Medicare proposes no ESRD drug add-on update in 2009

No Increase in ESRD Drug Add-On

In regards to the End-Stage Renal Disease Program, perhaps the most important proposal to the renal community is that there will be no update to the drug add-on payments for separately billable drugs used during dialysis.

In 2008, the base composite rate for dialysis services is $132.49 for independent dialysis clinics and $136.68 for hospital-based clinics. The rate includes all the services needed to provide a dialysis treatment, including routine drugs, lab tests, supplies and equipment.

Other injectable drugs, such as anemia drugs, and lab tests are billed separately to the composite rate. This year, $20.33 was added to each treatment’s reimbursement, and CMS is proposing that number should stay the same for 2009.

Medicare, however, questioned the validity of how drug add-ons are figured out and proposed an alternative solution. In the proposal, CMS estimates there will be a 1 percent reduction in the use of ESRD drugs in 2009. This, in turn, will reduce drug prices 1.9 percent in 2009, according to the agency.

Federal law requires Medicare to annually increase the amount of the drug add-on based on spending increases for separately billable ESRD drugs. In the proposal, CMS questioned the intent of that law and said an “alternative reading” is possible. “We believe that the Congress may not have intended to provide an increase in the drug add-on adjustment in a year where the projected growth in expenditures for separately billable ESRD drugs is declining,” CMS wrote in the proposal.

In essence, CMS believes there is a contradiction in increasing payment when growth is negative. To resolve what it sees as a statutory “gap,” CMS offered an idea, which would be to apply an adjustment of less than 1.0 to the drug add-on adjustment. For example, Medicare would adjust the payment in 2009 by 0.971, which would yield a drug add-on payment of $19.74 per treatment instead of the $20.33 add-on.

Medicare is also seeking comment on its zero update as well as its alternative approach.