SEC. 632.
REVISIONS TO THE MEDICARE ESRD BUNDLED PAYMENT SYSTEM TO REFLECT FINDINGS IN THE GAO REPORT. 

(a) ADJUSTMENT TO ESRD BUNDLED PAYMENT RATE TO ACCOUNT FOR CHANGES IN THE UTILIZATION OF CERTAIN DRUGS AND BIOLOGICALS.—Section 1881(b)(14) of the Social Security Act (42 U.S.C. 1395rr(b)(14)) is amended by adding at the end the following new subparagraph:
‘‘(I) For services furnished on or after January 1, 2014, the Secretary shall, by comparing per patient utilization data from 2007 with such data from 2012, make reductions to the single payment that would otherwise apply under this paragraph for renal dialysis services to reflect the Secretary’s estimate of the change in the utilization of drugs and biologicals described in clauses (ii), (iii), and (iv) of subparagraph (B) (other than oral-only ESRD-related drugs, as such term is used in the final rule promulgated by the Secretary in the Federal Register on August 12, 2010 (75 Fed. Reg. 49030)). In making reductions under the preceding sentence, the Secretary shall take into account the most recently available data on average sales prices and changes in prices for drugs and biological reflected in the ESRD market basket percentage increase factor under subparagraph (F).’’.

(b) TWO-YEAR DELAY OF IMPLEMENTATION OF ORAL- ONLY ESRD-RELATED DRUGS IN THE ESRD PROSPECTIVE PAYMENT SYSTEM; MONITORING.—
(1) DELAY.—The Secretary of Health and Human Services may not implement the policy under section 413.174(f)(6) of title 42, Code of Federal Regulations (relating to oral-only ESRD-related drugs in the ESRD prospective payment system), prior to  January 1, 2016.
(2) MONITORING.—With respect to the implementation of oral-only ESRD-related drugs in the ESRD prospective payment system under subsection
(b)(14) of section 1881 of the Social Security Act (42 U.S.C. 1395rr(b)(14)), the Secretary of Health and Human Services shall monitor the bone and mineral metabolism of individuals with end stage renal disease.

(c) ANALYSIS OF CASE MIX PAYMENT ADJUSTMENTS.—By not later than January 1, 2016, the Secretary of Health and Human Services shall—
(1) conduct an analysis of the case mix payment adjustments being used under section 1881(b)(14)(D)(i) of the Social Security Act (42 U.S.C. 1395rr(b)(14)(D)(i)); and
(2) make appropriate revisions to such case mix payment adjustments.

(d) UPDATED GAO REPORT.—Not later than December 31, 2015, the Comptroller General of the United States shall submit to Congress a report that updates the report submitted to Congress under section 10336 of the Patient Protection and Affordable Care Act (Public Law 111–148; 124 Stat. 974). The updated report shall include an analysis of how the Secretary of Health and Human Services has addressed points raised in the report submitted under such section 10336 with respect to the Secretary’s preparations to implement payment for oral-only ESRD-related drugs in the bundled prospective payment system under section 1881(b) of the Social Security Act (42 U.S.C. 1395rr(b)(14)).

Bill’s comments:

Section (a) is about EPO mostly but the way it is written it would include iron and injectable vitamin d. The EPO piece is the biggest part. The expanded payment bundle that went into effect Jan 2011 made assumptions about EPO use to come up with the payment amount – my memory of the final rule is it was assumed that EPO use would decline from ~5,700(mU/mL)/treatment to ~5,200/treatment but what actually happened was EPO use declined to <4,000/treatment I’m even hearing it was dropped to <3,000/treatment. You can think of each 1,000mU/mL of EPO as representing $10 of the bundle – the bundle included about $55/treatment for EPO. So if average EPO use is 2,000/treatment less by Medicare’s reckoning the payment is $20 too generous. That said Amgen jacked their prices and Iron use has increased so some of that over payment has been shifted but clearly Congress expects CMS to lower the bundled payment rate for 2014.

Section (b) delays including binders in the bundled payment. Bassed on current law at the end of this year all dialyzors would receive their binders and calcimimetics (for instance Sensipar) from the dialysis unit. It is good that there is going to be a delay even though it is bound to create a lot of confusion.

Section (c) asks for a CMS review of the case mix adjusters, I’m not sure what exactly this is about but in the past talk of case mix adjusters meant looking at a race adjuster.

Section (d) wants CMS to say how they are fixing problems the GAO report identified.

Of course all of this might well never get signed into law because it is part of a big contentious piece of legislation but at some point the Doc Fix will get passed fixing the problem for another year and I think we should expect this language to be part of the fix under any circumstance.