MedPAC final report: no increase in dialysis payment rate for 2016

Confirming an opinion released via a voice vote last month, the Medicare Payment Advisory Commission announced in its March written report to Congress that dialysis facilities did not need an increase in the bundled payment for 2016.

Specifically, “The Congress should eliminate the update to the outpatient dialysis payment rate for calendar year 2016.”

The report, one of two compiled each year by MedPAC that looks at Medicare programs and costs, includes a full chapter on dialysis care. In that chapter, the commission looks at access to care, the state of dialysis technology, the consolidation among dialysis providers, and other areas to determine if the industry needs an increase in Medicare payments.

When the dialysis bundle was established in 2011, it included a yearly review of costs of care. Called the “market basket,” the review, a hard fought victory for the renal community, determines if changes in technology and/or the dialysis marketplace would warrant in increase in the rate. But that review has been superseded over the last two years by a 12% rate cut for IV drug payments to dialysis clinics imposed by the Centers for Medicare & Medicaid Services. CMS imposed the rate cut after determining it had been paying too much for IV drugs within the bundled rate.

After legislation from Congress tempered the planned cut by CMS, it was agreed to apply any possible market basket review increases over multiple years to compensate for the cut.

'Costs have stabilized'
During a public meeting last Dec. 18, MedPAC presented a draft recommendation that Congress eliminate the update to the dialysis facility payment rate for calendar year 2016. MedPAC staff member Nancy Ray said at the time that eliminating the update would "lower spending relative to current law." She said that eliminating the payment update might put more financial pressure on dialysis providers, but said the commission does not "anticipate that it will impact [dialysis providers'] willingness or ability to furnish care. We do not anticipate this recommendation impacting beneficiaries."

In its final March report on dialysis care, MedPAC gave high marks to access to care and improvement in quality measures such as mortality. In looking at the cost of providing dialysis services vs. what providers were being paid, MedPAC said. “Our analysis of Medicare payments and costs is based on 2012 and 2013 claims and cost report data submitted to CMS by freestanding dialysis facilities. During this period, cost per treatment increased by 1%, while Medicare payment per treatment increased by about 1.5%. Taking into account the sequester, we estimate that the aggregate Medicare margin was 4.3% in 2013, and the projected Medicare margin is 2.4% in 2015. The evidence suggests that payments are adequate; the Commission judges that outpatient dialysis facilities can continue to provide beneficiaries with appropriate access to care with no update to the base payment rate in 2016.” -by Mark Neumann

For the full MedPAC report, go to http://medpac.gov/documents/reports/march-2015-report-to-the-congress-medicare-payment-policy.pdf?sfvrsn=0