Healthcare Business News

GAO push for lower dialysis bundle spurs controversy

By Beth Kutscher
Posted: December 17, 2012 - 6:45 pm ET

Dialysis and kidney-care providers are taking issue with a Government Accountability Office report released this month that found the government may be over-paying for end-stage renal disease treatment.

The report called on the CMS to re-examine the amount it's paying (PDF) for dialysis care, arguing that the agency bases its bundled payment rates on 5-year-old drug utilization trends that are no longer current.

It added that if the payments accurately reflected current prescribing trends for end-stage renal disease, Medicare would have saved at least $650 million in 2011, up to as much as $880 million—and that those savings are only forecasted to grow.

Robert Sepucha, senior vice president of government affairs at Fresenius, the country's largest dialysis provider, called the report “disappointing” for providing an “incomplete and ultimately inaccurate view of the bundle.”

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The debate around the bundled payment level is linked to another controversy playing out in nephrology: safety concerns surrounding widely used—and expensive—erythropoietin-stimulating agents that help prevent anemia in patients undergoing dialysis.

These blockbuster drugs include Amgen's Epogen and Aranep as well as Johnson & Johnson's Procrit. And they accounted for 73% of Medicare's expenditures on end-stage renal disease drugs in 2010, according to the GAO report.

The FDA changed its prescribing guidelines for ESAs in June 2011 after the drugs were linked to life-threatening side effects such as blood clots, stroke and heart attacks. Their usage subsequently plummeted, and by the end of 2011, the GAO found that ESA utilization was 31% lower than it was in 2007, the year that the CMS used to set the current bundled payment rates.

Sepucha noted that the report addressed only one component of care—utilization—while failing to take into account the rising costs of ESAs. Additional oral drugs for dialysis care are also scheduled to be added to the bundled payment in 2014, he added.

“Our point is: Let's take a look at the bundle holistically,” he said. “We don't think it covers all points.”

While the GAO called for a “rebasing” of the payment rate, it also acknowledged that CMS officials have indicated that they have no “immediate plans” to do so, and that the agency has said it lacks the specific authority to make changes.

Dr. Thomas Hostetter, chairman of the public policy board at the American Society of Nephrology, noted that he agreed with the “raw findings” of the report concerning decreased utilization. But, he noted, “I think the biggest concern is that this is such a widely fluctuating area right now.”

He noted that there's still limited clinical data on whether the declining use of ESAs has been good or bad for patients—and that if blood transfusions have gone up, it would be alarming.

The CMS first added drugs to payment bundle for dialysis care on Jan. 1, 2011. That year, the agency spent $10.1 billion on 365,000 beneficiaries with end-stage renal disease, according to the GAO.

The bundled payment is expected to increase 2.3% next year, after an increase of 2.1% for 2012.

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