Changes in ESRD Medicare Reimbursement: What The Patient Needs to Know Jay Wish, MD Medical Director, Dialysis Program University Hospitals Case Medical Center Cleveland, Ohio

Driving Factors for Revision of Medicare Reimbursement for ESRD  Randomized controlled trials failed to show improved outcomes when ESAs dosed to higher hemoglogin/hematocrit levels in patients with kidney disease  CHOIR and CREATE in non-dialysis CKD patients  Normal Hematocrit Study in hemodialysis patients  Costs of ESAs in ESRD patients escalating to >$2 billion/year  High percentage of dialysis patients (50% in 2006) with hemoglobin >12 g/dL (upper limit per KDOQI guidelines)  Previous payment policies did not provide financial incentive to constrain ESA use CMS indicates Centers for Medicare & Medicaid Services; ESRD, end-stage renal disease; PPS, prospective payment system; MIPPA, Medicare Improvement for Patients and Providers; CHOIR, The Correction of Hemoglobin and Outcomes in Renal Insufficiency; CREATE, The Cardiovascular risk Reduction by Early Anemia Treatment with Epoetin Beta; CKD, chronic kidney disease; ESA, erythropoiesis-stimulating agent; Hb, hemoglobin; Hct, hematocrit; HD, hemodialysis.

Previous Medicare Payment Policies  60% of what CMS paid was for the dialysis treatment itself and included labs ($4,8 billion)  40% of what CMS paid was for separately billed items  Parenteral drugs and biologicals ($2.8 billion)  Additional lab services ($333 million)  Certain supplies ($40 million)  Congress called upon CMS to develop a plan to bundle ESAs and other separately billable drugs into a single case- mix adjusted payment to dialysis facilities  Changes ESAs from a profit center to a cost center for dialysis providers  Encourages facilities to curtail ESA use *Total Medicare allowable payments, in CMS indicates Centers for Medicare & Medicaid Services; ESA, erythropoiesis-stimulating agent.

Major Provisions of Final Rule  Base payment rate of $230 (compared to old rate of around $130) per treatment  Excludes adjustments  Average adjustment 6% higher  Per treatment unit of payment  Up to 3 treatments per week (unless medically justified)  May discourage more frequent home HD modalities  Beneficiary/coinsurance amount is 20% of the total ESRD PPS payment after all adjustments HD indicates hemodialysis; ESRD, end-stage renal disease; PPS, prospective payment system.

Major Provisions of Final Rule (cont’d)  Patient level payment adjusters  Facility level adjusters  Low volume (<4000 treatments/year)  Geographic wage index  Inclusion of all ESRD related drugs  Previously separately billable IV drugs given on dialysis and their oral equivalents  Includes all antibiotics administered on dialysis for an ESRD-related indication  Excludes all vaccines BSA indicates body surface area, BMI, body mass index, RRT, renal replacement therapy, ESRD, end-stage renal disease; MIPPA, Medicare Improvements for Patients and Providers Act.

Major Provisions of Final Rule (cont’d)  2% withhold for payment for performance  Can earn all or part back based on “total performance score”  Performance measures for 2012 include hemoglobin and URR; new ones likely to be added  All ESRD-related lab tests are included in the bundled payment whether or not they are drawn in the dialysis facility URR indicates urea reduction ratio; MCP, monthly capitation payment.

Case Mix Adjusters CharacteristicAdjuster Age BSA per 0.1 m 2 over BMI < CharacteristicAdjuster Pericarditis in <3 months1.195 Bact. pneumonia in <3 mo GI bleed in <3 months1.183 Hereditary anemia1.072 Myelodysplastic syndrome1.099 Monoclonal gammopathy1.024 Onset of dialysis <4 months1.510 Facility <4000 treatments/yr1.189 A facility can adjust for the age and patient size characteristics and for EITHER one of the comorbidity characteristics OR the new onset of dialysis, but not BOTH

Self-Dialysis Training  $33.38 can be added on to the ESRD PPS payment for each self-dialysis training session  This amount is adjusted by the geographical area wage index and can range from $20.03 to $45.84  ESRD facilities cannot receive the self-training adjustment and the 4-month onset of dialysis payment on the same patient for the same session  Self-training add-on is capped at 15 treatments for PD and 25 treatments for hemodialysis

Future Adjustments  Annual increase to the bundled payment based on the increase in the ESRD market basket  Annual adjustments to the geographic wage index  Updated case-mix adjustments  Inclusion of oral ESRD drugs with no IV equivalent (such as phosphate binders and cinacalcet) in 2014  Need for data gathering on costs of these agents  Need to develop monitoring, tracking and outcomes quality measures for these agents ESRD indicates end-stage renal disease.

Quality Incentive Program (Nonpayment for nonperformance)  2% withhold, incremental pay-back for achieving “total performance score” based on  % of patients with Hb <10 (more is lower score)  % of patients with Hb >12 (more is lower score)  % of patients with URR >65% (more is higher score)  Hb and URR data averaged for each patient over entire year (initially using 2010 data)  QIP begins in 2012 Hb indicates hemoglobin; URR, urea reduction ratio; ESRD, end-stage renal disease; ESA, erythropoiesis-stimulating agent.

Total Performance Score  Each of three measures is worth 10 points  If the provider meets the performance standard, it would receive all 10 points for each measure  If the provider fails to meet the performance standard, it is docked 2 points for each 1% below the standard  The standard can be EITHER national data from 2008 or the facility’s own data from 2007  Hb 12 and URR >65% are each weighted at 25% of the total performance score

Payment Reduction Scale Total Performance ScorePayment Reduction % % % % %

New Performance Measures Being Developed By Expert Panels  Anemia Management (Target value for Serum Ferritin, Target value for Transferrin Saturation)  Mineral Metabolism (Target value for Calcium, Target value for Phosphorus)  Vascular Access Infection Rate (Catheter Infection Rate)  Pediatric Adequacy (HD, PD)  Pediatric Anemia (Anemia Management)  Fluid Weight Management CPM indicates clinical performance measures; TEP, technical expert panel; HD, hemodialysis; PD, peritoneal dialysis.

Changes in Anemia Management  Use of less expensive ESAs (when available)  More aggressive IV iron use  Maintenance rather than “load and hold”  Higher targets for iron levels in blood  Use of lower cost iron products  Lower Hb targets (10-12 rather than g/dL)  More conservative ESA use in ESA-resistant patients  Get rid of dialysis catheters  ? Subcutaneous administration SC indicates subcutaneous; ESA, erythropoiesis-stimulating agent; Hb, hemoglobin; SF, serum ferritin.

Changes in Bone and Mineral Metabolism Management (in 2014)  Use of lower cost phosphate binders  Use of lower cost oral/IV vitamin D agents (now)  Use of lower calcium dialysate  Abandonment of cinacalcet  Increased prevalence of parathyroidecomies  Decreased testing and replacement of 25-OH vitamin D

Changes in Vascular Access Management  Vascular access likely to become the next P4P indicator once CROWNWeb is able to capture those data  Increased use of vascular access coordinators to help navigate patients through fistula placement and troubleshooting  Catheters cost money because of high ESA requirements, antibiotics and absenteeism  Increased emphasis on getting rid of catheters even if that means an A-V graft

Summary and Conclusions  The ESRD bundled payment system began in January 2011  Since one of the goals of bundling was to decrease ESA use by making it a cost center, ESA use is likely to decrease by % (which is exactly what Congress intended)  Facilities are already testing algorithms for anemia management to decrease costs and maximize the number of patients within the hemoglobin target range of g/dL  Additional dialysis industry consolidation is likely occur as some smaller providers may not be able to adapt ESRD indicates end-stage renal disease.