As expected, and in response to a congressional directive from the American Taxpayer Relief Act, Centers for Medicare & Medicaid Services Department of Health & Human Services (CMS) made a 3.3% cut in payments for dialysis facilities for 2014 to account for reduced drug utilization. Rather than implementing the full 12% reduction as proposed by the agency this summer, CMS instead chose to phase in the cuts over time. The 2014 reduction is 27% of the total amount to be cut over the next 3-4 years.
According to federal law, dialysis facilities are entitled to inflationary updates and other fee increases each year to account for, among other items, the increases in the costs for operating a facility and providing the services. For 2014, CMS calculated this to be 2.8% When combined with other existing components of the payment formula, the net result is a slight decrease in payments to facilities. CMS also noted in the rule that it expected the 2015 cut to the drug component would be largely offset by these adjustments again, resulting in another flat payment. CMS intends to complete the full 12% cut by 2016 or 2017.
Therefore, the impact of the CMS rule is that rather than getting payment increases each year, dialysis centers will receive flat funding at least for the next two years; this is a reduction in Medicare spending. Da Vita has already publicly expressed its concerns with the CMS rule and has pledged to fight these reductions in Congress and with the agency in the weeks and months ahead. Also, by increasing payments for home dialysis training, CMS likely provided longer term incentives to shift care to the home and away from these dialysis centers.
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