Future shock: Progress on kidney-related health policy issues in 2014

For several years running now I have been asked to write a column for the January issue of Nephrology News and Issues predicting what I think might happen that year. An executive summary of my predictions this year are as follows:

The Washington Wizards will win their first NBA title since 1978.
The Washington Nationals will win the World Series for the first time in franchise history.
The Maryland Terrapins will go to the Rose Bowl in their inaugural Big Ten season.

Oh wait, this is supposed to be about health policy issues affecting kidney disease care—in that case, these are the predictions:

Repeal and reform of the sustainable growth rate (SGR) formula used to determine Medicare reimbursement for nephrologists and all other Part B providers will occur.
The Centers for Medicare & Medicaid Services will begin the process of making methodological changes in the ESRD Prospective Payment System in a way that will partially offset the scheduled 12% cut due to changes in drug utilization.
Congress will enact legislation that provides kidney transplant patients with coverage for immunosuppressive drugs for the life of the transplant.

In something of a surprise, the sports predictions are much more far-fetched than the health policy predictions (sadly for me in my sports fan life).

Let’s look at these issues individually and see if nephrology will have a winning season.

1. The Sustainable Growth Rate

As 2013 came to a close, Congress was approaching a historic opportunity to address Medicare physician payment reform. In July 2013 the House Energy and Commerce (E&C) Committee passed SGR repeal/replace legislation on a unanimous and bipartisan 51-0 vote (let that one marinate for a moment). Three months later the Senate Finance (SFC) and House Ways and Means (W&M) Committees released their own bipartisan and bicameral proposal to permanently fix Medicare Part B payment (and once again, this bears reflection—bipartisan and bicameral—in today’s rancorous environment?). For all of the disgust directed at Congress these days, 99% of it justified, these are relatively remarkable steps forward.

Both the E&C bill and the bicameral proposal roughly hew to the same framework: SGR repeal, creation of a period of stability in physician/Part B provider reimbursement, use of incentives to compel providers to move into alternative payment models, and progression toward more meaningful performance measurement and improvement activities. There are differences between the bills; the E&C bill provides a modest (0.5% annual) increase in reimbursement (and accordingly is expected to cost more), while the SFC/W&M proposal has more fleshed out provisions in the area of performance improvement. But again, the broad structures are similar.

So, will SGR repeal actually happen in 2014? The prediction here is a cautious and optimistic yes, as there is an alignment of the stars in place that just hasn’t happened previously. As has been widely reported, the price tag for SGR repeal is much lower than it was even 18 months ago (now somewhere between $150-175 billion as opposed to an earlier estimate of $250-300 billion), and there is belief that the next Congressional Budget Office score (the estimated cost) will be even lower, due to the expected and continued reduction in the overall rate of growth in the Medicare program. Additionally, there is a feeling that both Senate Finance Committee Chair Max Baucus, D-Mont., who is retiring, and W&M Committee chair Dave Camp, R-Mich., who is at least supposed to be term-limited according to Republican Party rules, consider SGR repeal as a legacy issue and want to make it happen. Finally, there are the somewhat paradoxical coexisting facts that Congress is very tired of this issue hanging over their heads every year and wants it off their plate, and that legislators recognize that instability and unpredictability in physician payment is fundamentally unfair and thus a fix is the right thing to do. Like the rest of organized medicine, the Renal Physicians Association has long advocated for physician payment reform generally and SGR repeal specifically.

Of the longstanding barriers on this issue (i.e., what should replace the SGR system, and where does Congress come up with the $150-175 billion to pay for the change), given Congress’ recent work, the first is somewhat off the table now and thus the pay-for is (as always) the overriding issue. The odds are that this funding would come from other sectors in the Medicare program, although in early December there was also a rumor floating around Washington that some Republicans were softening in their opposition to using the ‘peace dividend’ resulting from the reduction in U.S. military activities overseas for some funding.

2. Prospective Payment System (the bundle)

Unlike the SGR, we know with greater certainty that the End-State Renal Disease Program’s Prospective Payment System will undergo some degree of refinement in the next year, by virtue of the mandated rulemaking cycle (so I guess it wasn’t going out on much of a limb in predicting change here). And while there is no guarantee that whatever refinement occurs will be positive in a fiscal sense and thus begin to offset the 12% cut from the 2014 ESRD PPS final rule, we do know that there are some valid arguments indicating that CMS was methodologically inconsistent in developing the final rule.

For example, using 2012 drug utilization data and 2008 cost report data for all of the other components of the ESRD market basket, despite the availability of the 2011 and 2012 cost report data, is at best illogical and seems certain to result in inequities in the final PPS rate. The forecast here is that CMS will begin to address some of the issues as part of the 2015 ESRD PPS rulemaking cycle and that by 2016 there will have been some revisions that will in part mitigate the 12% cut.

3. Lifetime immunosuppressive drug coverage for kidney transplant patients

All of the right steps toward passage of this legislation to end the three-year limit on coverage for these expensive drugs are being taken. The underlying legislation, the Comprehensive Immunosuppressive Drug Coverage for Kidney Transplant Patients Act of 2013 (S. 323, H.R.1428) continues to gain co-sponsors, with the House bill in December passing the symbolic 100 co-sponsor mark. Additionally, there are indications that the legislation will be re-scored at a lesser cost, thus lowering the bar for this measure to be added to a broader Medicare bill. House leadership has also given its blessing for the immunosuppressive drug bill to proceed. RPA’s advocacy agenda for the past seven years has included extension of immunosuppressive drug coverage as a top priority.

(Find more articles from NN&I's January 2014 issue)

It would be irresponsible to paint too rosy of a picture here. Any measure that costs anything will have its challenges in Washington these days, and smaller initiatives such as the immunosuppressive drug bill will have to clear numerous procedural hurdles (such as the existence of a broader legislative vehicle to hitch its wagon to). However, the immuno bill has bipartisan, bicameral support, and the light bulb seems to have gone on for a lot of legislators that this should occur. If a broad Medicare package is enacted in 2014, the chances for inclusion of a provision extending immunosuppressive drug coverage for kidney transplant patients are strong.

Who will control the votes?

In a bonus prediction, the call here on the November mid-terms is that this will again be a status quo election and that House Republicans and Senate Democrats will continue to hold their respective chambers (recognizing that this is not exactly man-bites-dog stuff here). In the House, despite Democrats’ best hopes after the October shutdown debacle that they could retake control of leadership, that now seems pretty laughable. Actually gaining the 17 seats necessary to do so was always probably too steep a Hill (excuse the pun) to climb, and this was before the Obamacare website fiasco. The gerrymandering of the seats in the House is such that it will possibly take a true wave election before the GOP has to cede control.

The Senate is a dicier call but it still seems like it would require a lot for the Republicans to take over. While there are more vulnerable Democrats up for re-election this year than Republicans, and it only takes a party switch of six seats to turn control over to the GOP, where exactly those six seats come from is somewhat hard to see. The Senate seats in South Dakota and West Virginia are near-locks to turn over, but bruising Republican primaries seem fairly likely to occur in Alaska, Louisiana, North Carolina, and Oregon, such that the candidates that do emerge will be hard pressed to get back up to speed in the general election. Further, to the extent that a moderate Republican has to fend off a challenge from the right wing of the party, the steps he or she may have taken to gain the nomination may not serve her or him well in the general election.

All of these predictions could blow up in smoke. SGR reform/replacement could be nothing but a dream, CMS might go in the wrong direction on the PPS, maybe immunosuppressive drug coverage is years away, and both chambers of Congress could flip in November.

But maybe, just maybe, Maryland will play in the 2015 Rose Bowl. -by Rob Blaser