Medicare's payment adjustment to rural and low-volume dialysis facilities needs to be updated to better target facilities that are struggling, according to a new analysis from a key Medicare panel.
MedPAC finds low-volume, rural dialysis centers are underpaid
The analysis released Friday during a meeting of the Medicare Payment Advisory Commission found that low-volume and rural facilities had lower Medicare payment margins than high-volume and urban facilities.
"We have consistently found that cost per treatment decreases as the number of treatments a facility furnishes increases," commission staff member Nancy Ray said.
The Medicare margin for a rural facility was negative 5.5% while for urban facilities it's 0.4%, according to MedPAC's analysis of claims and free-standing dialysis cost reports. The margin discrepancy is even greater between high-volume (5.4%) and low-volume (negative 21%) facilities.
Currently Medicare offers a payment adjustment for low-volume facilities and a separate adjustment for rural facilities.
All rural facilities get an extra 0.8% bump in Medicare payments regardless of distance to other facilities or treatment volume.
In 2017, 18% of dialysis facilities were classified as rural, according to MedPAC's analysis of claims and cost reports for the CMS. Of the rural facilities, 20% were high-volume and provided more than 10,000 treatments.
"These higher-volume facilities have lower cost per treatment, suggesting the 0.8% rural cost adjustment could better preserve dialysis access if it were shifted to lower-volume and isolated facilities," MedPAC commission staff member Andy Johnson said.
The commission's analysis suggested it should replace the two current adjustments with one adjustment.
To qualify for the proposed adjustment, a facility must be more than five miles from the nearest dialysis facility regardless of ownership and exhibit a low volume of treatments over three prior years.
Currently a low-volume facility can qualify for an adjustment if they have only made fewer than 4,000 treatments over a period of three years.
"This so-called cliff effect might be encouraging some facilities to limit services" to qualify, Ray said.
Under the proposed payment adjustment, a facility would quality as low-volume if it has conducted either 4,000; 5,000; or 6,000 treatments annually. A facility currently receiving the adjustment that conducts under 4,000 treatments has a Medicare margin of negative 3% but facilities that provide between 4,000 to 6,000 treatments have a margin of negative 17%.
The proposal is expected to be considered by the commission during its fall meeting in September during a wide probe into improving dialysis services.
Major dialysis company Fresenius said that the effort is sorely needed to bring awareness to the challenges of providing rural dialysis care.
"Average distances traveled to dialysis facilities in rural settings are at least 2.5 times farther than their urban counterparts, introducing a major challenge," said Dr. Jeffrey Hymes, chief medical officer for Fresenius Kidney Care, in a statement to Modern Healthcare.
He added that Fresenius is pushing for increasing the use of home dialysis and telehealth to help "reduce these disparities and improve outcomes for those living with kidney failure in rural areas."
HHS is also exploring shifting Medicare payment policies to encourage providers to shift dialysis to a patient's home rather than a center. Deputy HHS Secretary Eric Hargan said last week that Medicare's payment program doesn't focus enough on prevention or home dialysis.
HHS Secretary Alex Azar also recently told the National Kidney Foundation that the CMS may underpay for home alternatives for dialysis.
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