Future Dialysis Cuts Reduced and Oral-only Drugs Remain under Part D until 2024

On Monday March 31, 2014, the Senate passed legislation that avoids substantial Medicare cuts to physician payments. This vote comes on the heels of House approval that occurred last week.   The one year patch to Medicare physician payments includes a provision tomitigate the effect of future cuts to dialysis payment for years 2016, 2017 and 2018.

Following legislation passed by Congress in 2012, the Centers for Medicare & Medicaid Services (CMS) issued a final payment rule that implemented a cut of more than 9% in payment for dialysis, but spread the reduction over several years. Effectively, payments to dialysis providers for 2014 and likely 2015 would be the same as 2013, rather than drastically reduced.  This was a great win for kidney patients and dialysis providers, but it was unclear exactly how much the payments would be cut in 2016 and 2017.  The legislation passed on Monday makes it a bit clearer what the future holds for dialysis payment in years 2016-2018, by directing CMS to first determine what the payment update would be for years 2016-2018 (based on a formula CMS uses to evaluate the costs for health care goods and services known as a market basket) and then reduce that updated amount by 1.25% in 2016 and 2017 and 1.0% in 2018. It’s expected that this legislation will actually reduce the total 9%+ cut to dialysis payment that otherwise would have been implemented by 2017.  While the legislation passed Monday evening provides some relief to dialysis providers, as health care costs increase there is still concern that some dialysis facilities will struggle to meet patient’s needs over the next few years.  NKF will continue to monitor how future dialysis payment affects patients’ access to high quality care across the country.

Another provision in the legislation delays the inclusion of oral-only medications (such as phosphorus binders that people on dialysis typically take) in the Medicare end-stage renal disease (ESRD) payment bundle until 2024.  Currently, medications that are injectable or have an equivalent oral form are included in the payment bundle that dialysis providers receive from Medicare, but drugs that don’t have an injectable form (such as phosphorus binders) are still paid separately by Medicare Part D.  Initially, these oral-only drugs were to be included in the payment bundle and no longer paid for separately by Part D in 2014, but in December 2013 legislation was passed to delay their inclusion until 2016.  Now, the legislation passed March 31 further delays including oral-only drugs in the ESRD payment bundle until 2024.

NKF has often cautioned CMS to ensure that the payment be properly increased and quality measures put in place when the drugs are rolled into the bundle. This will ensure that patients continue to have access to the medications they need.  NKF is hopeful that providing a further delay gives CMS time to thoroughly evaluate the costs of these medications and implement a thoughtful policy that ensures patient access to essential medications and proper incentives to improve quality of care.