Opportunities To Reduce Medicare Costs Under the End Stage Renal Disease Program for Home Dialysis Patients

GAO addressed issues related to the reimbursement system proposed by the Health Care Financing Administration (HCFA) for the End Stage Renal Disease (ESRD) Program. GAO focused on methods to reduce Medicare equipment and supply costs for home patients who deal directly with suppliers.

GAO estimated that during calendar year 1980 the total cost of obtaining dialysis supplies and equipment for home patients who dealt directly with suppliers was about $75 million, with Medicare paying about 80 percent. Most of these patients would incur lower costs if they continue to obtain equipment and supplies directly rather than through a facility under the HCFA-proposed ESRD reimbursement system. Since many patients will continue to deal directly with suppliers, GAO stated that it would be advantageous for Medicare to ensure that costs for direct-dealing patients are as low as possible. GAO noted that the main problem in purchasing equipment is the lump-sum coinsurance payment at the time of purchase. GAO learned that the amounts Medicare allowed for equipment rentals vary widely and that rental charges are substantially more costly over the estimated useful lives of the equipment than outright purchase. GAO also found that requiring the purchase of equipment would substantially reduce costs for patients who would be dialyzing for prolonged periods. For those cases where purchase is not reasonable, lease/purchase arrangements with suppliers would reduce Medicare costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Michael Zimmerman Team: General Accounting Office: Human Resources Division Phone: (202) 275-6195