GAO to CMS: Monitor Bundled Payments to ESRD Patients

As I have mentioned in previous posts, I think that bundled payments are one of the critical ways to control the cost of health care in this country. Obviously given its dominant funding position, the Medicare program's experience in bundling payments will be important to watch. The Government Accountability Office recently released a report on Medicare's pilot program to bundle payments for Medicare recipients with ESRD scheduled to begin 01/01/11. Highlights follow:

Under the current fee-for-service system of payment, certain demographic groups showed above average Medicare expenses for injectable ESRD drugs. For example, Medicare spent $782 per month in 2007 on injectable ESRD drugs for each African American beneficiary. This was nearly 13% higher than the average for all beneficiaries on dialysis and also was higher than for other racial groups.

In addition, monthly Medicare spending for beneficiaries with additional coverage through Medicaid was about 6% higher than the average across all beneficiaries on dialysis.

Although GAO did not identify those factors that created these differences, staff did obtain information from 73 nephrology clinicians and researchers on the factors that they thought would result in above average doses of injectable ESRD drugs. This included more than a dozen factors—such as chronic blood loss and low iron stores—as likely to result in above average doses of injectable ESRD drugs.

As required by law, CMS's proposed design for the new payment system for dialysis care includes two payment mechanisms to address differences among beneficiaries in their costs of dialysis care.

With the first payment mechanism—a case mix adjustment—CMS proposes to adjust payments based on characteristics such as age, sex, and certain clinical conditions, which are associated with beneficiaries' costs of dialysis care. The second proposed payment mechanism—an outlier policy—calls for making additional payments to providers when they treat patients whose costs of care are substantially higher than would be expected.

Missing from these preliminary plans, though, is to what extent CMS will monitor the effects on the quality of and access to dialysis care for different groups of beneficiaries. In particular, these areas should focus on above average costs of dialysis care under the new bundled payment system, GAO said.

This monitoring should begin as soon as possible once the new bundled payment system is implemented and should be used to create potential refinements to the payment system, GAO added.