The Government Accountability Office is issuing a cautionary note that Medicare's upcoming prospective payment system for end-stage renal disease might impair access to drugs for some demographic groups.

Groups such as African-Americans, urban dwellers and younger patients use higher amounts of products such as erythropoiesis-stimulating agents and intraveneous vitamin D, GAO says, and their treatment could be affected by payment constraints.

CMS is finalizing regulations that bundle dialysis with all other services, including drugs and diagnostic tests, related to ESRD treatment. A proposed rule was issued in September 2009. One contentious issue has been whether to include all ESRD drugs in the single bundled payment, even those traditionally not administered in the Part B setting (¹ Also see "CMS Defends Oral ESRD Drug Inclusion In Proposed Bundling Rule" - Pink Sheet, 21 September, 2009.). Medicare is the dominant payer for ESRD patients.

The GAO ² report, made public April 30, cautions that the bundled system could affect different patient groups' access to drugs, depending on how the payment rate is adjusted for case-mix (a measure of patient severity of illness) and for cases that qualify as treatment outliers.

"There are concerns ... that if the case-mix adjustment and outlier policy do not adequately account for differences across beneficiaries in the cost of care, some beneficiaries could have their access to or quality of dialysis adversely affected," the report states. "Beneficiaries who require higher-than-average doses, or amounts, of injectable ESRD drugs may be particularly vulnerable to the potential of such adverse effects on access and quality because of their above-average costs for these services."

House Ways and Means Subcommittee on Health Chairman Pete Stark, D-Calif., and Subcommittee on Oversight Chairman John Lewis, D-Ga., requested the report. Stark has kept a close watch on utilization and expenditures for ESAs in particular, including whether providers are following recommended treatment guidelines (³ Also see "Possible Legislation Regarding ESA Administration On The Horizon" - Pink Sheet, 16 November, 2009.).

The creation of the ESRD prospective pay system was mandated by the Medicare Improvements for Patients and Providers Act of 2008 to, among other things, ensure that ESAs are properly administered and not over-prescribed (⁴ 'The Pink Sheet,' July 21, 2008). ESAs are among the highest budgetary items for Medicare.

GAO's report is based on 2007 data, That year, it says, Medicare's dialysis population numbered about 414,000 and program expenditures for dialysis and injectable ESRD drugs were about $6.8 billion.

Groups identified by GAO as having higher-than-average expenditures on ESRD drugs include African-Americans, beneficiaries dually eligible for Medicare and Medicaid, beneficiaries age 20 to 64 years old, females, non-Hispanics and urban residents.

The average spending per Medicare beneficiary per month related to injectable ESRD drugs in 2007 was $693. For African-Americans, it was 13 percent higher at $782, which GAO states was due primarily to higher spending on ESAs and intravenously administered vitamin D. Dialysis services spending was 10 percent higher for this demographic group and IV vitamin D was 38 percent higher.

For dual-eligible beneficiaries, the average drug spend was $735 per month, 6 percent higher than the average across all beneficiaries and 12 percent higher than beneficiaries who were not on Medicaid. Again, GAO cited above-average expenditures on ESAs and IV vitamin D.

For individuals ages 20 to 44, Medicare spending on ESAs was about 9 percent higher than for the overall ESRD population for dialysis services.

Expenditures for females on injectable ESRD drugs were about 3 percent higher versus dialysis patients as a whole and 6 percent higher than males.

Providers Suggest Treatment Has Changed

GAO invited three industry groups to comment on its analysis: the Kidney Care Council, the National Renal Administrators Association and the Renal Physicians Association. All said the 2007 data analyzed may not be applicable to the current ESRD environment, particularly in light of changes in use of ESAs after safety issues raised.

"They asserted that prescribing patterns for injectable ESRD drugs may have changed since 2007 and that this may have been due in part to safety concerns associated with ESA use," the GAO report notes, adding that it used 2007 data because that was the most recent data available for analysis.

In 2007, ESA products - Amgen's Aranesp (darbepoetin alfa) and Epogin (epoetin alfa) and Johnson & Johnson's Procrit (epoetin alfa) - fell under heightened scrutiny because of safety concerns, but at that time indications related to uses in the non-renal setting were targeted (⁵ Also see "ODAC Calls For Additional EPO Trials To Support Continued Use In Oncology" - Pink Sheet, 10 May, 2007.). Ultimately, CMS issued a national coverage determination limiting the use of ESAs in the non-renal setting in July 2007 (⁶ Also see "Medicare ESA Coverage Will Not Experiment With Clinical Trial Approach" - Pink Sheet, 6 August, 2007.).

More recently, the Medicare Evidence Development and Coverage Advisory Committee took the first step toward determining whether CMS should open a national coverage determination for the use of ESAs in the ESRD setting (⁷ Also see "MedCAC Review Of ESAs In Renal Disease To Help Determine Need For NCD" - Pink Sheet, 29 March, 2010.).

Additionally, the GAO report adds that both KCC and NRAA "stated that the report did not sufficiently examine the socioeconomic status of ESRD beneficiaries, including how beneficiaries with both Medicare and Medicaid coverage would fare under the new bundled payment system."

Demographics Not A Factor: Experts

As part of the report, GAO conducted a web-based survey of 73 clinicians and researchers, with the majority citing clinical and not demographic factors as the likely result for people with above-average dosing of ESRD drugs.

"Specifically, at least 50 percent of these experts identified 14 such factors, including chronic blood loss, low iron stores, and recent hospitalization, as likely to result in above-average doses of ESAs," the report states. "Furthermore, a majority of the clinicians and researchers who completed our data collection instrument indicated that demographic factors were not likely to result in above average doses of ESAs. Specifically, at least 50 percent of these experts identified 16 of the 17 demographic factors, such as age, race and socioeconomic status, as not likely to result in above-average doses of ESAs."

The CMS proposed prospective payment system focuses on clinical factors for its case-mix adjustments that would help protect those treating ESRD from losing money from patients who require higher cost treatments.

In its proposed rule, as GAO notes, CMS considered using race and ethnicity as part of the case mix adjustment, but ultimately declined due to a lack of objective guidelines for classifying beneficiaries. The agency did ask for comment on the issue, noting that such an adjustment may be necessary.

And with the final case-mix adjustment and outlier policy still to be issued, GAO also expressed concerns regarding how CMS will monitor patients to ensure they are not adversely affected by the payment change.

"It will be important for CMS to monitor the effect of the new bundled payment on the access to and quality of dialysis care for these beneficiaries" with higher than average costs, the report advises.

GAO recommends that monitoring access to and quality of care, particularly for high-cost patients, "should begin as soon as possible once the new bundled payment system is implemented and used to inform potential refinements to the payment system."

GAO noted that the three industry associations highlighted the importance of monitoring.

"Representatives from all three organizations agreed that it will be important to monitor the effects of the new bundled payment system on beneficiaries but expressed concern about how CMS would conduct such monitoring," the report states, though "NRAA and RPA representatives questioned how CMS would identify these populations through its monitoring activities."

CMS said in April 30 letters to Stark and Lewis that it "will have a comprehensive monitoring system in place when the payment system is implemented on Jan. 1, 2011."

- Gregory Twachtman ( ⁸ g.twachtman@elsevier.com )

Access To ESRD Drugs Under Bundled Medicare Payments Concerns GAO

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