CMS Proposes 9.4% Pay Cut for Dialysis Providers

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WASHINGTON—The Centers for Medicare & Medicaid Services (CMS) issued a proposal late Monday that would cut dialysis provider’s reimbursement by 9.4 percent in 2014.

Click HERE to read the proposed rule.

CMS spent $10.1 billion on 365,000 end-stage renal disease (ESRD) beneficiaries in 2011, according to the Government Accountability Office (GAO). The Congressional Budget Office projected that Medicare will save $4.9 billion over 10 years as a result of the cuts.

The proposed rates are open to public comment until August 30; a final ruling expected later this year. In addition, CMS is looking for comments as to whether the phase-in period for the cuts should occur over the course of more than one year.

Concerned organizations such as the National Kidney Foundation (NKF) and Kidney Care Partners (KCP) are speaking up.

KCP's Chairman Ron Kuerbitz urged health care policymakers to “proceed with caution” as they consider adjustments to Medicare’s ESRD program.

 “People with kidney failure are among our most vulnerable Medicare beneficiaries,” said Kuerbitz. “Proposed cuts of this magnitude simply go too far. We are deeply concerned about the implications for dialysis patients and the sustainability of the Medicare ESRD system, especially in rural and inner city areas. For that reason, it is crucial for CMS to get it right as they consider adjustments to the system."

"The National Kidney Foundation (NKF) understands the Centers for Medicare & Medicaid Services (CMS) is required by law to reduce the Medicare payment rate to dialysis providers. However, NKF is concerned about the potential impact a cut this large may have on patient care. Currently, across all dialysis providers, Medicare profit margins are only 3-4 percent (as estimated by the Medicare Payment Advisory Committee – MEDPAC). Since CMS is proposing a 9.4 percent cut to the base rate for Medicare payments, most providers will have to make considerable changes in how they operate in order to cover the most basic costs of care," Bruce Skyer NKF CEO said. "NKF is concerned that some providers may not be able to withstand cuts and will have to close facilities and that many others may have to eliminate patient-focused programs, services, and benefits that improve patients' health and quality of life. Rather than wait and see how dialysis facilities respond to the cuts, we hope that Congress and CMS will engage in a meaningful dialogue with dialysis providers, patient groups, professionals, and others involved in caring for patients to identify ways to reduce the proposed cuts while still complying with the law."

A December 2012 GAO report argued that CMS had overpaid for dialysis treatments and using five-year-old drug-use data was not accurate and the bundled rate needed to reflect more recent data. Shortly thereafter, the legislative authority to rebase dialysis payments came with the passage of the American Taxpayer Relief Act of 2012.

In order to develop the new reimbursement rate, CMS compared treatment dialysis costs in 2007 and 2012 and proposed  a $29.52 reduction in the $246.47 base rate per treatment. Therefore, dialysis clinics would receive a base rate of $216.95 in 2014, or a 12 percent reduction. However, CMS did propose a market-basked update of 2.5 percent that slightly counteracts the large cut.

In an impact analysis, CMS determined all facilities would see 9.4 percent cut in 2014. Breaking that out further, hospital-based clinics would see a 9.3 percent cut, and freestanding facilities would see a 9.4 percent cut. Urban facilities would have a 9.4 percent cut, whereas rural facilities would see a 9.5 percent cut in reimbursement.

On the heels of the news, DaVita HealthCare Partners’ shares were down 5.8 percent mid-afternoon Tuesday from its Monday close. Fresenius Medical Care shares fell 8.7 percent Tuesday on the Xetra exchange in Germany.

"We are appalled by the Centers for Medicare & Medicaid Services' (CMS) proposal to dramatically reduce Medicare funding for the care of dialysis patients, which will put at risk both patient access and quality of care,” patient advocacy group, Dialysis Patient Citizens (DPC) said in a July 2 statement. 

“While we recognize that CMS was instructed by Congress to adjust dialysis payment based on recent changes in utilization, no one in the kidney community expected CMS to propose such a devastating cut. Dialysis patients are already seeing a dramatic reduction in staffing hours due to several recent cuts in payment, and an additional 9.4 percent reduction would further jeopardize the quality of their care and most likely lead to significant facility closings,” DPC added. “We urge CMS to reverse this proposal, which would adversely impact hundreds of thousands of Americans who rely on dialysis treatment in order to live."

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