GAO: Dialysis Bundle Payment Too High

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By Kasia Michalik

The Government Accountability Office (GAO) released a report on December 7 entitled "End-Stage Renal Disease: Reduction in Drug Utilization Suggests Bundled Payment Rate is Too High."

The GAO report concluded that Medicare may have overpaid by as much as $880 million for dialysis costs in 2011 due to lower use of anemia drugs compared to 2007, the year used to establish the base bundle rate.

As a result, the GAO is recommending that Congress and the Secretary of Health and Human Services (HHS) "rebase" the bundle rate soon and on a periodic basis to reflect the most current data.

Those are words that no dialysis clinic or organization wants to hear, especially since the rate just recently was approved to go up and some feel isn't enough, as is. However, health care costs are increasingly under the microscope as the government grapples with spending cuts. In 2011, Medicare spent approximately $10.1 billion on dialysis for 365,000 people.

Almost two years ago, on Jan. 1, 2011,the new  dialysis bundle took effect and started to include items such as injectable ESRD drugs and oral equivalents. Prior to 2011, those items were paid for by Medicare separately. The change was a result of  the 2008 Medicare Improvements for Patients and Providers Act (MIPPA).

The Centers for Medicare & Medicaid Services (CMS) increased the bundled payment rate by 2.1 percent  for 2012 and will increase it again by 2.3 percent for the year 2013. The GAO report states, "We and others have emphasized that, when CMS makes such payment changes, it is important for the bundled payment rate to accurately reflect the expected costs of beneficiaries' care to help ensure that any improvements in efficiency are not realized at the expense of beneficiaries' access to and quality of care."

To better understand payments, the GAO examined trends in the usage of ESRD drugs form 2007 and 2011 and focused on erythropoiesis-stimulating agents (ESA), intravenous (IV) iron and IV vitamin D. All three were incorporated into the bundled payment rate in 2011.

Between May and December, the GAO conducted an audit that suggests the bundle payment rate is higher than it should be. The report found that there was a decrease of 23 percent of ESRD drugs in 2011 compared to 2007.

"As a result, Medicare may have paid more than necessary for dialysis care in 2011 because the bundled payment rate in that year was based on 2007 utilization levels," the report said.

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