The ESRD provisions in the Baucus Bill: S. 3101

The text of Senator Baucus's bill is still not available from Thomas.gov yet and there has been no word on Senator Grassley's counter proposal. However, Renal Business Today has a thorough report posted: Baucus unveils legislation with significant ESRD reform that includes discussion of some of the details I have heard. For instance the details of the bundle:

• Items and services already in the composite rate
• Erythropoiesis-stimulating agents (ESAs) and any oral form of such agents
• Other drugs or biologicals given to ESRD patients that used to be billed separately
• Diagnostic laboratory tests

This is not good for providers without the purchasing power, economy of scale, of the two large providers. The thing all these items proposed for the expanded bundle have in common is that they are cheaper when purchased in bulk. The bill could address this tendency to accelerate consolidation with an epicycle-like correction based on the size of the purchaser. The Renal Business Today article does mention:

A payment adjustment will also be included for low-volume dialysis clinics that have higher costs than other clinics. The bill also calls for adjustments to be made for pediatric care, geographic wage differences and rural dialysis centers.

However, this language is worrying. It isn't the size of a given clinic that determines an economy of scale, it is the size of the organization that owns the clinic that determines the clinic's purchasing power. This language seems to indicate that the bill would reward the aggressive expansion of the large dialysis operators allowing them to open excess capacity and then receive a payment adjustment for low volume. This low-volume payment adjustment exacerbates the problem of dialysis industry consolidation.