Medicare Dialysis Facilities
Beneficiary Access Stable and Problems in Payment System Being Addressed Gao ID: GAO-04-450 June 25, 2004Medicare covers about 90 percent of patients with end-stage renal disease (ESRD), the permanent loss of kidney function. Most ESRD patients receive regular hemodialysis treatments, a process that removes toxins from the blood, at a dialysis facility. A small percentage dialyzes-at home. From 1991 through 2001, the ESRD patient population more than doubled, from about 201,000 to 406,000. As the need for services grows, so do concerns about beneficiary access to and Medicare payment for dialysis services. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 directed GAO to study beneficiaries' access to dialysis services. In this report, GAO (1) assessed the supply of dialysis facilities and the services they provide, overall and relative to beneficiary residence, and (2) assessed the extent to which Medicare payments for dialysis services are adequate and the methodology is appropriate. In order to assess the supply of dialysis facilities, GAO used Facility Surveys collected by the Centers for Medicare & Medicaid Services (CMS) and outpatient claims, the bills submitted to Medicare by providers of certain outpatient services from 1998 through 2001. To assess the adequacy of Medicare payment and the appropriateness of the payment methodology, GAO used 2001 Medicare cost reports and outpatient claims submitted by freestanding dialysis facilities.
GAO found that from December 31, 1998, through December 31, 2001, the total number of dialysis facilities nationwide increased at about the same rate as the Medicare dialysis population, 16 and 15 percent, respectively, and the total number of stations (that is, treatment areas and equipment, including dialysis machines, needed to dialyze the patient) increased by over 24 percent, a rate greater than the growth in the Medicare dialysis population. The dialysis industry opened facilities in more counties across the country, although facilities were more likely to be available to beneficiaries in urban counties than in rural counties. In addition, while almost all facilities provided in-facility hemodialysis, fewer facilities provided home dialysis. GAO estimates that total payments to freestanding dialysis facilities exceeded providers' allowable costs by 3 percent in 2001. Although payments were higher than costs overall, payments did not meet costs for small facilities. In addition, composite rate payments, intended to cover the costs of dialysis services associated with a treatment, including nursing, supplies, social services, and certain laboratory tests, were 11 percent less than the costs of providing those services, while payments for separately billed drugs, drugs not included in the composite rate, exceeded the costs of those services by 16 percent. Because of this imbalance, providers have an incentive to maximize the use of profitable separately billed drugs to compensate for inadequate payments under the composite rate. CMS generally agreed with GAO's findings. The agency noted that it has been working to redesign the payment system since 2000. Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), the Secretary of Health and Human Services is required to develop a report by October 1, 2005 detailing the elements and features necessary in the design and implementation of a broader payment system that includes separately billed drugs. MMA also requires the Secretary to conduct a 3-year demonstration project, beginning January 1, 2006, that uses a broader payment system incorporating patient characteristics identified in the report.
GAO-04-450, Medicare Dialysis Facilities: Beneficiary Access Stable and Problems in Payment System Being Addressed
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Report to Congressional Committees:
United States General Accounting Office:
GAO:
June 2004:
Medicare Dialysis Facilities:
Beneficiary Access Stable and Problems in Payment System Being
Addressed:
GAO-04-450:
GAO Highlights:
Highlights of GAO-04-450, a report to congressional committees
Why GAO Did This Study:
Medicare covers about 90 percent of patients with end-stage renal
disease (ESRD), the permanent loss of kidney function. Most ESRD
patients receive regular hemodialysis treatments, a process that
removes toxins from the blood, at a dialysis facility. A small
percentage dialyzes- at home. From 1991 through 2001, the ESRD patient
population more than doubled, from about 201,000 to 406,000. As the
need for services grows, so do concerns about beneficiary access to and
Medicare payment for dialysis services. The Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000 directed GAO to
study beneficiaries‘ access to dialysis services. In this report, GAO
(1) assessed the supply of dialysis facilities and the services they
provide, overall and relative to beneficiary residence, and (2)
assessed the extent to which Medicare payments for dialysis services
are adequate and the methodology is appropriate.
In order to assess the supply of dialysis facilities, GAO used
Facility Surveys collected by the Centers for Medicare & Medicaid
Services (CMS) and outpatient claims, the bills submitted to Medicare
by providers of certain outpatient services from 1998 through 2001. To
assess the adequacy of Medicare payment and the appropriateness of the
payment methodology, GAO used 2001 Medicare cost reports and outpatient
claims submitted by freestanding dialysis facilities.
What GAO Found:
GAO found that from December 31, 1998, through December 31, 2001, the
total number of dialysis facilities nationwide increased at about the
same rate as the Medicare dialysis population, 16 and 15 percent,
respectively, and the total number of stations (that is, treatment
areas and equipment, including dialysis machines, needed to dialyze the
patient) increased by over 24 percent, a rate greater than the growth
in the Medicare dialysis population. The dialysis industry opened
facilities in more counties across the country, although facilities
were more likely to be available to beneficiaries in urban counties
than in rural counties. In addition, while almost all facilities
provided in-facility hemodialysis, fewer facilities provided home
dialysis.
GAO estimates that total payments to freestanding dialysis facilities
exceeded providers‘ allowable costs by 3 percent in 2001. Although
payments were higher than costs overall, payments did not meet costs
for small facilities. In addition, composite rate payments, intended
to cover the costs of dialysis services associated with a treatment,
including nursing, supplies, social services, and certain laboratory
tests, were 11 percent less than the costs of providing those services,
while payments for separately billed drugs, drugs not included in the
composite rate, exceeded the costs of those services by 16 percent.
Because of this imbalance, providers have an incentive to maximize the
use of profitable separately billed drugs to compensate for inadequate
payments under the composite rate.
CMS generally agreed with GAO‘s findings. The agency noted that it has
been working to redesign the payment system since 2000. Under the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA), the Secretary of Health and Human Services is required to
develop a report by October 1, 2005 detailing the elements and
features necessary in the design and implementation of a broader
payment system that includes separately billed drugs. MMA also requires
the Secretary to conduct a 3-year demonstration project, beginning
January 1, 2006, that uses a broader payment system incorporating
patient characteristics identified in the report.
What GAO Recommends:
www.gao.gov/cgi-bin/getrpt?GAO-04-450.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact A. Bruce Steinwald at
(202) 512-7119.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Dialysis Facilities Increased at Same Rate as Beneficiary Population,
but Supply Varied Geographically and by Treatment Method:
Total Medicare Payments to Freestanding Dialysis Facilities Exceeded
Costs, but Current Payment Methodology Is Not Appropriate:
Daily Hemodialysis Appears Promising, but Rigorous Data Are Lacking:
Concluding Observations:
Agency and External Reviewer Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Centers for Medicare & Medicaid Services:
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Tables:
Table 1: Freestanding Dialysis Facility Adjusted Payment-to-Cost Ratios
for Composite Rate Services and Separately Billed Drugs, Overall and by
Size, 2001:
Table 2: Freestanding Dialysis Facility Unadjusted Payment-to-Cost
Ratios for Composite Rate Services, 1998-2001:
Table 3: Most Frequent Items Billed Separately in Association with
Hemodialysis, 2001:
Figures:
Figure 1: Dialysis Facilities by County, 1998-2001:
Figure 2: Percentage of Beneficiaries on Dialysis Who Reside in
Counties with at Least One Facility, 1998-2001:
Figure 3: Average Number of Facilities Available per County, by
Location, 1998-2001:
Figure 4: Average Number of Stations Available per County, by Location,
1998-2001:
Figure 5: Percentage of Beneficiaries on Dialysis Who Had a Treatment
Method Available in Their Counties, 1998-2001:
Figure 6: Average Number of Facilities Available per County, by
Treatment Method, 1998-2001:
Figure 7: Percentage of Beneficiaries on Dialysis in Rural Counties Who
Had a Treatment Method Available in Their Counties, 1998-2001:
Abbreviations:
AAKP: American Association of Kidney Patients:
AWP: average wholesale price:
BIPA: Medicare, Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000:
CMS: Centers for Medicare & Medicaid Services:
DCI: Dialysis Clinic, Inc.:
EPO: epoetin:
ESRD: end-stage renal disease:
FMC: Fresenius Medical Care:
HCFA: Health Care Financing Administration:
HHS: Department of Health and Human Services:
MedPAC: Medicare Payment Advisory Commission:
MMA: Medicare Prescription Drug, Improvement, and Modernization Act of
2003:
NIH: National Institutes of Health:
NRAA: National Renal Administrators Association:
PD: peritoneal dialysis:
RLC: Renal Leadership Council:
RPA: Renal Physicians Association:
United States General Accounting Office:
Washington, DC 20548:
June 25, 2004:
Congressional Committees:
Medicare covers approximately 90 percent of all individuals who have
end-stage renal disease (ESRD), the permanent loss of kidney function,
and treatment of the disease results in substantial costs to the
Medicare program. In 2001, Medicare spent an average of approximately
$46,600 on services for each beneficiary with ESRD, while the average
per-beneficiary spending across the entire Medicare population was
about $6,200. ESRD-related expenditures have increased rapidly and are
expected to continue to increase. From 1991 through 2001, the number of
individuals with ESRD more than doubled, increasing from about 201,000
to 406,000. During the same time, while total Medicare expenditures
increased by 108 percent, ESRD program expenditures increased by 166
percent, to almost $15.4 billion in 2001. The ESRD population is
projected to reach approximately 650,000 by 2010[Footnote 1].:
Although some receive kidney transplants, most individuals with ESRD
depend on regular treatments of dialysis, a process in which excess
fluids and wastes are removed from the blood.[Footnote 2] In 2001,
about 90 percent of all dialysis patients underwent hemodialysis,
typically three times per week, at one of almost 4,000 outpatient renal
dialysis facilities nationwide.[Footnote 3] In that same year, less
than 1 percent of hemodialysis patients dialyzed at home, and nearly
all peritoneal dialysis (PD) patients dialyzed at home.[Footnote 4]
Nationwide, about 200 hemodialysis patients dialyze five to seven times
per week, known as daily hemodialysis, which is thought by some
clinicians to improve patient outcomes.
Dialysis facilities furnish services to patients through one of two
methods: they provide hemodialysis and supplies and other support
services in the facility, or they provide equipment, supplies, and
support services to beneficiaries who dialyze at home. Regardless of
whether a beneficiary dialyzes at home or in a facility, Medicare pays
the facility a fixed, prospectively determined amount per treatment,
known as the composite rate, generally for up to three dialysis
treatments per week. The composite rate covers many commonly used
services and items; certain other items, including some drugs and
supplies, are paid for separately. Medicare adjusts the composite rate
to account for variation in area wages; however, there is no adjustment
for length of treatment, treatment method, or beneficiary condition. By
paying facilities a fixed amount, Medicare seeks to encourage them to
operate efficiently, as facilities retain the difference if their
payments exceed their costs of providing necessary services.
The composite rate has not been regularly updated, and is less than $4
higher today than when it was implemented in 1983. Despite the lack of
a regular update, the dialysis industry has remained profitable over
the years by increasing productivity and efficiency. In recent reports,
the Medicare Payment Advisory Commission (MedPAC)[Footnote 5] has found
that overall facility profits have steadily declined even though
Medicare payments for separately billed drugs have exceeded facility
costs. MedPAC has also found that the composite rate is covering
progressively less of the costs of composite rate services.[Footnote 6]
Representatives of the dialysis industry have stated that Medicare
payments are inadequate overall, and that these low payments are
resulting in facility closures in certain geographic areas and may
eventually lead to decreased access for beneficiaries nationwide. In
2000, the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA) required the Secretary of the Department
of Health and Human Services (HHS) to develop a payment system that
includes clinical laboratory tests and drugs that are routinely used
but billed separately.[Footnote 7] With the enactment of the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 (MMA),
the Secretary of HHS was required to continue development of a broader
payment system.[Footnote 8]
BIPA directed us to examine Medicare beneficiaries' access to dialysis
services.[Footnote 9] As agreed with the committees of jurisdiction, we
(1) assessed the supply of dialysis facilities and the services they
provide, both overall and relative to beneficiary residence; (2)
assessed the extent to which Medicare payments for dialysis services
are adequate and the payment methodology is appropriate; and (3)
reviewed whether increased use of daily hemodialysis can improve
patient care.
In order to measure the supply of dialysis facilities, we used the 1998
through 2002 Facility Survey files, which include information on the
number of hemodialysis stations and the services provided at each
facility.[Footnote 10] These surveys are administered to all dialysis
facilities, hospital-based and freestanding, by the Centers for
Medicare & Medicaid Services (CMS), the agency responsible for managing
Medicare.[Footnote 11] To identify beneficiaries on dialysis and their
residence, we analyzed the 1998 through 2001 Medicare outpatient
claims, the bills submitted by providers of certain outpatient services
to receive Medicare payment. These claims were the most recent data
available at the time of our analysis. We assessed the reliability of
the facility survey and claims data and found them suitable for our
purposes.
To assess the adequacy of Medicare payment and the appropriateness of
the payment methodology, we analyzed Medicare freestanding dialysis
facility cost reports from 1998 through 2001 and Medicare outpatient
claims data from 2000 and 2001. We performed this analysis in aggregate
for all freestanding facilities and for different sizes of facilities,
with size defined using the total number of treatments provided at a
facility. The Medicare payment methodology is the same for freestanding
and hospital-based dialysis facilities, but we did not analyze cost
reports or claims for hospital-based facilities because their reported
costs are affected by decisions in allocating costs between the
hospital and the dialysis facility. In 2001, about 84 percent of all
dialysis facilities nationwide were freestanding. We assessed the
reliability of the cost report and claims data. We excluded cost
reports that had questionable data or that did not cover at least 300
days. We found the remaining cost reports and the claims data suitable
for our purposes. We interviewed patient advocate organizations,
clinicians, manufacturers of dialysis equipment, and representatives of
the dialysis industry, and made site visits to three dialysis
facilities.
In order to review daily hemodialysis, we surveyed the relevant
scientific literature, interviewed physicians who provide daily
hemodialysis, and visited a dialysis facility providing daily
hemodialysis. Appendix I contains a more complete description of our
methodology. We conducted our work from July 2002 through June 2004 in
accordance with generally accepted government auditing standards.
Results in Brief:
From December 31, 1998, through December 31, 2001, the total number of
dialysis facilities nationwide increased at about the same rate as the
Medicare dialysis population, 16 and 15 percent, respectively. Over the
same period, the total number of stations increased by over 24 percent,
a rate greater than the growth in the Medicare dialysis population. The
dialysis industry opened facilities in more counties across the
country, although a greater number of facilities were available to
beneficiaries in urban counties than in rural counties.[Footnote 12] In
addition, while almost all facilities provided hemodialysis, fewer
facilities provided home dialysis.
In 2001, we estimate that overall Medicare payments to freestanding
dialysis facilities exceeded their Medicare-allowable costs, that is,
their reasonable costs for services directly related to medical care
for beneficiaries, by 3 percent. However, payments were less than costs
for small facilities. While we estimate that composite rate payments
were 11 percent lower than the costs of providing composite rate
services, payments for separately billed drugs were 16 percent higher
than the costs of those drugs. Because of this imbalance, providers
have an incentive to maximize the use of profitable separately billed
drugs to compensate for inadequate payments under the composite rate.
Daily hemodialysis appears promising for improving patient outcomes.
However, studies on the subject are limited in size and scope.
Definitive conclusions on the extent to which daily hemodialysis
improves patient care cannot be determined from the existing data.
In commenting on a draft of this report, CMS generally agreed with our
findings and our conclusion that all outpatient dialysis services
should be bundled into a single prospective payment amount based on
facilities' allowable costs. Although in the draft report we had also
recommended that CMS redesign the prospective payment system for
dialysis facilities to bundle the costs of services, including
separately billed drugs, into one payment amount, in its comments CMS
noted that it would not have the statutory authority to implement such
a system. CMS also noted that MMA requires the Secretary of HHS to
report to the Congress by October 1, 2005, on the elements and features
necessary in the design and implementation of a broader prospective
payment system. The Secretary is also required to conduct a 3-year
demonstration project, beginning January 1, 2006, that uses a payment
system incorporating patient characteristics identified in the report.
As a result, we deleted the recommendation in the draft report.
Background:
Individuals with ESRD are eligible for Medicare benefits regardless of
their age.[Footnote 13] In 2001, Medicare covered about 90 percent of
the 406,000 individuals with the disease. ESRD occurs when an
individual's kidneys have regressed to less than 10 percent of normal
baseline function. Without functioning kidneys, excess wastes and
fluids in the body rise to dangerous levels, and certain hormones are
no longer produced. The lack of one such hormone, erythropoietin,
results in anemia, a condition in which an insufficient number of red
blood cells are available to carry oxygen throughout the body. Diabetes
and hypertension are the two principal causes of ESRD.
ESRD Population Growth:
The ESRD population has grown steadily over the years and is expected
to continue to increase. From 1991 through 2001, the total number of
individuals with ESRD increased from about 201,000 to 406,000, with an
average annual growth rate of 7 percent. While the growth rate declined
to about 5 percent in the late 1990s as a result of better preventive
treatments, experts believe this decline to be temporary. Increases in
the African-American and Hispanic populations, which have particularly
high rates of diabetes, are expected to overwhelm this trend and lead
to even greater growth rates in the future.[Footnote 14]
Renal Dialysis Treatment:
In order to survive, individuals with ESRD require kidney
transplantation or dialysis, a process in which excess fluids and
wastes are removed from the blood. In 2001, about 292,000, or 72
percent, of all individuals with ESRD underwent dialysis, while the
remaining 28 percent, or about 114,000 individuals, were transplant
recipients. Transplantation is not a practical option for most
individuals with ESRD because suitable donated organs are scarce. Also,
many individuals are older and less healthy by the time they develop
irreversible kidney failure, making them medically unsuitable for
transplant. From 1991 through 2001, the total number of dialysis
patients increased at an average annual growth rate of about 7 percent,
the same as the ESRD population overall.
In 2001, most dialysis patients received services from one of almost
4,000 hospital-based or freestanding dialysis facilities located in the
50 states and the District of Columbia. These facilities provide
hemodialysis, as well as drugs and related clinical and support
services for patients who dialyze at home or in a facility. In
addition, some facilities provide training for home dialysis and may
furnish the equipment and supplies necessary for home dialysis
treatment.[Footnote 15] In 1973, when Medicare benefits were extended
to individuals with ESRD, the majority of dialysis facilities were
owned and operated by hospitals. By 2001, however, almost 84 percent of
all dialysis facilities nationwide were freestanding. In addition, for-
profit dialysis facility chains have represented an increasing share of
the market. By 2001, the four largest for-profit chains accounted for
about two-thirds of all freestanding facilities, and they provided
treatment to about two-thirds of all dialysis patients.
Dialysis can be administered using two methods: hemodialysis and PD.
During hemodialysis, a dialysis machine pumps blood through an
artificial kidney, called a hemodialyzer, and returns the cleansed
blood to the body. Hemodialysis is usually administered three times a
week at a dialysis facility, although patients may choose to undergo
hemodialysis at home with the assistance of a caregiver. In-facility
hemodialysis has become the dominant treatment method since the
introduction of dialysis in the 1960s. In 2001, about 90 percent of all
dialysis patients underwent in-facility hemodialysis, and less than 1
percent underwent hemodialysis at home.
In PD, the peritoneal membrane, which surrounds a patient's abdomen,
acts as a natural blood filter, thus eliminating the need for blood to
leave the body and filter through a machine. Patients remove the wastes
and excess fluids from their abdomen manually throughout the day, or a
machine automates the process while they sleep at night. Unlike
hemodialysis, these patients generally dialyze at home. PD became an
alternative to hemodialysis in the 1970s, and utilization peaked in the
early 1990s, when more than 15 percent of all dialysis patients used
this treatment method. By 2001, however, utilization had declined to
about 8 percent of the dialysis population.
Hemodialysis performed five to seven times per week, referred to as
"daily hemodialysis," more closely approximates the body's continuous
cleansing of the blood than the conventional regimen of three
hemodialysis treatments per week. Between dialysis treatments, excess
wastes and fluids build up in the patient's blood, and many dialysis
patients experience side effects such as hypertension, anemia, and low
energy levels, which may adversely affect their clinical outcomes and
quality of life. Because of these side effects, dialysis patients have
high rates of hospitalization and often take several medications. Daily
hemodialysis can take place either at home or in a facility, and
proponents have asserted that it leads to improved quality of life,
fewer hospitalizations, reduced use of medications, and overall cost
savings to Medicare.
Medicare Payment:
Since 1983, Medicare has paid dialysis facilities a composite rate for
each dialysis treatment it administers, generally up to a maximum of
three treatments per beneficiary per week. The composite rate is a
prospectively determined payment amount designed to cover the cost of
services associated with a single dialysis treatment, including nursing
and other clinical services, social services, supplies, equipment, and
certain laboratory tests and drugs.[Footnote 16] Because the composite
rate is prospectively determined, providers receive a fixed payment
regardless of how much the services actually cost them to deliver. The
initial fixed payment amount was derived from the median costs of
providing medical services to beneficiaries across a sample of dialysis
facilities. A prospective payment methodology encourages providers to
control the costs and utilization of the services they provide, as they
retain any difference between the payment and their costs.
In 1972, 40 percent of all dialysis patients underwent hemodialysis at
home. In 1981, the Congress passed legislation establishing a new
system for the payment of outpatient dialysis services for Medicare
beneficiaries. The changes were designed to reduce program costs by
encouraging home dialysis rather than in-facility dialysis. Under the
system, a single prospectively determined rate was implemented for home
and in-facility dialysis.[Footnote 17] However, the percentage of
patients who undergo dialysis at home has declined since 1983, the year
the composite rate was implemented. In 1983, the proportion of dialysis
patients dialyzing at home, whether with hemodialysis or PD, was 12
percent. By December 31, 2001, less than 9 percent of dialysis patients
dialyzed at home.
The composite rate has changed minimally since 1983, when the rate
averaged about $131 for hospital-based facilities and $127 for
freestanding facilities. The Congress passed legislation that decreased
the rate by $2 in 1986 and increased it in 1991, 2000, and
2001[Footnote 18] to about $135 for hospital-based facilities and $131
for freestanding facilities. From its implementation in 1983 through
the end of 2003, the real dollar value of the composite rate declined
by about 65 percent. The dialysis industry remained profitable under
this relatively flat payment by increasing efficiency and productivity.
However, industry representatives state that efficiency or productivity
improvements can no longer make up for the lack of payment increases.
They also state that although the number of dialysis facilities has
been increasing throughout the last decade, declining profits may
reverse that trend and eventually lead to decreased access for Medicare
beneficiaries.
While the composite rate was intended to pay for all services
associated with dialysis treatment, Medicare pays separately for
certain drugs and laboratory tests that have become routine treatments
since 1983. These drugs include, but are not limited to, epoetin (EPO),
vitamin D, and iron. Medicare's payment for EPO, a bioengineered
protein that substitutes for erythropoietin and is used to treat
anemia, is statutorily set at $10 for every 1,000 units
administered;[Footnote 19] all other separately billed drugs are paid
at 95 percent of their average wholesale price (AWP).[Footnote 20] The
Medicare composite rate includes payment for 16 laboratory tests deemed
to be routine for dialysis patients. For any of the approximately 1,350
other laboratory tests that beneficiaries may receive, payment is made
under a fee schedule to the clinical laboratory that performs the test.
Although facilities are paid under a prospective payment system, CMS
requires them to complete annual cost reports that are consistent with
Medicare cost principles. These reports include cost information for
separately billed drugs as well as items paid through the composite
rate. Medicare cost principles were designed to ensure that Medicare
pays for the expenses related to medical care for beneficiaries, and
that those costs are reasonable and allowable.[Footnote 21] The agency
periodically audits cost reports to remove unreasonable and
nonallowable costs and, in the past, has calculated the difference
between facility costs as reported on the cost reports and their
allowable costs, referred to as an audit adjustment. The Balanced
Budget Act of 1997 required the agency to audit dialysis facility cost
reports, beginning in 1996, at least once every 3 years.[Footnote 22]
In recent years, the Congress has moved toward a broader payment bundle
for dialysis services. In 2000, BIPA required the Secretary of HHS to
develop a payment system that includes clinical laboratory tests and
drugs that are routinely used, but are currently billed separately from
dialysis treatment.[Footnote 23] BIPA also required the Secretary to
submit a report and recommendations on this system to the Congress. CMS
issued the report in 2003, concluding that currently available data
appear sufficient to expand the payment bundle to include those
services.[Footnote 24] In December 2003, MMA mandated that effective
January 1, 2005, a payment system be implemented combining the
composite rate payment with the amount by which payments for separately
billed drugs exceed their acquisition costs. Drugs that are currently
paid separately will continue to be paid outside this system. This
system must adjust for certain beneficiary characteristics and
geographic differences in cost.[Footnote 25] In addition, the Secretary
is required to submit a report to the Congress by October 1, 2005, that
details the elements and features for the design and implementation of
a bundled payment system including certain drugs that are currently
billed separately. The Secretary is then required to establish a 3-year
demonstration project, beginning January 1, 2006, using a payment
system that accounts for patient characteristics identified in the
report.
Dialysis Facilities Increased at Same Rate as Beneficiary Population,
but Supply Varied Geographically and by Treatment Method:
From 1998 through 2001, the total number of hospital-based and
freestanding dialysis facilities increased at about the same rate as
the Medicare dialysis population, and the total number of dialysis
stations, or treatment areas devoted to providing dialysis to patients,
increased at a greater rate than the Medicare dialysis population. The
dialysis industry opened facilities in more counties across the
country, although the number of facilities available to beneficiaries
living in urban counties was greater than in rural counties. In
addition, while almost all facilities provided hemodialysis, fewer
facilities provided home dialysis.
Growth in Number of Dialysis Facilities Kept Pace with Growth in
Beneficiary Population:
Based on our analysis of the CMS Facility Survey files, the total
number of hospital-based and freestanding dialysis facilities increased
from 3,415 to 3,960, or about 16 percent, from December 31, 1998,
through December 31, 2001. Over the same period, the number of ESRD
beneficiaries on dialysis increased about 15 percent. While the annual
growth in facilities slowed each year, this occurred primarily because
of a decrease in new facilities, not because of an increase in
closures. From 1998 through 2001, the number of facilities closing each
year amounted to less than 1 percent of those that were operating at
the end of that year.
Because facilities vary in size, a more specific indicator of their
capacity to provide hemodialysis is the number of dialysis stations in
use at dialysis facilities. From December 31, 1998, through December
31, 2001, we estimate that the number of stations increased by over 24
percent, from about 53,100 to about 66,100, exceeding the growth rate
of the dialysis population. The annual growth rate of stations was over
10 percent in 2001, much higher than the 5 percent growth rate of the
Medicare dialysis population in that year.
In addition, the dialysis industry expanded services to a larger
portion of the country. The percentage of counties that had at least
one dialysis facility increased from 41 to 47 percent, so that a total
of 1,466 counties[Footnote 26] had at least one dialysis facility in
2001 (see fig. 1). While another 1,599 counties had at least one
beneficiary on dialysis but no facility in 2001, most of these counties
were adjacent to at least one other county that had a dialysis
facility. Of the counties that were not adjacent to another county with
a facility, many were concentrated in areas of the West and Midwest.
Beneficiaries living in these counties either traveled to another
facility or dialyzed at home.
Figure 1: Dialysis Facilities by County, 1998-2001:
[See PDF for image]
[End of figure]
The supply of facilities in counties with beneficiaries on dialysis has
remained stable. The percentage of beneficiaries on dialysis who
resided in counties with at least one facility increased from 89 to 91
percent from 1998 through 2001. In addition, the average number of
facilities per county, weighted by the number of beneficiaries in each
county, increased from 11 to 12 from 1998 through 2001, as did the
weighted average number of stations, which rose from 201 to 234.
More Dialysis Facilities Available in Urban Counties Than in Rural
Counties:
While overall beneficiary access to dialysis facilities remained
stable, more facilities are available to beneficiaries on dialysis who
reside in urban counties than to beneficiaries on dialysis in rural
counties. From 1998 through 2001, the percentage of urban beneficiaries
with at least one facility in their counties increased slightly from 97
to 98 percent, while the percentage of rural beneficiaries with at
least one facility in their counties increased, but remained much
lower, from 61 to 67 percent (see fig. 2).
Figure 2: Percentage of Beneficiaries on Dialysis Who Reside in
Counties with at Least One Facility, 1998-2001:
[See PDF for image]
[End of figure]
Furthermore, beneficiaries on dialysis residing in urban counties had
more dialysis facilities available in their counties. From 1998 through
2001, the average number of facilities per urban county, weighted by
the number of beneficiaries in each county, increased from 14 to 15
(see fig. 3), and the weighted average number of stations increased
from 252 to 296 (see fig. 4). From 1998 through 2001, the weighted
average number of facilities per rural county remained at 1, although
the weighted average number of stations increased from 10 to 13.
Figure 3: Average Number of Facilities Available per County, by
Location, 1998-2001:
[See PDF for image]
Note: Averages are weighted by the number of beneficiaries in each
county.
[End of figure]
Figure 4: Average Number of Stations Available per County, by Location,
1998-2001:
[See PDF for image]
Note: Averages are weighted by the number of beneficiaries in each
county.
[End of figure]
Across rural areas, substantial variation may exist in the supply of
dialysis facilities. For example, 73 percent of beneficiaries on
dialysis in Florida's 33 rural counties had at least one facility in
their counties in 2001, while only 39 percent of beneficiaries on
dialysis in Michigan's 58 rural counties had at least one facility in
their counties. Although such differences could potentially be
explained by differences in the geographic size of rural counties,
rural counties in both Michigan and Florida average roughly 695 square
miles.
The number of dialysis facilities may be lower or nonexistent in
certain geographic locations for certain reasons. The population of
beneficiaries on dialysis is relatively small, and it may not be
financially feasible to operate facilities in areas that do not have a
sufficient number of beneficiaries needing dialysis. For example, while
nearly 73 percent of counties were designated as rural in 2001, only 22
percent of beneficiaries on dialysis lived in those counties; about
half of all rural counties were home to 15 or fewer beneficiaries on
dialysis. Also, many industry representatives we interviewed stated
that it was difficult to recruit and retain nurses to staff facilities.
Shortages of nurses can hamper the industry's ability to open
facilities or keep facilities sufficiently staffed in certain
geographic areas.
Number of Facilities Providing Home Dialysis Much Lower Than Number of
Facilities Providing Hemodialysis:
Dialysis facilities provided in-facility hemodialysis almost
universally, but the number of facilities providing home dialysis (PD
and home hemodialysis) was much lower and declining. According to our
analysis of the CMS Facility Survey files, 98 percent of dialysis
facilities provided hemodialysis each year from 1998 through 2001. Over
the same period, the percentage of dialysis facilities providing PD
decreased from 46 to 40 percent, and the percentage of dialysis
facilities providing home hemodialysis decreased from 10 to 8 percent.
Beneficiaries on dialysis also had more facilities available in their
counties that provided hemodialysis than home dialysis.[Footnote 27]
The percentage of beneficiaries on dialysis who had a facility
providing hemodialysis in their counties increased from 89 to 91
percent from 1998 through 2001 (see fig. 5). In contrast, the
percentage of beneficiaries on dialysis who had a facility providing PD
in their counties slightly decreased, from 76 to 75 percent, and the
percentage of beneficiaries on dialysis who had a facility providing
home hemodialysis in their counties declined from 47 to 45 percent.
From 1998 through 2001, the average number of facilities providing
hemodialysis per county, weighted by the number of beneficiaries in
each county, increased slightly from 10 to 12 (see fig. 6). Over the
same period, the weighted average number of facilities providing PD per
county fell from 6 to 5, and on average, only 1 facility per county
provided home hemodialysis.
Figure 5: Percentage of Beneficiaries on Dialysis Who Had a Treatment
Method Available in Their Counties, 1998-2001:
[See PDF for image]
[End of figure]
Figure 6: Average Number of Facilities Available per County, by
Treatment Method, 1998-2001:
[See PDF for image]
Note: Averages are weighted by the number of beneficiaries in each
county.
[End of figure]
In rural counties, the number of facilities offering home dialysis
remained low. From 1998 through 2001, the percentage of rural
beneficiaries on dialysis with a facility providing hemodialysis in
their counties increased from 61 to 67 percent (see fig. 7). In
contrast, the percentage of rural beneficiaries on dialysis with a
facility providing PD increased slightly from 27 to 28 percent, and the
percentage of rural beneficiaries with a facility providing home
hemodialysis increased from 3 to 4 percent. Beneficiaries on dialysis
in rural counties had a weighted average of one facility providing
hemodialysis per county and no facility providing PD or home
hemodialysis. In addition, there were rural counties with beneficiaries
on dialysis but no facilities. These beneficiaries dialyzed either in a
neighboring county or at home.
Figure 7: Percentage of Beneficiaries on Dialysis in Rural Counties Who
Had a Treatment Method Available in Their Counties, 1998-2001:
[See PDF for image]
[End of figure]
The number of facilities providing home dialysis may have been low for
several reasons. Some providers and nephrologists we interviewed stated
that many physicians are either unfamiliar with home dialysis or
believe that patients have better outcomes with in-facility
hemodialysis. They also reported that home programs are often not
financially feasible for facilities unless there is a substantial
number of patients receiving the treatment method, because facilities
must hire staff to train and manage the care of these patients. Some
providers and nephrologists also stated that facilities have a
financial disincentive to provide home dialysis, because greater
utilization of PD may result in unused hemodialysis stations and may
reduce the need for certain profitable drugs like EPO. They also
reported that PD may be favorable for beneficiaries in rural areas,
where facilities can be more distantly located.
Total Medicare Payments to Freestanding Dialysis Facilities Exceeded
Costs, but Current Payment Methodology Is Not Appropriate:
We estimate that after adjusting to exclude nonallowable costs, total
payments to freestanding dialysis facilities exceeded providers' costs
in 2001. Although payments were higher than costs overall, payments to
small facilities were lower than costs. In addition, while composite
rate payments were well below the costs of those services, separately
billed drug payments far exceeded the costs of those services. Because
of this imbalance in the payment structure, providers have an incentive
to maximize the use of profitable separately billed drugs to compensate
for inadequate payments under the composite rate.
Payments to Freestanding Facilities Generally Exceeded Allowable Costs,
but Small Facilities Were an Exception:
We estimate that Medicare payments to freestanding dialysis facilities
exceeded their Medicare-allowable costs by 3 percent, on average. In
order to calculate this percentage, we used costs as reported on
dialysis facilities' cost reports and used an adjustment to exclude
nonallowable costs. Before the adjustment, we estimate that on average,
payments were 1 percent below costs, a payment-to-cost ratio of
0.99,[Footnote 28] for composite rate services and separately billed
drugs in 2001. Past agency audits have demonstrated that dialysis
facilities have included nonallowable costs in their cost reports. The
Health Care Financing Administration (HCFA) conducted audits of a
random sample of 1988 and 1991 dialysis facility cost reports and found
that providers' allowable costs were about 90 percent and 89 percent,
respectively, of reported costs. HCFA also audited the 1996 reports but
did not calculate a similar percentage of reported costs that were
allowable.[Footnote 29] When MedPAC compared the 1996 cost reports
before and after auditing, it found that the allowable cost per
treatment for composite rate services and separately billed drugs for
freestanding facilities was about 96 percent of the reported cost per
treatment.[Footnote 30] Because providers have historically included
nonallowable costs on their cost reports, we applied MedPAC's
adjustment, which is the most conservative and most recent adjustment,
to our payment-to-cost ratio of 0.99 and derived an adjusted payment-
to-cost ratio of 1.03 for 2001. Although we calculated an overall
payment-to-cost ratio for 2001 only,[Footnote 31] MedPAC has reported a
decrease in these ratios from 1.14 in 1996 to 1.04[Footnote 32] in
2001.[Footnote 33]
Although payments exceeded costs overall in 2001, they did not exceed
costs for all sizes of facilities. For example, payments were well
below allowable costs for small facilities,[Footnote 34] with an
adjusted payment-to-cost ratio of 0.91 (see table 1).[Footnote 35]
Given the fixed costs a facility incurs in terms of staffing,
equipment, supplies, and rent, revenue from the small patient base in
these facilities may not be sufficient to meet costs.
Table 1: Freestanding Dialysis Facility Adjusted Payment-to-Cost Ratios
for Composite Rate Services and Separately Billed Drugs, Overall and by
Size, 2001:
Facilities: All;
Overall payment-to-cost ratio: 1.03.
Facilities: Small;
Overall payment-to-cost ratio: 0.91.
Facilities: Medium;
Overall payment-to-cost ratio: 1.02.
Facilities: Large;
Overall payment-to-cost ratio: 1.05.
Source: GAO analysis of CMS data.
Notes: Payment-to-cost ratios among facilities in the 50 states and the
District of Columbia. Ratios are weighted by total Medicare payments
received by each facility. A payment-to-cost ratio of 1.00 indicates
that payments equal costs. A ratio above 1.00 indicates that payments
are greater than costs and below 1.00 indicates that payments are lower
than costs. We defined the size of the facility based on the 25th and
75th percentiles of total dialysis treatments. Small facilities are
those reporting a number of dialysis treatments less than the 25th
percentile, medium facilities are those reporting a number of dialysis
treatments greater than or equal to the 25th percentile and less than
or equal to the 75th percentile, and large facilities are those
reporting a number of treatments greater than the 75th percentile.
[End of table]
Current Payment Methodology Is Not Appropriate:
The Medicare payment methodology for dialysis services is not
appropriate. In 2001, composite rate payments to freestanding
facilities, intended to cover the costs of a variety of services
associated with a dialysis treatment, such as nursing, supplies, social
services, and certain laboratory tests, were well below the costs of
those services. In addition, the composite rate does not include all
the services beneficiaries on dialysis typically receive, and does not
account for variation in service utilization and costs among
beneficiaries. Separately billed drug payments, however, far exceeded
the costs of those items. Because utilization of separately billed
drugs is largely unconstrained,[Footnote 36] providers have an
incentive to overutilize them to compensate for lower payments under
the composite rate. In addition, composite rate payments for home
dialysis treatments far exceeded the costs of those services, but
payments for home dialysis training were well below the costs of those
services.
We estimate that from 1998 through 2001, composite rate payments were
well below the costs of composite rate services. During these years,
the unadjusted[Footnote 37] payment-to-cost ratio for composite rate
services was below 1.00 and steadily decreased every year, falling from
0.94 to 0.89 (see table 2).
Table 2: Freestanding Dialysis Facility Unadjusted Payment-to-Cost
Ratios for Composite Rate Services, 1998-2001:
Payment-to-cost ratio;
1998: 0.94;
1999: 0.93;
2000: 0.91;
2001: 0.89.
Source: GAO analysis of CMS data.
Notes: Payment-to-cost ratios among facilities in the 50 states and the
District of Columbia. Ratios are weighted by total Medicare payments
received by each facility. A payment-to-cost ratio of 1.00 indicates
that payments equal costs. A ratio above 1.00 indicates that payments
are greater than costs and below 1.00 indicates that payments are lower
than costs.
[End of table]
Furthermore, the composite rate does not pay for all services routinely
provided during a dialysis session. While the composite rate was
designed to pay for services associated with a single dialysis session,
certain items or services introduced since the creation of the rate are
paid separately. We determined that three separately billed drugs, EPO,
vitamin D, and iron, and drug-related supplies were provided to most
dialysis beneficiaries and frequently accompanied hemodialysis
treatments (see table 3). For example, 98 percent of beneficiaries
received EPO in 2001 and, on average, at every dialysis treatment.
Table 3: Most Frequent Items Billed Separately in Association with
Hemodialysis, 2001:
Item: EPO;
Percentage of beneficiaries[A] receiving item: 98;
Frequency of billing among beneficiaries receiving item[B, C]:
Every treatment.
Item: Drug-related supplies;
Percentage of beneficiaries[A] receiving item: 84;
Frequency of billing among beneficiaries receiving item[B, C]:
Every 9th treatment.
Item: Iron;
Percentage of beneficiaries[A] receiving item: 79;
Frequency of billing among beneficiaries receiving item[B, C]:
Every 17th treatment.
Item: Vitamin D;
Percentage of beneficiaries[A] receiving item: 70;
Frequency of billing among beneficiaries receiving item[B, C]:
Every 9th treatment.
Item: Hepatitis B vaccine;
Percentage of beneficiaries[A] receiving item: 25;
Frequency of billing among beneficiaries receiving item[B, C]:
Every 60th treatment.
Item: Vancomycin;
Percentage of beneficiaries[A] receiving item: 24;
Frequency of billing among beneficiaries receiving item[B, C]:
Every 50th treatment.
Item: Levocarnitine;
Percentage of beneficiaries[A] receiving item: 5;
Frequency of billing among beneficiaries receiving item[B, C]:
Every 12th treatment.
Source: GAO analysis of CMS data.
[A] Beneficiaries receiving in-facility hemodialysis.
[B] Medicare instructs providers to record each drug administration on
the claim separately, and accordingly, we defined one administration of
a drug as one record on the claim. Some providers may aggregate the
units of several administrations as one record. To the extent this is
the case, the billing frequencies for these specific drugs likely
underestimate the actual administration frequencies.
[C] Per in-facility hemodialysis treatment. Beneficiaries typically
receive 3 treatments per week, or about 13 per month.
[End of table]
The composite rate also does not adjust for factors that may affect the
cost of providing dialysis services.[Footnote 38] Providers we
interviewed told us that certain beneficiaries require more services
than others because of the presence of conditions including diabetes,
hypertension, vascular access problems,[Footnote 39] and other physical
impairments. They stated that care for these beneficiaries may be more
costly due to additional staff time, additional resources, or more
frequent dialysis. There is currently no adjustment to the composite
rate to account for variation in the costs of providing services to
beneficiaries who consume more resources than average.
While composite rate payments were well below costs, we estimate that
payments for separately billed drugs far exceeded the costs of those
drugs in 2001, with an unadjusted payment-to-cost ratio of 1.16.
Because utilization of separately billed drugs is largely unconstrained
and because payments for these items exceeded costs, providers have an
incentive to overutilize them. Representatives from one of the largest
chain providers and several nephrologists we interviewed reported that
this incentive to overutilize exists because separately billed drug
payments compensate for losses on composite rate services. However,
several nephrologists and researchers we interviewed also reported that
beneficiaries who undergo PD, or who otherwise dialyze more frequently
than three times per week, have a reduced need for separately billed
drugs.
In addition to the imbalance in payment between composite rate services
and separately billed drugs, an imbalance exists between payments for
home dialysis treatments and home dialysis training. Two industry
representatives and representatives of a patient advocacy organization
we interviewed stated that Medicare payments for home dialysis training
do not cover the costs of the service. We found that in 2001, the
unadjusted payment-to-cost ratio for composite rate payments for home
dialysis treatments was 1.11 and for home dialysis treatments and
training combined was 1.04.[Footnote 40] The unadjusted payment-to-cost
ratio for composite rate payments for home dialysis training alone was
0.38, indicating that payments were well below costs. A perception that
facilities are losing money on the initial home dialysis training, even
though payments are above costs for the training and treatment
combined, may serve as a disincentive to offering the home dialysis
treatment method.
Daily Hemodialysis Appears Promising, but Rigorous Data Are Lacking:
Daily hemodialysis, which is performed five to seven times per week,
may improve patients' clinical outcomes and quality of life because it
more closely approximates the body's continuous cleansing of the blood.
The literature indicates that daily hemodialysis patients have a
greater amount of toxin removed from their bodies, or a more adequate
dialysis dosage, than conventional hemodialysis patients.[Footnote 41]
Dialysis dosage is important because research suggests that inadequate
dosage correlates with increased mortality. In addition, studies report
that anemia and malnutrition, two serious conditions associated with
increased morbidity and mortality, improve with daily
hemodialysis,[Footnote 42] as does patient quality of life.[Footnote
43] For example, patients on daily hemodialysis experience less fatigue
and enjoy a wider range of dietary choices. Studies also report that
patients on daily hemodialysis have a reduced need for medication,
including EPO[Footnote 44] and drugs to control blood
pressure,[Footnote 45] and a reduced number of
hospitalizations.[Footnote 46]
Although studies on daily hemodialysis report improvements in patient
outcomes, these studies are limited in size and scope. The daily
hemodialysis patient base is extremely small, given that few dialysis
facilities provide the treatment, and those that do have few patients
using it. Although no national data exist on the utilization of daily
hemodialysis, nephrologists we spoke with who provide daily
hemodialysis estimate that approximately 200 patients are undergoing
the treatment nationwide. Published studies are principally
nonrandomized and have small sample sizes, typically fewer than 25
patients, and therefore do not provide definitive evidence supporting
the treatment. Specifically, studies do not evaluate whether observed
improvements in mortality can be attributed to the treatment itself or
to some other factor. To definitively assess the treatment, more
rigorous data are needed.
Dialyzing more frequently has drawbacks. Although patients may
experience better outcomes, daily hemodialysis increases the number of
times a patient connects to the hemodialysis machine, and may increase
transportation costs if a patient chooses to dialyze at a facility
rather than at home. Such increased burdens may outweigh the benefits
for a significant number of patients. Even so, providers and
nephrologists we interviewed estimated that anywhere from 10 to 50
percent of the dialysis population would choose to undergo daily
hemodialysis.
Several studies, each of which evaluated the costs of one to two
facilities, have found that facility costs increase upon implementation
of daily hemodialysis.[Footnote 47] Industry representatives reported
that despite the possible benefits of daily hemodialysis, it is not
currently financially feasible to offer it to a large number of
Medicare beneficiaries because Medicare does not routinely pay for more
than three dialysis treatments per week. However, if beneficiaries who
undergo daily hemodialysis have a reduced need for other Medicare
services, such as drugs and inpatient stays, the Medicare program may
realize overall cost savings.
Research currently being conducted by the National Institutes of Health
(NIH) may provide more rigorous data on daily hemodialysis, although it
will not determine whether there is an overall cost savings to
Medicare. With partial funding from CMS, NIH has funded four centers to
test whether it is feasible to randomize a representative sample of
patients into either conventional or daily hemodialysis. The trials
will track a number of patient outcomes for at least 6 months,
including anemia, nutritional status, blood pressure, medication use,
and hospitalizations, but they are not designed to enroll enough
patients to conclusively determine whether differences in mortality or
hospitalizations are significant. Trial results, which will not be
available until 2007, will determine whether NIH should continue with a
large-scale trial that would measure the impact of more frequent
dialysis on mortality or cardiovascular outcomes or both.
Concluding Observations:
From December 31, 1998, through December 31, 2001, beneficiary access
to dialysis facilities and services appeared stable. The total number
of dialysis facilities nationwide increased at about the same rate as
the Medicare dialysis population, and the total number of stations
nationwide increased at a faster rate than the Medicare dialysis
population. Over the same period of time, the number of counties with
at least one facility increased.
On average, Medicare payments to freestanding dialysis facilities for
composite rate and separately billed services combined exceeded
providers' estimated allowable costs by 3 percent in 2001. However,
composite rate payments were well below the costs of composite rate
services, and separately billed drug payments far exceeded the costs of
separately billed drugs. The current payment methodology gives
providers an incentive to overutilize separately billed drugs in order
to compensate for losses on composite rate services and does not
account for possible cost differences in treating beneficiaries. A
payment methodology that bundled the services a facility provides into
a prospective payment amount would encourage providers to control the
costs and utilization of these items, as they retain the difference if
their payments exceed their costs of providing necessary services. A
system that is based on allowable costs and accounts for possible cost
differences in treating beneficiaries would ensure that Medicare pays
appropriately for the efficient delivery of services.
As required by law, CMS is currently designing a bundled prospective
payment system. In 2003, CMS reported to the Congress that currently
available data appear sufficient to expand the payment bundle to
include drugs and other services currently paid separately. MMA
requires the Secretary of HHS to issue a second report by October 1,
2005, that details the elements and features for the design and
implementation of a bundled system, and then implement a 3-year
demonstration project beginning January 1, 2006, that is based on that
system.
Agency and External Reviewer Comments and Our Evaluation:
We received written comments on a draft of this report from CMS (see
app. II). We also received technical comments from NIH, which we
incorporated where appropriate, and oral comments from seven external
reviewers. The external reviewers represented industry and patient
organizations. They included the American Association of Kidney
Patients (AAKP); the Renal Physicians Association (RPA); Dialysis
Clinic, Inc. (DCI), the largest nonprofit dialysis chain; Fresenius
Medical Care (FMC), the largest for-profit dialysis chain; the National
Kidney Foundation, a foundation for the prevention and treatment of
kidney disease; the National Renal Administrators Association (NRAA),
which represents employees at dialysis facilities; and the Renal
Leadership Council (RLC), an association representing the four largest
for-profit dialysis facility chains.
CMS Comments and Our Evaluation:
In commenting on a draft of this report, CMS generally agreed with our
findings and our conclusion that all outpatient dialysis services
should be bundled into a single prospective payment amount based on
facilities' allowable costs. Although in the draft report we had also
recommended that CMS redesign the prospective payment system for
dialysis facilities to bundle the costs of services, including
separately billed drugs, into one payment amount, in its comments CMS
noted that it would not have the statutory authority to implement such
a system. CMS also noted that MMA requires the Secretary of HHS to
report to the Congress by October 1, 2005, on the elements and features
necessary in the design and implementation of a broader payment system.
The Secretary is also required to conduct a 3-year demonstration
project, beginning January 1, 2006, using a payment system
incorporating patient characteristics identified in the report. CMS
also asked that we recognize its research on a bundled payment system
that has been under way since October 2000. As a result of these
comments, we deleted the recommendation in the draft report. In
addition, although MMA was discussed in our draft report, we more
prominently highlighted it and CMS's research in the report.
CMS also stated that while our findings on beneficiary access were
reassuring, it is concerned that we did not specifically address access
issues at the regional level. According to CMS, its staff has been told
that hospitals in certain regions, such as New England and New York,
are having difficulty discharging and placing ESRD patients in dialysis
facilities in those areas. We acknowledged in the draft report that
supply varied geographically and by treatment method. We based our
findings on aggregate indicators, such as trends in numbers of stations
and facilities relative to the beneficiary population, which all
suggested that access had been stable from 1998 through 2001. We would
not have been able to identify the extent to which supply has changed
since 2001, as 2001 data were the most recent available at the time of
our analysis.
Industry and Patient Organization Comments:
Comments from the industry representatives and patient organizations
centered on three different areas: beneficiary access to dialysis, the
data used in our analysis of Medicare payment adequacy, and the
appropriateness of the current payment methodology.
Many comments addressed our finding that beneficiary access to dialysis
is stable. Five external reviewers stated that Medicare payments are
currently inadequate, and due to inadequate payments, facilities are
closing in areas where Medicare beneficiaries constitute a high
percentage of dialysis patients. RPA specifically was concerned that
facilities may try to maximize their numbers of private-pay patients
and minimize their numbers of Medicare beneficiaries in the future.
Three external reviewers asserted that access is currently decreasing
due to staffing shortages at available facilities, particularly with
respect to nurses. These reviewers also stated that certain minority
populations, such as Native Americans, and certain areas of the
country, such as rural and inner city areas, are currently experiencing
access problems.
Several external reviewers commented on access issues specifically
related to home dialysis. NRAA agreed with our finding that payment for
home training is inadequate and therefore serves as a barrier to home
dialysis. RPA agreed that one reason for low utilization of PD is that
PD patients use less of the profitable separately billed drugs. AAKP
provided the same assertion and added that the lack of training for
nephrologists serves as a barrier to home dialysis.
Industry representatives expressed concerns regarding our payment
analysis, specifically the use of data from 2000 and 2001 and our
application of an audit adjustment to facility cost data. DCI stated
that facility costs have risen since 2001; therefore, our analysis does
not reflect current conditions. FMC, RLC, and NRAA stated that using an
audit adjustment based on 1996 cost reports does not result in an
accurate assessment of costs; they asserted that the amount of
nonallowable costs that facilities include on their cost reports has
decreased since 1996.
Several groups commented on the appropriateness of the current payment
methodology. Two industry representatives, DCI and RLC, acknowledged
that an incentive exists to overutilize separately billed drugs in
order to compensate for losses on composite rate services, and the
physician association, RPA, acknowledged that there is excessive use of
these drugs. However, another industry group, NRAA, stated that our
assertion that an incentive to overutilize exists was extreme. In
addition, four external reviewers were concerned that bundling costs
would create an incentive for facilities to either underserve
beneficiaries or to accept only those beneficiaries who use relatively
few resources. Four external reviewers were concerned that there would
be no regular update to the payment rate if a bundled rate was
established, which could limit access to new technology.
Our Evaluation of Industry and Patient Organization Comments:
Concerning the comments that access is decreasing overall, for certain
regions and certain populations and for home dialysis, we acknowledged
in the draft report that supply may vary geographically and by
treatment method. However, also as noted in the draft report, we based
our finding that beneficiary access to dialysis is stable on aggregate
indicators, such as trends in numbers of stations and facilities
relative to the beneficiary population. In particular, we noted that
few facilities closed from 1998 through 2001, with the number of
facilities closing each year amounting to less than 1 percent of those
operating at the end of the year. We were not able to analyze the
adequacy of facility staffing due to a lack of adequate data.
With respect to our adjustment of facility cost data, BIPA required
that we use audited cost data when analyzing the adequacy of Medicare
payment. Although CMS is currently auditing the 2001 cost reports, the
agency's last completed audit was of the 1996 cost reports. Given the
increase in health care costs over time, we did not believe it was
appropriate to assess the adequacy of Medicare payment using only 1996
cost reports. In order to satisfy the requirements of our mandate, we
estimated the percentage of costs on the unaudited 2001 cost reports
that were Medicare allowable. To do so, we relied on an audit
adjustment calculated by MedPAC. MedPAC's adjustment was based on the
1996 cost reports and was lower than the previous two audit adjustments
calculated by HCFA in 1988 and 1991. We believe it is appropriate to
apply MedPAC's 1996 audit adjustment to 2001 costs because it is the
most recent of the last three audit adjustments. We also noted in the
draft report that it is the most conservative of the three adjustments.
With respect to our conclusion that the current payment methodology is
not appropriate, we acknowledge that a prospective payment could create
an incentive to underserve beneficiaries, because providers retain the
difference if their payments exceed their costs. However, this
incentive exists under all prospective payment systems. If the bundled
payment amount is based on facilities' allowable costs of delivering
services, and takes into account possible cost differences in treating
beneficiaries, facilities will be financially better equipped to
deliver the appropriate level of service to each beneficiary.
Industry representatives and patient organizations also raised several
issues that went beyond the scope of our report. These issues included
whether Medicaid and physician payments are adequate and the Medicare
definition of allowable costs.
Reviewers also made technical comments, which we incorporated where
appropriate.
We are sending copies of this report to the Administrator of CMS and
appropriate congressional committees. The report is available at no
charge on GAO's Web site at http://www.gao.gov. We will also make
copies available to others on request.
If you or your staffs have any questions, please call me at (202) 512-
7119. Another contact and key contributors to this report are listed in
appendix III.
Signed by:
A. Bruce Steinwald:
Director, Health Care--Economic and Payment Issues:
List of Committees:
The Honorable Charles E. Grassley:
Chairman:
The Honorable Max Baucus:
Ranking Minority Member:
Committee on Finance:
United States Senate:
The Honorable William M. Thomas:
Chairman:
The Honorable Charles B. Rangel:
Ranking Minority Member:
Committee on Ways and Means:
House of Representatives:
The Honorable Joe L. Barton:
Chairman:
The Honorable John D. Dingell:
Ranking Minority Member:
Committee on Energy and Commerce:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
In conducting this study, we analyzed the Centers for Medicare &
Medicaid Services (CMS) Facility Survey files, Medicare cost reports,
and Medicare outpatient claims. We interviewed officials from CMS and
the National Institute of Diabetes & Digestive & Kidney Diseases. We
also interviewed representatives from the American Association of
Kidney Patients, American Nephrology Nurses' Association, Forum of End
Stage Renal Disease (ESRD) Networks, National Kidney Foundation,
National Renal Administrators Association, and Renal Physicians
Association; representatives from five national dialysis facility
chains, a national manufacturer of dialysis equipment, and several
private health insurance companies; and nephrologists who provide daily
hemodialysis. We conducted site visits at three dialysis facilities,
one of which provides daily hemodialysis, and interviewed officials at
these facilities.
To analyze the supply of freestanding and hospital-based dialysis
facilities, we used the Facility Survey files from 1998 through 2002,
and to identify ESRD beneficiaries on dialysis, we used Medicare
outpatient claims from 1998 through 2001, the most recent years for
which data were available at the time of our analysis. From the
Facility Survey files, we identified all dialysis facilities operating
the entire year, opening during the year, and closing during the year,
and the number of stations at each facility.[Footnote 48] We identified
a facility as offering a treatment method if it provided at least one
treatment or had at least one patient using that method. From the
Medicare outpatient claims, we identified Medicare ESRD beneficiaries
receiving dialysis each year, and their residence by ZIP code. We then
calculated the number of dialysis facilities operating the entire year
and the number of beneficiaries receiving dialysis for each county in
the 50 states and in the District of Columbia, which we considered a
county. We determined the average number of facilities and stations in
each county, weighted by the number of beneficiaries in each county. We
defined a county as urban if it was in a metropolitan statistical area
and as rural if it was outside a metropolitan statistical area, as
determined by the Office of Management and Budget.[Footnote 49] We
assessed the reliability of the Facility Survey file and claims data by
analyzing trends in the number of beneficiaries on dialysis and
dialysis facilities over time and comparing these to trends reported by
CMS. We determined that the data were reliable for our purposes.
To calculate payment-to-cost ratios for composite rate services only,
we used cost reports for freestanding renal dialysis facilities from
1998 through 2001, the most recent data available. The Medicare payment
methodology is the same for freestanding and hospital-based dialysis
facilities, but we did not analyze cost reports or claims for hospital-
based facilities because their reported costs are affected by decisions
in allocating costs between the hospital and the dialysis facility. In
2001, about 84 percent of all dialysis facilities nationwide were
freestanding. We first edited the cost reports to exclude those
facilities located outside the 50 states or the District of Columbia,
those with cost reporting periods less than 300 days, and those that
reported composite rates outside the range of possible rates from the
Medicare program. We excluded 577 of the 2,983 cost reports, or about
19 percent. From the remaining cost reports, we calculated each
provider's total Medicare payments and total reported costs. We
calculated the proportion of total cost attributable to Medicare
beneficiaries using the proportion of each facility's treatments that
was furnished to Medicare beneficiaries. We summed payments and costs
across all providers to obtain payment-to-cost ratios from 1998 through
2001 weighted by total Medicare payments received by each facility.
Additionally, we stratified ratios by dialysis treatment method, as
reported in the cost reports. We assessed the reliability of the cost
report data by comparing our payment-to-cost ratios to those published
by the Medicare Payment Advisory Commission. We determined that the
data were reliable for our purposes.
In order to calculate 2001 payment-to-cost ratios for overall costs,
that is, composite rate services and separately billed drugs, we used
2001 cost reports for freestanding renal dialysis facilities and 2000
and 2001 Medicare outpatient claims data.[Footnote 50] We first edited
the cost reports to exclude those facilities located outside the 50
states or the District of Columbia, those with cost reporting periods
fewer than 300 days, and those that reported composite rates outside
the range of possible rates from the Medicare program. Payment
information for individual drugs is not available on Medicare
outpatient claims prior to July 1, 2000, and therefore we did not
calculate these ratios for years prior to 2001.[Footnote 51] We used
the claims data to obtain payments for separately billed drugs, as they
are not available in the cost reports. We obtained the total costs of
separately billed drugs from the cost reports and calculated the
proportion attributable to Medicare beneficiaries using the proportion
of each facility's treatments that was furnished to Medicare
beneficiaries. We then added our previously calculated composite rate
payments and costs and summed total payments and total costs for all
providers to obtain an overall payment-to-cost ratio for 2001 weighted
by total Medicare payments received by each facility. We stratified the
ratios by size. We defined the size of the facility based on the 25th
and 75th percentiles of total dialysis treatments each facility
reported in its cost report. Small facilities are those reporting a
number of dialysis treatments less than the 25th percentile, medium
facilities are those reporting a number of dialysis treatments greater
than or equal to the 25th percentile and less than or equal to the 75th
percentile, and large facilities are those reporting a number of
treatments greater than the 75th percentile. We could not calculate
these ratios by treatment method, as separately billed drug costs are
not reported by treatment method on the cost report.
In order to identify separately billed items or services frequently
billed in association with in-facility hemodialysis, we used 2001
Medicare outpatient claims data. We limited our claims population to
those that reported only in-facility hemodialysis and no other
treatment method. We defined "frequently billed" as those separately
billed services that were billed over 100,000 times annually. We
excluded laboratory services because these are typically billed
directly to Medicare by the laboratory, not by the dialysis facility.
Medicare instructs providers to record each drug administration on the
claim separately, and accordingly, we defined one administration of a
drug as one record on the claim. It is possible, however, that some
providers aggregate the units of several administrations. To the extent
this is the case, the billing frequencies for these specific drugs
likely underestimate the actual administration frequencies.
To review cost and clinical data on daily hemodialysis, we examined 25
articles obtained through a MEDLINE literature search for studies on
daily hemodialysis published from 1998 through 2002. We examined an
additional 11 articles referred to us during our interviews.
We conducted our work from July 2002 through June 2004 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Centers for Medicare & Medicaid
Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services:
Administrator
Washington, DC 20201:
DATE: APR 2 7 2004:
TO: A. Bruce Steinwald:
Director, Health Care-Economic and Payment Issues:
General Accounting Office:
FROM: Mark B. McClellan, M.D., Ph.D.
Administrator:
Centers for Medicare & Medicaid Services:
Signed by: Mark B. McClellan:
SUBJECT: General Accounting Office Draft Report, Medicare Dialysis
Facilities: Beneficiary Access Stable, but Methodology Needs
Improvement (GAO-04-450):
Thank you for the opportunity to review the GAO draft report entitled
Medicare Dialysis Facilities: Beneficiary Access Stable, but
Methodology Needs Improvement
(GAO 04-450), in which GAO recommended that the Centers for Medicare &
Medicaid Services (CMS) first, redesign the prospective payment system
(PPS) for dialysis facilities to bundle the costs of services delivered
to Medicare beneficiaries into one payment amount. And that, second,
this payment system should be based on facilities' allowable costs of
delivering services.
The GAO posed two issues for analysis: (1) Given that the composite
payment rates have only been minimally revised since their inception in
1983, has beneficiary access to outpatient maintenance dialysis been
adversely affected? And (2) does the end stage renal disease (ES RD)
composite rate payment system need to be revised to include separately
billable services?
The GAO concluded that despite minimal changes to the ESRD composite
payment rates, beneficiary access to dialysis services has not been
impaired. Composite rate payments to dialysis facilities are less than
composite rate costs. However, payments for separately billable
dialysis services exceed separately billable costs by an amount more
than sufficient to make up the shortfall and generally provide an
overall profit margin. This unintended cross subsidization between
composite rate and separately billable dialysis services should be
eliminated by bundling all outpatient dialysis services into a single
prospective payment amount based on ESRD facility costs.
The GAO's findings with respect to beneficiary access are similar to
those of MEDPAC in a Report to Congress. While these findings are
reassuring, we are concerned that GAO's analysis did not specifically
address regional access issues of which we have been made aware, such
as those in New England and New York. Regional office staff have
informed us that hospitals are having difficulty discharging and
placing ESRD patients in dialysis facilities in those areas.
We concur with the GAO's conclusion that all outpatient dialysis
services should be bundled into a single prospective payment amount
based on facility costs to the extent feasible. However, we point out
that CMS currently does not have the statutory authority to implement
this recommendation. As part of outpatient ESRD reform, section 623(d)
of Pub. L. 108-173, the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) mandated the development of a basic
case mix adjustment to the composite payment rates, effective January
1. 2005. While the initial case mix adjustment will be restricted to
comply with the MMA's directive that it reflect a "limited number of
patient characteristics," adoption of such a risk adjuster will begin
to address a major limitation of the current payment system, which is
its inability to account for patient variation in resource consumption.
The statute, however, specifically prohibits CMS from bundling any
additional items and services into the composite payment rate.
Section 623(f) of the MMA requires the Secretary to submit a Report to
Congress by October 1, 2005 detailing the design and features of a
fully bundled ESRD PPS. The proposed fully bundled ESRD PPS will be the
subject of a three-year demonstration project beginning January 1,
2006. Given the GAO's endorsement of a bundled ESRD PPS, we believe
that its recommendation should be revised to acknowledge the statutory
limitations to revising the payment system for dialysis services. It
should also recognize CMS' sponsored research to develop the bundled
payment system that has been underway since October 2000.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Nancy A. Edwards, (202) 512-3340:
Acknowledgments:
Kevin J. Dietz, Joanna L. Hiatt, Maria Martino, and Yorick F. Uzes made
major contributions to this report.
FOOTNOTES
[1] See J.L. Xue, et al., "Forecast of the Number of Patients with End-
Stage Renal Disease in the United States to the Year 2010," Journal of
the American Society of Nephrology, vol. 12 (2001): 2753-2758.
[2] Dialysis is administered either by a machine that filters blood
through an artificial kidney (hemodialysis) or by filtering the blood
through the lining of the patient's abdominal area, called the
peritoneal membrane (peritoneal dialysis).
[3] In this report, we refer to outpatient renal dialysis facilities as
"dialysis facilities."
[4] In this report, we use the term "hemodialysis" to refer to in-
facility hemodialysis, and we use the term "home dialysis" to include
both PD and home hemodialysis.
[5] MedPAC is an independent federal body, established by the Balanced
Budget Act of 1997, that advises the Congress on issues affecting the
Medicare program. See Pub. L. No. 105-33, § 4022, 111 Stat. 251, 350.
[6] Medicare Payment Advisory Commission, Report to the Congress:
Medicare Payment Policy (Washington D.C.: March 2001, March 2002, and
March 2003).
[7] Pub. L. No. 106-554, App. F, § 422(c)(1), 114 Stat. 2763, 2763A-
517.
[8] See Pub. L. No. 108-173, § 623, 117 Stat. 2066, 2312-17.
[9] Pub. L. No. 106-554, App. F, § 422(d), 114 Stat. 2763, 2763A-517.
[10] A station is typically defined as the treatment area and
equipment, including the dialysis machine, needed to dialyze the
patient.
[11] In July 2001, the agency's name was changed from the Health Care
Financing Administration (HCFA) to CMS. In this report, we refer to the
agency as HCFA when discussing actions it took or was required to take
under that name.
[12] We defined a county as urban if it was in a metropolitan
statistical area and as rural if it was outside a metropolitan
statistical area, as determined by the Office of Management and Budget.
[13] Generally, to be eligible for benefits under Medicare, a person
with ESRD must be (1) entitled to a monthly insurance benefit under
Title II of the Social Security Act (or an annuity under the Railroad
Retirement Act), (2) fully or currently insured under Social Security,
or (3) the spouse or dependent child of a person who meets at least one
of the first two requirements. 42 U.S.C. § 426-1(2000).
[14] See Xue, et al., "Forecast of the Number of Patients with End-
Stage Renal Disease in the United States to the Year 2010."
[15] Instead of receiving equipment and supplies from a facility,
beneficiaries may choose to order them through a supplier.
Beneficiaries choosing this option still receive the ancillary clinical
and social services from a facility.
[16] Facilities receive a supplemental payment for training
beneficiaries on home hemodialysis or PD. The facility receives a
composite rate payment for the dialysis services and an additional
amount for costs associated with training, such as the instruction
beneficiaries receive from facility staff while dialyzing.
[17] Pub. L. No. 97-35, § 2145, 95 Stat. 357, 799-800. See H. Conf.
Rep. No. 97-208, at 948-9 (1981).
[18] MMA increases the composite rate by 1.6 percent for services
furnished on or after January 1, 2005. See Pub. L. No. 108-173, §
623(a), 117 Stat. 2066, 2315.
[19] 42 U.S.C. § 1395rr (b)(11)(B)(ii)(2000). While the Secretary of
HHS is authorized to adjust this payment, it has remained the same
since 1994.
[20] MMA changed Medicare's payment formula for drugs. In general,
payments for outpatient drugs furnished in 2004 will equal 85 percent
of AWP. Separately billed drugs furnished in connection with dialysis
services will continue to be paid at 95 percent of AWP in 2004. See
Pub. L. No. 108-173, § 303(b), 117 Stat. 2066, 2238.
[21] An example of a nonallowable Medicare cost is the cost of
transporting beneficiaries to and from a dialysis facility, because
transportation is not directly related to medical care. The salary of a
facility administrator is an example of a cost that is allowable but,
depending upon the salary amount, may not be reasonable. For example,
in most instances, the Medicare compensation for a facility
administrator may not exceed $90,000. If a facility claims $100,000 as
compensation, Medicare would consider $10,000 of the amount as an
unreasonable cost, unless the facility can justify a compensation rate
over the $90,000 limit.
[22] Pub. L. No. 105-33, § 4558(a), 111 Stat. 251, 463.
[23] Pub. L. No. 106-554, App. F, § 422(c)(1), 114 Stat. 2763A-517.
[24] U.S. Department of Health and Human Services, Toward a Bundled
Outpatient Medicare End-Stage Renal Disease Prospective Payment System
(Baltimore, Md.: 2003).
[25] Pub. L. No. 108-173, § 623(d), 117 Stat. 2066, 2313-14.
[26] In 2001, there were a total of 3,140 counties in the 50 states. In
addition, we include the District of Columbia as a county.
[27] Proximity to a facility is somewhat less critical for
beneficiaries who perform home dialysis because they are not required
to regularly visit a facility for dialysis treatments.
[28] A payment-to-cost ratio of 1.00 indicates that payments equal
costs. A ratio above 1.00 indicates that payments are greater than
costs and below 1.00 indicates that payments are lower than costs.
[29] CMS is currently auditing the 2001 cost reports and expects to
complete this task in 2005.
[30] Medicare Payment Advisory Commission, March 2003.
[31] We were unable to determine a payment-to-cost ratio for the
composite rate and separately billed drugs before 2001 because, prior
to July 1, 2000, the Medicare outpatient claims data contained payment
information for all services included on the claim but not for each
individual service.
[32] Our 2001 payment-to-cost ratio differs from MedPAC's ratio because
we used a more recent version of the 2001 cost report file.
[33] Medicare Payment Advisory Commission, March 2003.
[34] We defined the size of the facility based on the 25th and 75th
percentiles of total dialysis treatments. Small facilities are those
reporting a number of dialysis treatments less than the 25th
percentile, medium facilities are those reporting a number of dialysis
treatments greater than or equal to the 25th percentile and less than
or equal to the 75th percentile, and large facilities are those
reporting a number of treatments greater than the 75th percentile.
[35] From the 1996 cost reports, MedPAC also calculated that the
allowable cost per treatment for composite rate services and separately
billed drugs for small and large freestanding facilities was 97 percent
of the reported cost per treatment and for medium freestanding
facilities was 96 percent of the reported cost per treatment. Our
definition of size and MedPAC's definition of size are the same.
(Medicare Payment Advisory Commission, March 2003.)
[36] While facilities must report specific clinical indicators in order
to provide EPO to beneficiaries, other separately billed drugs are
administered when they are deemed medically necessary by the physician.
[37] MedPAC's adjustment to exclude nonallowable costs specifically
applies to the combined costs of composite rate services and separately
billed drugs. Therefore, we did not apply this adjustment to the
payment-to-cost ratios for either the composite rate or separately
billed drugs individually, and refer to those ratios as unadjusted.
[38] The only adjustment to the composite rate accounts for variation
in area wages.
[39] In order to filter a patient's blood during hemodialysis, the
vascular system, or bloodstream, must be accessed through a fistula,
graft, or catheter. The access site must be continually maintained to
help prevent complications, such as narrowing of the blood vessel or
infection of the site.
[40] Providers' separately billed drug costs are not reported by
treatment method on the cost report, and therefore, we cannot calculate
payment-to-cost ratios for the composite rate and separately billed
drugs together by treatment method.
[41] For example, see J. Traeger, et al., "Daily Versus Standard
Hemodialysis: One Year Experience," Artificial Organs, vol. 22, no. 7
(1998): 558-563.
[42] For an example of improvements in anemia, see J.D. Woods, et al.,
"Clinical and Biochemical Correlates of Starting 'Daily' Hemodialysis,"
Kidney International, vol. 55, no. 6 (1999): 2467-2476. For an example
of improvements in malnutrition, see R. Galland, et al., "Short Daily
Hemodialysis Rapidly Improves Nutritional Status in Hemodialysis
Patients," Kidney International, vol. 60, no. 4 (2001): 1555-1560.
[43] For example, see P.F. Vos, et al., "Clinical Outcome of Daily
Dialysis," American Journal of Kidney Diseases, vol. 37, no. 1, suppl.
2 (2001): S99-S102.
[44] For example, see Vos, et al.
[45] For example, see A. Pierratos, et al., "Nocturnal Hemodialysis:
Three-Year Experience," Journal of the American Society of Nephrology,"
vol. 9, no. 5 (1998): 859-868.
[46] For example, see R.S. Lockridge, Jr., et al., "Nightly Home
Hemodialysis: Fifteen Months of Experience in Lynchburg, Virginia,"
Home Hemodialysis International, vol. 3 (1999): 23-28.
[47] For example, see P.E. Mohr, et al., "The Case for Daily Dialysis:
Its Impact on Costs and Quality of Life," American Journal of Kidney
Diseases, vol. 37, no. 4 (2001): 777-789.
[48] Facilities indicate on their annual surveys whether they closed
during the survey year. However, we found that many facilities that
indicated they closed during the year then continued to operate in the
next year. This discrepancy may occur for a variety of reasons,
including when facilities indicate they are closing when they are
actually changing ownership. We used the 2002 file to adjust the number
of closings in 2001.
[49] For 1998 and 1999 analyses, we used metropolitan statistical area
definitions as of June 30, 1996, and for 2000 and 2001 analyses, we
used metropolitan statistical area definitions as of June 30, 1999.
[50] We did not include separately billed laboratory services in our
payment-to-cost ratios because they are billed by the laboratory that
performed the test, rather than by the dialysis facility.
[51] Prior to July 1, 2000, Medicare outpatient claim files provide the
total payment for all services that a provider records on each claim,
but not the individual payments for each service.
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