After the Epogen overuse dust up last year, you just knew the US government would stumble over itself trying to remedy the problem and end up making it worse. Well, here come the unintended consequences.
Earlier this year the Centers for Medicare & Medicaid Services (CMS) submitted a report to Congress, “A Design for a Bundled End Stage Renal Disease Prospective Payment System.” The crux of the proposal is to “bundle” payments for dialysis medications and medical treatment into a single payment of US$234.66 (in 2006 dollars) per treatment with up to 13 treatments per month. The intent of the proposal, presumably, is simple: reduce Epogen overuse by capping and combining payment for it with medical services.
A secondary purpose behind the proposal is probably to reduce the Medicare expense for dialysis. Almost all dialysis patients are covered under Medicare, regardless of age. The CMS report indicates that as of 2006 there were roughly 4,700 outpatient dialysis facilities serving 315,000 Medicare dialysis patients to the tune of US$8.1 billion.
If the goal is to stop the overuse of Epogen, there are far better ways to reach that goal: have Medicare negotiate the medication prices directly, thereby removing dialysis providers from the drug business is one that comes immediately to mind. Paying providers based on patient outcomes is another.
One of the unintended consequences of the CMS bundling proposal is provider consolidation, because the bundled reimbursement price is based on the costs of the large dialysis providers. Large, for-profit dialysis providers like DaVita and Fresenius enjoy economies of scale that can’t even be remotely approached by small, independent, non-profit providers. This became especially evident during last June’s House Ways and Means committee’s subcommittee on health’s hearing on ensuring kidney patients receive safe and appropriate anemia management care. Testimony disclosed that the large, for-profit dialysis providers were paying substantially less for Epogen than small, independent, non-profit providers resulting in a major profit center for the large dialysis providers. For the eight years that I’ve been a dialysis patient, provider consolidation has been rampant. Provider consolidation may be good for corporate interests but certainly doesn’t bode well for patient outcomes.
Another unintended consequence (or maybe its an intended consequence) is the bundled fee itself. The proposed US$234.66 (in 2006 dollars) per treatment is actually less than the 2005 Medicare per-treatment payment of US$237.02. Figure this won’t see Congressional consideration before 2009 and that’s three years of unaccounted inflation and other cost increases. CMS’s strategy seems to be to lower the per-treatment payment and let the providers figure out how to make it up.
A cursory reading of the CMS proposal seems to indicate that the dialysis providers would themselves become some sort of hybridized health maintenance organization (HMO), as the providers would be responsible for services that are currently external to the provision of dialysis. Things like nephrology, interventional radiology, and surgery. Unintended or not, this is a very alarming consequence. I have no interest in my dialysis provider determining who my nephrologist is or how the efficacy of my fistula is maintained. Actually, because of consolidation and other factors the former already happens. My nephrologist’s practice refuses to see patients at a competing dialysis facility.
Dialysis services should be improved and to be sure costs should be a factor, but the basic problem here is that the wrong metrics are being used to determine improvement. Improvement should be based solely on patient outcomes; instead, the predominant criteria used is reduction of provider costs or, to put it bluntly, corporate financial outcomes.
It’s time for the US to have a come-to-Jesus meeting about healthcare. One of the basic questions—aside from how we pay for healthcare and whether it’s a basic human right or a privilege—must be whether healthcare should be for-profit, corporate-based or non-profit, community-based. I believe that community-based, non-profit healthcare provision is the morally responsible and most sustainable option. Instead of being accountable solely to shareholders, healthcare providers become accountable to the stakeholders within the community. Bill Peckham offers a thorough analysis of the value inherent in non-profit, community-based dialysis providers.
Lots of questions remain with regard to the CMS bundle proposal. The Renal Support Network has produced an informative video of some of the questions from the perspective of the dialysis patient. Shouldn’t this be the primary source on the matter?
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