Special Treatment — The Story of Medicare's ESRD Entitlement

Perspective
Special Treatment — The Story of Medicare's ESRD Entitlement
Richard A. Rettig, Ph.D.
N Engl J Med 2011; 364:596-598February 17, 2011
ArticleReferences
In October 1972, Medicare, which had been enacted for the elderly in 1965, was extended to the disabled by the Social Security Amendments. One provision, added at the last minute, declared that persons with chronic renal disease who required hemodialysis or kidney transplantation “shall be deemed to be disabled” for purposes of Medicare Parts A and B. To be eligible for this Medicare coverage, patients had to have paid into the system long enough to be “fully or currently insured” under Social Security or be the spouse or dependent child of someone who was. This near-universal Medicare entitlement for end-stage renal disease (ESRD) has now been in effect for nearly 40 years.
The consequences in numbers of beneficiaries and in expenditures have been significant. In 2008, there were more than 112,000 new patients with ESRD in all eligibility categories (elderly, disabled, and ESRD-only). There were approximately 548,000 U.S. patients undergoing dialysis at the end of 2008, but many of them were not covered by Medicare, either because they had not yet fulfilled the initial waiting period or because they had received transplants and their coverage had ceased after 3 years. Medicare expenditures for ESRD in 2008 were $26.8 billion for Parts A and B. Non-Medicare expenditures for ESRD (covered by employer-sponsored group health plans or paid directly by patients) added another $12.7 billion, for total national expenditures of $39.5 billion.1 According to an analysis by the U.S. Renal Data System, ESRD beneficiaries represented 1.3% of all Medicare beneficiaries and used 7.9% of Medicare expenditures.1
So how was it that full coverage for treatment of one specific disease became enshrined in U.S. law? The story began during World War II, in Nazi-occupied Holland, where Willem Kolff invented the artificial kidney; after a visit by Kolff to the United States in 1947, a modified version of his machine was developed and used in Boston by John Merrill and colleagues at the Peter Bent Brigham Hospital. During the Korean War in the early 1950s, proof of concept was provided for treating acute renal failure with this Kolff–Brigham device. In 1960, Belding Scribner and Wayne Quinton, at the University of Washington Hospital in Seattle, invented an implanted arteriovenous shunt that made it possible for a patient to be connected to the machine repeatedly and ushered in the use of hemodialysis as a treatment for chronic renal failure. The shunt was later replaced by a subcutaneous fistula developed by the physicians Michael Brescia and James Cimino at the Bronx Veterans Administration (VA) Hospital.
In the 1960s, in addition to dialysis, kidney transplantation was emerging as a treatment for chronic renal failure. The two therapies interacted in both complementary and competitive ways, each following its own developmental pathway. Though initially greeted with skepticism by many in the medical establishment, these therapies had demonstrated their clinical effectiveness by the mid-1960s.

Photo: Clyde Shields, the First Patient with Chronic Kidney Disease to Undergo Dialysis, University of Washington, 1960.

Both lifesaving treatments were costly — beyond the means of most individuals — and not covered by insurance. In Seattle, in response to financial limitations, access to dialysis was restricted through explicit rationing carried out by an anonymous lay committee — an approach that was laid bare for the American public in a Life magazine article in November 1962.2 Elsewhere, decisions limiting access to dialysis were tacitly incorporated into traditional medical decision making. Dialysis highlighted the tragic choices that had to be made when fundamental societal values encountered problems of scarcity.3
The issue was clearly understood by many. For example, James Shannon, director of the National Institutes of Health (NIH), wrote to the Surgeon General in 1962 about the “difficulties” created by Scribner's success: lives could be saved, but at a high cost to individuals and the country. This understanding permeated all policy discussions concerning how to respond. The recurrent issues were clinical effectiveness, patients' rehabilitation and quality of life, and — central to everything — cost.
Advocates for a national treatment program pressed their case with Congress and the administration. The government responded. In 1963, the VA announced its intention to build dialysis centers in 30 VA hospitals throughout the country. The Public Health Service, beginning in 1964 and continuing through 1972, funded 12 dialysis centers, 12 home dialysis programs, and half a dozen organ-procurement efforts. The NIH, responding to congressional appropriations committees, established a contract research program within the National Institute of Arthritis and Metabolic Diseases to build a better, less costly dialysis machine; initiated a similar effort in transplant immunology within the National Institute of Allergy and Infectious Diseases; and nourished many important advances in kidney transplantation through the Clinical Research Centers program. Two registries — one for dialysis and one for transplantation — were supported by the NIH in building a database for epidemiology and policymaking.
A dilemma confronted policymakers. Only the VA had the legal authority to pay for direct patient care. The Public Health Service had authority only to support research, training, and “demonstrations.” But once a patient began treatment, his or her need for care did not end at the conclusion of a time-limited grant or contract. The search for statutory authority to pay for direct patient care became a major element in the decade-long debate over what to do for Americans with ESRD.
In late 1965, the VA proposed a budget to the Bureau of the Budget to sustain the expansion of its dialysis centers program. Recognizing the broader national implications, the Budget Bureau, with help from the Office of Science and Technology, convened an expert committee to examine not only the VA effort but all federal government agencies involved with dialysis and kidney transplantation. Chaired by Carl Gottschalk, the committee included nephrologists, transplantation specialists, and economists. Its report, released in November 1967, recommended a national treatment program financed by amending the Medicare statute. It endorsed home dialysis over center dialysis, and transplantation over both, on the grounds of clinical effectiveness and reduced costs. But the Budget Bureau parked the report: financing the war in Vietnam had assumed priority over Great Society initiatives and had put a hard stop to all major new programs.
Home dialysis had developed as an alternative to center dialysis largely as a way of reducing costs and increasing access; the Gottschalk Committee report reinforced this development. By 1972, when the legislation was enacted, nearly 40% of all patients receiving dialysis, then numbering about 10,000, were receiving the treatment at home.
The kidney-disease amendment to Medicare stemmed from the cumulative effect of demonstrations of clinical effectiveness, sustained advocacy, and previous incremental responses by the federal government. Many state governments also enacted programs to help patients with kidney failure during the same period. Consequently, there were steady increases in the numbers of dialysis and kidney transplantation centers, of newly minted nephrologists and transplantation specialists, nurses, and social workers to staff those centers, and of patients who were candidates for and recipients of the treatment they offered.
These facts were not lost on the news media: the New York Times, the Wall Street Journal, the Washington Post, NBC television, and local news outlets across the country brought the ESRD story to millions of Americans. Inevitably, these stories came to the attention of Congress and state legislatures.
In November 1971, a patient received dialysis — albeit very briefly — at a hearing of the House Committee on Ways and Means. Many casual observers attribute the passage of the 1972 legislation to this event, overlooking the myriad other contributing developments. But the committee saw that the patient was a family man, in his prime working years, who could be rehabilitated and returned to gainful employment — with help from his government. Ultimately, the ESRD entitlement was added to Medicare because the moral cost of failing to provide lifesaving care was deemed to be greater than the financial cost of doing so.
Many things have changed since 1972. Responsible voices are suggesting that perhaps we should treat fewer patients with dialysis.4 And data are increasingly available indicating that among some elderly patients with multiple coexisting conditions, dialysis does not increase survival.5 These suggestions should be considered seriously, but they should be approached with great caution and humility — as the 2009 controversy over “death panels” demonstrated, such an issue can all too easily become a political football.
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SOURCE INFORMATION
From RAND Washington, Washington, DC.

http://www.nejm.org/doi/full/10.1056/NEJMp1014193