The Centers for Medicare and Medicaid Services has proposed a bundled prospective payment system for facilities that provide dialysis services to Medicare beneficiaries who have end-stage renal disease.
The proposed PPS would provide a single bundled payment to dialysis facilities that would cover items and services used in providing outpatient such services, including dialysis treatment, prescription drugs and clinical laboratory tests.
The new system is required under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The CMS notice proposes three quality measures that it plans to use for its quality incentive program (QIP) and lays out a model for public comment.
"Combining a fully bundled prospective payment system with required performance standards would encourage facilities to operate more efficiently and ensure that beneficiaries receive high quality care, while saving dollars for both beneficiaries and the Medicare program," said Jonathan Blum, director of the CMS Center for Medicare Management.
ESRD is the only category for Medicare eligibility that is based on a specific diagnosis, without regard to the age of the patient. Patients diagnosed with ESRD must rely on dialysis or receive a kidney transplant for survival.
In 2007, there were about 591 hospital-based and 4,330 freestanding ESRD facilities furnishing outpatient dialysis services to nearly 330,000 Medicare patients. The total cost of this service was $9.2 billion, including the dialysis service and other ESRD-related items such as drugs.
ESRD services are furnished on an outpatient basis in independent or hospital-based dialysis facilities. Currently, Medicare pays for certain dialysis services under a partial bundled rate, referred to as the composite rate. Payments for these composite rate services represent about 60 percent of total Medicare payments to ESRD facilities.
The remainder of Medicare spending for dialysis services is for separately billed items such as drugs, but may also include laboratory services, supplies and blood products.
Under the proposed rule, the CMS would establish a base bundled payment rate of $198.64 for all services related to a dialysis session, including the services in the current composite rate and items, including oral drugs, that are billed separately.
The proposed base rate was derived from 2007 claims data for both composite rate and separately billable services and updated to reflect projected 2011 prices. The CMS would adjust the rate for case mix factors such as the patient's age, gender, body size and time on dialysis. A special case-mix adjustment would apply to pediatric patients.
Additional adjustments to the payment rate would be made for specific conditions or co-morbidities that have a significant impact on a course of treatment. CMS officials claim that by accounting for more characteristics of patients, the new PPS would target payments more appropriately, paying higher rates to those facilities with the most costly patients.
The base rate would also be adjusted to reflect geographic differences in labor costs. The CMS is also proposing to provide an adjustment for low-volume facilities, as well as an outlier policy that would make an adjustment for particularly expensive cases.
CMS officials will accept comments on the proposed rule through Nov. 16 and will respond to them in a final rule to be issued in 2010. The new payment system would apply to dialysis services furnished to Medicare beneficiaries on or after Jan. 1, 2011.