Squeezing more cost and care out of dialysis: our patients would pay the price

Abstract

When Medicare first began to fund the treatment of patients with chronic kidney failure, nobody imagined that 30 years later it would cost taxpayers more than $12 billion a year (1). Original estimates of the program’s size were off by a factor of 8, and the number of patients who are older and sicker continues to grow. As the expense grew, reimbursement eroded, but dialysis units adapted. They substituted unlicensed technicians for nurses, reduced treatment time, and reused dialyzers. In the late 1980s, concern about high dialysis mortality rates prompted both renewed research on the intensity of dialysis treatment and the adoption of detailed clinical practice guidelines. Nonetheless, many believe that large numbers of dialysis patients across the country are receiving less than optimal care. Although the statistics may look good, and most units make it past the regulators, patients have suffered as efforts to control costs have spread critical personnel too thin. Biotechnology brought a new financial surprise to the treatment of chronic kidney failure: anemia can now be corrected, but at a cost of more than a billion dollars a year. To ensure adequate treatment of patients with anemia, the proportion of patients whose hematocrit level exceeds 33% became a new quality metric (2), and the performance of each dialysis unit is reported on a Medicare web site (3). The cost of treating patients with anemia increases each year. In this issue of the Journal, Hynes et al. project the potential cost savings of substituting subcutaneous for intravenous erythropoietin (4). Their spreadsheet calculations yield a simple syllogism. Given that: (a) dialysis units are paid on a fee-for-service basis for administering erythropoietin; (b) about one-third less erythropoietin is needed to achieve the hematocrit goal if the drug is given subcutaneously rather than intravenously; and (c) the discomfort associated with subcutaneous erythropoietin injection is considered mild, very mild, or nonexistent by 86% of patients (5); ergo (d) converting hemodialysis patients to subcutaneous administration of erythropoietin could save between $15 million and $144 million dollars annually, with virtually no sacrifice of quality. We’re not so sure. Quality is likely to suffer. Erythropoietin revenue subsidizes dialysis treatment, and patients could pay the price for the public savings. Measurements of hematocrit levels and the sting of subcutaneous injection do not capture the potential effect on patient care. Bear with us while we explore some of the arcane details of dialysis reimbursement. Twenty-five years ago, the costs of dialysis and kidney transplantation were 30 times greater than costs associated with the average Medicare patient; with the erosion of reimbursement, they are now 7.5 times greater (6). Cost control has been achieved by prospective payment. Medicare pays dialysis facilities a “composite rate” to cover all the resources that were identified in the 1970s as required for routine dialysis treatment. These include administrative, nursing, and technical staff; the services of a dietician, a social worker, and a medical director; dialysis machines, dialyzers, and other medical supplies; specified routine laboratory tests; the physical plant; and intravenous infusions, including saline and heparin. Adjusted for inflation, the treatment payment rate has decreased by about 64% since 1973 (6). Virtually all units, no matter what the characteristics of their patient population, are reimbursed at the same rate—a “one-cost-fits-all” system. Dialysis units rely on two other sources of revenue. Private insurance, for those who have it, pays for the first 30 months of dialysis treatment. Private insurance has traditionally paid more than Medicare, but that situation is changing. Some managed care plans now negotiate dialysis treatment rates that are even lower than Medicare’s. During the last decade, a more reliable cross-subsidy to the composite rate has been the reimbursement for parenteral drugs, which are commonly given during dialysis treatment and are billed to Medicare separately. These “billable drugs” include erythropoietin, iron, and vitamin D, which were introduced to routine practice well after the composite rate was defined. How do the various dialysis facilities fare under the current reimbursement scheme? The Medicare Payment Advisory Commission (MEDPAC) estimated from dialAm J Med. 2002;112:232–234. From the William B. Schwartz, MD Division of Nephrology, Department of Medicine, New England Medical Center; and the Tufts University School of Medicine, Boston, Massachusetts. Dr. Meyer directs the dialysis program operated by Dialysis Clinic, Inc. at New England Medical Center, Boston, Massachusetts, and serves as Medical Director for Information Systems at Dialysis Center, Inc. Requests for reprints should be addressed to Klemens B. Meyer, MD, New England Medical Center, Box 391, 750 Washington Street, Boston, Massachusetts 02111.