Impact of the Changes in the End Stage Renal Disease Composite Rate.

The following summary is of a report from the Secretary of Health and Human Services released to Congress on December 30, 1988.

Legislative mandate

This report was prepared in response to section 9335(b) of Public Law 99-509, the Omnibus Budget Reconciliation Act of 1986, which states:

“The Secretary of Health and Human Services shall provide for (A) a study to evaluate the effects of reductions in the rates of payment for facility and physicians' services under the medicare program for patients with end stage renal disease on their access to care or on the quality of care, and (B) a report to Congress on the results of the study by not later than January 1, 1988.”

Overview

Medicare coverage was extended to persons with end stage renal disease (ESRD) and became effective on July 1, 1973, as a result of the enactment of Public Law 92-603, known as the Social Security Amendments of 1972. Since the inception of the ESRD program in 1973, a continuing effort has been made to improve the efficiency and effectiveness of this program.

The congressional intent of this study was to determine the impact of the 1986 $2 composite rate reduction on access and quality of care provided to patients with ESRD who receive dialysis in a variety of settings. The composite rate for dialysis is a payment based on the weighted average audited costs of providing: (a) facility hemodialysis, and (b) home dialysis. Under the composite rate, hospital-based and independent ESRD facilities are paid a weighted average of the cost of caring for facility-based and home-based individuals.

Although the impetus for the congressional study was the reduction in 1986, the report focused on the substantially larger reduction that took place in August 1983. That reduction amounted, on average, to $12 per dialysis session for Medicare reimbursements. The report did not focus on the 1986 reduction because not enough time had elapsed to assemble the necessary volume of experience to carry out a statistically valid study.

Findings

Impact on costs:

It would appear that some savings in outpatient dialysis and physician services per “patient days at risk” have accrued to Medicare following the imposition of the composite rate for dialysis.

Payments to physicians experienced the largest reductions in the period 1982-84.

Significant dollar increases were observed for total approved inpatient charges per day at risk for patients located in prospective payment system (PPS) States, which appear to have offset the outpatient savings. These charges represent payments for both dialysis and other required hospital services.

Experience in non-PPS States suggests that the composite rate and other policy changes did lead to nominal savings in the total Medicare cost per patient day at risk.

There is no clear evidence on how renal facilities were able to control their costs to offset lower Medicare payments.

Impact on access and quality of care:

Home hemodialysis did not grow faster after the decrease of the composite rate; all growth in home dialysis was because of the increased use of continuous ambulatory peritoneal dialysis.

There is some evidence of an increase in the number of dialysis treatments per patient, but not a large enough increase to fully offset the reduction in the price paid for each.

There were no obvious indications of quality problems on the gross measures commonly used for aggregate analysis—no apparent changes in the patterns of patient survival or morbidity.

Reuse of dialyzers has continued to rise among all types of units; however, it is not clear whether the composite rate changes increased the practice of dialyzer reuse.

The number of ESRD patients per staff increased for all types of dialysis units.

The number of dialysis facilities has continued to increase, suggesting that, in general, access to care was not impeded.

Conclusions

There is little evidence to support the notion that the reduction of the composite rate had any negative impact on patients with ESRD during the time period studied. However, it is important to acknowledge that changes did take place during the time period of the study. They include an increase in the number of dialysis treatments per patient, a rise in the number of centers that reuse dialyzers, an increase in the number of patients per staff member in the dialysis centers, and a small but steady rise in the number of persons receiving dialysis at home.

In addition, there was observed to be a decrease in the payments to physicians. It can be stated that there was clearly an overall savings to the Medicare program for all outpatient dialysis services following the institution of the composite rate reduction in 1983.

Thus, the researchers found no detectable negative impact on patient access to services, nor on the quality of care provided to ESRD patients, following the reduction in the composite rate.

Program contact

For further information:

Mr. Carl Josephson

Office of Research and Demonstrations

Health Care Financing Administration

2502 Oak Meadows Building

6325 Security Boulevard

Baltimore, Maryland 21207

Telephone (301) 966-7703