By Craig A. Solid, Phd, and Allan J. Collins, MD
The new prospective payment system, or bundled payment plan, for dialysis treatments presents dialysis providers with the potential for clinical and economic risk and opportunity, depending on the modality of dialysis therapy used and the frequency and doses of injectable drugs administered. Under the bundle, some financial incentives may encourage starting incident patients on home dialysis, either home hemodialysis or peritoneal dialysis. Administration of injectable medications such as vitamin D and iron, which are no longer separately billable, may require providers to consider oral equivalents or slightly different dosing patterns. Treatment of anemia with erythropoiesis-stimulating agents will also require careful consideration, as will use of oral medications when they are added to the bundle in 2016. These factors are already playing out in the marketplace, and going forward providers will need to balance changes in utilization with patient care.
The bundled payment system presents providers with many options. Different dialysis modalities have different cost structures for common intravenous injectable drugs, and providers must consider appropriate treatment of anemia and bone and mineral disease. The United States Renal Data System showed preliminary data from the new dialysis payment system at the May 2012 National Kidney Foundation Spring Clinical Meeting in Washington D.C., in the Annual Data Report for 2012, and at the November 2012 American Society of Nephrology conference in San Diego.1 In this review, we briefly discuss the various incentives, risks, and opportunities that providers face under the new dialysis payment system.
The first consideration is the bundled payment adjusters and Medicare eligibility, and how these affect dialysis modality choices for incidence and for the prevalent patient population. Next we discuss challenges associated with injectable medications, with particular focus on the erythropoietin-stimulating agents.
Adjustments to the bundle
Table 1 displays adjustments to the bundle. One adjustment applies to small dialysis facilities that provide fewer than 4,000 treatments per year for three years. This adjustment is intended to protect small, essential community providers, particularly in rural areas, and pediatric units that will be less likely to receive pricing breaks or be able to leverage costs over large populations (as the large dialysis organizations can do). Recent Government Accountability Office analyses have questioned whether the small dialysis unit adjustment was applied as intended or missed the mark.2 This adjustment is likely to be revised to ensure it is applied as intended.
The other adjusters highlight important considerations for treating incident patients, for whom providers receive a 51% greater payment in the incident month and for three subsequent months. The incentives for home versus in-center treatment created by a single payment system were considered prior to the inception of the first composite rate bundle in 1983, and they are still relevant today.3 Since the 90-day waiting period for Medicare coverage for patients aged less than 65 years is waived for those who begin home dialysis (either home hemodialysis or peritoneal dialysis), the adjustment to the bundle for incident patients creates an incentive to consider home dialysis for eligible patients. In 2014, when the base rate will be approximately $240 per treatment, the incident adjustment represents an increase of $120 per session for a total of $360 per treatment. Although there is an adjuster for home dialysis training after the first four months, it is only $33.44 per session (much less than the 51% incident adjuster) and thus encourages providers to begin home dialysis in the first four months rather than later.
In addition to the bundle adjustment, savings are associated with peritoneal dialysis related to lower costs for injectable medications ($6,000 to $7,000 per year) versus comparably matched in-center hemodialysis patients.4 These considerations clearly favor home dialysis and particularly peritoneal dialysis, which requires a lower cost structure than home hemodialysis. Continuous ambulatory peritoneal dialysis also creates an advantage because it requires less training time than continuous cycling peritoneal dialysis or home hemodialysis. To what extent providers use the home peritoneal dialysis option will depend on their ability to increase the training capacity and infrastructure support to manage their patients.
Payments for the injectable agents used to treat anemia and bone and mineral disease are now rolled into the fixed dialysis bundled payment rates. Providers may consider less costly alternatives; however, these may be less effective, and providers must balance cost against efficacy. For example, IV vitamin D has an oral equivalent used predominantly in the peritoneal dialysis population.5 Oral iron products have been shown to be less effective due to low absorption.
Various IV iron products are available and their use has shifted over the past several years.5,6 Another option might be to consider the dosing patterns of current vitamin D and IV iron therapies. For example, some providers may decide to switch patients from maintenance iron to intermittent iron doses, or vise versa. Since reimbursement for these drugs is included in each bundled payment, providers will likely have to balance frequency and doses not only to maintain appropriate laboratory levels for patients, but also to ensure financial feasibility for facilities. As hemoglobin levels have fallen (in June 2011, the U.S. Food and Drug Administration ESA label target hemoglobin level changed from 10-12 gm/dL to 10-11 gm/dL), IV iron requirements may also be reduced, thereby saving costs.7
Before March 2012, only two ESAs––epoetin and darbepoetin––were available; these have different tissue half-lives and pricing structures. Many providers have preferred using the shorter-acting epoetin, which is traditionally given at each dialysis session. Darbepoetin, used mainly in hospital-based and independent units and in some smaller chains, is given once weekly, or in some cases once every two to four weeks. In March 2012, peginesatide, a new once-monthly ESA, was approved by the FDA for use in dialysis patients. Although peginesatide was recently recalled by Affymax, other long-acting ESAs may possibly emerge, creating other alternatives to shorter-acting agents.
For dialysis providers, the new bundled payment system potentially offers both economic risks and opportunities related to ESAs, just as with other injectable medications, depending on the frequency and doses of ESAs administered. With short-acting (thrice-weekly) ESAs, there are risks associated with high-dose patients, although these risks are somewhat tempered by the ability to apply for outlier status. Providers appear to have adapted to this risk, as recently reported by the USRDS, the Centers for Medicare & Medicaid Services, and GAO; doses of most medications declined in 2011 compared with 2010.8 Doses of IV iron in September 2011 were 23% less compared with September 2010; doses of IV vitamin D were 12% less, and doses of epoetin were 27% less. These data suggest that providers being paid under the bundle have adapted to the new payment system.
The GAO recently suggested that Medicare overpaid dialysis providers by as much as $880 million in 2011, citing the fact that utilization of ESRD drugs in 2011 was about 23% lower than in 2007, the year the bundle was based upon. Notably, a decline in hemoglobin levels and an increase in transfusions also occurred during this time period.9
Treating anemia is challenging because variability of hemoglobin levels can lead to variability of ESA dosing. Under a fixed per-treatment payment system, this creates economic risk in the short term. One source of hemoglobin variability is hospitalization events. Pre-bundle, hospitalizations were associated with falling hemoglobin levels during the hospitalization and increasing ESA doses post-hospitalization.10 At present, little is known about hemoglobin variability and ESA dose changes during hospitalization events for longer-acting agents. With increased availability of long-acting ESAs, the potential risks and benefits to providers will change slightly.
Assuming that these long-acting ESAs will be priced to reflect a certain number of dialysis sessions per month, the economic risks and opportunities for providers will revolve around the number of sessions billed by the provider during a given month. An understanding of these risks and opportunities, and of strategies for mitigating the risks, is crucially important for providers considering long acting versus short-acting ESAs.
Recently, the decision was made to delay inclusion of oral-only medications in the bundle until 2016. This is good news for providers in the short term since it lowers costs, and it has received support from biotech companies.11 Additionally, as the Congressional Budget Office noted, by that time many medications will go off-patent, making them cheaper and requiring less of an adjustment to the bundled payment; this would potentially result in more savings for Medicare than including the oral medications in the current bundle.
The bundled payment for dialysis sessions may involve some risk for smaller providers, but these risks can be mitigated through practice patterns, cooperative purchasing, or negotiations with suppliers on pricing alternatives. The CBO also plans to rebase the bundle in the near future, with an expected savings to the government of almost $5 billion. 12 Providers have proven that they can reduce their costs, but how this decrease in drug utilization will translate to patient care is unclear, as is whether these savings will be used to benefit patients with new investments to reduce morbidity and mortality.
It will be important to review how providers adapt to the new challenges under the dialysis prospective payment system started in January 2011, and how they continue to adapt as that system evolves.
1. United States Renal Data System. 2012 presentations and 2012 Annual Data Report. Available at www.usrds.org. Accessed March 14, 2013.
2. Government Accountability Office. Report to Congressional Committees. End-Stage Renal Disease: CMS should improve design and strengthen monitoring of low-volume adjustment. Available at http://www.gao.gov/assets/660/652530.pdf. Accessed March 14, 2013.
3. Department of Health and Human Services. Centers for Medicare & Medicaid Services. Federal Register 75(155):49031-49032, §I.B, Aug 12, 2010. Available at http://www.gpo.gov/fdsys/pkg/FR-2010-08-12/pdf/2010-18466.pdf. Accessed March 14, 2013.
4. U.S. Renal Data System, 2012. Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. Vol. 2, Chapter 11, Figures 11.19-11.24. National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, Md.
5. U.S. Renal Data System, 2012. Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. Vol. 2, Chapter 11. National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, Md. 2012.
6. US Renal Data System, 2011. Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. Vol. 2, Chapter 11. National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, Md.
7. US Food and Drug Administration. FDA Drug Safety Communication: Modified dosing recommendations to improve the safe use of Erythropoiesis-Stimulating Agents (ESAs) in chronic kidney disease. 2011. Available at: http://www.fda.gov/drugs/drugsafety/ucm259639.htm. Accessed March 14, 2013.
8. US Renal Data System, 2012. Annual Data Report: Atlas of Chronic Kidney Disease and End-Stage Renal Disease in the United States. Vol. 2, Chapter 10, Figure 10.10
9. Government Accountability Office. Report to Congressional Committees. End-Stage Renal Disease: Reduction in drug utilization suggests bundled payment is too high. Available at: http://www.gao.gov/assets/660/650667.pdf. Accessed March 14, 2013.
10. National Institutes of Health, National Institute of Diabetes and Digestive and Kidney Diseases, Bethesda, Md.
Dr. Solid is Director of biostatistics and health economics for the Chronic Disease Research Group at Minneapolis Medical Research Foundation, Minneapolis. Dr. Collins is director of the Chronic Disease Research Group and professor of medicine at the University of Minnesota in Minneapolis.