Report: Medicare payments to cover costs of rural dialysis care not getting to clinics in need

Medicare pays dialysis clinics that qualify for its low-volume payment adjustment almost 24% more per treatment than urban dialysis facilities to compensate for higher operational costs. However, according to a new report, in many cases, facilities that apply for the adjustment – and get an additional 0.8% adjustment for being a rural clinic – may be gaming the system by capping the number of treatments to qualify for the bonus payments.

Those funds, which went to about 5% of dialysis clinics in 2017, should be directed to clinics that are in isolated areas that truly have higher costs, the Medicare Payment Advisory Commission (MedPAC) said in their semi-annual report to Congress released on April 5.

“The 23.9% low-volume and 0.8% rural payment adjustments under the dialysis prospective payment system (PPS) are not targeting facilities that are critical to beneficiary access,” the commissioners said in the report.

CMS currently defines a low-volume facility as one that provides fewer than 4,000 treatments (Medicare and non-Medicare) in each of the 3 years before the payment year and has not opened, closed or received a new provider number because of a change in ownership during the 3-year period, according to MedPAC. A facility can apply for the low-volume payment adjustment (LVPA) if it meets that criteria, along with being at least 5 miles away from another clinic with similar ownership. Since 2016, all rural facilities, irrespective of their treatment volume or proximity to other dialysis facilities, also receive an adjustment of 0.8%.

The concern, said MedPAC commissioners Nancy Ray, MS, and Andy Johnson, PhD, in a presentation based on the report’s findings is that the maximum 4,000 treatments per year criteria may create a “so-called ‘cliff’ effect [that] may incentivize some facilities to limit services” to get the bonus payment.

In 2017, 40% of the dialysis facilities that qualified for the LVPA were within 5 miles of another facility, raising questions about whether these clinics experienced higher costs and needed the adjustment.

This policy “does not account for higher costs of facilities with relatively low volume (eg, between 4,000 to 6,000 treatments per year)” that are in more isolated areas, they reported.

A facility currently receiving the adjustment that conducts fewer than 4,000 treatments annually has a Medicare margin of - 3%, but facilities that provide between 4,000 to 6,000 treatments have a margin of - 17%, Ray and Johnson reported.

They proposed to replace the rural and low volume adjustments with one low-volume and isolated (LVI) adjuster for a facility.

To qualify for the proposed adjustment, a facility must be more than 5 miles from the nearest dialysis facility regardless of ownership and exhibit a low volume of treatments for 3 prior years, ranging from 4,000 to 6,000 treatments per year.

The LVI adjustment “would better account for higher cost in low-volume and isolated facilities,” Ray and Johnson said in their presentation.

The proposal is expected to be considered by the commission during its fall meeting in September.

The following are MedPAC Report highlights (based on Medicare data from 2017):

nearly 395,000 beneficiaries with ESRD on dialysis were covered under fee-for-service (FFS) Medicare and received dialysis from approximately 7,000 dialysis facilities;

Medicare expenditures for outpatient dialysis services were $11.4 billion, a 0.4% increase over 2016 expenditures;

between 2012 and 2017, there were declines in mortality, hospitalization and 30-day readmission rates, though the proportion of fee-for-service dialysis beneficiaries using the emergency department increased;

negative cardiovascular outcomes associated with high anemia drug use generally declined, and blood transfusion use, which initially increased under the Prospective Payment System adopted in 2011, has trended downward since 2013; and between 2012 and 2017, beneficiaries’ use of home dialysis increased from 9.5% to 11% –by Mark E. Neumann

 

Reference:

http://www.medpac.gov/-documents-/reports

 

 

 

Medicare pays dialysis clinics that qualify for its low-volume payment adjustment almost 24% more per treatment than urban dialysis facilities to compensate for higher operational costs. However, according to a new report, in many cases, facilities that apply for the adjustment – and get an additional 0.8% adjustment for being a rural clinic – may be gaming the system by capping the number of treatments to qualify for the bonus payments.

Those funds, which went to about 5% of dialysis clinics in 2017, should be directed to clinics that are in isolated areas that truly have higher costs, the Medicare Payment Advisory Commission (MedPAC) said in their semi-annual report to Congress released on April 5.

“The 23.9% low-volume and 0.8% rural payment adjustments under the dialysis prospective payment system (PPS) are not targeting facilities that are critical to beneficiary access,” the commissioners said in the report.

CMS currently defines a low-volume facility as one that provides fewer than 4,000 treatments (Medicare and non-Medicare) in each of the 3 years before the payment year and has not opened, closed or received a new provider number because of a change in ownership during the 3-year period, according to MedPAC. A facility can apply for the low-volume payment adjustment (LVPA) if it meets that criteria, along with being at least 5 miles away from another clinic with similar ownership. Since 2016, all rural facilities, irrespective of their treatment volume or proximity to other dialysis facilities, also receive an adjustment of 0.8%.

The concern, said MedPAC commissioners Nancy Ray, MS, and Andy Johnson, PhD, in a presentation based on the report’s findings is that the maximum 4,000 treatments per year criteria may create a “so-called ‘cliff’ effect [that] may incentivize some facilities to limit services” to get the bonus payment.

In 2017, 40% of the dialysis facilities that qualified for the LVPA were within 5 miles of another facility, raising questions about whether these clinics experienced higher costs and needed the adjustment.

This policy “does not account for higher costs of facilities with relatively low volume (eg, between 4,000 to 6,000 treatments per year)” that are in more isolated areas, they reported.

A facility currently receiving the adjustment that conducts fewer than 4,000 treatments annually has a Medicare margin of - 3%, but facilities that provide between 4,000 to 6,000 treatments have a margin of - 17%, Ray and Johnson reported.

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They proposed to replace the rural and low volume adjustments with one low-volume and isolated (LVI) adjuster for a facility.

To qualify for the proposed adjustment, a facility must be more than 5 miles from the nearest dialysis facility regardless of ownership and exhibit a low volume of treatments for 3 prior years, ranging from 4,000 to 6,000 treatments per year.

The LVI adjustment “would better account for higher cost in low-volume and isolated facilities,” Ray and Johnson said in their presentation.

The proposal is expected to be considered by the commission during its fall meeting in September.

The following are MedPAC Report highlights (based on Medicare data from 2017):

nearly 395,000 beneficiaries with ESRD on dialysis were covered under fee-for-service (FFS) Medicare and received dialysis from approximately 7,000 dialysis facilities;

Medicare expenditures for outpatient dialysis services were $11.4 billion, a 0.4% increase over 2016 expenditures;

between 2012 and 2017, there were declines in mortality, hospitalization and 30-day readmission rates, though the proportion of fee-for-service dialysis beneficiaries using the emergency department increased;

negative cardiovascular outcomes associated with high anemia drug use generally declined, and blood transfusion use, which initially increased under the Prospective Payment System adopted in 2011, has trended downward since 2013; and between 2012 and 2017, beneficiaries’ use of home dialysis increased from 9.5% to 11% –by Mark E. Neumann

 

Reference:

http://www.medpac.gov/-documents-/reports