An Explanation of Bundling
Give Input to Medicare by December 16
Bundling is coming
Medicare payment changes for “renal dialysis services” are coming, in 2011. Congress passed the law in 2008 so these changes are not related to national health care reform. The law provides a much-needed permanent “annual update mechanism” for dialysis payments to rise with inflation, just as payments to hospitals and nursing homes are adjusted annually. In return for this inflation adjustor we got bundling.
How is dialysis paid for now, and what would change?
In the current payment system, a dialysis facility bills Medicare monthly for “composite” dialysis treatments, and also for any intravenous drugs given. When we draw blood for laboratory tests, the lab sends its bills to Medicare and gets paid separately. Oral drugs to treat problems related to kidney failure are obtained from a pharmacy of choice and paid for by the Medicare Part D pharmacy plan. Bundling would reshuffle these elements, making the dialysis center responsible to provide them all in exchange for a packaged, bundled payment. Congress’ goal is to cut the overall Medicare dialysis expense by 2 percent compared to current overall costs – without harming quality.
Proposed bundling rules are complicated and very broad in scope
- Lab tests and oral drugs.
The bundle is supposed to pay dialysis facilities for all “labs used in the treatment of ESRD” and selected oral drugs from pharmacies, specifically oral Zemplar or Hecterol, Sensipar and phosphate binders. In 2011 dialysis units will have to take full responsibility to purchase tests conducted by outside labs and these specific oral drugs, and then bill for them to Medicare and get paid the bundle. This is a new administrative responsibility for buying and billing labs and oral drugs, and it increases our costs. There needs to be enough money in the bundle to pay for these increased costs.
- Adjustors.
Medicare proposes 18 potential adjustments to the bundled payment, specific to each patient. Some adjustors are: age, body size, sex, being new on dialysis (first four months), recent infections, intestinal bleeding, HIV/AIDS and sickle cell anemia. Medicare has lowered the base rate for all treatments in the U.S. to ensure there is money to pay for these many adjustors and thus ensure the whole bundle is “budget-neutral, less 2 percent.” In comparison, today there are three adjustors to the composite treatment payment: age and two adjustors for body size. It is a new administrative responsibility for dialysis facilities to identify all of these conditions, many of which are based on information we do not capture today.
- Outliers.
Medicare has set aside a small amount of funding for “outliers,” e.g., treatments with extremely high costs due to higher than average use of IV drugs, blood products, oral drugs or laboratory tests.
- New Quality safeguards.
Congress did not want the new system to harm treatment quality. To maintain quality, Medicare will reduce payments to dialysis providers deemed to have low quality outcomes. Medicare will issue an overall quality program rule later but in this rule Medicare must define the way it measures quality at the outset of bundling. The proposal says the three quality measures should be hemoglobin less than 10 and hemoglobin greater than 12 (both of which are negative measures) and URR greater than 65 percent (urea reduction, which is a positive dialysis adequacy measure). The entire facility’s patient outcomes in 2010 will determine the payment penalty in 2012, so there is an incentive for all facility patients to do well to avoid the quality-related payment penalty.
- Transition.
When bundling starts in 2011 each facility has the option to transition to the new payment over three years. (For example, in Year 1, 25 percent of treatments paid the new bundled way, 75 percent paid the current way; 50/50 in Year 2, etc.) This means the impact of the bundle will not happen all at once, which is good, so everyone can adjust to the change over several years.
Much of the proposal is good. Thank you, Medicare!
| 1. | Per treatment (not per week or per month) is the basis for payment. This maintains the model we know well. | |
| 2. | Nephrology and hospital services are outside the dialysis center’s bundle, just like today. | |
| 3. | More than three hemodialysis treatments per week will be covered if there is medical justification. More dialysis is better for patients. | |
| 4. | Penalty triggers for poor quality are few in number, collected and reported today (so there’s a good clinical track record), and not unreasonable. We can work today to improve our outcomes on these. In the future, more quality measures may be implemented if baseline data is available. |
Some parts of the bundle are very problematic
There are real problems in the proposal due to impact on doctor and patient relationship, cost to dialysis facility, and administrative burden. Initial calculations show that Medicare has not included enough funding for these areas:
| 1. | Lab tests unrelated to dialysis. By law, lab tests “used in the treatment of ESRD” must be in the bundle. Medicare proposes that all labs for a dialysis patient, ordered by any nephrologist, are the dialysis unit’s cost responsibility. Labs drawn in the facility for patient convenience are outside the bundle, if ordered by a non-nephrologist. Our alternate proposal: A defined set of lab tests should be in the bundle. Lab tests unrelated to dialysis, regardless of who orders them, should be outside the bundle. Nephrologists need to be able to order labs to care for the whole patient. Medicare must ensure funding is adequate to cover lab costs. | |
| 2. | Expensive oral drugs. By law, oral drugs with IV equivalent (e.g., Zemplar, Hecterol, and Calcijex) should be in the bundle. However, Medicare proposes that even more oral drugs be included in the bundle and therefore the dialysis unit’s responsibility, specifically calcimimetics and oral phosphate binders. Drug companies charge over $5,000 each year for each of these drugs per patient, and many dialysis patients would benefit from these drugs. Medicare has very little data from the new Part D plan about use and costs of these drugs, and therefore it is already clear that reimbursement rates would not be sufficient. Our alternate proposal: Do not include oral drugs in the bundle that do not have IV equivalents. Medicare must ensure funding is adequate to cover oral drugs. | |
| 3. | Home training. Despite payment adjustments for factors that increase the cost of treatment (advanced age, large body size, etc.), there is no adjustment- as there is today- for the clear and documented cost of home training for either peritoneal or home hemodialysis. Training is vital, costly compared to a routine treatment, and critical for safety. Our alternate proposal: Make a payment adjustor for home training. Pay for training whether a patient chooses home dialysis at the beginning of dialysis or shifts to peritoneal or home hemodialysis at some point. Ensure that funding is adequate to cover costs. |
Give input on the bundle by Dec. 16. Thank you! Final rules come out in 2010.
Medicare wants comments on the rules. NKC is giving input. We invite patients, staff, doctors and the public to submit your own opinions.
Read a Sample Comment Letter to Medicare
Return to main Medicare Bundling Proposal page