This rate is generally designed to  cover the costs that an efficient provider would incur to provide the  bundled services. This bundled  payment did not cover all dialysis-related items and services. Including Oral-Only ESRD Drugs in the Bundled Payment Could Promote Efficiency, Clinically Appropriate Care, and Access to These Drugs

There are three key reasons for including oral-only ESRD drugs in the  bundled payment for dialysis care: to encourage more efficient care, to  encourage more clinically appropriate care, and to increase access to  these drugs for certain beneficiaries. As a  result, dialysis organizations gain financially if beneficiaries receive these  drugs to treat mineral and bone disorder instead of drugs included in the  bundled payment, such as vitamin D, even though doing so may not always  represent the most clinically appropriate care. Finally, including oral-only ESRD drugs in the bundled payment for  dialysis care could improve access to these drugs for certain beneficiaries,  including beneficiaries who do not currently have prescription drug  coverage and beneficiaries with Part D prescription drug coverage whose  annual drug costs are within a certain range. Most Large Dialysis Organizations Provided Oral-Only ESRD Drugs to Some Beneficiaries in 2010; Both Large and Small Organizations Identified Potential Issues with Providing These Drugs in 2014

Three of the 4 large dialysis organizations in our review reported that they  provided oral-only ESRD drugs to some of the Medicare beneficiaries they  served in 2010. In contrast, all 16 of the small dialysis organizations in our  review reported that they did not provide these drugs to beneficiaries in  2010. Both Large and Small Dialysis Organizations Identified Several Issues That Could Affect Their Ability to Provide Oral- Only ESRD Drugs in 2014

Both the large and small dialysis organizations in our review identified  several issues that could affect their ability to provide oral-only ESRD  drugs in 2014. Specifically, 3 of the 4 large dialysis organizations and 11 of the 16  small dialysis organizations in our review noted that they were concerned  about the extent to which the bundled payment for dialysis care would  cover their costs of obtaining oral-only ESRD drugs and providing these  drugs to beneficiaries. CMS officials told us that they had  identified two potential sources of data on payments under Medicare for  oral-only ESRD drugs that they could use to account for these drugs in the  bundled payment—payments for these drugs under Medicare’s Part D and  Retiree Drug Subsidy programs. Although CMS is limited to using data on payments under Part D for oral- only ESRD drugs to account for oral-only ESRD drugs in the bundled  payment, certain aspects of these data suggest that the data on total  payments under Part D for 2007 through 2009 may understate the costs  that dialysis organizations would incur to provide these drugs. CMS does not know whether the payment amount for the entire bundle of  items and services, including oral-only ESRD drugs, will be adequate—that  is, whether it will cover the costs incurred by an efficient dialysis  organization to supply oral-only ESRD drugs in addition to the range of  other items and services included in the bundle. However, the possibility  that Part D data may understate the costs of providing oral-only ESRD  drugs raises questions about the adequacy of the overall bundled payment  rate. CMS Is Developing New Quality Measures Related to Mineral and Bone Disorder; However, CMS’s System for Collecting Data for Its Quality Measures Has Been Delayed

CMS is currently developing new quality measures for monitoring  treatment of mineral and bone disorder in order to identify measures for  which a consensus target level can be proposed based on the clinical  evidence available. CMS is also developing a new data collection system,  called CROWNWeb, which the agency plans to use to collect data to  support these new measures. With regard to our recommendation that CMS ensure the availability of  data for monitoring the treatment of mineral and bone disorder, CMS  noted that it plans to include measures related to mineral and bone  disorder in the ESRD Quality Incentive Program (QIP). The five groups’  comments on our draft report generally focused on three areas of concern:  (1) the reasons for including oral-only ESRD drugs in the bundled payment  system, (2) the data CMS intends to use to account for oral-only ESRD  drugs in the bundled payment system, and (3) CMS’s ability to monitor the  quality of care provided to dialysis beneficiaries.
Why GAO Did This Study

For most individuals with end-stage renal disease (ESRD), Medicare purchases a bundle of dialysis-related services using a single payment. In 2014, the Centers for Medicare & Medicaid Services (CMS) plans to include in this bundled payment "oral-only" ESRD drugs used to treat mineral and bone disorder. Currently, Medicare generally pays for these drugs only if the beneficiary has Part D prescription drug coverage. This report (1) describes the rationales for including oral-only ESRD drugs in the bundled payment, (2) examines dialysis organizations' recent experience providing oral-only ESRD drugs and their future ability to provide these drugs, (3) examines the data sources that CMS could use to account for oral-only ESRD drugs in the bundled payment, and (4) examines CMS's ability to monitor treatment of mineral and bone disorder. GAO interviewed CMS officials, experts in mineral and bone disorder, and representatives of 4 large and 16 small dialysis organizations. GAO also reviewed ESRD payment regulations, related reports, clinical guidelines, and state pharmacy licensure requirements in 10 selected states.

What GAO Found

There are three key reasons for including oral-only ESRD drugs in the bundled payment for dialysis care. First, including these drugs could promote more efficient dialysis care, because organizations that provide this care receive a fixed payment and gain financially to the extent they reduce their costs for the items and services included in the bundle. Second, including the oral-only ESRD drugs could promote clinically appropriate care. Currently, dialysis organizations gain financially if beneficiaries receive oral-only ESRD drugs instead of drugs that are in the bundle because this reduces costs without reducing the payment these organizations receive. Including oral-only ESRD drugs in the bundle would remove financial incentives under the payment system to use certain drugs over others. Finally, including oral-only ESRD drugs in the bundled payment could improve access to these drugs for certain beneficiaries, such as those who currently lack separate prescription drug coverage for these drugs. Three of the 4 large dialysis organizations interviewed by GAO reported that they provided oral-only ESRD drugs to some of the beneficiaries they served in 2010. In contrast, all of the 16 small dialysis organizations that GAO interviewed reported that they did not provide these drugs in 2010. Regardless of their recent experience providing oral-only ESRD drugs, the large and small organizations GAO interviewed identified issues that could affect their ability to provide these drugs in 2014. For example, most organizations expressed concern about whether the bundled payment for dialysis care would adequately cover the costs of providing oral-only ESRD drugs. To account for oral-only ESRD drugs in the payment bundle in 2014, CMS officials noted that they would be limited to using data on payments for these drugs under Medicare Part D. However, these data may understate the costs that dialysis organizations would incur to provide these drugs, in part, because Medicare currently pays for these drugs primarily for those beneficiaries with Part D coverage. Although CMS does not know whether the bundled payment in 2014 will be sufficient to cover the costs that efficient dialysis organizations would incur to provide the entire bundle of dialysis-related items and services, a potential underestimate of the total cost to provide oral-only ESRD drugs raises questions about payment adequacy beginning in 2014. GAO and others have stated that inadequate payments could lead to access and quality of care issues for beneficiaries on dialysis. CMS is developing new, consensus-based measures that it could use to monitor treatment of mineral and bone disorder. CMS is also developing a new Web-based system to collect data for such measures. However, full implementation of this new system has been delayed repeatedly, and dialysis organizations and others GAO interviewed expressed concern about the reliability of data collected using this system. Recognizing the importance of timely and reliable quality monitoring under bundled payment systems, CMS officials told GAO that they intend to collect data using an alternative mechanism in 2011.

What GAO Recommends

GAO recommends that CMS assess payment adequacy when oral-only ESRD drugs are included in the bundled payment and ensure availability of reliable data for monitoring treatment of mineral and bone disorder. CMS agreed with GAO's recommendations.