New rules proposed Sept. 15 (PDF) by the Centers for Medicare and Medicaid for dialysis reimbursement could prove to be a boon for NxStage Medical Inc. and other home dialysis system makers.
Required by the Medicare Improvements for Patients and Providers Act of 2008, the proposed payment system, to take effect Jan. 1, 2011, will provide a single per-treatment case-mix adjusted payment to replace the current separate payments for the dialysis treatment, required diagnostics and clinical laboratory tests and dialysis-related drugs administered in the facility.
The changes are aimed at removing long-standing (and, critics say, perverse) financial incentives for dialysis facilities to generate profits by providing more drugs and tests, replacing them with incentives to minimize resource utilization while pursuing quality outcome improvements. The new payment system is to be implemented in stages over a four year period to allow dialysis facilities time to evaluate and adapt their clinical and financial management systems.
Some experts believe that Lawrence, Mass.-based NxStage’s system, which facilitates brief daily home dialysis, can provide substantial clinical and quality of life benefits to patients while reducing total costs of end-stage renal disease care. Standard in-facility regimens involve three treatments a week, each lasting more than three hours and requiring a time commitment (including travel, treatment initiation and termination) of six or more hours.
Home hemodialysis, practiced today by fewer than 1 percent of ESRD patients, eliminates travel to and from the facility, but replaces it with significant logistic and family support demands, including a trained family member to serve as an aide. NxStage’s technology alleviates some of that burden, although a trained aide is still required.
But the most important benefit is the system’s ability to mimic the natural function of the healthy kidney. Patients report feeling better more of the time, there is evidence of reduced need for drugs and the therapy could translate into fewer hospitalizations.
But adoption of the technology has been slowed by CMS’ unwillingness to routinely pay for more than three treatments per week.
NxStage CEO Jeff Burbank told MassDevice that the new bundled payment proposal contains several provisions his company and the dialysis community at large were hoping for. For example, Burbank told us that he’s pleased that proposal would maintain individual dialysis treatment as the unit of payment.
“There was some discussion early on about changing it from a per-treatment payment to a per-week or per-month payment,” he said. “That, quite honestly, made a number of us nervous. … Fortunately, they proposed a per-treatment bundle, which we’re all happy about.”
And Burbank is thankful the proposal doesn’t increase the barrier to payment for more frequent, briefer treatments. Medicare’s fiscal intermediaries now will consider physicians’ letters requesting coverage for more than three treatments per week on medical necessity grounds. According to Burbank, that process works well, although “we’d like it to be simpler and more predictable. We were worried in the bundling process that they would do something that would take that away.”
But Burbank is disappointed at another of the provision’s proposals: The elimination of incremental payments for home dialysis training.
“They went in a very different direction,” he said. “They took those training costs and put them into the bundle. So instead of having the reimbursement coincide with the activity, they just spread it out and have a little bit with every treatment.”
The elimination of payment for training will, Burbank said, be a disincentive to adoption of home hemodialysis, a result he views as contrary to CMS’ intent.
“We got two out of three, which isn’t bad, but we’ve got some work to do on this third one,” he said. “We have consistently reached out to our representatives. Unfortunately, we’re in a transition period due to Sen. Kennedy’s death, but Sen. Kerry has been supportive of NxStage, as have our representatives in Congress. We’ll take advantage of all routes available to us to [re-introduce the training reimbursement].”
Ed Berger, principal of reimbursement consultancy Larchmont Strategic Advisors, a dialysis industry veteran and MassDevice blogger, told us thinks the new bundled payment system could be a net positive for NxStage.
“With drugs and diagnostics bundled with treatment payment, dialysis facilities will have a larger pot of money to spend and more flexibility in deciding how to spend it. Savings on drugs and laboratory expenses can pay for the extra supplies required by more frequent dialysis,” Berger explained. “That opens the door for NxStage to demonstrate that daily home hemodialysis can improve care and grow facilities’ bottom lines. But there would be much more flexibility, and a much bigger opportunity, if patient care were fully capitated. Fold hospitalization costs into the bundle and the market potential for NxStage would be immense.”