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Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

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New rule for 2021 would accelerate CMS’ effort to direct patient care to lower-cost settings and improving access to care

Medicare is using data to assess where it spends the most money on clinical services. Then, guided by that data, it wants to take steps to encourage better, proactive care for patients, including directing clinical care into lower-cost settings. This has implications for clinical laboratories because such efforts can move patients into alternative care settings and make it more difficult for labs to collect lab test specimens.

In pursuing the goal of better, more proactive care, the federal Centers for Medicare and Medicaid Services (CMS) proposed changing Medicare payments for dialysis to encourage more at-home dialysis services. The initiative confirms that CMS will be steadfast in its efforts to identify high-cost diseases and sites of care, and to direct that care into lower-cost settings that reduce Medicare expenditures without sacrificing care quality.

And, though the initiative has the potential to decrease Medicare spending while improving patient compliance and quality of care, it may lead to logistical challenges for clinical laboratories that will have to collect specimens for testing from patients’ homes rather than dialysis centers.

Changing Government Barriers to Home Dialysis

A press release from the federal Department of Health and Human Services (HHS) states that Medicare spends roughly $114 billion annually on kidney disease, accounting for 20% of all fee-for-service spending. In the United States, 37-million patients suffer from chronic kidney disease and more than 726,000 have end-stage renal disease (ESRD).

“In-center dialysis can be more expensive and produce worse outcomes for patients than at-home dialysis or even a kidney transplant,” Healthcare Dive reported CMS Administrator Seema Verma telling reporters last year when President Trump announced he would sign an executive order overhauling kidney disease payment models.

In a news release, CMS pointed out that currently more than 85% of ESRD patients on Medicare travel to a facility to receive dialysis at least three times a week. On average, they spend 12 hours per week on dialysis machine away from home. The proposed rule (CMS-1732-P) for calendar year 2021 would expand the transitional add-on payment adjustment to include certain new home dialysis machines, CMS said.

“CMS data shows that those with ESRD have the highest rate of hospitalization of any single group, a trend consistent with having to frequently leave home to receive dialysis,” Seema Verma (above with President Trump), Administrator of the federal Centers for Medicare and Medicaid Services, said in a news release. “In the midst of a deadly pandemic that poses a particular threat to those with serious underlying conditions, President Trump’s call for increased access to home dialysis has never been more urgent. Unfortunately, government rules too often stand in the way.” (Photo copyright: New York Times.)

COVID-19 and Threatening Traditional Dialysis Providers

Additionally, the ESRD population has the highest hospitalization rates due to COVID-19 among Medicare beneficiaries, Healthcare Finance reported.

In a statement, Kidney Care Partners (KCP) praised the changes that foster development of home dialysis machines and add new dollars for dialysis calcimimetic drugs. The coalition’s one “disappointment” was that CMS did not change the adjusters currently used in the ESRD Prospective Payment System (PPS) bundle. KCP contends the “underlying methodology used to create the current adjusters gets them wrong and leads to money being taken away from patient care.”

In its analysis of the rule change, Laffer Healthcare Intelligence warned that the federal government’s effort to “modern and optimize ESRD protocols” and its advocacy for home dialysis, artificial 3D-printed kidney development, and high rates of kidney transplants is putting “traditional facility-based dialysis providers at higher risk.”

In its healthcare investment newsletter, Laffer cited HHS Secretary Alex Azar’s “blunt language” in a March 19, 2019, speech to the National Kidney Foundation, in which Azar said his department’s plan was to “pay for Americans with kidney disease to actually get good outcomes, rather than the endless, life-consuming procedures,” as evidence of the federal mandate to overhaul the current system of kidney care.

Lower Cost versus Superior Care

But, according to Modern Healthcare, dialysis centers and patient advocacy groups are not all onboard with CMS’ plan to realign financial incentives to increase home dialysis and kidney transplants and shift providers to risk-based payments. Modern Healthcare’s review of comments on the proposed new payment models (one mandatory and four voluntary) found “some providers and patient groups think the [CMS] Innovation Center exaggerated the clinical evidence, and choosing whether to receive treatment at home or in a dialysis center should be based on patient choice, not financial rewards.”

But Strive Health co-founder and Chief Revenue Officer Robert Badal believes the new rule has the potential to “drive meaningful savings in dialysis costs and improvements in member care” for Medicare Advantage (MA) organizations.

“Skeptics of the new rule claim it may negatively impact access for members who dialyze in the outpatient setting, but this argument appears unfounded,” Badal wrote in an article posted on the Strive Health website. “Existing MA members with ESRD will maintain access to their dialysis provider, whether their provider is contracted or not, and continuity-of-care requirements ensure that dialysis providers will continue treatments and not displace the member. Even as such, we have talked to dozens of payors about the new rule, and the consensus has been a member-centric view of the changes. In fact, many payors are planning to keep their [participating] networks completely unchanged.”

The rule change builds on President Trump’s 2019 executive order launching his “Advancing American Kidney Health”  initiative. Its goals are to:

  • Reduce the number of Americans developing ESRD by 25% by 2030;
  • Have 80% of new ESRD patients in 2025 either receiving dialysis at home or receiving a transplant; and
  • Double the number of kidneys available for transplant by 2030.

This proposed CMS rule change is further evidence that the shift from “volume to value” in healthcare may impact clinical laboratories and pathology groups in unexpected ways.

—Andrea Downing Peck

Related Information:

Dialysis/ESRD Investments: CMS Proposes Increased Reimbursement for Home Dialysis

CMS Proposes Medicare Changes to Increase the Use of Dialysis in the Home

Medicare Program; End-Stage Renal Disease Prospective Payment System, Payment for Renal Dialysis Services Furnished to Individuals with Acute Kidney Injury, and End-Stage Renal Disease Quality Incentive Program

CMS Proposes Medicare Changes to Support Innovation and Increased Access for Dialysis in the Home Setting

Kidney Care Partners Reacts to Recently Released Prospective Payment System (PPS) Rule

CMS Changes to Network Adequacy Pave the Way for MA Organizations to Dramatically Improve Quality and Reduce Dialysis Costs

HHS Launches President Trump’s ‘Advancing American Kidney Health’ Initiative

Trump Executive Order Seeks to Overhaul US Kidney Care

Remarks to the National Kidney Foundation