A proposed 9.4% cut in the composite rate for 2014 –– about $24 per treatment –– has brought sharp responses from dialysis advocacy groups and hit stock prices hard for megaproviders Fresenius Medical Care and Davita, but the Centers for Medicare & Medicaid Services said it would be open to ideas from the renal community on how to stretch the impact of the cut over a period of time to reduce the impact.

“While we propose to implement the full reduction in CY 2014, we note that we are also concerned that this one-time reduction to the ESRD [Prospective Payment System] base rate could be a significant reduction to ESRD facilities for the year and potentially impact beneficiary access to care,” CMS wrote in the proposed rule release July 1. “Therefore, we are soliciting comments on a potential transition or phase-in period of the 12% reduction and the number of years for such transition or phase-in period.”

CMS released the proposed rule for changes to the PPS and to the Quality Incentive Program in early July, as it does each year.  However, after two years of modest increases in the composite rate, two stinging government reports released earlier this year said the agency’s use of 2007 data to determine payments for dialysis drugs mean the agency was overpaying providers by more than $660 million. Dialysis providers have cut back on the use of EPO as a result of the new bundled payment system, which includes IV drugs in the payment. CMS faced a Congressional mandate to cut the composite rate based on those changes in use.

The agency’s actual proposed cut is 12%, but it is tempering the reduction with a 2.6% market basket update, which brings it down to 9.4%. Hospital-based facilities would see a 9.3% reduction. If the proposed cut remains in place in the final rule, it would reduce the Medicare composite base rate from $240.36 per treatment to $216.95 per treatment. The change, along with other adjustments to outlier payments, would save the Medicare program approximately $780 million a year, and $190 million for Medicare beneficiaries, CMS says in the rule.


Cuts "go to far”

Kidney advocacy groups and professional organizations said they were “alarmed” by CMS’s proposed cuts to the Prospective Payment System, saying the cuts go “too deep.”

“Dialysis providers are struggling to absorb and adjust to the repeated Medicare cuts made to the program in recent years,” said Kidney Care Partners chairman Ron Kuerbitz.  “As government data clearly show, Medicare barely covers the cost of providing dialysis to ESRD patients, even before the impact of sequestration-related cuts. The current proposal would dramatically underfund this crucial therapy for Medicare beneficiaries on dialysis. To protect the well-being of our patients, CMS must moderate its approach to this rule.”

The proposed rule for the PPS also calls for payment for dialysis services under the bundled payment model for ESRD facilities located in the United States Territories of Guam, American Samoa and the Northern Mariana Islands, starting in January. Facilities in these locations have been paid on the basis of reasonable costs and charges, rather than under the ESRD PPS.