Dialysis and Medicare/CMS Cuts


Update 7/18/14: I came across this post and thought I should update it.

The proposed cuts got kicked down the road to 2015 when they will be phased in.    That’s not the end, however.  The dialysis community will probably come together again to diminish the adverse impact of any cuts like these.   There’s no sense trying to deal with them now.  We’ll have to see what can be done then.  The biggest problem with these cuts, no matter when they come into effect, is how they might impact on dialysis patients.

Update 8/5/13: A short update from the NKF CEO about his visits to Congress last week… http://t.co/rX9GP2inPf

cost cuts

Update 7/25/13:  Sign this Petition at Change.org and this one too for a Dialysis Patient. 

Update 07/24/13:  I got a question about the cuts.  “Is this proposed cut BECAUSE of the Affordable Care Act?”  The simple answer is: “No”.  This cut is because of the “American Taxpayer Relief Act of 2012” (ATRA2012) that mandated Medicare to review the 2012 vs. 2007 dialysis and medication costs and deduct the difference (about $30) from the payments to providers.  I updated some parts of this posting to include some background behind the cuts. 

For the last several days, I’ve been posting about the Medicare/CMS cuts to providers payments for dialysis treatments.  (“Dialysis and Action” and “Dialysis and Action (More)” and “Dialysis and Further Action“)  Well, here’s more.  I don’t want to bore you about this but it’s really quite important.  I’d like to fill you in on the cuts and what they mean to us.

In every forum and group I’ve been involved with this week, this have been a topic of discussion.  It’s that important.  We’re all very concerned about it, not because it’s cuts to provider payments but that it will surely filter down to cuts at the patient level.  For the large providers, it means less than to smaller, independent providers.  Then, finally, we will be the ones most hurt by these cuts.

Some History

From the Wall Street Journal:

Based on government reports, Medicare for years has overpaid for the anti-anemia drugs used in the treatment of kidney dialysis patients. One recent estimate said Medicare paid $529 million more than it should have in 2011 for the drugs made by Amgen Inc. (AMGN) and others.

As a result, lawmakers have tried to rein in the costs of those drugs. In 2011, the drugs were included in the “bundle” payment given to dialysis centers, a lump sum that includes the costs for all dialysis services.

In addition, CMS was expected to propose a new payment rate by this summer that will go into effect next year. The reductions are projected to save Medicare $4.9 billion over 10 years, according to the Congressional Budget Office.”

So Medicare/CMS is not the “bad guy” in this case.  They are simply doing what Congress told them to do in the ATRA2012.  It’s not like they would put themselves into this hotseat on purpose!

The Proposal

So, here’s a careful review of the proposed cuts from the CMS along with my thoughts about them.  First, here’s the actual text of the section in the CMS proposal having to do with the cut to provider payments.   I highlighted the pertinent parts of the paragraph as shown below…



We applied the 2014 prices to the CY 2007 and CY 2012 drug and biological utilization data to calculate aggregate amounts for each year. For drugs and biologicals for which we have utilization data for CY 2012, but that were not present on CY 2007 claims, we priced these drugs using the ASP+6 percent price for 2012, which is an average of the four quarter prices, and inflated it using the CY 2013 and the CY 2014 proposed ESRDB market basket, productivity, and wage index budget neutrality adjustment factors. While most of these drugs had minimal utilization, we note that Feraheme was the only significant exception. Specifically, Feraheme was not available until January 2010 and once the drug was available, the use of the drug rose to the top 12th drug furnished to ESRD beneficiaries. Next, we divided each year’s estimated aggregate amount for drugs and biologicals by that year’s count of treatments furnished to Medicare beneficiaries to get an average payment per treatment for the year. This resulted in a per treatment amount for drugs and biologicals of $83.76 in 2007 and a per treatment amount for drugs and biologicals of $51.42 in 2012. We then subtracted the average payment per treatment for CY 2012 from the average amount per treatment for CY 2007 to get a total of $32.34 ($83.76−$51.42 = $32.34). We then reduced this amount by the standardization, the outlier, and the 98 percent budget neutrality adjustments to get a total of $29.52 ($32.34 × .9407 × .99 × .98 = $29.52). We would apply these adjustments before reducing the base rate because the base rate was reduced by these adjustments when it was first established, and the reduction should be adjusted in the same way to make the two figures comparable.  We would then reduce the CY 2014 proposed base rate of $246.47 by $29.52, resulting in the CY 2014 proposed base rate of $216.95.  A reduction of $29.52 from the proposed CY 2014 ESRD PPS base rate results in a 12 percent reduction in Medicare payments. We solicit comments on the proposed methodology for the reduction to the ESRD PPS base rate to reflect the change in the utilization of ESRD-related drugs and biologicals from CY 2007 to CY 2012.While we propose to implement the full reduction in CY 2014, we note that we are also concerned that this one-time reduction to the ESRD PPS base rate could be a significant reduction to ESRD facilities for the year and potentially impact beneficiary access to care. Therefore, we are soliciting comments on a potential transition or phase-in period of the 12 percent reduction and the number of years for such transition or phase-in period.


It’s interesting that they note this is a drastic reduction but they do open the door to suggestions for a “transition or phase-in period for the 12 percent reduction”.

It concerns me that they are using the 2007 rates for dialysis and essentially rolling back their payment rate to the 2007 rate. “We then subtracted the average payment per treatment for CY 2012 from the average amount per treatment for CY 2007 to get a total of $32.34 ($83.76−$51.42 = $32.34)”.  That’s how they get this ridiculous rate!
I spoke with a very knowledgeable source about the cuts and he explained that part of the sense behind this roll-back to 2007 was because Medicare felt they had been overpaying the providers since then because of the “bundling” of payments over the last couple years.  This cut, in their minds, was to level the payment field.  Since they had increased total payment to include things other than just dialysis, they were due for a cut to reflect the savings from “bundling”.

I suggest we continue to protest the total reduction but be prepared to comment with a suggestion for a phase-in or transition for the reduction… say, 5 years (about the middle of August (before the 8/30/13 deadline).  However, a CPI adjustment should also factor into the calculation.  In fact, I’m concerned there is no factor in their calculation for increases in the Consumer Price Index or other provider cost increases over that SIX YEAR period from 2007 to 2013! That should just about cover the “bundling” savings CMS wants to use as the basis for this cut. 

As a patient, caregiver, or provider, you can comment on the proposal by CLICKING HERE.  Then scroll down and click on the blue “Comment Now” button.  Comments will close on 8/30/13.   This is the same link from my post “Dialysis and Further Action

About DevonTexas

I am a person with ESRD (End Stage Renal Disease) which means my kidneys don't work. Forty or so years ago that would have been a death sentence but today there is Dialysis which means I could be hooked up to a machine that would clean my blood as the kidneys should. Three days a week, I went to a dialysis center and had too very large needles stuck in my arm to remove and replace my blood as it passed through a process where it was cleaned and the fluid was removed, a process taking a little over four hours each time. In November 2017, I received a kidney transplant from a deceased donor. My life went into overdrive. With a "new" functioning kidney, I no longer had to go to a dialysis center and my days were not open to be lived rather than recovering from dialysis which meant dialyzing for three days and resting for 4 days a week. I work full-time and often 50 hours per week. It is something I never imagined. I highly recommend it! HeeHee I want to advance knowledge about dialysis and transplant so that others can learn from my experience and mistakes. We shouldn't have to reinvent the wheel, eh? There is so much to be learned and experienced about our predicament. There are vast resources available to support us and enrich our lives but many patients don't know about them. There are also many issues that we have to deal with whether we want to or not. So I blog about them in www.DevonTexas.com All comments are confidential until I approve them. If you don't want your comment public, let me know and I will respect that. So, feel free to leave a comment. I also blog in LegacyTales in WordPress if you are interested in the ramblings of a Old Man. Give a peek and let me know what you think. https://legacytales.wordpress.com/ Enjoy.
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2 Responses to Dialysis and Medicare/CMS Cuts

  1. Devon, have been following and sharing your posts with interest. Is there any explanation why they used 2007 math without taking into account the addition in cost and inflation since that time? I agree with you that it may be a wash if you take into account those factors. What is your opinion about the affects of these cuts on home dialysis patients? I wrote a blog about that and I think this affects them as well. Here is the link to that on WordPress: http://kidneystoriesblog.wordpress.com
    Drop me a line, kidneystories@hotmail.com, let me know what you think. Jim

    • DevonTexas says:

      There’s really no apparent logic to the use of 2007. It’s just what was in the law passed by Congress (If you can imagine anything being passed by Congress!?). As to home dialysis, it shouldn’t be any different than in-center dialysis. They will pay the provider less for that services and materials in the bundles payment.

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