WASHINGTON—On Sept. 4, the Medicare Payment Advisory Commission met to discuss the implications of the latest round of Medicare reforms that were passed through the Medicare Improvements for Patients and Providers Act of 2008. The agenda included MIPPA’s changes to the End-Stage Renal Disease Program’s payment system.
For years, Medicare has reimbursed each dialysis treatments with a set amount of money called the composite rate. Over time, new drugs—such as erythropoietin, vitamin D and iron—started making their way into routine care. Because they weren’t around when the composite rate was introduced in 1983, they were billed separately. MedPAC analyst Nancy Ray said that spending on these drugs has increased significantly. “In 2006, drug payments accounted for about one-third of a facility’s total Medicare payments.”
MIPPA Basics
MedPAC, which advises Congress on Medicare payment, has been critical of this system and has championed a bundled payment system to combine the composite rate with separately billable drugs. The bundle became a reality when MIPPA passed this summer after Congress overrode President Bush’s veto. MIPPA also changed dialysis payments depending on a patient’s “case-mix,” which includes factors such as age, weight, ethnicity and other factors, as well as for low-volume clinics and rural clinics.
The most immediate change MIPPA brings to dialysis clinics is the 1 percent composite rate increase in 2009 and 2010. In addition, beginning in 2009, MIPPA will implement a site-neutral composite rate. Currently, hospital-based clinic are paid $4 more, on average, than freestanding clinics, according to Ray.
In 2012, dialysis clinics will see an annual update. Before MIPPA, clinics would not see a reimbursement update unless mandated by an act of Congress. And updates have been sporadic in recent years. According to Ray, there weren’t updates between 1996 and 1999, 2002 to 2004, and in 2008. Under MIPPA, the Secretary of Health and Human Services will have the power to update the payment rate.
Bundling Questions
The payment bundle, with a four-year phase-in starting in 2011, includes services in the composite rate as of 2010, separately billable drugs and their equivalents, and lab tests that are not part of the composite rate. The HHS Secretary will have the ability to include other services into the bundle. Last year, MedPAC included oral nutritional supplements as a potential addition. Part D drugs used to treat ESRD comorbidities could also be added.
Another power granted to the HHS Secretary, is the ability to set the unit of payment for dialysis. Right now, clinics are paid for each treatment. The Secretary could keep that method or start paying on a weekly or monthly basis. The Secretary must also adjust payments for high-cost patients and for low-volume facilities that have high costs.
MedPAC commissioner Ronald Castellanos, MD, said that the organization hoped that bundling could allow doctors to start treating patients simultaneously for dialysis and other complications. “We were hoping that this would be allowed, that the doctor could see that patient at the time of dialysis, not just for dialysis-related problems but for his general medical care.”
Ray explained that doctors get reimbursed directly by Medicare on a monthly capitated payment that is based on how many times a physicians sees the patient. However, when pressed by Castellanos, Ray said that nephrologists caring for other conditions varies from doctor to doctor.
