February brings us almost to the end of winter. Even on the cold days we get a bit more sunlight, and by now we are instinctively looking forward to spring. So it seems that it is about time that we have a closer look at the effect of the Medicare Improvements for Patients and Providers Act (MIPPA) passed July 15, 2008, that has already changed some long-standing financial protocols for end-stage renal disease payment.
Per the Centers for Medicare & Medicaid Services fact sheet on MIPPA, “Section 153(a) of the MIPPA requires CMS to increase the composite rate payment for most services furnished to beneficiaries with end-stage renal disease (ESRD) by 1 percent, effective for services furnished on or after January 1, 2009, and before January 1, 2010.”
An increase in payment, no matter how modest, is always welcome. The question that will be addressed in future “Focus on Finance” articles is, “How adequate is the payment itself?”
But, it is important to also focus on the next sentence in the CMS fact sheet, which goes on to state “The MIPPA also requires that the base composite rate for hospital-based renal dialysis facilities be the same as the base composite rate for independent dialysis facilities and, when applying the geographic index, reflect the labor share based on the labor share otherwise applied for renal dialysis facilities.”
This boils down to a payment reduction of about $4 a treatment for hospital-based units, which, depending on the number of stations in the unit and number of patient shifts, is about a $50,000 reduction in payment per year, per unit. This may not seem like much, given the overall cost of running a dialysis unit, but then again, consider how hard it is for a hospital-based unit to get an increase in its operational budget—for instance to hire new staff or buy new equipment. A $50,000 cut in payment can be viewed as very substantial.
The CMS/MedPAC rationale for the reduced hospital payment is that hospital dialysis units should no longer receive additional payment to subsidize a higher overhead payment than is incurred by freestanding units. It can be argued that the hospital-based unit provides the same service as the freestanding unit, and it seems inequitable to pay more for the same service simply because it is provided in a different setting.
