With over 80% of all dialysis sessions in the United States provided by for profit companies (USRDS ADR Provider Characteristics pdf link), one might wonder if there is any role for nonprofit dialysis. Larger companies enjoy economies of scale, they can buy supplies and medications cheaper than independent, smaller, nonprofit providers. Less expensive supplies lead to greater profits. It is these larger profits that have caught the eye of Congress and fueled Congress's and the Administration's interest in dialysis treatment reimbursement bundling.
Dialysis provider size and the dialysis bundle
Efforts to create a bundled dialysis reimbursement rate i.e. paying one price
for all services rendered in the provision of dialysis are designed to
save CMS money. The bundle imagined in 2007's CHAMP act
would have cut 4% from what is currently reimbursed for CKD 5 healthcare via dialysis. The one bundled
reimbursement amount would be meant to pay for lab tests, epo,
nutrition counseling, etc. and the staff time and supplies needed to complete some number of dialysis treatment (Congress could implement a monthly, weekly or per treatment bundled rate).
Last year on June 26th the House Committee on Ways and Means Subcommittee on Health held a Hearing on Ensuring Kidney Patients Receive Safe and Appropriate Anemia Management Care. Congressman Stark chaired the hearing to review Medicare's policies regarding anemia management. In general there is concern in Congress that the Centers for Medicare and Medicaid Services (CMS) reimbursement policies may lead to clinically dangerous over use of medications used to treat dialysis patient anemia and there is concern that CMS is paying too much to manage dialysis patient anemia. Testimony was heard from Leslie V. Norwalk, acting CMS Administrator, testomony included a statement that the cost of a unit of EPO for the LDOs (the two Large Dialysis Organizations in the US) is in the $8.50 range while the cost for the small or independent (I cannot remember which term was used) would be in the $8.95/unit range; reimbursement is $9.03. That profit that the LDOs make on EPO is the source of the imagined dialysis bundle savings.
A dialysis bundle encourages dialysis provider consolidation
A bundle based on the LDO cost of doing business would be too low for smaller providers to provide dialysis without drastically cutting costs in nursing/staff time. Since a Medicare primary patient would have more net value to the LDO than he or she would have to the smaller provider a bundle based on the LDO's economics would encourage smaller organizations to sell out to the larger organization. The bundle would encourage consolidation.
A bundle based on a small dialysis organization's cost structure would be generous for a LDO. The additional profitability of the bundle would allow smaller organizations to continue the current level of care but again the LDO would be motivated to buy out the smaller providers since a Medicare primary patient would have more net value to the LDO than he or she would to the smaller provider. The bundle would encourage consolidation.
Why not encourage consolidation?
Is there a role for nonprofit organizations in the provision of dialysis in the US? When acting CMS chief Kerry Weems said legislation to institute a bundle could proceed it was a tacit endorsement of large for profit medicine. Dialysis industry consolidation is not in the interest of diayzors. This is a flawed approach that again uses gains in economic efficiencies as a measure of program improvement. The measure of ESRD program improvements should be clinical outcomes, not financial outcomes. I am in favor of being good stewards of the tax payers dollar but only after the ESRD program meets its obligation to Americans with severe kidney disease.
Comments