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Health Care Policy & Politics / ESRD Payment Bundle

ESRD community benefits from new Medicare bill

April 01, 2014
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Sustainable, it is.

The U.S. Senate approved legislation yesterday by a 64-35 vote to keep on life support the unpopular sustainable growth rate (SGR) formula for paying Medicare physicians, and provide some important benefits to the renal community and pharmaceutical industry. The bill awaits President Obama’s signature.

Based on the bill’s language, nephrologists and dialysis providers will be able to continue billing for oral dialysis drugs through 2024, and get major relief from a 12% cut in the composite rate imposed last year by the Centers for Medicare & Medicaid Services.

The main focus of House bill HR 4372, the "Protecting Access to Medicare Act," however, is the 13-month patch on the SGR—the 17th such reprieve since the policy was enacted in 1995—that will prevent a 24% Medicare payment cut today, and replace it with a 0.5% update for the rest of 2014 and 0.0% update from January 1, 2015 until April 1, 2015. The bill was fought by the American Medical Association and doctors in general, who said it was time to bury the SGR for good and finalized efforts to overhaul physician pay methods at Medicare.

“While I’m pleased with this temporary patch, I hope it’s our last patch,” Senate Majority Leader Harry Reid, D-Nevada, said ahead of the vote.

Physicians were disappointed by the temporary measure because just last month lawmakers announced they reached agreement on how to permanently repeal the payment formula. But the deal unraveled when Republicans in the House inserted language tying passage of the bill to a delay in the Affordable Care Act's mandate requiring all individuals to obtain health insurance.


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Senate Majority Leader Harry Reid, D-Nev., and House Speaker John Boehner, R-Ohio, worked together on the bill, and Boehner won House approval on Thursday. Both lawmakers said they hope to reach agreement on how to pay for permanent repeal of the SGR by next year. The Congressional Budget Office estimates it will cost as much as $180 billion to permanently repeal it.

ESRD Program benefits
According to a review by the National Renal Administrators Association, the legislation includes the following measures that impact the dialysis community.

Oral drugs

The bill further delays oral drugs from entering the ESRD bundled payment system for eight years, to 2024, and updates the base years CMS will use for pricing those oral drugs in the bundled payment by directing them to use data from the "most recent year available" in setting the price for these drugs.

Prospective Payment System ( ESRD Bundle)

H.R. 4302 limits the payment years CMS can lower the PPS to account for lower drug utilization to payment years 2014 and 2015. CMS has already set the PPS for payment year 2014 by regulation and indicated in that regulation they planned to keep payments flat for payment 2015. This bill would effectively halt CMS from further implementing their planned $30 per dialysis treatment reduction in payment beyond payment year 2015. The bill does replace the reductions in payment from drug utilization with reductions in future year market basket updates. The payment year 2016 market basket update will be reduced by 1.25% and payment years 2017 and 2018 market basket update will be reduced by 1.25% and 1%, respectivley.

ESRD Quality Incentive Program

H.R. 4302 amends MIPPA to include a new outcomes-based quality measure for anemia management treated by oral-only drugs. The Secretary of Health and Human Services is directed to use an endorsed measure to the extent possible.

Cost report audit

The bill directs the secretary to audit ESRD cost reports beginning with reports from 2012 using a random sample.

Sequestration adjustment

H.R. 4302 adjusts budget sequestration for 2024 by requiring a 4% cut for the first six months of the year and lowering the cut to 0% in the second six months of the year.

Other provisions
The bill also delays the implementation of the ICD-10 coding system, which was supposed to take effect Oct. 1, for at least a year; postpones compliance with the controversial two-midnight rule for six months, and “pauses” recovery audits of medically unnecessary claims until March 15 because of a huge backlog in appeals.

AMA president Ardis Dee Hoven, MD, whose organization has been approving the SGR reform efforts—even with plans to tie payments to performance —said the latest patch to the SGR has cost taxpayers more “than it would cost to solve the problem for good.”

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