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ESRD Bundling Comment

Creation/Revision Date: December 15, 2009

December 15, 2009

Ms. Charlene Frizzera
Acting Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Hubert H. Humphrey Building
Room 445-G
200 Independence Avenue, SW
Washington, DC 20201

Re: CMS-1418-P: Medicare Programs; End-Stage Renal Disease Prospective Payment System; Proposed Rule

Dear Acting Administrator Frizzera,

The Renal Physicians Association (RPA) is the professional organization of nephrologists whose goals are to ensure optimal care under the highest standards of medical practice for patients with renal disease and related disorders. RPA acts as the national representative for physicians engaged in the study and management of patients with renal disease. We are writing to provide comments on selected portions of the End-Stage Renal Disease Prospective Payment System Proposed Rule.

RPA appreciates the Agency’s commitment to its mission of ensuring effective, up-to-date health care coverage and to promote quality care for Medicare beneficiaries. Further, we acknowledge the complexity of CMS’ task in balancing the need to promote optimal health outcomes in ESRD patients with exercising its fiduciary responsibilities and executing its legislative mandate in development of the ESRD payment bundle. Our comments will focus on the following issues:

  • Inclusion of Oral Drugs and Equivalents
  • Inclusion of All Lab Tests Ordered by the MCP Physician in the Bundle
  • Setting the Base Payment Rate and the Transition Payment Adjustment
  • Pediatric Payment Policy
  • Case-Mix
  • Outlier Payments
  • Future Review of the Bundle
  • Home and Alternate Dialysis Modalities
  • Physician Services and Vascular Access Maintenance

Inclusion of Oral Drugs and Equivalents

In the proposed rule CMS determines that it is appropriate to include oral drugs and their equivalents in the revised payment bundle, noting that:

“the exclusion of oral drugs and biologicals for which there is no injectable equivalent (or other non-oral form of administration) from
the ESRD PPS would defeat one of the very purposes of the new system—the inclusion of all renal dialysis services furnished to ESRD
patients in a comprehensive payment bundle to which a reasonable payment amount can be attached empirically.”

While RPA understands this rationale in the abstract, we also believe that on a practical level there are numerous issues that will make this policy exceptionally difficult to implement, and are likely to have an adverse effect on many Medicare ESRD beneficiaries. Prior to the release of the proposed rule, RPA’s position on inclusion of oral drugs and equivalents in the bundle called for their inclusion only if the following criteria were met:

  • ESRD patients must have full access to all medications prescribed by their physicians. This includes resolving complex delivery issues at a local and state level including any restrictions of state pharmacy laws.
  • Appropriate tracking systems must be in place to ensure patients receive their drugs at the right frequency and duration.
  • Appropriate metrics must be in place to evaluate whether patients have received their drugs.
  • Patients who receive their drugs through private payers must not be adversely impacted.
  • Home patients must have full access to drugs.
  • A study by the OIG, MedPAC or IOM must be performed after two years to ensure these criteria are met.
RPA believes that the safeguards outlined above were not sufficiently accounted for in the proposed rule; therefore, we strongly urge CMS to exclude oral drugs and their equivalents from the proposed rule until these safeguards are put into place.

If CMS upholds its decision to include oral drugs and their equivalents in the expanded payment bundle, we urge the Agency to implement the following recommendations:

  • RPA recommends that CMS develop and use a specific list of ESRD-only drugs for inclusion in the bundle.
  • RPA recommends that CMS outline a specific process for periodic review of the included drug and equivalent list to account for evelopment of new therapies and other technological innovation in the pharmaceutical and biological sectors as it affects ESRD care delivery.
  • RPA urges CMS to take all steps necessary to ensure that patients have access to all drugs and equivalents appropriate for their treatment, as ordered by their nephrologists. Patients should be able to receive the most effective treatment, and not the least costly alternative.
  • RPA recommends that CMS establish a process whereby MedPAC or other appropriate advisory bodies can track utilization of drugs and equivalents in the bundle to avoid unintended consequences for patients.
  • RPA urges CMS to define and implement an expeditious appeals process for physicians to challenge payment for drugs that may be excluded from dialysis companies’ formularies.

In addition to the points outlined above regarding inclusion of oral drugs and equivalents, RPA also shares the concerns of Kidney Care Partners (KCP) and others in the renal care community regarding the proposed reimbursement level for the drugs. Beyond the underlying fact that RPA questions the appropriateness of their inclusion, establishing a reimbursement level that at best represents one-third of the expense of providing these drugs threatens not only the viability of the service but also the health outcomes of the Medicare beneficiaries receiving the care. RPA therefore, urges in the strongest terms possible that if CMS chooses to include oral drugs and their equivalents in the ESRD bundle, it establish a reimbursement rate sufficient to account for the facility’s expense incurred in providing these services.

Inclusion of All Lab Tests Ordered by the MCP Physician in the Bundle

Like other organizations in the renal care delivery community, RPA is concerned about the proposal to include in the bundle those “laboratory tests ordered by a physician who receives monthly capitation payments (MCPs) for treating ESRD patients.” It is our belief that this is not only an unnecessary change but that it also is likely to cause substantial disruptions in care delivery for those patients whose nephrologist serves as their primary care provider. If the physician in this circumstance chooses to order, for example, a strep test for a dialysis patient in his or her care who has a sore throat, this test would be rolled into the ESRD bundle, and the expense for this service would become the responsibility of the dialysis facility. Thus, implementation of this provision would both create a disincentive for nephrologists to provide primary care services, and would burden dialysis facilities with responsibility for care and services beyond what is appropriate for their mission and charge.

Alternatively, RPA recommends that CMS retain the current list and process for coverage of lab tests in the ESRD bundle. RPA believes that this is one of the numerous aspects of the current bundle that works well and does not require revision. RPA further recommends that CMS outline a specific process for periodic review of the lab tests included in the bundle to account for issues such as frequency of testing, medical innovation and development of new therapies. Historically, there have been tests included in the bundle that were frequently not provided to patients for extended periods of time, while other tests that were provided frequently were not included in the bundle. Periodic review of the bundle would address this issue.

Finally, RPA believes that CMS should include a provision for “compassionate blood draws.” This would enable nephrologists to draw and bill for labs requested by other treating physicians (non-nephrologists). Such a policy feature would be of tremendous benefit in terms of patient comfort (by reducing the number of times a patient must be stuck by a needle, patient convenience (by minimizing the number of necessary interactions with health care professionals) and reduced fragmentation of care (by centralization of the lab tests). Further, to advance the goals of CMS’ Fistula First Initiative, it is critically important to preserve vein access to the greatest extent possible, thereby avoiding unnecessary phlebotomies; allowing the dialysis clinic draw the labs ordered by other physicians is one way to accomplish this goal. For all of these reasons, RPA urges CMS to take advantage of opportunities such as the revision of the bundle to implement patient-friendly policies such as the compassionate blood draw.

Setting the Base Rate and Transition Payments

RPA shares the concerns of KCP and other organizations in the renal community regarding the lack of clarity and other seeming gaps and definitional concerns in the Agency’s methodology for setting the ESRD bundled base rate. As CMS knows, MIPPA specifies that the Secretary shall select from 2007, 2008 and 2009 the year with the lowest “per patient utilization” when projecting the overall ESRD payment envelope and bundled payment rates. However, CMS does not specify how it will define terms such as “per patient utilization” and is otherwise unclear in how it will implement this critically important component of the bundle. RPA believes this substantially disadvantages dialysis providers and ultimately patients as the providers seek to plan for providing care to Medicare beneficiaries in future years. CMS needs to clarify these issues, and provide opportunity for public comment, in advance of finalizing the payment bundle methodology.

Similarly, RPA is concerned regarding the exclusion of categories of available data in the development of the base rate. The caps on hemodialysis-equivalent sessions at twenty (20) per-patient, per-month and EPO utilization at 30,000 units per treatment, as well as the exclusion of actual paid claims from facilities missing a valid county-code, and patients without a valid date of birth from the Medicare Allowable Payment (MAP) calculations result in a lower “total amount of payments” (as mandated by MIPPA) than would otherwise occur. RPA believes this artificially reduces the underlying base pool of dollars which Congress intended to serve as the foundation for the bundled rate. RPA urges CMS to remove the caps and include all of the actual paid claims as it determines the MIPPA mandated “estimated total amount of payments that would have been made under this title if such system had not been implemented.”

Finally, RPA concurs with other organizations in the renal care community regarding the additional 3% reduction in payments resulting from the use of a transition period to the new bundled payment system. Not only do we believe that the additional reduction is duplicative of the legislated reduction that establishes reimbursement at 98% of the ESRD prospective payment system (PPS), but it also is based on an assumption of behavioral changes that are already embedded in the new PPS. Not only does this additional reduction financially penalize dialysis providers in a period of extreme upheaval, it also appears to be based on an interpretation of statute that far exceeds Congressional intent and assumes behavioral modifications already accounted for. RPA strongly urges CMS to eliminate implementation of the additional 3% payment reduction during the transition period from the final rule.

Pediatric Payment Policy

RPA commends CMS for specifically seeking input on its proposed case-mix adjustor for pediatric patients. At the same time, we urge the Agency to either substantially revise the payment methodology for pediatric patients, or delay its implementation. Since the pediatric dialysis patient population accounts for approximately 0.6 percent of prevalent dialysis patients, and only 0.2 percent of dialysis Medicare beneficiaries, delaying application of the revised bundled payment to pediatric patients should have little budgetary impact on broader use of the bundle. Conversely, implementing the bundle in pediatric facilities without substantial revision could have a catastrophic impact on the care provided to pediatric dialysis patients.

RPA shares the opinion of the American Society of Pediatric Nephrology (ASPN), KCP and others that appropriate revision of the payment methodology will include the following characteristics:

  • Analysis of the actual data currently available from cost reports of pediatric units;
  • Segregation of cost data for pediatric patients dialyzed in adult units, which does not accurately reflect the increased cost of dialyzing pediatric patients;
  • Use of a single pediatric case-mix adjustor for all pediatric age-groups;
  • Use of pediatric-appropriate co-morbidities such as developmental delay, failure to thrive, seizure disorder, deafness, pulmonary hypoplasia, congenital heart disease and renal osteodystrophy of growing bones, rather than the adult co-morbidities utilized for pediatric patients in the proposed rule.

Absent development of a revised payment methodology for pediatric dialysis patients that uses actual data and age appropriate co-morbidities, and other data to accurately capture the higher staff costs, higher costs of pediatric-specific dialysis disposable equipment, and higher costs of support for home care of children, RPA strongly urges CMS to postpone the application of the bundled payment to pediatrics until such a methodology can be developed.


RPA supports CMS’ continued use of existing case-mix adjustors such as age, body mass index (BMI), and body surface area (BSA), as we believe these adjustors strike the right degree of balance with regard to simplicity of data gathering and predictive ability. However, it is also RPA’s opinion that the Agency should further enhance the strength of the bundle’s case-mix methodology by implementing adjustors for race and gender, and that the absence of such changes would represent a missed opportunity in the context of revising the ESRD bundle.

Simply put, RPA believes that CMS should account for adjusters such as race/ethnicity and sex that are known by nephrologists and other renal clinicians to affect patient outcomes. Regarding race and ethnicity, CMS itself indicates in the NPRM that there is a “statistically significant relationship” between race and costs, and further cites the “demonstrated significance that race has on provider costs and drug utilization.” RPA believes that the revised payment bundle should account for this demonstrated significance. Given the substantial and concentrated demographics of minority populations in particular parts of the country, failure to implement an adjustor for race and/or ethnicity will adversely affect minority populations that are in many cases already at risk with regard to access to appropriate renal care.

A similarly sound policy rationale exists for creation of a case-mix adjustor for gender. Again, CMS states in the proposed rule that “patient sex is a strong predictor of variation in payments for ESRD patients” and patient sex is an “objective measure, and data on patient sex are readily available.” RPA concurs with CMS on both points and accordingly urges the Agency to utilize patient gender as a case-mix adjustor in the revised payment bundle.

RPA also urges CMS to include a more robust discussion of its plans to account for the implementation of ICD-10 diagnosis codes as of October 1, 2013 in the final rule for the ESRD bundle. As the Agency knows, while ICD-10 implementation is a necessary step on the path to a more comprehensive diagnosis coding system, it will also represent massive overhaul of the coding system in all disciplines and settings of care, and we think it would be prudent for CMS to consider and address the impact of ICD-10 implementation on the ESRD case-mix adjustors as prospectively as possible.

Outlier Payments

As clinicians, nephrologists are aware of numerous categories of patients whose care will be more expensive than average. These include not only frequently occurring circumstances such as those patients with chronic fluid overload, but also other clinical circumstances such as chronically obese or pregnant patients. In finalizing its outlier payment policy, we urge CMS to account for these and similar categories of patients. RPA also believes that CMS should develop an open and transparent review or appeals process for determining reimbursement for these categories of patients.

Future Review of the Bundle

RPA recommends that CMS include a specific and predetermined process for periodic review of the drugs and services included in the bundle, with review of the reimbursement for the bundle being required if and when services are added to or removed from the bundle. The current bundle of services includes components such as lab tests and other services that due to technological advancement are rarely if ever
provided to dialysis patients, while excluding other tests and services that are routinely provided. Periodic review of the bundle would address this issue.

Further, RPA believes that it is only with sufficient resources that nephrologists and dialysis providers will be able to continually improve the care provided to the nation’s ESRD patients. As such, the reimbursement for bundled payment systems must not only cover the services included in the bundle but also be sufficient to promote the use of electronic medical records, integration of emerging technologies, and other innovations in medical practice.

Home/Alternative Dialysis Modalities

RPA commends CMS for the steps taken in the rule that support the advancement of the use of home and alternative dialysis modalities. These include the use of a single bundled payment that is independent of location, the per treatment unit of payment, and the retention of the current policy allowing providers to bill for all medically justified treatments. We believe that these components of the proposed rule indicate the Agency’s positive support of home and alternative dialysis modalities.

However, RPA does remain committed to the position that any policy decision that disadvantages the patient’s ability to move into the home environment must be avoided, and as such, we believe that the decision to eliminate separate reimbursement for self care dialysis training is problematic. This training is a critically important element of a successful home dialysis regimen, and represents significant clinical activity and expense that is incurred by the dialysis provider. RPA therefore urges CMS to restore separate payment for self care dialysis training, and to also apply the reimbursement to home training provided any time the patient changes modality, and not only during first 4 months of treatment. Finally, in the spirit of prospectively accounting for future innovation in the development of the ESRD bundle, we recommend that CMS establish a process for review when there is new science or innovation relating to home dialysis.

Physician Services and Vascular Access Maintenance

RPA commends CMS’ decision to maintain reimbursement for physician services, and services related to the patient’s vascular access maintenance, outside of the ESRD payment bundle, to allow for physicians to serve as the patient’s advocate as necessary and appropriate. Maintaining physician reimbursement for services outside of the bundle gives more options to the nephrologist to prescribe treatments and services in the best interest of the patient, and serves as an effective method of ‘checks and balances’ in the provision of care to ESRD patients. Similarly, segregating reimbursement for vascular access maintenance services minimizes disruption and fragmentation of vascular access care. 
As always, we welcome the opportunity to work collaboratively with CMS in its efforts to improve the quality of care provided to the nation’s ESRD patients, and we stand ready as a resource to CMS in its future endeavors. Any questions or comments regarding this correspondence should be directed to RPA’s Director of Public Policy, Rob Blaser, at 301-468-3515, or by email at


Edward R. Jones, M.D. 

CC: Barry Straube, M.D., Director and Chief Medical Officer, CMS 
Jonathan Blum, Director, CMS Center for Medicare Management

Renal Physicians Association

1700 Rockville Pike
Suite 220
Rockville, MD 20852

Phone: 301-468-3515
Fax: 301-468-3511

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