to medications: Since Medicare Part D will no longer cover medications that are now considered by CMS to be a part of renal services, patients may no longer have access to the same medications they do now.  Dialysis clinics would receive payment from Medicare for dialysis related medications and clinics would be responsible for ensuring patients’ access to the medications prescribed by their doctors. However clinics may discourage physicians from prescribing certain brands of medications that are more costly, particularly if CMS does not adequately reimburse for the cost of these drugs in the bundle.

• The additional medications dialysis clinics would be paid for as part of the bundled payment include phosphorus binders, vitamin D analogues, and calcimimetics.  
• Dialysis clinics would have to find a way to distribute these drugs to patients.  Many clinics are not set up to dispense these medications that patients now get through a pharmacy.
• Additionally, it is unclear how the cost for new drugs would be factored. If there is no allowance for payment of new medications, pharmaceutical companies may not find it worthwhile to research and develop newer and better drugs.

Home dialysis: Inclusion of the costs for home dialysis training in the bundled payment could impact who, when, and how many patients have access to home dialysis.  Whether access to home dialysis is available to patients will depend on whether dialysis providers believe creating more home dialysis programs or expanding current programs will be sustainable. There are a couple of areas within the proposed new payment that dialysis providers will look at when deciding whether or not to expand their offerings of home dialysis programs.

• There are payment incentives for dialysis providers to get new patients on home dialysis modalities, but there could be a lack of incentive to invest in training someone on home dialysis after they have been in center dialyzing for awhile.  Dialysis providers get an increase in payment for new patients who are already on Medicare (usually those over 65) for the first four months because many new patients are often sicker and require more monitoring and medications to stabilize.  Patients who choose home dialysis as their treatment have access to Medicare right away and do not have the typical three month waiting period. Therefore, if a patient begins a home therapy before their three month waiting period is up they are automatically eligible for Medicare right away.  This creates an extra incentive for dialysis clinics to educate new patients, as soon as they begin dialysis, about their options to dialyze at home. If a patient begins home dialysis at the beginning of the three month window providers get the extra payment and may see long-term savings because home dialysis is less expensive to dialysis providers.
• However, there is not an extra incentive to train someone after the first four months.  This could pose a hardship for some providers who would have to pay for the upfront costs of training patients who have been on dialysis for longer than four months.  In fact, most home hemodialysis patients choose to dialyze at home after they have been on dialysis in center for a while. 

Racial disparities: While patient sex, some co-illnesses, and body size were a factor CMS considered when determining how much Medicare will pay a dialysis facility for a particular patient’s dialysis treatment, race and ethnicity were not factored in.  This is concerning because some studies have shown that African Americans require higher doses of anemia medications (known as Erythropoietin Stimulating Agents or ESAs, like EPOGEN®).  Without proper payment, doctors may not be as likely to prescribe adequate doses of ESAs if they know providers will not get paid for the higher dosage.

Anemia: As is the case for all medications patients receive, doctors prescribe the amount of EPOGEN® (EPO) patients receive to treat anemia. However, dialysis providers are paid to give this drug to patients and under current policy, Medicare reduces payment to dialysis clinics for EPO if a patient’s hemoglobin reaches 13g/dl or more and remains there for three months.  It is unclear how this policy will continue under the bundled payment. 

• Since EPO is included in the proposed bundled payment, and is a very expensive medication, dialysis providers could recommend to doctors that they prescribe lower doses of EPO for patients.  
• However, CMS has said that patients’ hemoglobins should be maintained between 10g/dl and 12g/dl which is what the Food and Drug Administration (FDA) recommends as proper for patients receiving EPO.
• CMS will issue a separate proposed rule on a program that will be designed to monitor quality in dialysis care.  Anemia management will be one area that is a part of the quality program. CMS is considering a quality measure that will reduce the bundled payment if a patient’s hemoglobin falls below 10 g/dl or above 12g/dl. 

It is important to remember this is only a proposed rule and none of these changes have been made to the payment system yet. Patients, providers, pharmaceutical companies and any interested parties have the opportunity to provide comments to CMS on what they think about the new payment system.  Comments will be accepted through November 16.  After considering all comments, CMS will then release their final rule on the bundle. 

DPC will continue to work with the dialysis community to better understand the impact the new bundled payment will have on all dialysis patients, so we can continue to keep our members informed.  There will be a town hall meeting held by CMS on Friday, October 23rd in Maryland from 9:00 a.m. to noon Eastern Time.  During this meeting, around 300 phone lines will be available for people to call in and listen as CMS further explains their proposed rule and those in the dialysis community also provide their input.  If you are interested in listening to the town hall by phone you may call in to 1-800-837-1935, conference ID number 33239635. Since only a limited number of individuals will be able to call in early you may wish to try calling at least 15 minutes prior to the beginning of the town hall.