AKF urges changes to Medicare proposal that would impact quality of care and access to innovative products for people on dialysis

Update: CMS released a final rule on October 27 that includes a PPS market basket update of 2.1%, a slight increase from its proposed 1.7% update. However, the final rule does not address the significant concerns raised by AKF and many others in the kidney community regarding adequate provider payment and staffing shortages facing dialysis providers and ensuring long-term patient access to innovative drugs. AKF released a statement on the final rule. 

Editor's note: This blog post contains a number of policy-related terms that may not be familiar to everyone. To help you understand the importance of the issues in this blog, we have included a glossary at the end of the post to explain what those terms mean.

The Centers for Medicare and Medicaid Services (CMS) recently published their annual proposed rule on the Medicare End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) and Quality Incentive Program (QIP). In response, AKF submitted a comment letter expressing our concerns about two critical issues within the proposed rule that would have a major impact on people on dialysis and offering recommendations for how to address them. (We also separately submitted a second comment letter that addressed other parts of the proposed rule.) Here, we summarize the key points of this comment letter.

Issue 1: Adequate Medicare payment to providers and ensuring quality patient care

The Medicare ESRD PPS is a bundled payment that provides a per treatment payment to ESRD facilities for renal dialysis services provided in-center or at home. The bundled per treatment payment includes drugs, laboratory services, supplies and capital-related costs for the facility to provide maintenance dialysis treatments. In its annual rulemaking, CMS proposes updates to the ESRD PPS base rate (per treatment payment) through expected updates to the ESRD market basket, including increased costs for goods and services and the price inflation facing health care providers.

AKF is deeply concerned that CMS's proposed market basket update of 1.7% for 2024 does not accurately reflect the increase in health care inflation and the increased cost of labor that ESRD facilities face. Many people on Medicare with ESRD already face significant health inequities, and the continued misalignment between the ESRD market basket and actual inflation only worsens those health inequities. Appropriate payment to providers is critical to ensure facilities can hire and retain the clinical staff needed to provide quality care.

To address this problem, AKF recommends that CMS adopt a forecast adjustment that would account for the disparity in the market basket forecast and the actual increase in inflation for the years 2019 through 2022. This would result in a 4% market basket increase and address the underfunding of the ESRD bundled payment for those years. We also recommend that in future years, the forecast adjustment be applied uniformly, meaning it is applied not only when the forecasted percent change is lower than actual inflation, but when it is higher as well.

Issue 2: Protecting patient access to innovative products

In 2019, CMS implemented the Transitional Drug Add-on Payment Adjustment (TDAPA) for new FDA-approved renal dialysis drugs and biological products. For these new drugs, ESRD facilities receive a TDAPA payment for two years to cover the cost of the drug. As the name suggests, the TDAPA is an additional (or "add-on") payment on top of the bundled payment.

TDAPA is widely supported in the kidney community because it helps drive innovation in kidney care. For far too long, the pace of innovation in drug and biological products for ESRD has lagged, especially when compared to other diseases. However, CMS has also stated that for certain TDAPA drugs, there will be no changes to the ESRD PPS base rate after the TDAPA period ends, meaning there will be inadequate funding to cover the cost of the drug. For this reason, AKF and many others in the kidney community have advocated to CMS that there needs to be a payment adjustment after the TDAPA period to ensure patients have long-term access to innovative drugs and biological products originally covered by TDAPA.

In this year's proposed rule, CMS agrees with the need for a post-TDAPA payment adjustment to address concerns that a sudden decrease in payments after the end of the TDAPA period for these products could result in decreased access to these new renal dialysis and biological products. CMS proposes to implement an adjustment to the post-TDAPA add-on payment, and while AKF and many in the kidney community are glad to see that CMS has acknowledged the need for this, the proposed structure of the payment adjustment is very concerning.

The proposed structure of the post-TDAPA add-on payment adjustment will result in an inadequate payment for innovative renal dialysis drugs and biological products, which will hinder patient access to needed treatments that help improve their care and quality of life. Specifically, CMS proposes to apply the post-TDAPA add-on payment adjustment across all PPS bundled payments and patients. This means that facilities that did not prescribe the TDAPA product will also receive the add-on payment adjustment. This dilutes the payment adjustment for those facilities that do prescribe the TDAPA product and drastically underpays for it, creating a disincentive for facilities to continue using the innovative product. Additionally, CMS proposes to have the post-TDAPA add-on payment adjustment last for three years. This is concerning because it creates another payment cliff and does not ensure long-term patient access to innovative products.

In our comment letter, AKF recommends CMS apply the post-TDAPA add-on payment adjustment only to claims for patients who receive the new renal dialysis drug or biological product and apply the payment adjustment on a permanent basis. These changes would help ensure a more appropriate and targeted payment adjustment for those who medically need an innovative renal dialysis drug or biological product and ensure long-term patient access to those products.

Glossary

Bundled payment: A single payment that covers multiple services or expenses (instead of paying for each service individually).

Comment letter: Letters to policymakers from individuals or organizations in response to a proposed new rule, policy or law with feedback on that rule, policy or law. Comment letters are public.

End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP): A program administered by CMS that links a portion of a dialysis facility's Medicare payment to their performance on quality-of-care measures. If a dialysis facility does not meet or exceed performance standards on a set of quality measures, they will see a reduction in their Medicare payment.

Inflation: An increase in prices for goods and services in all markets and a decrease in the value of money as it can buy less than in times without inflation.

Market basket: A list of goods and services that is used to measure inflation in a specific market or an economy.

Proposed rule: A proposed rule announces CMS's plans to issue a new regulation or revise an existing regulation. CMS publishes proposed rules on Medicare payment programs for various health care providers, such as dialysis facilities, annually.

Prospective Payment System (PPS): A fixed health care payment that Medicare pays to health care facilities on behalf of its patients. The amount of this payment is based on what CMS determines is the cost of the medical diagnosis, including drugs, laboratory services, supplies and capital-related costs (one-time costs for a business).

Payment cliff: When you suddenly cannot pay for services you have been receiving because a government-funded program ends or reduces coverage, but you have not had any increase in income to pay for that previously covered cost.

Transitional Drug Add-on Payment Adjustment (TDAPA): An additional payment outside the ESRD bundled payment that covers the cost of a new and innovative dialysis drug. The TDAPA for a drug is paid for two years.