Medicare Proposes Deep Cuts for Dialysis

On Monday July 1, the Centers for Medicare & Medicaid Services (CMS) released the annual proposed rule to update Medicare payment to dialysis providers beginning January 1, 2014 and to modify the Quality Incentive Program (QIP), which reduces reimbursement to providers if they don’t meet specified quality measures. What is most notable about this year’s proposed payment rule (also known as the End-stage Renal Disease Prospective Payment System – ESRD PPS) is that in response to legislation passed by Congress, CMS proposed to cut payment to dialysis providers by 9.4 percent.

The American Taxpayer Relief Act (ATRA) of 2012 required CMS to reduce the payment rate based on the decline in the use of injectable drugs (and their oral equivalents), most notably, erythropoietin stimulating agents (ESA). While ATRA required CMS to reduce the payment rate it did not specify the amount of the reduction, but instead to factor in the decline in the use of these drugs and the current price of the drugs. The National Kidney Foundation (NKF) understands CMS is required by law to reduce the payment rate.  However, NKF is concerned about the impact that this large of a cut may have on patient care across the country.

Currently, across all dialysis providers, Medicare profit margins are only 3-4 percent (as estimated by the Medicare Payment Advisory Committee – MEDPAC). Since CMS is proposing a 9.4 percent cut to the base rate for Medicare payments, most providers will have to make considerable changes in how they operate in order to cover the most basic costs of care. NKF is concerned that some providers may not be able to withstand cuts and will have to close facilities and that many others may have to eliminate patient-focused programs, services, and benefits that improve patients’ health and quality of life. Rather than wait and see how dialysis facilities respond to the cuts, we hope that Congress and CMS will engage in a meaningful dialogue with dialysis providers, patient groups, professionals, and others involved in caring for patients to identify ways to reduce the proposed cuts while still complying with the law. You can help us start the dialogue by contacting your Members of Congress and asking them to help stop the cuts.

Also included in this proposed rule are a number of changes to the Medicare ESRD Quality Incentive Program (QIP) that if finalized would impact Medicare payments in 2016. The QIP is a provider penalty program that has been in place since 2012. Dialysis facilities can receive a 0-2 percent reduction in Medicare payments for not meeting the specified quality measures. Each year CMS makes changes to the program to add, remove, or revise quality measures based on new standards of care, or the availability of new data. CMS is proposing to include five new measures that facilities will start being measured on in 2014.

These include:

• The percentage of in-center and home dialysis patients with hypercalcemia (a serum calcium level above 10.2%)
• The percentage of hemodialysis (including home) patients with a bloodstream infection
• The percentage of dialysis patients that the facility states have been educated and advised on the risks, benefits and options for anemia treatment
• A requirement to report on iron therapy for all pediatric patients
• A requirement to report certain health related conditions that each dialysis patient has. These conditions include heart disease, hypertension, diabetes, drug and alcohol dependence, tobacco use as well as others.

If finalized, these five measures will be in addition to the six that are currently being measured.

Given the proposed 9.4 percent cut to dialysis payments in 2014, we note that for many facilities implementing strategies to achieve some of these quality measures may be particularly challenging. However, NKF believes quality measurement is an important way to drive improvement in the quality of care patients receive. As we continue to review the proposed regulation, we will consider the impact of the proposed changes to dialysis payment and to the QIP on patient care and provide recommendations to CMS before the agency issues a final rule. As we prepare these recommendations we will call on many of our patient and professional volunteers to weigh in as the experts. Comments are due to CMS August 30, 2013 and we will be sure to share with your our final comment letter and activities around this proposed rule.