Bundling:Adding medications to the dialysis composit rate

[Bill Peckham]

There has been a lot of talk in Washington DC about Epogen. There has been articles in the NY Times and other outlets about studies that indicate clinical risks in treating anemia in CKD and cancer patients.

There has been a lot of discussion on IHD about this issue too. See:
http://ihatedialysis.com/forum/index.php?topic=3041.0
http://ihatedialysis.com/forum/index.php?topic=3393.0
http://ihatedialysis.com/forum/index.php?topic=3610.0
http://ihatedialysis.com/forum/index.php?topic=3079.0
http://ihatedialysis.com/forum/index.php?topic=3663.0
http://ihatedialysis.com/forum/index.php?topic=1827.0

etc., etc. - there are more but those cover the jist of the media's recent interest.

The response to all this attention has been a chorus - from Senator Grassley, Congressman Stark, the General Accounting Office, MedPAC - all saying the bundling medications with the dialysis composit rate would solve the "problems".

I disagree. I think bundling is a bad idea. I could cross post but if you're interested, you can read my take here:
http://billp830.mydd.com/story/2007/5/18/23915/0869
and here:
http://billp830.mydd.com/story/2007/5/20/152434/622

[JerseyGirl]

I agree that bundling is NOT a good idea.  Getting patients to take SC ESA's may not go over real well either.  I am afraid that if bundling becomes a reality not enough medication will be given to achieve adequate HGB's nor PTH's.

[Bill Peckham]

What if Medicare rules where changed?

Dialyzors who took their EPO subq would be allowed to have target hemoglobins in the same range as today but those who wanted to receive Epogen in the lines would have target hemoglobins in the 8 to 10 range. Dialyzor choice would be maintained and Medicare would spend less on Epogen.

With the Epogen savings we could pay for HR1193 and HR5321 (from the last Congress) without increasing the period that private insurance is primary. There may even be enough money left over to get rid of the current three year limit on immunosuppressant medications coverage under Medicare.

[stauffenberg]

The American government is so 'thrifty' with its welfare benefits that it fails to see how this costs more in the long run and on the macroeconomic scale.  A hemoglobin level of 8 to 10 is PROFOUNDLY anemic, what in hospital settings is called "mandatory best rest anemia," meaning the patient cannot safely be allowed to get out of bed.  If dialysis patients taking EPO through their lines are kept at this level, not one of them will be able to work, and the loss in productivity for the whole society, well-being for the patients, and tax income for the government will far exceed any savings in the EPO costs.

[Bill Peckham]

The American government is so 'thrifty' with its welfare benefits that it fails to see how this costs more in the long run and on the macroeconomic scale.  A hemoglobin level of 8 to 10 is PROFOUNDLY anemic, what in hospital settings is called "mandatory best rest anemia," meaning the patient cannot safely be allowed to get out of bed.  If dialysis patients taking EPO through their lines are kept at this level, not one of them will be able to work, and the loss in productivity for the whole society, well-being for the patients, and tax income for the government will far exceed any savings in the EPO costs.

That's just not true. Until 1991 when EPO was introduced dialyzors routinely had hemoglobin in the 7 to 8 range. Many people worked, went to school, raised families, etc. When I was CKD4 in 1987 my hemoglobin dipped below 7 and I received a blood transfusion, which is how they kept hemoglobins above 7. I was working full time as a VISTA during this period.

When I tried to travel around the world during my CKD4 period, early 1987, my hemoglobin was a smidge above 7 - I spent a month trekking in Nepal around the Anapurna Mastiffs - a group of mountains that rise to over 8,000 meters.

[Bill Peckham]

So I wrote this long -1,400 word - dialysis reimbursement article and it turns out the editor wanted 500 words. Sigh.

Rather the leave it collecting cobwebs on my computer I thought I'd post it here. I guess it is too unreadable too because the readability score is off the charts but it's reimbursement/bundling ... how do you explain it simply?

The point I was trying to make is no matter what your personal insurance you should care what Medicare and Medicaid pays for dialysis. Here it is, comment welcome ... in fact comments encouraged.

How is dialysis paid for in the United States? That seems like a simple question but it’s a complicated situation so there really is not a simple answer. In 2004 (the most recent year for which data is available) nearly 500,000 people had CKD5 (kidney disease so severe that to live a person needs either a kidney transplant or regular dialysis), 336,000 (Table D.6, 2006 ADR)  individuals were treating their CKD5 with either hemodialysis or peritoneal dialysis. Medicare calls it End Stage Renal Disease (ESRD), while the FDA uses the term Chronic Renal Failure, no surprise I prefer the term CKD5 instead of End Stage or Chronic ... Failure.

With nearly 500,000 people needing treatment it should be no surprise that there is now a giant industry involved in providing care for all of those people. There are the manufacturers who make the equipment and supplies (e.g. dialysis machines, artificial kidneys, needles), there are drug makers (e.g. Amgen, Genzyme, Watson Pharma.) because in addition to dialysis or transplant treatment of CKD5 requires various medications, and there are the providers who provide dialysis and transplantation (e.g. DaVita, Fresenius, your local hospital transplant center). It is those providers of dialysis that we think of when we talk about how dialysis is paid for but we should remember that they are just a part of a very large industry.
 
The care experienced by an individual dialysis patient is the same no matter how their dialysis is reimbursed. Once you're in the door you get the same treatment varying only by doctor’s order. Payment for dialysis comes from three main sources: Medicare (the federal insurance program), Medicaid (insurance available through states for those with limited income and assets) and private insurance (usually provided through an employer). Depending on your age, employment status and years with CKD5 your treatment will be reimbursed at a variety of rates depending on which insurance program is your primary payer.

Medicare
75% of all US dialysis patients have Medicare as their primary insurance. For those that are Medicare primary, Medicare sets the reimbursement amount and pays 80% of that amount. Medicare actually pays one rate for routine dialysis services and a separate, per dose rate for dialysis medications. The routine dialysis services (everything needed for a single treatment) are paid based on your dialysis facility’s Composite Rate (CR). The CR varies somewhat depending on a person’s gender, age and body size and the CR is adjusted by a geographic wage index (the CR is higher in an expensive wage city vs. an inexpensive wage rural area). On average the CR is $150 +/- $30. The per dose rate for medications (e.g. Epogen, vitamin D, Iron) varies but it is in addition to the CR. In general about two thirds of the per patient revenue comes from the CR and one third comes from medications.

As a primary payer, Medicare Part B always pays just 80% of the allowed charges, which leaves 20% plus the annual Part B deductible to be paid by a secondary insurer or you if you don’t have secondary insurance. About 50% of the people who are Medicare primary have the remaining 20% picked up by Medicaid, these are the so called dual eligible's (whether or not Medicaid pays the full 20% or part of it depends on the state) the other 50% of Medicare primary patients either have secondary insurance through work as a worker or dependent or they are covered by a Medicare supplemental insurance plan.

 
Medicaid
About 10% of all dialysis patients have Medicaid. As a primary payer, the state may pay what Medicare pays or it may pay more or less based on state policy. People who are Medicaid primary do not have additional insurance to pay what their state’s Medicaid program does not pay.  However, if a dialysis unit accepts Medicaid it must write off anything except Medicaid copays (if the state requires a Medicaid patient to pay copays).  Medicaid can also pay secondary to Medicare and may pay all or part of the 20% Medicare does not pay.  Again, if a unit accepts Medicaid, it must write off any balance other than Medicaid copays.

Private Insurance
About 10% of all dialysis patients are covered through employer group health plans (EGHPs) or other private insurance including Medigap (Medicare supplement) coverage. EGHP plans pay primary for patients who have been eligible for Medicare less than 30 months.  In this case, the dialysis provider can bill their EGHP what that plan is willing to pay.  These private payers are reportedly charged multiples (2 to 10 times) of the Medicare allowed rates. What private insurance is charged and what they pay is a closely held secret but all dialysis providers charge private insurance payers more than what Medicare would allow and are reimbursed on average twice Medicare’s CR.  The only thing that limits the amount an EGHP pays is the contract between the insurance company and the provider, if any.  The only thing that limits what a patient with an EGHP may owe depends on whether the patient has Medicare Part B as a secondary payer.  If so, the dialysis unit cannot bill patient any balance if the commercial insurance has paid at least 100% of Medicare’s dialysis CR and Medicare’s allowed amount for drugs provided by the unit.

The remaining 5% is rounding error and about 2-3% without insurance. Those without insurance are mostly waiting for Medicare or Medicaid but there is a growing number of "never eligibles" as federal law limits Medicare and Medicaid coverage of undocumented patients.

Depending on the state and the payer mix at the dialysis unit, 100% of Medicare's allowed rate could be the lowest amount received by the dialysis unit or among the highest amounts. Dialysis units where Medicaid pays at least what Medicare pays for dialysis and drugs or dialysis units that have a higher percentage of patients with private insurance will have a higher average reimbursement for dialysis than units with low Medicaid payment rates or few patients with EGHP coverage. Remember: the care experienced by an individual dialysis patient is the same no matter what their payment method. Everyone’s care is based on the average rate of reimbursement. This is why each of us should care what Medicaid pays for dialysis even if we are covered by Medicare or private insurance. If Medicaid pays too little it will drag down the average reimbursement rate and everyone’s care will have to be adjusted to cost less than the lower average reimbursement rate.  And if there is no update to the Medicare CR to allow for higher labor and supply costs or improved technology, inflation will continue to dimminish the value of Medicare reimbursement and the average reimbursement rate. Again, the care experienced by an individual dialysis patient is the same no matter what their payment method even if you have private insurance Medicare reimbursement impacts the care you receive.

Bundling
Bundling refers to paying just one amount for all services received through a dialysis unit. Instead of the CR and separate medication reimbursement, Medicare would bundle medication reimbursement with the CR. This would mean that your unit would receive the same amount of money no matter how much medication you did, or did not, receive during treatment. The Government Accountability Office (GAO) and Medicare Payment Advisory Commission (MedPAC) both say that bundling medications with the CR would save money but the GAO and MedPAC’s evaluation criteria is fiscal not clinical.

Bundling raises clinical concerns because there would be financial incentives to use fewer medications and to reduce the doses of those medications given to patients.  Since some patients need large doses of medication to achieve clinical targets, while other patients need low doses, this could mean that some patients will not receive their optimal medication dose. Another concern is whether dialysis units will stop providing drugs that are available in pill form and instead will hand patients prescriptions to fill at their pharmacy using other drug benefits.  This could affect whether patients could afford to take necessary drugs.  How a new bundled CR would address the needs of patients who require more medications than average or medications that are only covered by Part B is not clear.

I am in favor of being good stewards of the taxpayers’ money, but bundling is the wrong way to save money on Medicare’s dialysis program. It is not in the patient’s interest to turn medications into cost to be controlled along with 4x4s, band-aids & staff time. Let’s improve Medicare reimbursement without sacrificing clinical outcomes.

[keefer51]

Thanks for the info. It is helpful to know this.

[stauffenberg]

A friend of mine had Chrohn's Disease, an inflammatory deterioration of the intestine which produces considerable blood loss, and he found he was unable to work when his hemoglobin fell below 90.  When I was first in the hospital with renal disease, because it was the practice of the hospital not to give EPO to patients classified as 'acute renal failure' cases, as I was, my hemoglobin dropped to 85 and I was unable to lift my head off the pillow.  The Merck Manual -- the Bible of every hospital intern because it is designed to fit in the pocket of a lab coat and covers every question you are bound to encounter on grand rounds -- defines "severe" anemia for males as any value below 120, but the symptoms in each patient will vary according to their normal hemoglobin level.  My normal, pre-dialysis hemoglobin level was always in the 160s, though for some males this is in the 140s, so I was affected more by the dialysis red blood cell count levels than some others were.