Transcript Allen R. Nissenson MD

The Medicare Modernization Act:
One step forward or two steps
back?
Allen R. Nissenson MD
Professor of Medicine
Director, Dialysis Program
David Geffen School of Medicine at UCLA
Los Angeles, CA
Thomas Golper MD
Professor of Medicine
Vanderbilt University Medical Center
Medical Director
Medical Specialties Patient Care Center
Nashville, TN
The Medicare Modernization Act
• The Medicare Modernization Act (MMA)
-- an act mainly known for its payment
for medications for Medicare
beneficiaries -- was passed at the end
of 2003.
• It affects the pricing and
reimbursement of drugs in both
hospitals and dialysis facilities.
Thomas Golper MD
Dialysis units and injectable
drugs
• Historically, dialysis facilities have a major
fraction of their treatment margins come from
injectable drugs (erythropoietic substances,
iron supplements, vitamin D analogs,
carnitine).
• With the MMA they will be reimbursed at a
much lower rate for these drugs.
• The dialysis unit now gets paid a composite
rate covering the actual treatment for each
patient and a separate payment for injectable
drugs.
Thomas Golper MD
Allen Nissenson MD
Can dialysis units survive financially
only on the composite rate?
• Dialysis units survive on:
– Non-Medicare payers who are charged
higher fees.
– Profits from injectable drugs.
• With this change on payment of injectable
drugs, facilities with a large number in
noncommercial patients will struggle.
– Especially in underserved areas, rural areas,
inner cities where few have insurance …
• Will affect access to care for patients.
Allen Nissenson MD
Cutting costs
• There are currently no rigid rules at the
national level regarding dialysis unit staff.
• “Amputations”
– As revenue shrinks, the unit first cuts social workers,
then dieticians, nurses, and patient care technicians.
• Two thirds of the cost in a unit relates to staff;
the remaining third covers supplies and
equipment.
– Cutting costs for either staff (fewer staff, hiring those
with less training) or supplies (reuse of dialyzers,
prolonged use of outdated equipment) is not
desirable.
Thomas Golper MD
Allen Nissenson MD
Impact of case-mixed adjustment
on the composite rate payment
• Some patients cost more to dialyze.
• The current strategy balances out
expensive vs less-expensive patients
within a unit.
• Case-mixed adjustment or differential
payment: higher payment for those
whose dialysis is more expensive and
vice versa.
• Must first determine the most expensive
patients to dialyze.
Thomas Golper MD
Allen Nissenson MD
Drawbacks of case-mixed
adjustment
• Should balance out for large units with
a broad distribution of patients, but
smaller units will likely experience a
detrimental effect:
– Particularly in units with a large number of
patients in the mid-range of cost
• The major drawback is our ability to
identify the patient characteristics that
really influence cost.
Thomas Golper MD
Allen Nissenson MD
A study for case-mixed
adjustment
• One very rigorous analysis was done by
a very credible group on behalf of CMS.
• Drawback: the study relied on Medicare
cost reports, which are:
– required by Medicare, and
– have a number of constraints built in which
don’t really reflect the actual costs but
rather reflect rigid Medicare rules
• The analysis was based on “flawed
data.”
Allen Nissenson MD
What about big corporations?
• Impact on large units is neutral -- some
corporations run hundreds or thousands
of units each:
– eg, Frenesius and DaVita/Gambro
• It will all equal itself out and not create
any adverse effects:
– Their small units may lose a huge amount
of money and larger ones will win some.
– They will need to redistribute funds within
the company, which is very difficult.
Allen Nissenson MD
Was it the right decision?
• We have urged CMS to reconsider and
to re-examine the methodology and go
back to the basics:
– What are we trying to accomplish?
– How can that best be accomplished?
• This will need to be monitored very
closely and modified if the adverse
effects we suspect actually do occur.
Allen Nissenson MD
Was it the right decision?
(cont.)
• Theoretically the methodology is sound,
but practically speaking there are
problems:
– Fiscal intermediaries who received the
demographic data didn't know how to
handle it.
– Some payments were held up this year
simply because the bill was too confusing.
• We had urged CMS to conduct a pilot
project, a demonstration project that
CMS chose not to do.
Thomas Golper MD
One step forward or two steps
back?
• The old payment system had its flaws but all
facilities adapted to it over 20 years, then CMS
changed the system overnight.
• This kind of change may work in industry
sectors but not in healthcare.
• CMS must be reminded that, when dealing
with very sick patients, abrupt changes in
reimbursement can have devastating shortterm effects on patient outcomes.
• Changes in payment systems should be
proven to bring about better patient care
before being implemented on a large scale.
Allen Nissenson MD