ESRD Program Faces Payment Freeze for 2014; Cuts on the Horizon

The kidney community enters 2014 on the heels of receiving some good news—and some bad news—regarding dialysis payments in the Medicare ESRD program.

First, the good news: in its November 22, 2013, final rule, the Centers for Medicare & Medicaid Services (CMS) responded to concerns raised by ASN and other stakeholders that a proposed 12% cut to dialysis payments could impede patient access to care and jeopardize the quality of care. The agency acted to delay the cuts for two years, rather than having them take effect starting this month, responding to calls from the kidney community to phase in the cuts.

In 2014 and 2015, dialysis providers will effectively see a payment freeze, as CMS set the cuts to equal exactly what the market basket update (an annual increase to account for changes in price increases) would have otherwise been. CMS has not yet decided whether it will phase in the remainder of the cuts in one year (2016) or over the course of 2016 and 2017.

Also in the good news department: CMS provided a 50% increase in payments for the home dialysis training add-on. ASN and others in the kidney community had long advocated for an increase in the training payment, which was widely perceived as undervalued, and in some cases an obstacle to starting or expanding home dialysis programs. As a result of the decision to raise the payment rates, 2014 could see more patients having access to a choice of training to dialyze at home or continuing to receive care in their dialysis centers.

The bad news is that the 12% cut is still coming. Despite concerns raised by the community regarding both the legality of the cut and its potential effect on patient care, CMS finalized the 12% reduction as originally proposed. The agency emphasized that in determining the size of the cut, it closely followed the American Taxpayer Relief Act of 2012, which specified that payment amount to reflect the Department of Health and Human Services Secretary’s estimate of the change in the utilization of ESRD-related drugs and biologicals.

Cuts likely to affect vulnerable patients disproportionately

Going into 2014, concerns persist that cuts of this magnitude could result in unintended consequences for the most vulnerable patients resulting from the closure of some units, reduced staffing and facility hours, and certain quality improvement initiatives. These changes mean that patients who already face difficulty getting to dialysis may have to travel farther and face fewer choices of when to dialyze; dialysis care teams may have to contend with a higher patient-to-staff ratio; and certain benefits—such as nutritional supplements—that patients currently enjoy may be eliminated.

“Patients who rely on lifesaving dialysis in rural and inner-city environments are most likely to be at risk as a result of the 12% cut,” said ASN President Sharon M. Moe, MD, FASN. “ASN is grateful that CMS delayed these cuts in the short-term. The society is committed to working with the entire kidney community and CMS in 2014 and 2015 to ensure that patients continue to receive access to the highest quality care when the cuts take effect in 2016.”

Although there will be two years of flat dialysis payments, changes in practice patterns may come as early as 2014 and 2015 as providers begin to react in anticipation of the 2016 cuts.

“Increased monitoring of facility closures and patient outcomes will be crucial,” said ASN Public Policy Board chair Thomas H. Hostetter, MD, FASN. “CMS already assesses many aspects of care via claims-based monitoring, and ASN has suggested a number of other important elements that the agency should track in as close to real-time as possible. We were pleased to see in the final rule that CMS is looking into the feasibility of collecting that information, which will be all the more important as 2016 approaches.”

The year 2016 will also bring the addition of oral-only drugs to the bundled payment rate for dialysis care. It is unclear exactly how CMS will integrate those costs to the bundle and how those changes will interface with the slated cuts. What is clear is that the kidney community in 2014 will likely focus on developing strategies to mitigate the potentially harmful effects of the 12% cut and ensuring patients’ continued access to care in 2016.


January 2014 (Vol. 6, Number 1)