Transcript The Medicare ESRD Prospective Payment System: A Reality Check

Implications of The Medicare
Prospective Payment System (PPS)
for Small Dialysis Organizations
Annotated ASN 2011 Presentation
Fredric Finkelstein, MD
Alan Kliger, MD
Hospital of St. Raphael
Yale University
New Haven, CT
John Kochevar, PhD
Mark Stephens
Kochevar Research
Associates
Purpose
To determine :
• The financial impact of the PPS on small
dialysis organizations.
• The consequences of gains/losses for
treatment practices, facility sale or closure.
Background
• Facility patient costs and outcomes vary widely.
• Variations are due to patient and facility
characteristics, geography, facility efficiency, etc.
• We focused on which facilities might gain or lose
income, which patients were most costly, and what
strategies were being considered to maintain
financial solvency
Background
Detailed analysis of the CMS Facility Impact file showed high variation in PPS payments.
Ownership Type
LDO
Regional Chain
Independent
Hospital
Total
N
3205
651
516
576
4,948
Average
Avg System Average Income Avg Individual Range Individual
Income (000) % Gain/Loss Gain/Loss (000) % Gain/Loss
% Gain/Loss
$
1,954
-3.6% $
(70)
-2.2% -26% to +87%
$
1,799
-0.1% $
(1)
1.4% -34% to +65%
$
1,667
0.9% $
15
5.0% -38% to +80%
$
1,629
3.6% $
58
9.0% -24% to +110%
$
1,865
-2.0% $
(37)
0.4% -38% to +110%
The top quintile of income losing facilities will lose much more than 2% income.
Average
Income Loss
Ownership
Number
% Income Loss
LDOs
641
$
264,000
███████████████-12.7%
Regional Chains
131
$
187,000
█████████████-11.1%
Independents
103
$
179,000
███████████-9.6%
Hospitals
115
$
134,000
█████████-7.7%
Total
990
$
230,000
█████████████-11.6%
Methods
Sample
• Quota sample of SDOs selected by region, size, urbanicity
(rural, suburban, urban), chain status, % minority in zip code.
• Randomly selected within cells.
• Final sample: 41 Facilities, 3039 patients.
Interviews
• Four interviews each facility: facility characteristics,
treatment practices, financials, plans for changes.
Patient Data
• Form 2728. Comorbidity check list, 2009 treatments,
payments, EPO, Hgb, hospitalizations for 2009.
Methods
Calculations
• Calculated PPS payments for 2011 and subtracted from 2009
payments, up-dated for inflation.
Cautions
• Under-represents facilities in South, those at high risk.
• The number of SDO facilities has declined since 2009.
Facilities Patients
Region
%
%
Midwest
34
33
Northeast
27
32
South Atlantic
7
4
South Central
10
7
West
22
24
Total
100%
100%
Patient Characteristics
The Reality Check sample was older, more patients were new to dialysis, and they had
fewer comorbidities.
than the CMS sample.
18 - 44
Total
Patient
Months
2,641
45 - 59
60 - 69
6,653
6,211
25.2%
23.5%
25.2%
23.2%
70 - 79
80 +
Underweight (BMI < 18.5)
6,302
4,637
1,149
23.8%
17.5%
4.3%
25.1%
12.3%
3.9%
Duration of renal replacement therapy < 4 months
Pericarditis (during prior 0-3 months)*
1,642
57
6.2%
0.2%
5.6%
0.4%
487
261
223
1.8%
1.0%
0.8%
1.7%
1.2%
2.4%
73
50
0.3%
0.2%
1.1%
1.4%
Patient Characteristics
Age:
Pneumonia/Other Infections (during prior 0-3 months)*
Gastrointestinal bleeding (during prior 0-3 months)*
Hereditary hemolytic or sickle cell anemia*
Myelodysplastic syndrome*
Monoclonal gammopathy*
% of Total UM-KECC % of
Patient
Total Patient
Months
Months
10.0%
14.0%
Total Patient Months
26,444
100.0%
100.0%
Source: Patient 2728 Form, Clinical Comorbidity Form, and PPS Calculation Model
Note: Table percentages do not total to 100% because patients may be counted in multiple categories.
UM-KECC % of patients from February 2008 UM-KECC report, based on 2002-2004 patient data.
* Patients were counted if coded "Yes" on these conditions.
Payment Reductions
Facilities in our sample were projected to lose more than the CMS average.
CMS Projected Income Reduction
2007 Data ¹
Present Study Sample Income Reduction
2009 Data
•
•
•
•
•
•
4951 Facilities:
- 2.0%
Top Quintile:
-12.0%
Income reductions higher:
LDOs
South
Minority areas
41 facilities:
- 5.1%
Top Quintile: - 15.3%
Income reductions higher:
Rural
Northeast
¹ Final Rule, Table 35
Many facilities in our sample reported cutting ESA use in 2009.
Payment Reductions
For 38 Facilities in Present Study
Impact File (2007)
- $ 338,016 (-0.4%)
Our Calculations (2009)
- $3,885,676 (-4.9%)
We double checked our calculation model and compared it to a similar
model created for the NRAA. The payment reductions reported in the
Impact file were not predictive of our sample’s reductions or others.
Income Reductions Per Patient, Per Treatment
Facilities will lose income on a small portion of patients.
Average Annual Payments Per
Patient
CR/SB Payments
$26,930
PPS Payments
Difference
$25,422
-$ 1,508
Average Income Gain/Loss/Tx
Total
N=3039
-$15
Quintiles
1
-$102
2
-$ 30
3
-$ 2
4
$ 21
5
$ 54
Patient Average Income Gains/Losses
Per Treatment By Quintile
Characteristics not in the PPS accounted for large income gains and losses.
Income Losses/Gains by Quintile
N
607
608
608
608
Biggest
Reductions
Avg $ Change in
Income per Tx
608
Biggest
Gains
- $101.63 - $30.08
- $1.81
$21.04
$54.46
% Died 2009
19.6%
14.6%
14.1%
10.9%
10.9%
% Black
38.4%
30.8%
27.1%
26.8%
24.1%
% Rural
14.5%
10.2%
8.2%
8.2%
11.0%
9.1%
8.4%
9.9%
17.1%
46.9%
% New to Dialysis
Characteristics of Patients with Highest
Income Losses Per Treatment
Characteristics combined produced even higher income losses.
Death during year
-$31
-$18
-$18
-$24
< Age 65
3+ co-morbidites
African American
-$26
-35
-30
-25
-20
-15
-10
-5
AVERAGE INCOME LOSS PER TREATMENT
Rural
0
Comorbidities and ESA Use
The PPS failed to include ESA related comorbidities.
Comorbidity
PPS Adjustors
HIV
Hemolytic/Sickle Cell Anemias
Related to ESA
Use p < 0.05
X
X
X
Cancer
X
Diabetes
X
Peripheral Vascular Disease
X
SHPT
X
Pneumonia
X
Septicemia
GI Bleed
X
X
X
X
Inability to Ambulate
X
Inability to Transfer
X
Need assistance with ADL
X
Multiple Comorbidities and ESA Use
The PPS case mix adjustors do not pay more for multiple comorbidities.
Number of Comorbidities
Total
0
1
2
3
4+
Patient N
3039
382
847
664
437
709
ESA $/Tx
$51.
$47.
$47.
$49.
$50.
$60.
ESA Units/Tx
(000)
5.5
5.2
5.0
5.3
5.6
6.4
Gain/Loss /Tx
$15
$3.8
$7.6
$12
$17
$30
Facilities with sicker patients lost more money and it was not only because
of ESA use.
Facility Loss /Gain Analysis
Losses/Gains are due to an interaction of patient burden and facility practices.
Average Loss / Gain/ Tx by Facility
< -$26
-$25 to - $20
-$19 to -$9
-$8 to +$.24
>$ 0.25
Facility N
8
8
9
8
8
Patient N
446
827
642
649
430
% Patients losing > $5000
37%
23%
17%
13%
7%
Av. ESA Annual Costs
$6660
$6160
$5080
$3780
$4510
Av. Hgb
11.5
11.4
11.4
11.5
11.3
% Black
45%
38%
19%
12%
36%
% 4+ Comorbidities
33%
23%
35%
20%
20%
% New to Dialysis
15%
18%
19%
21%
17%
Note: All differences were statistically significant.
ESAs – Average Payments and Costs
PPS Bundle ESA Payment /Tx (2011)
Base Rate
$53
With Adjustments
$57
Average ESA /Tx Costs - Cost Reports 2009
LDOs
$65
MDOs
$54
SDOs
$41
Average ESA/Tx Reimbursements 2009
Sample SDOs
$51
All costs / reimbursements adjusted to 2011 for inflation.
Financial Health
Will reduced Medicare revenues drive SDOs out of business?
Wide variation in % Medicare treatments
Average % Medicare treatments 73%
Range
40-95%
Multiple sources of income, all in flux
Medicare, Medicaid, HMOs, PPO, Copays, Nursing homes
Individual units have different revenue and cost profiles.
No clear patterns emerged.
Some units can survive a 5% cut in Medicare revenue. Others
will be in trouble and require subsidies, staff cuts or closure.
Responses to the Bundle: Positives
Final interviews with clinicians and financial managers.
Nearly total agreement:
• No salary reductions
• No further staff reductions, including nursing, social
work, and dietary support
• No reductions in time spent with patients
• No change in dialysis time
• No facilities were considering immediate closure.
Responses to the Bundle: Negatives
Cost shifting and selectivity
• Likely more selective in admissions (40%) with admission
of fewer charity cases (47%) and fewer non-compliant
cases (45%).
• Likely more patients refused by other facilities (63%).
• Likely more patients remain in local hospitals (37%).
• Likely reduction in lab tests (80%).
• Likely reduction in equipment spending (65%).
Responses: Practice Changes
• Likely to change anemia protocol (90%) and to
lower hemoglobin target (75%).
• Likely to change to subcutaneous EPO (68%).
• Likely to send more patients for transfusions
(55%)
• More likely to send patients to hospital if they
require costly medications (50%).
Response: Reevaluation of Practice Patterns
• Likely reducing EPO will lead to more patients below
Hgb 10 (65%).
• But, impression is that reducing EPO and lowering
Hgb target will not have negative impact on quality
of life (65%), overall health (50%), and mortality of
patients (80%)_
• Likely to increase use of cinacalcet (86%) and calcitriol
(78%) and decrease use of paracalcitol (75%).
• Likely to increase home dialysis use (60%) but
anticipate slow increase
• Likely to work with other physicians to improve pre
dialysis care (74%).
PPS Challenges for SDOs
• The PPS is likely to cut payments more than 2%,
much more for rural and minority facilities.
• Outlier payments and case mix adjustors do not
work as planned.
• Facilities are cutting and shifting costs but this will
not solve the problem of high cost patients.
• Few expect to close this year, but they are vulnerable
to additional cuts in private insurance and Medicaid.
• The potential risk for patients and the health care
delivery system needs to be more closely examined.