GAO reports CMS plans to end medical exception payments under expanded bundle

Cross posted from my blog

RenalWEB links to a 32 page GAO report (pdf link) that looks at the impact of expanding the Medicare payment bundle (due to happen in 2011) on the provision of home dialysis. The GAO paid particular interest to the costs of providing more frequent home hemodialysis. The headline is that CMS Should Monitor Effect of Bundled Payment on Home Dialysis Utilization Rates.

That’s a good idea but the real news is on page 16 and 17 of the report (pages 20 and 21 of the pdf):
Indeed, under the current partially bundled payment system, we found that some home dialysis providers now have been granted medical necessity exceptions to receive Medicare reimbursements for additional dialysis treatments beyond three per week. CMS officials told us that they are unlikely to allow these additional reimbursements under the expanded bundled payment system.
That is bad news for the future of frequent home hemodialysis.

No one knows what will happen with the bundle of services. All we know is that it’s currently law that Medicare implement a bundle of service for dialysis. To get the law changed would require advocacy with legislators in Congress and you’d be swimming against the tide of trying to save money in Medicare.

What if the Medicare reimbursement in the bundle for drugs, labs, and dialysis treatments is high enough to cover extra treatments for everyone who wants them because patients doing extra treatments are healthier and don’t need as many expensive drugs that in-center patients need and that are included in the bundle? At one time, several dialysis providers said that they would break even on daily/nightly dialysis if Medicare paid for one extra treatment a week. The current average composite rate for each dialysis treatment is about $140/week. I haven’t checked, but I suspect the cost to Medicare of the average ESA and IV iron dose alone for and in-center patient compared a daily/nightly dialysis patient is more than $140/week.

Also, although some Medicare MACs (what used to be fiscal intermediaries) pay for 4 treatments a week (or possibly more), others strictly follow the Medicare payment policies and do not pay for extra treatments unless a patient has a medical diagnosis that Medicare is looking for (fluid overload, congestive heart failure, etc.) and good enough medical justification. In those areas, facilities are in a bind because patients are asking for more frequent home treatments and they must choose to provide the treatment and lose money on Medicare patients or not offer Medicare patients daily or nightly dialysis. Is that right?

I’ve always wondered what a dialysis provider does when a patient who has an excellent employer group plan that pays multi-times Medicare for each treatment becomes Medicare primary after 30 months. Do facilities bill Medicare for those treatments Medicare will cover and bill the employer plan for the treatments Medicare won’t cover OR do facilities find reasons for the patient to cut back to 3 treatments a week (or every other day) OR do facilities continue to let patients do daily/nightly dialysis and lose some money each week figuring that the higher revenue for 30 months makes up for the lower revenue now? Color me curious…about the bundle and facility billing practices.

I hear that these days all MACs are paying for additional submitted treatments, with medical justification. The issue, according to the Government Accounting Office, is that Medicare is not going to continue these payment for those who are dialyzing at home more frequently than 3x/week.

Is CMS going to allow (is the reimbursement framework going to accomodate) medically justified sessions above 3x/week for incenter dialyzors? If so how? The expanded bundle will be in the neighborhood of $236 (that is the number CMS provided in their Report to Congress).

Beth did you read the GAO’s report? Which cost numbers are you going to use? Also the GAO says upfront that they are not including the cost of training which is a significant imbedded cost. Are units suppose to eat the cost of one on one daily training sessions (receiving only the three expanded payments)? Would you start a home hemodialysis program under this framework?

Tell me how CMS intends to reimburse for four incenter, medically justified treatments a week and I will tell you how Medicare can reimburse for frequent home hemodialysis.

Hi Bill,

As I’ve said before, I don’t know what CMS is going to do and don’t know that anyone does. I don’t even know if the people working on the bundle at CMS know exactly what the final product will be because when the proposed regulation is published there will be a public comment period and policies can be changed with well documented and justified comments.

I hope that CMS will consider the contents of the GAO report. I didn’t read the whole 118 page Report to Congress but did read the section of that report that contained information about the two proposed bundles. Former Sec. Leavitt understood that because of the way Medicare currently reimburses treatments and drugs, too many patients are doing in-center dialysis rather than PD and/or longer and/or more frequent home treatments. He also pointed out the concern expressed on this message board that the bundle needs to consider that patients may come and go from their facility during the month due to hospitalization and other reasons why service may be interrupted, as well as the fact that some patients may want or need to change facilities.

[I]The Secretary’s May 2003 report [33] pointed out that some critics have argued that the composite rate’s three times weekly payment structure regardless of dialysis modality has discouraged innovative treatment methods that could often lead to better clinical outcomes for patients and an enhanced quality of life. In recent years, ESRD facilities have relied heavily on separately billable drugs as a source of revenue growth. Some believe that this reliance on separately billable services has impeded the greater use of less costly PD and alternative treatment regimens such as nocturnal dialysis, home HD using compact portable dialysis machines, and shorter but more frequent dialysis sessions (1.5 to 2 hours).

An ESRD PPS combining composite rate and separately billable services furnished during a specified interval of time would provide the financing flexibility to use whatever forms of dialysis were in the patient’s best interests. Because of Medicare’s usual monthly billing cycle, an ESRD PPS based on monthly payments is a frequently mentioned approach. A unit of payment for an entire month is technically feasible. However, certain issues would need to be addressed such as hospitalization, the day of the month dialysis started, interruption of dialysis, and movement to other facilities. The alternative to a monthly unit of payment is the current system, which is per treatment.[/I]

As I’ve said before, now is the time to be gathering hard data on costs and outcomes and begin preparing a position paper that would include evidence supporting home dialysis, including reimbursement that encourages rather than discourages more frequent HOME treatments as well as a strategy for how to advocate with CMS and with other individuals and organizations to get them to support that position paper.

One of the things I take away from the GAO report is that all facilities haven’t provided data in the same way on their cost reports to CMS. When a facility provides data on costs for 3 treatments a week but provides 5-7, it doesn’t help the argument that it costs more to provide more treatments. Getting facilities to consistently provide data on all costs associated with the treatments they actually provide would be a good place to start and the time to start providing this is now.

Why not advocate with CMS to consult with providers of PD and more frequent treatments to develop explicit instructions for cost reports that would tell clinics to report ALL costs of home treatments, not just costs associated with the number of treatments Medicare covers and encourage CMS to allow facilities to use those instructions to file amended cost reports for prior years so data used by UM-KECC in calculating the costs of the bundle accurately reflects actual costs?

With an economics background, I would be more than happy to lobby CMS. CMS is not considering all costs of dialysis. With Home Nocturnal dialysis, even with full Nocturnal dialysis, the taxpayer is going to be saving a bundle. First, the taxpayer is not going to be paying for expensive drugs, Second, the taxpayer will not be paying for excessive hospital costs. Third, the taxpayer will not be paying for the loan that is required to purchase a dialysis building. Fourth, the taxpayer will not be paying for the interest on the loan to purchase the building. Fifth, the taxpayer will not be paying for high hourly nursing costs. Sixth, the taxpayer will not be paying the costs of transporting the dialysis patient to the dialysis facility. Need I continue? Economics and costs are not a one step process, they are a many step process. As a taxpayer, I am really ticked off about the lack of knowledge in reining in costs.