Medicare proposes no ESRD drug add-on update in 2009

ESRD Wage Index Update

In addition to the drug add-on proposal, CMS is also proposing an update to the ESRD wage index, which adjusts the composite rate payment based on the different wage levels found across the United States.

CMS is proposing that the wage index be calculated the same way it was for 2008, only that it uses 2005 wage and employment data to determine the 2009 numbers.

Here is how CMS explains its wage index creation process: “To calculate the ESRD wage index, hospital wage index data for FY 2004 for all providers in each urban/rural geographic area are combined. The sum of the wages for all providers in each geographic area was divided by the total hours for all providers in each area. The result is the average hourly hospital wage for that geographic locale. The ESRD wage index was computed by dividing the average hourly hospital wage for each geographic area by the national average hourly hospital wage. The final step was to multiply each wage index value by the ESRD wage index budget neutrality factor."

CMS is also proposing that the wage index floor be reduced to 0.70 for 2009. Before 2006, wage indices were bound between 0.90 and 1.30. This meant that payment to clinics weren’t adjusted in areas where labor costs exceeded 130 percent or fell below 90 percent of the national average.

A ceiling no longer exists, but CMS said it believes that patients’ access to ESRD care could be adversely affected if the floor was completely eliminated. Instead, CMS implemented a four-year reduction starting in 2006. “We believe that a gradual reduction in the floor is still needed to ensure patient access to dialysis in areas that have low wage index values,” CMS wrote in the proposal.

Click HERE to read the entire CMS proposal.

“We are taking a multi-pronged approach to improve how Medicare pays for healthcare services for our nation’s seniors,” CMS acting administrator Kerry Weems said in a statement. “These efforts are designed to ensure that beneficiaries continue to get the highest quality of healthcare at the greatest value for beneficiaries and the Medicare program.”