Dialysis service providers would see a 9.4% cut to their Medicare pay in 2014 under a proposed CMS update (PDF) issued late Monday.
Under a provision of the last-minute fiscal deal reached on New Year's Eve, the CMS proposed recalculating payments to dialysis providers to obtain $4.9 billion in savings.
Shares of publicly traded dialysis companies took an immediate hit in response to the news. DaVita HealthCare Partners, the country's second-largest dialysis provider, was down 5.8% mid-afternoon Tuesday from its Monday close. Shares in Fresenius Medical Care dropped 8.7% Tuesday on the Xetra exchange in Germany, where the company is based.
The new rate stems from rebasing Medicare's bundled payments to dialysis providers to bring the reimbursement in line with lower use of a costly group of anti-anemia drugs, which represent Medicare's largest drug expenditure. The current rate is based on 2007 treatment protocols, and the use of them has dropped significantly in recent years due to safety concerns.
The agency compared treatment costs for end-stage renal disease in 2007 and 2012 and concluded that a $29.52 reduction in the $246.47 base rate per treatment was in order. That cut would provide a 2014 dialysis base rate of $216.95, or down 12%. That blow is mitigated somewhat by an adjusted marketbasket update of 2.5%.
The proposed rule sought comments over whether the phase-in period should occur over longer than one year.
In 2011, the CMS spent $10.1 billion on 365,000 beneficiaries with end-stage renal disease, according to the Government Accountability Office.
The legislative requirement for Medicare to change the dialysis payment—folded into the American Taxpayer Relief Act of 2012—followed a December GAO report that argued Medicare has overpaid for end-stage renal disease treatment by relying on 5-year-old drug use trends that are no longer accurate.
Ron Kuerbitz, chairman of a coalition of patients, providers and manufacturers called Kidney Care Partners, said in a statement that the “proposed cuts of this magnitude simply go too far.” The statement cites letters from lawmakers urging the CMS to take a cautious approach to the adjustment that Congress asked for. “We are deeply concerned about the implications for dialysis patients and the sustainability of the Medicare ESRD system, especially in rural and inner city areas,” Kuerbitz said.
The proposed rule also includes changes to the ESRD Quality Improvement Program, which could cost dialysis providers as much as 2% of their Medicare payments if they fail to meet performance targets.
The CMS will accept comments on the proposed rule until Aug. 30.
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