MedPAC and dialysis payment adequacy

Commenting on my previous post Matt points to MedPAC to dispute my contention that Medicare is not paying its way in the provision of diaysis.

The March 2007
MedPAC report (pdf)
the summary is:
"In summary, most of our payment adequacy indicators are positive. Therefore, the recommendation is to update the composite rate" The final recommendation is to update the Composite Rate by 1.2%. Sounds like payments are about right but there's a catch.

The "payment adequacy indicators are positive." These indicators are that there was a measured increase in the number of treatments on pace with the growth in beneficiaries i.e. nationally supply kept pace with demand.

One might think that the MedPAC recommendations would be based on audited costs, but no they look at program growth as a surrogate. The thinking is if the program is growing then reimbursement must be adequate. What I was trying to explain is that it is the payments from private insurers that are driving program profits and as a result program growth.

States that base the Medicaid dialysis composite rate on audited costs pay a higher rate. The audited cost reports show that a single dialysis treatment costs more to deliver than Medicare pays, however, to get to the private payer honeypot, providers accept the partial payment from Medicare.

I do not think the MedPAC report and my post are at odds.

I do support the Bill, in general it is better than nothing and as Matt said there is no chance that the Bill will be passed and signed, rather another update will be tucked into some other CMS focused Bill. I like the other elements and would only want to strengthen some elements, things like tech certification. CKD education before starting dialysis is a obvious program improvement.

I wish I could do a better job explaining the larger point. The built in Medicare discount relies on over-charging private payers. If private payers were eliminated then public payers would have to pay more for the same services they currently buy at a discount. This is the case throughout the US health care system

Tags: kidney dialysis, Medicare, MedPAC (all tags)

Comments

6 Comments

Re: MedPAC and dialysis payment adequacy

No, the bill is not better than nothing, and an increase should not be tucked into a budget bill somewhere.  This Epogem nonsense is wasting billions of dollars a year.  Here's the important quote from MedPAC.

The Commission remains concerned that Medicare continues to pay separately for drugs and laboratory tests that providers commonly furnish to dialysis patients. Medicare could better achieve its objectives of providing incentives for controlling costs and promoting access to quality services if all dialysis-related services, including drugs and laboratory tests, were bundled under a single payment. In addition to broadening the payment bundle, the Secretary should continue efforts to improve dialysis quality.

Medicare should put Epogem into a basket of treatment.

by Matt Stoller 2007-04-28 06:29PM | 0 recs
Re: MedPAC and dialysis payment adequacy

I think there will be a bundle - I'll try to address bundling in a diary on my view of EPO usage/reimbursement.

Still even if there was bundling that would not solve the problem of the yearly inflation cut. All other Medicare programs include some sort of framework to accommodate the effect of inflation, HR 1193 (and HR 1298 in the 109th Congress) update payments based on the impact of inflation.

Conflating the EPO issue with treatment reimbursement does not solve the lack of an inflation update. Bundled or not inflation will continue to erode the value of reimbursement unless checked through one off add ons or some kind of frame work.

by billp830 2007-04-28 07:51PM | 0 recs
Re: MedPAC and dialysis payment adequacy

I wish I could do a better job explaining the larger point. The built in Medicare discount relies on over-charging private payers. If private payers were eliminated then public payers would have to pay more for the same services they currently buy at a discount. This is the case throughout the US health care system.

The reason you can't explain this point is because it's not true.  If private payers were eliminated and for-profit clinics were eliminated then the system would work.  As it is, the nonprofit clinics are given the least profitable cases and the private payers work with the profitable clinics and drugmakers to keep the system going.

This is not a stable system and we can't keep paying for this anymore.  Health care is just too expensive and it's not because of cost but because of profit incentives.

by Matt Stoller 2007-04-28 06:32PM | 0 recs
Re: MedPAC and dialysis payment adequacy

It maybe that I am missing something when I apply the lessons of the provision of dialysis to the greater issue of the provision of health care. I am an expert on the provision of dialysis, I'm a hobbyist on the big picture health care debate.

When it comes to dialysis I can confidently assert that one: "If private payers were eliminated and for-profit clinics were eliminated then the system would work  is wrong.

Two: As it is, the nonprofit clinics are given the least profitable cases and the private payers work with the profitable clinics and drugmakers to keep the system going. is also wrong.

In dialysis if the private payers were eliminated and everyone was reimbursed at Medicare rates then  much less money would be available for care. Without private payers Medicare would have to increase their reimbursement rate.

With 80% of the 370,000 US dialyzors dialyzing through for profit companies I'm not sure how the cherry picking you describe is possible. To the extent that people choose where to dialyze they base that choice on geographic proximity and preferred dialysis shift (days/time) availability.

by billp830 2007-04-28 07:40PM | 0 recs
Re: MedPAC and dialysis payment adequacy

Bill P,

You say that much less money would be available for care if private pay was eliminated, but isn't it that much less money would be available for profits? Shouldn't we be cracking down on the excess profits instead of trying to get Medicare to pay more? Davita and Fresenius use the same tired old arguements that the pharmaceutical companies use. The drug companies claim they charge so much on the free market to Americans with insurance because they need to make up for the cost controls in Canada and every other country and with the VA. They claim they need the money for research and development, but it mostly goes to profits. The same thing happens with the big dialysis companies, who are working the system to make the most money they can off of people who desperately need their services to stay alive. When big money flows into a sector of the health care sysetm, it's because the money managers have found an edge they can exploit. Kidney dialysis is now 80% for-profit because Big Capital has found a way to profit from a procedure that keeps people alive. It doesn't cure anyone, it simply cleans the blood because the kidneys can't anymore. Should this be a service that makes big corporations and their CEOs rich? Will giving these companies an increase in public funding make them charge less to private pay patients?

by riseupeconomics 2007-04-29 01:32PM | 0 recs
Re: MedPAC and dialysis payment adequacy

I don't come to my position from the perspective of the large dialysis organizations (LDOs), so I am less than enthusiastic when I'm asked to defend them or justify their business practices. However, you bring up fair points that I must acknowledge while maintaining my position - support for HR 1193.

I think this is deserving of a post. I'll try to layout my thinking in light of the LDO business practices.

I should also write a post making clear that I think Seattle/King County is my preferred model dialysis-wise. I need to explain the situation here; where we've been; where we went wrong.

by billp830 2007-04-29 02:21PM | 0 recs

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