Even those among us who are used to reading regulations may be somewhat intimidated by the 547 detail-filled, complex pages in the new ESRD bundle proposed rule, which describes at length how CMS plans to fundamentally alter how dialysis is reimbursed by Medicare.
There are several understandable reactions to this volume of regulatory complexity. One approach, “the wait and see approach,” would be to wait until the final regulations come out. However, there is no guarantee that time lost now waiting, might not be costly later. Another approach, which I call the “Cliff Notes” approach, might be to get a hold of some else’s quick and dirty summary of the proposed new payment system. However, there is no guarantee that quick and easy summaries will provide adequate insight for your situation.
The approach in this series of articles is to present you with a focused, plain spoken, discussion of some potentially overlooked but important key elements of the new ESRD reimbursement system. This should at least provide a complement to whatever else might come across your desk pertaining to the fiscal future of dialysis.
Last month, we discussed the transition methodology of the proposed regulations and that, per the proposed payment regs, ESRD facilities that fail to affirmatively make an election by Nov. 1, 2010, will be paid based on the a blended amount rather than the new bundle amount. I would again like to point out that the proposed transition deadlines and other specifics may change in the final rule. In fact, the final rule may have already been promulgated by the time you read this—so check the final rule for transition selection deadlines.
What won’t change with the promulgation of the final rule is your need for financial analysis and careful decision making. Substantially accurate and comprehensive reimbursement models should be used to assess how the bundle will impact your facilities, based on your demographics and your specifics regarding items such as labs, drugs, and supplies.
This month, I am taking a closer look at outlier payments, an element of the payment bundle which, although new to outpatient dialysis, has long been part of non-renal Medicare prospective payment bundles for both inpatient and outpatient services.
Briefly, the outlier payment is meant to protect the provider from serious financial loss incurred due to a few exceptionally costly patients. The outlier payment method should ideally also mitigate any trend or tendency towards adverse selection that would make it more difficult for sicker patients to receive care. In the past, outlier methodologies for non-renal services have had to be modified by CMS because they became objects of abuse, most notably, the DRG outlier formula which previously paid for longer inpatient stays (day outliers) and still pays for costlier admissions (cost outliers). So another quality desirable in an outlier formula is to be abuse-proof or at least abuse-resistant.
CMS has proposed an outlier payment formula that distinguishes between adult and pediatric patients. The outlier calculation methodology itself is, at first glance, complex and potentially challenging to follow. However, what is absolutely clear is that the outlier payment only pertains to those items that will be in the ESRD bundle and that are currently separately billable. Outlier payment does not apply to additional labor costs incurred as the result of a higher than normal percent of sicker patients, which was historically recoverable by successfully filing an atypical service intensity exception request. Separately billable items potentially qualifying for outlier payment include those labs, drugs (including ESAs) and supplies presently paid outside the composite rate. CMS has not yet decided if AMCC (Automated Multi-Channel Chemistry) panels will be subject to outlier payment.
