Medicare Payment for Dialysis Care

Medicare uses different methods to pay (1) dialysis facilities for providing  dialysis treatments to patients and for training them to perform home  dialysis and (2) physicians for managing patients’ dialysis care and  educating them about their condition. Percentage of Patients on Home Dialysis Generally Declined between 1988 and 2008 and then Slightly Increased; Stakeholder Estimates Suggest Potential for Future Growth

Historical trends in the overall percentage of all dialysis patients on home  dialysis—including both Medicare and non-Medicare patients—show a  general decrease between 1988 and 2008 and a more recent increase  thereafter through 2012. According to USRDS data, 16 percent of  104,200 dialysis patients received home dialysis in 1988. Home dialysis  use generally decreased over the next 20 years, reaching 9 percent in  2008, and then slightly increased to 11 percent of 450,600 dialysis  patients in 2012—the most recent year of data available from USRDS. Estimates from dialysis experts and other stakeholders suggest that  further increases in the use of home dialysis are possible over the long  term. As another example,  physician stakeholders we interviewed estimated that 15 to 25 percent of  dialysis patients could realistically be on home dialysis. In the short term, however, an ongoing shortage of peritoneal dialysis  solution has reduced the use of home dialysis, and this shortage could  have a long-term impact as well. Incentives for Facilities to Provide Home Dialysis May Have Limited Impact in Short Term

Medicare payments to dialysis facilities, including those that provided  home dialysis, gave them an overall financial incentive to provide dialysis,  as shown by their generally positive Medicare margins. When CMS established the current payment system, it stated that its  decision to have a single payment rate regardless of the type of dialysis  would give facilities a powerful financial incentive to encourage the use of  home dialysis, when appropriate. In contrast, increasing home dialysis resulted in a smaller benefit. For example, although the average cost  of an in-center hemodialysis treatment is typically higher than the average  cost of a peritoneal dialysis treatment, facilities may be able to add an in- center patient without incurring the cost of an additional dialysis machine  because each machine can be used by six to eight patients. Reliable cost report data are important for CMS to be  able to perform effective fiscal management of the program, which  involves assessing the adequacy of payment rates. Medicare Payment Policies and Limited Nephrology Training May Constrain Physicians’ Prescribing of Home Dialysis

Medicare physician payments for dialysis care do not consistently result  in incentives for physicians to prescribe home dialysis. Medicare Physician Payments May Not Consistently Result in Incentives to Prescribe Home Dialysis

We found that the structure of Medicare’s monthly physician payments— one of several factors that could affect the use of home dialysis—may  give physicians a disincentive for prescribing home dialysis, which could  undermine CMS’s goal of encouraging the use of home dialysis when  appropriate. Payment Limitations on Categories of Providers and Patients for Kidney Disease Education Benefit May Constrain Its Use

Few Medicare patients have used the KDE benefit, which covers the  choice of therapy (such as in-center hemodialysis, home dialysis, or  kidney transplant) and the management of comorbidities, and  stakeholders generally told us this low usage was related to payment  limitations on the types of providers who are permitted to furnish the  benefit and on the Medicare patients eligible to receive it. According to  USRDS, less than 2 percent of eligible Medicare patients used the KDE  benefit in 2010 and 2011—the first two years it was available—and use of  the benefit has decreased since then. Conclusions

The number and percentage of patients choosing to dialyze at home have  increased in recent years, and our interviews with home dialysis experts  and stakeholders indicated potential for future growth. If  training payments are inadequate, facilities may be less willing to provide  home dialysis. The Administrator of CMS should examine Medicare policies for  monthly payments to physicians to manage the care of dialysis  patients and revise them if necessary to ensure that these policies are  consistent with CMS’s goal of encouraging the use of home dialysis  among patients for whom it is appropriate. In response to our first recommendation that CMS  improve the reliability of cost report data for training and treatment  associated with specific types of dialysis, HHS said that it is willing to  consider reasonable modifications to the cost report that could improve  the reliability of cost report data. HHS did not concur with our third recommendation that CMS examine the  KDE benefit and, if appropriate, seek legislation to revise the categories  of providers and patients eligible for the benefit. We noted in the report that certain visits for  managing in-center patients can be provided via telehealth.
Why GAO Did This Study

In 2013, Medicare spent about $11.7 billion on dialysis care for about 376,000 Medicare patients with end-stage renal disease, a condition of permanent kidney failure. Some of these patients performed dialysis at home, and such patients may have increased autonomy and health-related quality of life.
GAO was asked to study Medicare patients' use of home dialysis and key factors affecting its use. This report examines (1) trends in home dialysis use and estimates of the potential for wider use, (2) incentives for home dialysis associated with Medicare payments to dialysis facilities, and (3) incentives for home dialysis associated with Medicare payments to physicians. GAO reviewed CMS policies and relevant laws and regulations, and GAO analyzed data from CMS (2010-2015), the United States Renal Data System (1988-2012), and Medicare cost reports (2012), the most recent years with complete data available. GAO also interviewed CMS officials, selected dialysis facility chains, physician and patient associations, and experts on home dialysis.

What GAO Found

The percentage of dialysis patients who received home dialysis generally declined between 1988 and 2008 and then slightly increased thereafter through 2012, and stakeholder estimates suggest that future increases in the use of home dialysis are possible. Dialysis patients can receive treatments at home or in a facility. In 1988, 16 percent of 104,200 dialysis patients received home dialysis. Home dialysis use generally decreased over the next 20 years, reaching 9 percent in 2008, and then slightly increased to 11 percent of 450,600 dialysis patients in 2012—the most recent year of data for Medicare and non-Medicare patients. Physicians and other stakeholders estimated that 15 to 25 percent of patients could realistically be on home dialysis, suggesting that future increases in use are possible. In the short term, however, an ongoing shortage of supplies required for peritoneal dialysis—the most common type of home dialysis—reduced home dialysis use among Medicare patients from August 2014 to March 2015. Some stakeholders were also concerned the shortage could have a long-term impact.
Medicare's payment policy likely gives facilities financial incentives to provide home dialysis, but these incentives may have a limited impact in the short term. According to the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS), setting the facility payment for dialysis treatment at the same rate regardless of the type of dialysis gives facilities a powerful financial incentive to encourage the use of peritoneal dialysis when appropriate because it is generally less costly than other dialysis types. However, GAO found that facilities also have financial incentives in the short term to increase provision of hemodialysis in facilities, rather than increasing home dialysis. This is consistent with information from CMS and stakeholders GAO interviewed. For example, facilities may be able to add an in-center patient without paying for an additional dialysis machine, because each machine can be used by six to eight in-center patients. In contrast, for each new home patient, facilities may need to pay for an additional machine. The adequacy of Medicare payments for home dialysis training also affects facilities' financial incentives for home dialysis. Although CMS recently increased its payment for home dialysis training, it lacks reliable cost report data needed for effective fiscal management, which involves assessing payment adequacy. In particular, if training payments are inadequate, facilities may be less willing to provide home dialysis.
Medicare payment policies may constrain physicians' prescribing of home dialysis. Specifically, Medicare's monthly payments to physicians for managing the care of home patients are often lower than for managing in-center patients even though physician stakeholders generally said that the time required may be similar. Medicare also pays for predialysis education—the Kidney Disease Education (KDE) benefit—which could help patients learn about home dialysis. However, less than 2 percent of eligible Medicare patients received the benefit in 2010 and 2011, and use has declined since then. According to stakeholders, the low usage was due to statutory limitations in the categories of providers and patients eligible for the benefit. CMS has established a goal of encouraging home dialysis use among patients for whom it is appropriate, but the differing monthly payments and low usage of the KDE benefit could undermine this goal.

What GAO Recommends

GAO recommends that CMS (1) take steps to improve the reliability of the cost report data, (2) examine and, if necessary, revise policies for paying physicians to manage the care of dialysis patients, and (3) examine and, if appropriate, seek legislation to revise the KDE benefit. HHS concurred with the first two recommendations but did not concur with the third. GAO continues to believe this recommendation is valid as discussed further in this report.