Entrenching the status quo

The big Medicare Modernization Act (MMA)from the 108th Congress required studies relating to the Medicare ESRD composite rate. Currently Medicare pays a composite rate that covers one dialysis treatment (the payment is suppose to cover the costs of providing the treatment – supplies and staff – about 80% of $140) and Medicare will allow 13 composite rate payments a month – basically three hemodialysis treatments a week. The MMA requires the Secretary of Health and Human Services (HHS), Michael O. Leavitt, to submit a report to Congress by October 1, 2005 that details the elements and features for the design and implementation of a bundled payment system for a range of services furnished by dialysis facilities. These elements would include the bundling of drugs, clinical laboratory tests and other items that are now separately billed by dialysis facilities. Also, the MMA requires the Secretary of HHS to conduct a three-year demonstration project beginning on January 1, 2006 relating to the use of a payment system for dialysis services that bundles the payment for drugs furnished to dialysis patients, including EPO, and clinical laboratory tests.

To accomplish this an advisory committee was formed, which has met three times; their meetings are open to the public and I am on an email distribution list that provides a report on what is discussed at the meetings. From what I have read of their deliberations their whole approach is flawed. Their approach will just perpetuate the status quo. What the advisory board discussed at their July 14th and 15th meetintg was to pay a monthly rate based on 13 treatments a month. They would include the big three drugs – EPO, iron and vitamin D – in a new bundled payment as well as the routine lab tests. How would that help patients? How does this address the 22% yearly mortality rate or reduce the 11 days a year the typical dialysis patient spends in the hospital?

I think the Congress’s intent was to allow providers more flexibility to achieve better patient outcomes. I can not see any benefit to patients in bundling the minimum level of care the current Medicare reimbursement system supports and this new approach will just further entrench the bare minimum level of care provided to the 90% of all patients who dialyze incenter. Congress has clearly indicated that home therapies should be encouraged and promoted yet the advisory committee is excluding PD from their demonstration and they are making no provision for home hemo let alone more frequent home hemo.

Significant savings are available to Medicare by improving the care given to dialysis patients. These savings could come from fewer hospitalizations – one fewer hospitalization a year would provide the funds needed for another treatment a week. However, this demonstration project does not look at that at all. The advisory board discussions revolve around rearranging the deck chairs on the Titanic - which by the way the average five year survival rate for a dialysis patient is the same as the average survival rate for a passenger on the Titanic, about 32%. The advisory board should be looking at ways to lower patient hospitalization and then use the money saved to give patients the option of doing away with dialysis “weekends”. At the very least the advisory board should be talking about patient satisfaction, expanding patient options and patient choice rather than simply changing the way Medicare pays for EPO. I think Medicare is out of sync with the intent of Congress and the needs of people on dialysis.

I think the bureaucrats at Medicare have already decided what the new payment scheme will include and the advisory board meetings, the demonstration project and all the rest are just hoops they’re jumping through to meet the legal requirements for change. It is too bad they are missing this opportunity to promote healthier treatment options, patient satisfaction and patient choice. It looks to me that it will take Congressional action to move from the current unacceptable status quo to a more progressive and humane system. Tweaking Medicare’s payment system should not be the end sought by this advisory board, changing the payment system should be the means to achieving better outcomes for all people on dialysis.

I think the people at CMS need people that think innovatively and creatively like you do and who will make “out of the box” suggestions.

What is the incentive to give people more of a bundled drug or do an extra lab test that might be necessary to keep someone healthy if the clinic gets paid the same amount every month whether or not you do it? Bundling services and paying a monthly payment per patient makes it easy to calculate how much you’re going to spend every month so you can budget easier, but managed care hasn’t turned out to be that great for many people with chronic illnesses. The only way that I think bundling services in dialysis could work to the patient’s advantage is if there is an incentive at the same time to improve performance.

Here’s the website where you can read about this project, read the minutes of meetings and see the list of members of the committee (Kris Robinson, the executive director of the American Association of Kidney Patients and a transplant recipient is on the advisory committee). It lists an email address which I assume is for comments or questions.

www.cms.hhs.gov/faca/esrd/default.asp

If you want something to put you to sleep, you can read the report on the status of Medicare in 2005 at www.cms.hhs.gov/publications/trusteesreport/tr2005.pdf. It looks like Part A is underfunded since its revenue comes from taxes alone and these haven’t gone up for some time. Part B and the new Part D (prescription drug coverage) premiums go up every year placing a larger burden on beneficiaries but not a higher burden on taxpayers – yet. They say Part B is in good financial shape and they expect Part D to be in good shape too.

Not to get too far into politics, I believe if there was no cap on income for Social Security and Medicare taxes, this might be a way to solve the revenue problem that Social Security and Medicare are facing with the baby boomers getting ready to retire and facing all kinds of chronic illnesses, including kidney disease that will cost Medicare lots of money.

These posts are amazing. I won’t comment on all because I couldn’t agree more.
However, I was just at a dinner/signing for my new book and I was telling people much the same. The government is NOT thinking out of the box, they do not understand about patients on 3X/week going to emergency rooms, the cost of drugs, etc…that are wasting money, our tax dollars. They are of course, wasting a lot of time waiting for a NIH study that will tell them what everyone here knows just through experience and what people like Dr. Blagg (who does know from the start) tries to tell them. Spend a little more at first, save a lot. I thought that is what government likes to do. Save dollars. Why aren’t they looking at countires such as Australia?
ANyway, the people at dinner were astounded but not surprised.

I’ve met many of the people on the Advisory Board and I would guess that they share my desire to improve dialysis outcomes – Kris spoke of the high dialysis mortality rate in her opening introduction. The problem is the constraints that they are working under do not allow for a rational demonstration. The demonstration the advisory board can propose has to be budget neutral in regard to Medicare Part B – meaning the total reimbursement an outpatient facility receives should be the same during the demonstration as it is under the current system – which is why I made the comment about rearranging deck chairs on a sinking ship. Part B isn’t the problem it’s the solution. More Part B spending will lower Part A spending.

The funds that go to dialysis facilities go for our treatment. These funds could be tweaked so care is more efficient - maybe - but these potential savings represent pennies compared to the Part A savings available. What Congress wants and what I think the members of the advisory board want, is to minimize the negative aspects of dialysis, to minimize suffering – the big source being hospitalizations. Of course hospitalizations are terrible from the patient point of view but they are also terrible from a budget point of view. I believe that on average a dialysis patient spends 11 days a year in the hospital, which is hugely expensive. Any retooling of the reimbursement system should work towards lowering the average number hospitalizations.

A worthy demonstration would look at the total cost incurred by a dialysis patient or a dialysis population and allow dialysis providers to use more resources to lower the total yearly cost. A worthy demonstration would allow 16 treatment payments a month. A worthy demonstration would allow patients to choose to get rid of the dialysis weekend. Some people may choose to continue on a three day a week schedule but they should have the healthier option of at least every other day dialysis if not a four day a week schedule. Progressive providers should be encouraged by a demonstration to try different ways of offering more dialysis, not the same minimum treatment with a different payment scheme.

I think the intent of Congress was to improve the lives of dialysis patients – which to me means fewer hospitalizations. I think hospitalizations are a apt measure of dialysis quality but because of the Part A/ Part B quirk of Medicare accounting the advisory board is left to twiddle with Part B funds while the large Part A cost – costs financial and in human suffering are left unaddressed. This is the flaw of the advisory board – its constraints, not its members.

Bill P.

Congress is going on vacation this month. I am working on getting a meeting with Rep. James McGovern (D-MA) to discuss H.R. 3096 and my book that deals with these issues. You have a very good perception and knowledge of the politcal scene. Dr. Blagg emailed the other day and said he is working on the Senate companion. Could you email me and maybe we can work on some talking points to prepare me. I can talk, but I tend to get carried away and don’t have all solid facts to “talk about” Thanks. John

Bill@ Thanks for this important post, am not really into poilitics but with this information your sharing it helps me and if not other dialysis patients understand how all this part of the system works. If possible, perhaps even some suggestions and tips along with these kinds of posts might help patients know what they can do to help or assist in the proccess…also wanted to say, don’t you think there might be a loophole created if something like this is implemented? For example, let’s say the option to have 4 dialysis treatments per week is added then those 90% patients who are burned out and frustrated of those needles and visits say heck no! Then the provider might take for granted those 4 treatment options when actually the patient is only doing 3 treatments… :? …see what I mean? Only 10% of us care… :wink:

Beth@ Thanks for the additional information

Hi y’all,

Bill wrote:

the demonstration the advisory board can propose has to be budget neutral in regard to Medicare Part B – meaning the total reimbursement an outpatient facility receives should be the same during the demonstration as it is under the current system – which is why I made the comment about rearranging deck chairs on a sinking ship. Part B isn’t the problem it’s the solution. More Part B spending will lower Part A spending.

Ahhh, I get it–it’s the artificial “wall” between Medicare Part A and Part B that is again the problem. For those of you who might not follow this stuff (and, as Beth rightly said, it can put you to sleep!), Medicare Part A pays for hospitalization. Part B pays for dialysis, which is considered an “outpatient” service. The problem is, efforts to improve care will tend to reduce hospitalization–a Part A savings. But dialysis providers, working under Part B, don’t get any credit for Part A savings.

A couple of possible solutions, if we’re willing to think outside the box, might include:

  1. MOVE dialysis from Part B to Part A. While it is delivered “outpatient,” it is a medically intensive treatment that must be done under strictly controlled conditions. Home Health care (delivered outside of hospitals) and Hospice are both covered under Part A. I don’t know that any service has ever been moved from one side of the “wall” to another, but ESRD is unique within Medicare, and the savings would be very likely to outweigh the costs. This idea has some potential drawbacks in terms of premiums etc. that would need to be worked out.

  2. ELIMINATE the wall between Part B and Part A. . This could be done either by getting rid of Part A and Part B altogether, and just having a single system, or by at least allowing the General Accounting Office to consider Part A savings against increased Part B costs. Either way, this would create a “closed loop” system, like Kaiser Permanente has, where costs can be fairly weighed against savings, and there are true incentives to improve care.

This is an interesting document that outlines the range of bundling options that were on the table last year. Not much activity on the bundling front … what happened?

Well bundling has come back with a vengeance. I’ve reread this thread and really I haven’t changed my point of view - if anything with time I’ve decided bundling is an even worse idea. It’s all about EPO. (You can read my take hereand here.)

There seems to be a move to discount the concept of quality of life - people are saying that the only reason to take EPO is to avoid a transfusion. Hematocrits of 20 to 24 anyone? Tomorrow there is an important hearing.

Gird your loins and keep the powder dry … I think there’s a battle coming.

You’re absolutely right about discounting the quality of life, Bill. The FDA now views Amgen’s QOL claim (which the FDA allowed them to put in their label in 1989) as questionable because back then they didn’t use reliable, validated QOL tools. Um, this would be because there weren’t any back then.

Even at the point where we started the Life Options program (http://www.lifeoptions.org), nurses and social workers in dialysis centers were using the Karnofksy scale, which was a staff assessment of patient QOL. There was a range of points from zero (dead) to 100 (functions quite well in day-to-day life). Not surprisingly, staff who didn’t ever want to see themselves sitting in those dialysis chairs rated patient QOL significantly lower than patients did themselves when tools were developed to ask them.

Nobody in dialysis uses the Karnofsky any more–at least I fervently hope not. But the FDA is choosing to disregard hundreds of studies done since 1989 that did use reliable, validated tools to measure QOL and that all–except for the poorly done CHOIR study (in which the researchers, who were unfamiliar with the QOL literature in ESRD chose to use tools from breast cancer instead)–found a QOL advantage of a higher vs. a lower hemoglobin. Duh…

You’re right to keep your eye on this hearing. While the FDA may discount QOL, on a day-to-day basis, hemoglobin level plays an awfully important role in ability to function, both physically and mentally.

If you’re a wonk watch the hearing live on line here

Bill – a couple of observations.

  1. I think I caught the end of the hearings, but it seemed that Drs. Kliger and Singh, as well as Kris Robinson said they favored bundling, although the docs were adamant is saying they should be the arboters of their pts treatments, and not the clinic. Since I didn’t catch all of the testimony, it surprised me that they said they favored bundling. Much of their concern apparently was with overdosing, as well as underdosing, of ESA’s.

  2. A second thing that struck me was that there were only three congresspeople at the hearing. Obviously, not enough consciousness has been raised to get a larger attendance, just as there are not many co-sponsors for legislative initiatives. This contributes to the non-ending introductions and deaths of initiatives from one legislative session to the next. Will a change in the Executive Branch help? Certainly we would hope so, but obviously more pressure has to be put on individual congresspeople in order to increase awareness and change priorities.

  3. I agree that there is not enough out-of-the-box thinking. But can we be surprised. It seems our governments are mostly reactive, rather than proactive. I could go on and talk about many different aspects of American life, but to what end? Regarding CKD, with over 9% of the public already affected with a certain degree, and with diabetes, obesity and high blood pressure running rampant, we are on the verge of a renal epedemic, and the healthcare system is ill-equipped to handle it. There aren’t enough nephrodocs, dialysis clinics and tranplant donors. And there isn’t enought money! When the onslaught is officially added to the ranks of ESRD patients, we really will be in trouble. The need for education and pre-treatment is absolutely essential. And in our own self-interests as current ESRD patients, we would want fewer patients so the available care isn’t spread even thinner.

Leave it to the bureaucrats to not analyze both the left and right pockets of Medicare. Whether money is spent out of Part A or B, it’s still a cost. It doesn’t rally matter whether one is funded primarily from taxes and the other from user contributio9n, the bottom line is the funding still comes from taxpayers.

I’ll have more to say tonight but did you hear Stark say that you could create incentives for under dosing or you could create incentives for over dosing but you can’t incentivize the right dose… or something like that - he appeared to be reading the phrase. We’ll wait for the transcript but it sounded a lot like what I wrote here

I agree with a friend of mine who said reimbursement policy can either create incentives for giving too many drugs or not enough; it’s not possible to create reimbursement incentives for giving the appropriate doses.

The friend I was quoting was Dori so Dori - maybe Stark took your observation to heart. You never know.

FYI: Hereis a link to a new opinion piece that I wrote for Lori Hartwell’s site:
http://www.kidneytimes.com/article.php?id=20070626173734

[quote=Rich Berkowitz;13895]Bill – a couple of observations.

  1. I think I caught the end of the hearings, but it seemed that Drs. Kliger and Singh, as well as Kris Robinson said they favored bundling, although the docs were adamant is saying they should be the arboters of their pts treatments, and not the clinic. Since I didn’t catch all of the testimony, it surprised me that they said they favored bundling. Much of their concern apparently was with overdosing, as well as underdosing, of ESA’s.

  2. A second thing that struck me was that there were only three congresspeople at the hearing. Obviously, not enough consciousness has been raised to get a larger attendance, just as there are not many co-sponsors for legislative initiatives. This contributes to the non-ending introductions and deaths of initiatives from one legislative session to the next. Will a change in the Executive Branch help? Certainly we would hope so, but obviously more pressure has to be put on individual congresspeople in order to increase awareness and change priorities.

  3. I agree that there is not enough out-of-the-box thinking. But can we be surprised. It seems our governments are mostly reactive, rather than proactive. I could go on and talk about many different aspects of American life, but to what end? Regarding CKD, with over 9% of the public already affected with a certain degree, and with diabetes, obesity and high blood pressure running rampant, we are on the verge of a renal epedemic, and the healthcare system is ill-equipped to handle it. There aren’t enough nephrodocs, dialysis clinics and tranplant donors. And there isn’t enought money! When the onslaught is officially added to the ranks of ESRD patients, we really will be in trouble. The need for education and pre-treatment is absolutely essential. And in our own self-interests as current ESRD patients, we would want fewer patients so the available care isn’t spread even thinner.

Leave it to the bureaucrats to not analyze both the left and right pockets of Medicare. Whether money is spent out of Part A or B, it’s still a cost. It doesn’t rally matter whether one is funded primarily from taxes and the other from user contributio9n, the bottom line is the funding still comes from taxpayers.[/quote]

I came in late too Rich. I was able to watch about an hour of the hearing online. I think there were additional Reps present at the start of the hearing. As I posted I was struck by something that Stark said (or words to this effect): “We can create incentives that will lead either to over dosing or to under dosing.” This may be true. If it is then why not do both? CMS could error on the side of overdosing for those patients willing to have subq Epo administration and error on the side of under dosing for those patients who choose to have their Epo administered intravenously. One target and titering protocol for subq and a more conservative target and protocol for intravenous administration.

The key point I would think dialyzors and our supporters should make is that any savings from spending less on ESRD ESAs must stay in the ESRD program. I think that our position should be that if the question is “How can we decrease the ESRD burden - on both the patient and society (the taxpayer)?”. Then my answer is dialysis. Dialysis is the solution. With longer and more frequent treatments comes savings on medications, savings on hospitalizations and savings on the human misery that comes with chronic under dialysis.

If the goal is to save money through using less EPO than we should go to subq directly rather than indirectly via bundling. Studies consistently show that equivalent hematocrits can be achieved with 20% less medication if it is administered subq. Of course patients don’t like it (despite what the aakp says) because it requires an additional needle stick. But if the government needs everyone to make a bit of sacrifice (though I don’t recall hearing that message from the administration) then I think it is reasonable to ask dialysis patients accept the discomfort of an avoidable shot.

Again, what I think is critical is keeping the savings in the ESRD program. A 20% ESA reduction from subq administration would create a $360 million a year pay go credit - that would pay for HR1193/S635 and last year’s HR5321 without extending the private payer period. A good idea. This would be a fair use of savings that are built on patients having to accept a third needle stick each treatment.

It seems manifest that bundling would turn medications into costs to be controlled - along with 4x4s, band-aids and staff time - and corporations know nothing if not how to control costs. I am sure any renal professional could come up with policies that would lower costs (i.e. use less medication) in a bundled environment where medications are a pure expense. I am not sure that those cost control measures would advance patient care. And, I am not sure that bundling would in fact save money. It depends on the details of the bundling scheme and what is done about outliers. We should save money on ESAs, while maintaining patient choice and use those savings to pay for HR1193/S635 without extending the private pay period and we should fund McDermott’s HR5321 from last year.

Bundling, as it is normally understood, would either result in increased large dialysis organization profits (the testimony included a statement that the cost of a unit of EPO for the LDOs is in the $8.50 range while the cost for the small or independent (I cannot remember which term they used) would be in the $8.95/unit range) or it would result in financial hardship for the non-LDOs. It is hard to imagine a bundled rate that would impact all providers similarly. Either it would be a windfall to the LDOs or it would financially squeeze small providers.

I did not hear a compelling case for bundling. I did hear that some people seemed resigned to bundling. I can not imagine how someone could be for bundling without knowing the details. Without some sort of novel mechanism (that has yet to be described) a bundled rate will represent a missed opportunity, it will be another case of progress in dialysis care being defined as increased economic efficiency rather than improved outcomes. We should work to improve clinical outcomes. Outcomes that have a real significant impact such as lower mortality rates and/or lower hospitalization rates.

I know it is bad form to continue to reply to oneself but I am … what’s the word - troubled. Concerned. About the American Association of Kidney Patients presentation at the hearing. Here is the written submission we’ll have to wait for the transcript.

The temptation is to provide the written testimony line by line, but instead I’ll just post the bit directly talking about bundling (their emphasis):

Bundling:
Because every medical case is unique, AAKP strongly adheres to the principle that a physician and patient must be permitted to decide a care plan best suited for that patient. Averages and other statistics are fine for certain purposes, but let’s remember that medicine is fundamentally about the treatment of a unique individual.

In this light, we worry about any policy that clouds the doctor/patient decision-making relationship for treatment options. Separate Medicare reimbursement for ESAs potentially distracts from the doctor and patient deciding which course to pursue. That is why we support bundling Medicare reimbursement for ESAs into the overall Medicare composite reimbursement rate for ESRD. We believe that bundling the payment would not only result in cost savings, but also would result in more appropriate dosing of ESAs and draw more attention to the necessarily comprehensive nature of kidney care. It is important, however, to ensure that any bundling structure include risk-adjustment so as not to inadvertently create a disincentive for providers to cover the sickest patients.

Does this make sense?

“In this light, we worry about any policy that clouds the doctor/patient decision-making relationship for treatment options. Separate Medicare reimbursement for ESAs potentially distracts from the doctor and patient deciding which course to pursue. That is why we support bundling Medicare reimbursement for ESAs into the overall Medicare composite reimbursement rate for ESRD.”

What? What are they trying to say? How could the aakp be in favor of a wholesale change in the reimbursement system sight unseen? What I am reading is that the aakp is in favor of fewer resources going into dialysis care. Fewer resources because the current reimbursement structure “distracts from the doctor and patient deciding which course to pursue.”

Are you kidding me?!?

Just to try and clarify what I am saying. The aakp’s position seems to be that the 10% margin that large dialysis organizations (i.e. Davita and FMC) make on administering EPO to Medicare primary patients “clouds” the doc’s decision making process. The aakp reports to be worried that the LDO’s 10% Epogen margin “potentially distracts from the doctor and patient deciding which course to pursue.”

I don’t think that is true but let’s assume that it is, if you believed that then the last thing you’d want is bundling. Bundling turns medications into pure expenses. Surely, if a 10% carrot boggles the doc’s decision making ability then a 100% stick would be far, far worse.

I think the term for this is cognitive dissonance.

I wonder if there is any evidence that doctors are aware of the profit margin on EPO, let alone that it impacts their decision of how much drug to prescribe for a given patient? My sense is that doctors are so exclusively focused on clinical concerns that they don’t even pay attention to whether patients have jobs or not, let alone the profit margin of a drug.

Doctors don’t learn business management in medical school; most have clinic practice managers to handle those aspects of their jobs. So, unless they are getting a kickback (say part of the profit on the drug they prescribe)–and I’m not aware of anyone saying that–I can’t imagine what their motivation would be to prescribe more or less drug than a patient needs, regardless of the payment system. Why would they care? In most cases, they don’t work for dialysis companies, they work for practice groups that dialysis companies may contract with.

It’s possible that I’m being naive, though. Certainly with bundling, I expect EPO prescriptions to drop below the levels they’re at now. Chances are that more folks will get less EPO than they need to maintain a Hgb that allows a reasonable level of physical functioning and a good quality of life. But the FDA, at least, doesn’t seem worried about that. Too bad, since there are more data supporting the ill effects of a low Hgb than the harmful effects of a high one.