The 2011 ESRD Prospective Payment System by Vasco Miranda

Editorial The 2011 ESRD Prospective Payment System: Welcome to the Bundle

n January 1, 2011, the US Centers for Medicare & Medicaid Services (CMS) implemented the new case-mix–adjusted end-stage renal disease (ESRD) prospective payment system (PPS).1 This expanded bundle and the accompanying ESRD Quality Incentive Program (QIP)2 represent the most substantial payment reform in dialysis therapy in the United States since 1983 and the first non–demonstration project foray into pay-for-performance programs by the CMS. The expanded bundle has a very simple goal; specifically, that the CMS pay no more than providers require to offer high-quality care. Although conceptually simple, achievement of this goal is far more complex, particularly given the absence of evidencebased quality measures. The following paragraphs briefly summarize the history of the ESRD PPS and highlight several key elements in the expanded bundle, along with their potential implications, introducing a series of editorials from a variety of stakeholders, many of whom previously commented on the PPS in this journal during the time that the final rule was being developed.3-7 From their unique perspectives, ranging from the 2 large dialysis organizations (Fresenius Medical Care of North America and DaVita)8,9 to a medium-sized provider (Dialysis Clinic Inc)10 to a small dialysis chain (Atlantic Dialysis Management Services),11 these dialysis providers discuss both the opportunities raised by the new PPS and elements within the ESRD PPS prompting caution and concern. Additionally, Bill Peckham, a dialysis patient and home dialysis patient advocate, provides his opinion about the effects of the incentives and disincentives in the new PPS.12 These perspectives are prefaced by an in-depth editorial from Drs Winkelmayer and Chertow,13 who cautiously detail potential medical and economic effects of the ESRD PPS from a national perspective.

FINANCING DIALYSIS IN THE UNITED STATES Long-term hemodialysis therapy was introduced in the United States in 1960, but did not become widely available until 1973, after the 1972 extension of Medicare coverage to individuals with kidney failure.14,15 Medicare has struggled with reimbursing dialysis care ever since. In 1983, Medicare implemented a payment mechanism that eventually had 2 components: a composite rate and a separately billable rate. The composite rate set a ﬁxed price for reimbursement of routine dialysis services into a single payment of ⬃$130 per session.16 The separately billable rate covered items that became availAm J Kidney Dis. 2011;xx(x):xxx

able after 1983, including certain drugs, laboratory measures, and supplies. Although originally accounting for only a small proportion of costs, by 2005, separately billable items accounted for 40% of facility payments, largely driven by erythropoiesis-stimulating agents (ESAs) and other injectable medications. By 2004, consistent with increasing use, ESAs were Medicare’s largest single pharmaceutical expense at ⬃$2 billion.17 Recognizing that the reimbursement system for ESAs, speciﬁcally epoetin and darbepoetin, and other injectable medications provided an incentive for greater use, the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 directed the Department of Health and Human Services to investigate a more inclusive dialysis bundle.18 Subsequently, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) mandated: (1) expanding the payment bundle for renal dialysis services to include drugs, laboratory services, and other commonly furnished items for which providers currently receive separate payment under Medicare Part B; and (2) linking payment to quality measures.19 Reﬂecting the goal of cost containment, one of the most critical elements of the ESRD PPS is the requirement for 98% budget neutrality in 2011. More clearly stated, the estimated total amount of payments under the ESRD PPS in 2011, including any payment adjustments, must equal 98% of the estimated total amount of payments for renal dialysis services that would have been made with respect to services in 2011 if the ESRD PPS system had not been implemented.1

THE EXPANDED PPS Through December 31, 2010, the CMS used a case-mix–adjusted composite payment system, with additional reimbursement for separately billable items. With nearly all US dialysis units electing to opt in to the bundle, the basic case-mix–adjusted composite payment system was essentially replaced by an expanded ESRD bundle on January 1, 2011, which now most notably includes previously separately billable This article is part of a series in the April 2011 issue of AJKD that explores the 2011 ﬁnal rule for the Medicare ESRD prospective payment system. Address correspondence to Daniel E. Weiner, MD, MS, Division of Nephrology, Tufts Medical Center, Box 391, 800 Washington St, Boston, MA 02111. E-mail: dweiner@tuftsmedicalcenter.org © 2011 by the National Kidney Foundation, Inc. 0272-6386/$36.00 doi:10.1053/j.ajkd.2011.01.007 1

Daniel E. Weiner

injectable medications and their oral equivalents in a single composite payment. Current case-mix adjusters include the pre-2011 adjusters (age, body mass index, and body surface area), an adjuster for low-volume facilities, a new patient adjuster, and 6 comorbid conditions. Several changes between the 2009 proposed rule and the 2011 PPS were made by the CMS in response to extensive stakeholder commentary. The most notable change is delayed inclusion of oral medications, including phosphate binders and cinacalcet, into the expanded bundle until 2014. Other changes include a decrease in number of case-mix adjusters from 18 to 11 and recognition that not all services provided in a dialysis unit are dialysis related, with allowance of billing modiﬁers to delineate these non–dialysisrelated services.

BALANCING QUALITY AND COST: PAY FOR PERFORMANCE One major struggle with any capitated payment system is ensuring that patients receive quality treatment despite the ﬁnancial disincentive to providers to provide such treatments. The CMS has designated 3 measures for their QIP: (1) limiting the proportion of patients with hemoglobin levels ⬍10 g/dL, (2) limiting the proportion of patients with hemoglobin levels ⬎12 g/dL, and (3) limiting the proportion of patients with urea reduction ratios ⬍65%.2 These performance targets are weighted at 50%, 25% ,and 25%, respectively. Poor performance results in an up to 2% reduction in CMS payments to an individual dialysis unit. Given both the preferential weight of the QIP measures to anemia management as well as the expense of ESAs, anemia management will epitomize this conﬂict, with providers balancing ESA use with the use of other medications including intravenous iron, individualized target hemoglobin levels, and the QIP measures. Unfortunately, despite the substantial funds expended to treat anemia in patients with ESRD during the past 20 years, the nephrology community is uncertain about the optimal hemoglobin level target and how to achieve this target, particularly in individuals with poor ESA responsiveness. Similarly, optimal dialysis dose and frequency also are unknown.

ASSESSING THE IMPACT OF THE ESRD PPS The ESRD PPS has the potential to improve both the quality and the cost of dialysis care. However, the facile and effective monitoring that will be critical to assess its effects is not yet in place. Several tools may be available for this purpose, each with limitations. CROWNWeb is a federally mandated data system that 2

will incorporate real-time data entry by dialysis units. Accordingly, although CROWNWeb may facilitate monitoring of changes in practice, it is not yet fully implemented and data entry procedures for smaller dialysis providers are uncertain. Other programs include the DOPPS (Dialysis Outcomes and Practice Patterns Study) Practice Monitor, a new initiative of the US DOPPS that will monitor trends in dialysis practices during implementation of the policy revisions, and propriety data from the individual dialysis chains. One issue is that use of CROWNWeb and the DOPPS Practice Monitor to evaluate the impact of the new ESRD PPS may be hampered by a paucity of baseline data because the former is not yet implemented and the latter may have too few baseline data points, particularly for smaller chains and independent dialysis units, to fully evaluate the impact of the expanded bundle.

CONCLUSION On January 1, 2011, substantial payment reform was enacted in the Medicare ESRD program, one of the largest single sources of Medicare expenditures. This reform brought novel elements to the CMS, including an expanded capitated payment and pay for performance, and it has been accompanied by both great trepidation and excitement. The coming years will be informative, with results of this natural experiment that is dialysis care in 2011 likely guiding future CMS endeavors in cost controls and quality programs. Daniel E. Weiner, MD, MS Tufts Medical Center Boston, Massachusetts

ACKNOWLEDGEMENTS Financial Disclosure: Dr Weiner is a medical director of a Dialysis Clinic Inc unit. He has received research funding from the American Society of Nephrology and the Paul Teschan Research Fund (administered by Dialysis Clinic Inc).

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Editorial 5. Sadler J. The 2009 proposed rule for prospective ESRD payment: perspectives from a not-for-profit small dialysis organization. Am J Kidney Dis. 2010;55(2):229-230. 6. Bhat JG, Bhat P. The 2009 proposed rule for prospective ESRD payment: perspectives from a for-profit small dialysis organization. Am J Kidney Dis. 2010;55(2):231-233. 7. Kristensen C, Wish J. The 2009 proposed rule for prospective ESRD payment: perspectives from the forum of ESRD Networks. Am J Kidney Dis. 2010;55(2):234-236. 8. Lacson E Jr, Hakim RM. The 2011 ESRD prospective payment system: perspectives from Fresenius Medical Care, a for-profit large dialysis organization. 2011. Am J Kidney Dis. doi:10.1053/j.ajkd.2011.01.008. 9. NissensonAR, Mayne TJ, Krishnan M. The 2011 ESRD prospective payment system: perspectives from DaVita, a for-profit large dialysis organization. 2011. Am J Kidney Dis. doi:10.1053/ j.ajkd.2011.01.009. 10. Johnson DS, Meyer KB, Johnson HK. The 2011 ESRD prospective payment system and the survival of an endangered species: the perspective of a not-for-profit medium-sized dialysis organization. 2011. Am J Kidney Dis. doi:10.1053/j.ajkd.2011.01.010. 11. Bhat JG, Bhat P. The 2011 ESRD prospective payment system: perspectives from a for-profit small to medium-sized dialysis organization. 2011. Am J Kidney Dis. doi:10.1053/ j.ajkd.2011.01.012.

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12. Peckham B. The 2011 ESRD prospective payment system: perspectives of a home dialysis patient advocate. 2011. Am J Kidney Dis. doi:10.1053/j.ajkd.2011.01.011. 13. Winkelmayer WC, Chertow GM. The 2011 ESRD prospective payment system: an uncontrolled experiment. 2011. Am J Kidney Dis. doi:10.1053/j.ajkd.2011.01.013. 14. Blagg CR. The early history of dialysis for chronic renal failure in the United States: a view from Seattle. Am J Kidney Dis. 2007;49(3):482-496. 15. Rettig RA. Origins of the Medicare Kidney Disease Entitlement: the Social Security Amendments of 1972. In: Hanna KE, ed. Biomedical Politics. Washington, DC: National Academy Press; 1991:176-214. 16. Rettig R, Levinsky N. Kidney failure and the federal government. Committee for the Study of the Medicare End-Stage Renal Disease Program. Washington, DC: Division of Health Care Services; 1991. 17. Steinbrook R. Medicare and erythropoietin. N Engl J Med. 20074;356(1):4-6. 18. Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Pub L 108-173 (2003). 19. Medicare Improvements for Patients and Providers Act of 2008. Medicare, Provisions Relating to Part B, Other Payment and Coverage Improvements. Pub L No. 110-275, §153(a) (2008).