Congress has not rushed to revisit the Medicare physician fee schedule or to develop another Medicare package since it is not facing another deadline until the end of June. But much has happened regarding ESRD-related policy outside of Congress over the last few months. In February, the Centers for Medicare and Medicaid Services (CMS) released its long-awaited report on bundling, and in March the Medicare Payment Advisory Commission (MedPAC) submitted its annual report to Congress, once again endorsing a bundled payment system. Removing what they assert is the current incentive to over use profitable separately billable drugs; Providing dialysis facilities more flexibility in tailoring treatment to individual patient needs; and Directing additional payment to facilities treating more costly patients. CMS offered two options for the ESRD bundle, although it favored the more limited bundle that would include composite rate services, ESRD-related separately billed injectable drugs, laboratory tests used in furnishing dialysis services not currently in the composite rate, and other dialysis-related services. The report discussed both per-treatment and per-month payment units. It outlined a number of case-mix adjusters that could work for either unit of payment, including age, gender, body surface area, underweight, time on dialysis, and a list of comorbidities. One thing that appears absolutely certain is that whenever Congress acts on ESRD reform, bundling will be the centerpiece of the package. CMS indicated that different types of providers would be affected differently by a system with the characteristics discussed in the report. They concluded that urban facilities, independent facilities, facilities with fewer than 5,000 sessions per year, facilities owned independently or by a regional chain, and facilities that provide a large amount of peritoneal dialysis would see higher payments than they do under the current system. Rural facilities, facilities with 5,000 or more sessions per year, facilities owned by large dialysis organizations, and facilities providing little or no peritoneal dialysis would see lower payments. Even though they acknowledged a negative impact on rural facilities, CMS believes that an adjustment for rural areas may not be warranted. They also expressed agreement with MedPAC s recommendation to remove the payment differential between hospital- based and independent facilities. Reaffirming its past positions on ESRD reform, MedPAC s “March Report to the Congress” once again recommended a bundled payment system, stating “Medicare could better achieve its objectives of providing incentives for controlling costs and promoting access to quality services if all dialysis-related services, including drugs, were bundled under a single payment”. Both the CMS and MedPAC reports support the overall policy direction concerning bundling in the Medicare section of the House-passed Children s Health and Medicare Protection Act (CHAMP). It also appeared that Senate staff was ready to embrace bundling in discussion on Medicare legislation last fall. During a hearing on March 11, Chairman Fortney H. “Pete” Stark (D-Calif.) added further controversy to the debate when MedPAC chairman Glenn Hackbarth testified before the House Ways and Means Health Subcommittee. During the hearing, Stark pointed out that Medicare spends $26,000 a year per ESRD patient and the two large for-profit dialysis chains have Medicare margins of 7.6% while all other providers have Medicare margins of 2.0%. Stark then suggested that since dialysis services are provided by hospitals in most countries, the Medicare margins for dialysis providers should be redirected to hospitals and in return hospitals should have the responsibility of running all in- and outpatient dialysis facilities. He said dialysis is “socialized medicine” and perhaps private chains should be barred from participating in Medicare and outpatient dialysis treatments should be provided by hospitals. According to Stark, the proposal is a “low-hanging fruit”, which could resolve the problems in dialysis care and the issue of underpayment to hospitals. Whether Congress will endorse Stark s proposal, if he chooses to pursue it, is open to debate and tremendous controversy. But one thing that appears absolutely certain is that whenever Congress acts on ESRD reform, bundling will be the centerpiece of the package.
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Open Access
Aug 1, 2011
Ramesh Saxena 
