WASHINGTON— Medicare spending for dialysis and dialysis drugs reached $8.6 billion in 2007, an increase of 2 percent over 2006, according to a recent government report.
In 2007, the average Medicare dialysis payment was $155 per treatment and each dialysis drug payment averaged $75, according to the Medicare Payment Advisory Commission’s March report to Congress. Medicare spending—for composite rate services and dialysis drugs—averaged about $26,000 per patient in 2007.
About half of the new ESRD patients to Medicare in 2007 were under 65, and that same year there were about 113,000 new dialysis patients, according to the report. More than 330,000 dialysis patients were covered by Medicare at approximately 4,900 facilities in 2007.
The cost per dialysis treatment rose 3.3 percent each year between 2000 and 2007, according to the MedPAC report. The largest factor in the rising costs was due to general and administrative costs, such as legal and accounting services, recordkeeping, data processing, utilities and malpractice premiums.
In 2007, these costs accounted for approximately 30 percent of the total cost per treatment. Capital, labor and other direct medical costs accounted for 19 percent, 41 percent and 11 percent, respectively, of the total cost per treatment in 2007.
In addition, the 2007 Medicare margin was 4.8 percent for composite rate services and dialysis drugs in freestanding facilities. The two largest chains—DaVita and Fresenius—had a much higher margin than other freestanding dialysis providers: 6.9 percent vs. 0.2 percent. Taking into account increases in the composite rate and drug add-on payment, MedPAC projects that the Medicare margin for all providers in 2009 will be 1.2 percent.
For the annual report, Congress called on MedPAC to determine whether 2009 payments can cover the costs for “efficient” dialysis providers and how much payments should change in 2010.
