At the American Society of Nephrology meeting last month in Atlanta, I polled a number of attendees about what they thought the Centers for Medicare & Medicaid Services would ultimately decide on the final rule for dialysis payments. The controversy over a proposed 12% overall cut in the bundle’s adjustment for IV drugs to account for lower usage over the last five years generated more than 1,000 comments to the agency, plus some heated letters from Congress telling CMS to move carefully on any reductions in payment.
(Where Medicare and the ESRD Program are headed)
Most of those I talked to had predicted CMS would blink, and reduce the cut to 3–5%. The dialysis industry would be happy, Congress would have called it responsible, and the agency would move on to other things.
That didn’t happen last Friday when CMS' final rule was released with the 12% cut in place. To help weaken the blow to the dialysis industry’s bottom line, CMS created other offsets to make the first two years of the cut budget neutral (For more details on the final rule, click here.) But the adjustment itself in the bundle will go down by 3.3% starting in January as part of a 3-4 year transition period to reach the 12% reduction.
That seemed to satisfy Wall Street. Stock prices for Fresenius Medical Care and DaVita jumped on Monday, and a provision to increase home dialysis training payments by 50% helped NxStage Medical’s stock price go up more than 4% as well.
Nonetheless, retaining of the 12% cut, no matter how well CMS disguised its impact, didn’t sit well with the renal community. Most of their statements about the impact of the final rule were the same as when CMS made its initial proposal back in July: the cuts, no matter how distributed, will hurt the industry.
"Today’s Medicare ruling substantially reduces funding needed for patient care and interferes with the ability of our physicians, nurses, and clinical teams to do the very best for their patients," said Kidney Care Council chairman Tom Weinberg. Ultimately, the payment cut of $29.93 per dialysis treatment “contradicts the unified voice of patients, clinicians, providers, facilities, and members of Congress to correct the total amount of the reduction" originally proposed in July, said Weinberg. “Phasing in a cut of this magnitude only delays the harm.”
Kidney Care Partners agreed, saying the phase-in “only delays the inevitable harm that will come as a result of failing to cover the cost of care. Simply put, this model is unsustainable.”
In a prepared statement, Davita said, “The bad news is that CMS appears to have accepted the premise that the language in the American Taxpayer Relief Act of 2012 required it to make a partial rebasing of the bundle. This could unfairly result in cuts of nearly $30 per treatment over a three to four year period by looking only at pharmaceutical economics. This means that Medicare dialysis rates will be flat in 2014 and 2015 in an environment of increasing expenses." DaVita group vice president LeAnne Zumwalt told the Denver Business Journal that the provider would still look at closing clinics, though the spreading out of the payment cut will give it time for a more careful evaluation.
Dialysis providers can also use the time to "work with Congress and CMS on trying to mitigate future cuts, and CMS has a number of appropriate reimbursement levers to pull to offset cuts a few years out if it chooses to do so, since Medicare reimbursement already fails to cover the full cost of caring for Medicare patients," said Zumwalt.
Smaller dialysis providers looking for a better deal
During the comment period on the proposed rule, small and mid-sized providers suggested to CMS that it look more closely at the impact of the cuts on their bottom line, and consider a lower reduction in payment for these dialysis providers. In the final rule, CMS wrote: “In regards to the commenters that suggested that CMS create a different payment amount or transition scheme for non-profit ESRD facilities and (small dialysis organizations), as well as for those ESRD facilities that were created due to FTC-ordered divestiture, we believe that we must provide for a single payment rate in accordance with section 1881(b)(14)(A)(i) of the [American Taxpayers Relief Act], but that the transition (over 3–4 years of the payment cut) will mitigate the potential negative effects of the adjustment that commenters pointed out.”
In its comments post-final rule, the National Renal Administrators Association, which represents smaller and mid-sized dialysis providers, wrote, “NRAA is concerned about the release of this final rule and its plan to cut our reimbursements so significantly. The 12% reduction in payment goes too far and if fully implemented could significantly limit patients choices of and access to care. NRAA appreciates the efforts on behalf of CMS to implement the reductions required by the American Taxpayer Relief Act in a manner to attempt to mitigate the negative impact. However, small independent community-based providers of dialysis that already operate on extremely thin margins, will have their viability challenged due to these cuts.”
Analysis of final rule
Two organizations to date have announced plans to offer a review of the final rule to its members:
Dec. 2: The National Renal Administrators Association. Go to www.nraa.org for more information.
Dec. 10: the American Nephrology Nurses Association. Go to anna.inurse.com
On Jan. 15, CMS will also hold a National Provider Call to help facilities and other stakeholders in the ESRD community understand the final rule. The discussion will be recorded and made available at www.cms.gov/live.