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35–773 2007

PATIENT SAFETY AND QUALITY ISSUES 

IN END STAGE RENAL DISEASE TREATMENT 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

SECOND SESSION 

DECEMBER 6, 2006 

Serial No. 109–87 

Printed for the use of the Committee on Ways and Means 

( 

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COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

RON LEWIS, Kentucky 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

CHRIS CHOCOLA, Indiana 

DEVIN NUNES, California 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

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between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

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C O N T E N T S 

Page 

Advisory of November 29, announcing the hearing .............................................. 2 

WITNESSES 

The Honorable David M. Walker, Comptroller General, U.S. Government 

Accountability Office ............................................................................................ 26 

Leslie V. Norwalk, Acting Administrator, Centers for Medicare and Medicaid 

Services ................................................................................................................. 45 

Ajay K. Singh, Associate Professor of Medicine, Brigham and Women’s Hospital, Harvard Medical School, Boston, Massachusetts .................................... 12 

Laura T. Pizzi, Research Associate Professor of Health Policy, Department 

of Health Policy, Thomas Jefferson University, Philadelphia, Pennsylvania . 8 

Dennis J. Cotter, President, Medical Technology and Practice Patterns Institute, Inc., Bethesda, Maryland ........................................................................... 18 

SUBMISSIONS FOR THE RECORD 

American Society of Pediatric Nephrology, Indianapolis, IN, statement ............ 66 

Amgen, statement .................................................................................................... 67 

Carrancejie, Richard, Birmingham, AL, statement .............................................. 75 

DaVita Patient Citizens, statement ....................................................................... 76 

Henrich, William, Anemia Management, letter .................................................... 76 

Ishak, Noshi, Central New Hampshire Kidney Center, Laconia, NH, letter ..... 78 

Kidney Care Partners, statement ........................................................................... 81 

National Kidney Foundation, Inc., New York, NY, statement ............................ 83 

Renal Physicians Association, Rockville, MD, statement ..................................... 85 

Robinson, Kris, American Association of Kidney Patients, Tampa, FL, statement ...................................................................................................................... 86 

Schatell, Dori, Medical Education Institute, Madison, WI, statement ................ 88 

Sweeney, Jim, Coalition for Dialysis Patient Choice, letter ................................ 90 

Tate-Harris, Patricia, Association of Dialysis Advocates, Baton Rouge, LA, 

statement .............................................................................................................. 92 

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PATIENT SAFETY AND QUALITY ISSUES 

IN END STAGE RENAL DISEASE TREATMENT 

WEDNESDAY, DECEMBER 6, 2006 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:45 a.m., in Room 

1100, Longworth House Office Building, Hon. William M. Thomas 

(Chairman of the Committee) presiding. 

[The advisory announcing the hearing follows:] 

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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1721 

November 29, 2006 

FC–27 

Thomas Announces Hearing on 

Patient Safety and Quality Issues in 

End Stage Renal Disease Treatment 

Congressman Bill Thomas (R–CA), Chairman of the Committee on Ways and 

Means, today announced that the Committee will hold a hearing on safety and quality for Medicare beneficiaries with End Stage Renal Disease (ESRD). The hearing 

will take place on Wednesday, December 6, 2006, in the main Committee 

hearing room, 1100 Longworth House Office Building, beginning at 10:30 

a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. Witnesses will include experts on Medicare payment and treatment of beneficiaries with ESRD and government officials. 

However, any individual or organization not scheduled for an oral appearance may 

submit a written statement for consideration by the Committee and for inclusion in 

the printed record of the hearing. 

BACKGROUND: 

In 1972, Medicare began to cover treatment for patients with kidney failure, 

known as ESRD. Patients with kidney failure are typically treated with dialysis and 

are prescribed medication to address anemia, calcium and other deficiencies. 

Between 1998 and 2003, ESRD treatment spending increased by almost 50 percent. In 2004, Medicare covered about 309,300 dialysis patients, nearly 93 percent 

of all such patients in the United States. According to U.S. Renal Data System 

(USRDS) and the Medicare Payment Advisory Commission (MedPAC), Medicare 

spends about $64,000 per year for each person on hemodialysis for all medical services. 

In the last 10 years, mortality rates for ESRD patients have declined except for 

patients that have been receiving therapy for 5 or more years. During the same time 

period, however, hospitalizations for infections and cardiovascular complications are 

up 20 and 10 percent, respectively. To address these problems, the Centers for 

Medicare and Medicaid Services (CMS) has taken steps to improve quality and safety in ESRD facilities. For instance, in 2004, CMS developed a dialysis facility comparison website that contains service and quality information on all Medicare approved dialysis facilities. 

However, significant problems remain with the quality of care for patients that 

receive dialysis for kidney failure as well as the payments for this population. Two 

recent studies have indicated two specific concerns: 

1. Patient safety. USRDS data show that 40 percent of patients in the dialysis 

population that are being treated with an anemia drug have a red blood cell 

count above the Food and Drug Administration (FDA) recommended level. 

Moreover, half of the 40 percent have a level associated with the higher risk 

of cardiovascular events and mortality, according to a November 2006 study 

published in the New England Journal of Medicine. 

2. Inefficient and unnecessary Medicare spending. A recent study from November 2006 in Dialysis and Transplantation found that the population with 

a red blood cell count above industry guidelines also has higher drug costs, specifically, $3,100 per patient per year more just on the anemia drug. 

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In March 2006, the MedPAC reported that dialysis facilities continue to lose 

money on the composite rate, which includes the costs of nursing services, equipment and supplies. However, the losses are partially recouped by Medicare payment 

for drugs at Average Sales Price plus 6 percent. The Commission reported that the 

Medicare Modernization Act of 2003 (P.L. 108–173) made Medicare’s drug payments 

less profitable in total, but also reported that the financial incentive to use more 

drugs persist even under the revised payment policy. 

In announcing the hearing, Chairman Thomas stated, ‘‘While we have made gains 

in improving the End Stage Renal Disease program, clearly we need to continue to 

explore what more can be done to improve patient safety and quality of care. Patient safety and efficient use of taxpayer dollars are critical. We should examine the 

increased dosage of these drugs and the possible detrimental health effects. I am 

also concerned that Medicare has not been a prudent purchaser in this arena, given 

its rapid growth in spending. ESRD providers do not receive an annual update 

which is why a permanent solution that provides payment stability is critical to end 

perverse incentives based on the utilization of drugs.’’ 

FOCUS OF THE HEARING: 

In continuing the Committee’s consideration of improving the quality of health 

care in the Medicare program, the hearing will focus on recent research on the 

Medicare payment for drugs used in treating ESRD patients, the quality and safety 

of the treatment for ESRD patients as well as oversight on the CMS operations related to ESRD. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

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the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

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225–1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

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Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

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by the Committee. 

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3. All submissions must include a list of all clients, persons, and/or organizations on whose 

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f 

Chairman THOMAS. Good morning. First of all, I want to thank 

our witnesses and the Members of the Committee. In an attempt 

to make sure that we can utilize the time as usefully as possible 

on a very important hearing—made more timely by recent publications that were released in a GAO study—notwithstanding the fact 

we are in a lame duck session in which system negotiations are occurring between the House and the Senate; therefore, we have 

asked the panel of specific experts who have a body of written information that has been available, and they will comment directly 

on that. The Chair would request that Members limit any questioning if at all possible, so that we could delve then relatively 

quickly to members of the administration of the GAO, who have 

time constraints of their own. 

The Committee will hear from our distinguished panel of witnesses, basically, whether Medicare is appropriately safeguarding 

the packets and the integrity of the trust funds because, recently, 

the scientific and even mainstream press have pointed out a growing concern about unsafe and questionable treatment for Medicare’s coverage for kidney failure, also known as End Stage Renal 

Disease. 

We know that for more than 30 years Medicare has covered 

treatments for patients with ESRD. Treatments usually consist of 

dialysis, also with anemia, a lower number of red blood cells, drugs. 

Medicare payments for these treatments have increased rapidly by 

almost 50 percent between 1998 and 2003. In fact, one of the drugs 

to treat ESRD has been identified as the single largest expenditure 

in Medicare part B each year, notwithstanding the small population that receives the drug. More importantly, there has been 

longstanding safety concerns about whether patients receiving 

treatment for ESRD are actually being harmed by the perhaps high 

doses of anemia drugs they are prescribed. According to the U.S. 

Renal Data System 40 percent of the dialysis patients treated for 

low red blood cells with anemia drugs actually have a red blood cell 

count above the FDA recommended levels. In fact, after the drugs, 

beneficiaries have a level high enough to trigger serious cardiovascular problems, some resulting in death. So, the question is not 

only one of taxpayers’ money being spent on a monopoly drug; it 

is the question of what is reasonable and appropriate from a health 

point of view. 

We are also anxious to hear testimony from the Centers for 

Medicare and Medicaid Services, CMS. In April of this year, the 

Chair wrote to then administrator Mark McClellan asking several 

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pointed questions about why CMS had developed the policy to deal 

with what we considered to a certain extent out-of-control dosing 

of ESRD patients at a different level than the FDA recommended 

and the labels on the drugs prescribed. 

If this was the right policy, the Chair believes it should have 

been easy to answer the letter. It took CMS 8 months, until this 

week in fact, to respond. Then, again, in November, not having 

that in a response, House Subcommittee Ranking Member Stark 

and the Chairman wrote a letter to Acting Administrator Norwalk—and the Committee appreciates her ability to attend today— 

reiterating our concerns. Again, the letter was not responded to 

until Monday night. Obviously, today we are going to talk about 

the letter response but, more importantly, the concerns that the 

letter reflected. 

Now, after a number of months and having seen a significant 

number of publications focusing on exactly those issues, hopefully, 

we will be able to get some understanding of the issue of the treatment for patients. Obviously, we are going to solicit ideas for improving qualities for these beneficiaries, and we are interested in 

hearing now the GAO’s testimony following the release yesterday 

of their report on Medicare payment for ESRD services. We have 

a significant document, a printed evidentiary record, that will be 

in front of us, and we want to know where we are going to go from 

here. 

So I am excited about this hearing. Obviously, this is the beginning, notwithstanding the fact it is coming at the end of this Congress; these questions will obviously carryover. I appreciate the ongoing bipartisan working relationship that we have had on this 

very important issue, and I will recognize the gentleman from New 

York for any statement he may wish to make. 

Mr. RANGEL. Thank you, Mr. Chairman. This meeting is historic for a variety of reasons. One, because you visited with us in 

the Democratic Caucus together and made it clear that you and 

Peter Stark were in agreement on this subject matter. For us, that 

is a gigantic step, and we wanted that to be properly recorded. 

The second thing—— 

Chairman THOMAS. Would the gentleman yield? 

Mr. RANGEL. I would be pleased. 

Chairman THOMAS. I am pleased you finally got it right. 

Mr. RANGEL. The second thing is this probably will be the last 

formal hearing that you will be chairing. I think the audience 

should know that, notwithstanding what the record would indicate, 

these Committee hearings, as it relates to your relationship with 

me, that the audience should know that Bill Thomas and I have 

never, but never, in the years that we have served in the House 

of Representatives had an unpleasant conversation outside of the 

Committee room. 

I also would like to say that the Committee has agreed, and I 

have agreed, to host the reception that was supposed to be a surprise, but knowing how difficult it is in the last few days of our 

work, that we hope that you will be available at 5:00 tomorrow 

when the Committee members and staff would like to thank you 

for the dedication which you have given to the Committee, the Congress, and the country. 

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Lastly, we would like to wish you a happy birthday. This is your 

65th birthday, and now I can see why you are concerned about Social Security, as you become eligible for Medicare, and I have personally had a special Social Security card made up in connection 

with reform that Jim McCrery and I are going to be working on, 

and I have signed this so that if you have any problems at all, you 

can rest assured that this will be able to get you the proper health 

care that you might need. 

Chairman THOMAS. I want to thank the—this looks like the $3 

bill he gave me last year. The gentleman needs to know that, unfortunately, I voted for the extension of age not nearly long enough 

based on life expectancy so I don’t get to use my Social Security 

card until I am 65 years, 8 months. However, Medicare kicks in immediately and hence the reason for this particular hearing. 

Mr. RANGEL. I would like to yield the substantive questions to 

your colleague, Peter Stark. 

Mr. STARK. Thank you. 

Thanks, Bill. My wishes for a happy 65th birthday. I wish I could 

remember what I did on mine. 

But now that you are no longer just an observer, I want to ensure you that we will do our best to make it a successful program 

for you and all Americans. 

I am pleased to call this hearing. It is—the ESRD policy is 

unique in our country. Some may say it is our only form of socialized medicine. Almost everybody who is involved in dialysis is involved in the government finance program. One of the problems 

that we have had is that we have been involved in using these 

drugs which have cost us a couple billion dollars a year, and many 

of us have maintained for a long time that we should be getting 

a better deal. We are now faced with the potential that we may actually, through policies of reimbursement, be putting people at risk 

for danger to their health, and that is something that I don’t think 

we should tolerate. 

I wanted as many of you in the room to know I have a long history on this issue, and it has come to my attention, Mr. Chairman, 

that recently certain interests may be misrepresenting my past positions, and I would just like to submit for the record a copy of a 

letter I wrote to CMS in 1997 that has been circulated and a written response from my then lead staff person Bill Vaughan who 

helped draft my response, and I just add this to clarify the record 

if Mr. Chairman would accept. 

Chairman THOMAS. Without objection. 

[The information follows:] 

November 29, 2006 

The Honorable Fortney H. (Pete) Stark 

Ranking Member, Subcommittee on Health 

Committee on Ways and Means 

239 Cannon House Office Building 

Dear Congressman Stark: 

As a former staff member who served on the Ways and Means Health Subcommittee between 1996 and the spring of 2001, your current staff has asked me 

to elaborate on the letter you asked me to draft, and which you signed, addressed 

to former Health Care Financing Administrator Nancy-Ann DeParle dated December 8, 1997 relating to Medicare coverage of EPO. 

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Apparently someone—who has not read the letter thoroughly—is alleging that 

this letter indicates your support of higher dosages of EPO. That is a complete 

misreading of your letter. Your letter was an effort to encourage the removal of financial incentives that have long distorted the administration of EPO—a distortion 

that has cost taxpayers hundreds of millions—perhaps billions!—of dollars and 

which we now find may have been hurting the health of hundreds of thousands of 

patients. As you repeatedly stressed to me, your goal on the Subcommittee has always been to encourage the best practice of medicine, without financial influences 

to over—or under—treat patients. This letter is part of that theme—a theme seen 

in your other efforts, such as the physician referral laws (Stark I and II) and your 

successful amendment to limit the amount that managed care physicians can be financially placed at risk for under-treatment of patients. 

Because historically there has been a spread between what Medicare reimburses 

a dialysis center for a unit of EPO and what the company’s net selling cost of the 

product to the center is, centers have profited by increasing their use of EPO. I once 

even saw a chart that a salesperson for the company gave to dialysis clients showing 

how profit would increase as dosage was increased! 

Only by eliminating the profit incentive to administer higher and higher doses can 

patients have the peace of mind that they are getting an appropriate level of EPO. 

Ideally, in my opinion, centers would be reimbursed for their net acquisition cost 

plus a dollar for administration (since it is generally administered through an existing line to the patient). 

The VA, Kaiser, and most of Europe generally (but on a case by case basis) administers EPO subcutaneously, which in most people results in the more efficient 

uptake of the medicine and can save substantial amounts of money because less 

EPO is necessary to achieve the same hematocrits. I urge you to encourage such 

a policy, perhaps sharing the savings with beneficiaries through reduced copayments as compensation for the inconvenience of the injection. It would also be useful 

to ask if the company has finally made a dose formulation that minimizes any pain 

of injection. 

The December 8, 1997 letter was written before I remember ever seeing any studies (such as those excellent papers by Dennis Cotter, et. al) raising safety concerns 

of over-dosage. It was written before the recent important discussion of CMS dosage 

rates exceeding FDA recommended dosages. In writing the letter, we were concerned that the HCFA policy would cause centers to under-dose because of fear of 

non-payment. Under-dosing for financial reasons is clearly as bad as over-dosing for 

financial gain. Your letter was designed to deal with both issues: allow upward dosing where a physician thought it was appropriate, but take away almost all of the 

overpayment incentive that was causing over-dosing for financial gain. 

As a former staffer, who organized the very first Ways and Means oversight hearings on the ESRD program in 1975, I have long felt that the financial incentives 

in this program have been an abuse to the taxpayer and to the best care of patients. 

I deeply regret that we did not make more progress on this issue when I was one 

of your staff members, and I wish you the best in finally achieving good health policy at a reasonable cost to taxpayers. 

Sincerely, 

William Vaughan 

P.S. Don’t cap medical malpractice! Maybe it’s time for someone to get sued for 

the abuse of patients in this sector. 

Mr. STARK. I look forward to hearing from our witnesses. 

Chairman THOMAS. Any other member may put a written statement in the record. Our witnesses have an extensive body of studies and the rest, and my goal would be to have you present in a 

very succinct way, in the time you have available, the key points 

you might want to make based upon these recent studies, which 

have obviously been very timely and focused us on the concerns 

that we had, some general concerns that clearly now have been evidenced by clinical studies as well. It seems to me, given the three 

panelists, that we would start with Dr. Pizzi for no other reason 

than the fact that you are in the middle. 

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STATEMENT OF LAURA T. PIZZI, PharmD, MPH, RESEARCH ASSOCIATE PROFESSOR OF HEALTH POLICY, DEPARTMENT OF 

HEALTH POLICY, THOMAS JEFFERSON UNIVERSITY, PHILADELPHIA, PENNSYLVANIA 

Dr. PIZZI. Chairman Thomas and distinguished Committee 

members. My name is Dr. Laura Pizzi. I am research associate professor of health policy at Jefferson Medical College in Philadelphia. 

I am a pharmacist by training but for the past 10 years have 

worked as a researcher on issues related to the costs and outcomes 

of pharmaceuticals and presently lead a group of six researchers at 

Jefferson who are dedicated to this topic. I hold the secondary appointment as adjunct assistant professor in pharmaceutical business at the University of Sciences in Philadelphia and am co-editor 

of the text entitled, Economic Evaluation in U.S. Health Care, 

Principles and Applications, which was released last year. 

I am here today to discuss the results of a study that I led at 

Jefferson which was published in the November 2006 journal, Dialysis and Transplantation. This study was conducted by our team 

at Jefferson along with Dr. David Goldfarb, who is a nephrologist 

at the New York Harbor Veterans Affairs Medical Center in New 

York City, and Dr. Joseph Fuhr, who is a professor of economics 

in Chester, Pennsylvania. The study was funded by a grant from 

Watson: Laboratories. While we received funding from Watson, our 

team formulated the research objective, designed the study, and 

performed the analysis independently. My testimony does not reflect the views of the sponsor nor of Jefferson. 

The objective of this study was to determine the extent to which 

health care providers adhered to clinical practice guidelines for the 

treatment of anemia in patients receiving hemodialysis. The guidelines that we used were those published by the Kidney Disease 

Outcomes Qualified Initiative, also known as KDOQI, released in 

the year 2000 by the National Kidney Foundation. We compared 

actual utilization in practice for the anemia drugs, erythropoietin, 

or EPO, and intravenous iron to the KDOQI 2000 guideline recommendations. Actual utilization was obtained from the United 

States Renal Data Service annual report for 2004. 

The critical target for anemia in this population was a hemoglobin of 11-12 mg/dL. To reach this hemoglobin level, patients 

need to have their iron stores replenished with intravenous iron, 

and they also need to receive EPO to stimulate red blood cell production. The guideline calls for an initial EPO of 120-180 units per 

kg per week, which we assumed remained the dose during the 

study period. We calculated recommended dosages based on the average weight of an adult receiving hemodialysis, 159.5 pounds. 

For iron, we used recommended doses from KDOQI. We then examined actual utilization per the United States Renal Data Service 

Data and compared it to what was recommended by the KDOQI 

2000 guidelines. Our findings indicated that there was significant 

overuse of EPO and slight underuse of intravenous iron. Although 

we were not surprised to see that the providers were not strictly 

adhering to the guideline, we were quite surprised by the extent 

to which EPO use in practice deviated from KDOQI recommendations. 

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1Pizzi LT, Patel NM, Maio VM, Goldfarb DS, Michael B, Fuhr JP, and Goldfarb NI. Economic 

Implications of Non-adherence to Treatment Recommendations for Hemodialysis Patients with 

Anemia. Dialysis and Transplantation 2006;1–7. 

Next, we converted the difference in utilization to dollars based 

on 2005 Medicare reimbursement rates. We estimate that CMS 

could have reduced expenditures for these drugs by 36 percent if 

dialysis facilities adhered to the guidelines. If CMS spends $2 billion per year on EPO, it is reasonable to say that several hundred 

million dollars could have been saved if the providers followed the 

guidelines. 

Chairman THOMAS. Dr. Pizzi, you are down to about a minute, 

and I would prefer that you move to your recommendations and 

conclusions, because we have your written testimony, and it will be 

made a part of the record. 

Dr. PIZZI. I believe the best way to address the matter of EPO 

overuse is to reward dialysis providers who achieve an appropriate 

hemoglobin target—whether the target is based on KDOQI recommendations, product labeling, expert opinion, or a combination 

of these sources. Once the target has been agreed upon, CMS may 

wish to consider a pay-for-performance reimbursement policy centered upon that hemoglobin target as follows: Lower the reimbursement rate for EPO such that it is cost neutral to the facilities and 

reward facilities with a higher reimbursement rate for the dialysis 

session for patients whose hemoglobin is in the target range. 

In conclusion, the results of our study indicate that EPO use far 

exceeded what was recommended in the KDOQI guideline during 

the study period. Despite changes in the guideline as well as the 

Medicare reimbursement policy, I believe EPO is still being used 

in excess today. 

I thank you very much for your consideration and hope that a 

pay-for-performance-based reimbursement policy will be evaluated 

as a means to ensure sufficient treatment for this vulnerable population. 

Thank you very much. 

[The prepared statement of Dr. Pizzi follows:] 

Statement of Laura T. Pizzi, Research Associate Professor of Health Policy, 

Department of Health Policy, Thomas Jefferson University, Philadelphia, 

Pennsylvania 

Chairman Thomas and distinguished Committee Members, my name is Dr. Laura 

Pizzi and I am a Research Associate Professor of Health Policy at Jefferson Medical 

College in Philadelphia. I am a pharmacist by training, but for the past 10 years 

have worked as a researcher on issues related to pharmaceutical cost and outcomes 

and presently lead a group of 6 researchers at Jefferson who are dedicated to this 

topic. I hold a secondary appointment as Adjunct Assistant Professor of Pharmaceutical Business at the University of the Sciences in Philadelphia and am co-editor 

of the text entitled ‘‘Economic Evaluation in U.S. Healthcare: Principles and Applications’’ which was released last year. 

I am here today to discuss the results of a study that I led at Jefferson, which 

was published in the November 2006 issue of the journal Dialysis and Transplantation.1 This study was conducted by our team at Jefferson, along with Dr. David 

Goldfarb who is a nephrologist at New York Harbor Department of Veterans Affairs 

Medical Center in New York City and Dr. Joseph Fuhr who is a professor of economics at Widener University in Chester, Pennsylvania. 

The study was funded by a grant from Watson Laboratories in Morristown NJ. 

While we received funding from Watson, our team formulated the research objective, 

designed the study, and performed the analysis independently. My testimony does 

not reflect the views of the sponsor nor of Jefferson. 

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2 National Kidney Foundation. KDOQI Clinical Practice Guidelines for Anemia of Chronic Kidney Disease 2000. American Journal of Kidney Disease 2000; 37:S182–S238 (suppl 1). 3 USRDS Annual Data Report 2004. Available at: http://www.usrds.org/adr_2004.htm 

(Accessed 27 Nov 2006) 4 USRDS Annual Data Report 2006. Table 5.37. Available at: http://www.usrds.org/atlas.htm 

(Accessed 29 Nov 2006) 5Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, and Reddan D, for the Correction of Hemoglobin and Outcomes in Renal Insufficiency (CHOIR) Investigators. Correction 

of anemia with epoetin alfa in chronic kidney disease. New England Journal of Medicine 2006; 

355:2085–98. 

Summary of the Study 

The objective of this study was to determine the extent to which healthcare providers adhere to clinical practice guidelines for the treatment of anemia in patients 

receiving hemodialysis. The guidelines that we used were those published by the 

Kidney Disease Outcomes Quality Initiative (KDOQI), released in the year 2000 by 

the National Kidney Foundation.2

We compared actual utilization in practice for the anemia drugs, erythropoietin 

or ‘‘EPO’’ and intravenous iron to the KDOQI 2000 guideline recommendations. Actual utilization was obtained from the United States Renal Data Service (USRDS) 

Annual Report for 2004, which includes 431,284 active patients.3 This data source 

captures patient and facility records from the CMS End Stage Renal Disease 

(ESRD) Program’s Management and Medical Information System, an Annual Facility Survey, and data related to services delivered via Medicare, including treatments 

administered to ESRD patients, patient outcomes, and costs. The report is updated 

annually. 

From USRDS, we obtained the total number of Medicare beneficiaries who received hemodialysis, which was 372,643. Approximately 96% received EPO at least 

once during a 3 month period. 

The clinical target for treatment of anemia in this population, per the KDOQI 

2000 recommendations, was a hemoglobin level of 11–12 mg/dL. To reach this hemoglobin level, patients need to have their iron stores replenished with intravenous 

iron, and they also need to receive EPO, which stimulates red blood cell production 

and thereby works to correct the anemia. The recommended target for iron stores 

was a serum ferritin level of at least 100ng/mL. 

The guideline called for an initial EPO dose of 120–180 units per kg per week, 

which we assume remained the dose during the study period. We calculated the recommended dosage of EPO based on a 72.5 kg adult, which is the average weight 

of hemodialysis patients reported by USRDS. For iron, the recommended dose for 

adults was 100–125mg given intravenously at every hemodialysis session for 8–10 

doses followed by a maintenance dose of 25–125mg per week upon reaching the target ferritin level. 

We then examined actual utilization, per USRDS 2004, and compared it to what 

was recommended by the KDOQI 2000 guidelines. Our findings indicated that there 

was significant over use of EPO and slight under use of intravenous iron. Although 

we were not surprised to see that providers were not strictly adhering to the guideline, we were quite surprised by the extent to which EPO use in practice deviated 

from KDOQI recommendations. 

Next, we converted the difference in utilization, which was actual versus recommended practice, to dollars based on 2005 Medicare reimbursement rates for 

EPO and iron. We estimate that CMS could have reduced expenditures for these 

drugs by 36% if dialysis facilities adhered to the guidelines. If CMS spends $2 billion per year on EPO, it is reasonable to say that several hundred million dollars 

could have been saved on the drug if providers followed the guidelines. 

Recent Data 

If we were to repeat our study today using the same clinical target but newer 

data from the 2006 USRDS Annual Report, our findings regarding EPO over use 

would hold, because the mean EPO dose according to this latest report is similar 

to what we used in our study. Specifically, the mean monthly EPO dose that we 

used in our study was 76,473 units per month, and data from 2006 USRDS shows 

a mean monthly EPO dose ranging from approximately 72,000–81,000 units per 

month in calendar year 2005.4

In addition to the costs resulting from EPO overuse, safety concerns have emerged 

about maintaining hemoglobin levels above 13.5mg/dL, as we know from Dr. Singh’s 

testimony on the findings from the Correction of Hemoglobin and Outcomes in 

Renal Insufficiency (CHOIR) trial.5 In response to this study, the FDA issued an 

Alert on November 16, 2006, which states that the target hemoglobin for EPO 

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11 

6 Information for Healthcare Professionals: Erythropoiesis Stimulating Agents (ESA) [Aranesp 

(darbepoetin), Epogen (epoetin alfa), and Procrit (epoetin alfa)]. FDA ALERT 11/16/2006. Available at: http://www.fda.gov/cder/drug/InfoSheets/HCP/RHE_HCP.pdf (Accessed 27 Nov 2006) 7 Berenson A. Treatment of anemia questioned. New York Times, November 30, 2006. 8 Claims Monitoring Policy: Erythropoietin/Darbopoietin Alfa Usage for Beneficiaries with End 

Stage Renal Disease. Center for Medicare and Medicaid Services, 2005. Available at: 

www.cms.hhs.gov/coverage/8b5.pdf Accessed 12/02/05. 9Levy R. The new CMS monitoring policy for anemia drug reimbursement: Implications for 

providers. Dialysis and Transplantation 2006; 35(2): 88–90. 10 Hynes D, Stroupe KT, Kaufman JS, Reda DJ, Peterman A, Browning MM, Huo Z, and 

Sorbara D. Adherence to guidelines for ESRD anemia management. American Journal of Kidney 

Diseases 2006;47(3):455–6. 11Thamer M, Zhang Y, Kaufman J, Stefanik K, Cotter DJ. Factors influencing route of administration for epoetin treatment among hemodialysis patients in the United States. American 

Journal of Kidney Diseases 2006;48(1): 77–87 12 Besarab A. Optimizing Anemia Management with Subcutaneous Administration of Epoetin. 

Nephrology Dialysis Transplantation 20(6): vi10-vi16, 2005. 13 Besarab A. Reyes CM. Hornberger J. Meta-analysis of Subcutaneous versus Intravenous 

Epoetin in Maintenance Treatment of Anemia in Hemodialysis Patients. American Journal of 

Kidney Diseases 2002; 40(3):439–46. 

should not exceed 12 g/dL.6 Although the KDOQI guidelines were recently updated 

in 2006 and now recommend a hemoglobin ≥11g/dL while not routinely maintaining 

the level ≥13g/dL, the upper threshold of 13g/dL was established prior to publication 

of the CHOIR. As a result of these developments, the National Kidney Foundation 

announced last week that it will convene an expert panel to assess EPO use.7

Hence, though our study focused on the economic impact of non-adherence to the 

guidelines, very recent data and concerns have emerged about the safety impact of 

maintaining a hemoglobin level exceeding 12g/dL. These recent events, coupled with 

the results from our study, provide evidence that it is time to more aggressively 

manage EPO use in dialysis facilities. 

Recommendations 

In the time since our study was completed, CMS did change the reimbursement 

policy for EPO. The revised payment policy required the dose to be reduced by 25% 

when the hemoglobin exceeded 13g/dL.8, 9 Providers who failed to reduce the EPO 

dose by 25% received a payment reduced by 25%, unless the higher dose was approved through an appeals process. This policy change marked a step towards more 

efficient treatment, however in my opinion, it will not sufficiently stimulate renal 

dialysis facilities to achieve the clinical target. 

I believe that the best way to address the matter of EPO over use is to reward 

dialysis providers who achieve an appropriate hemoglobin target—whether that target is based on the KDOQI recommendations, product labeling, expert opinion, or 

a combination of those sources. Clearly, a target hemoglobin of 11–12mg/dL is appropriate, but there is uncertainty about whether the window should be expanded 

to include hemoglobin levels between 12 and 13mg/dL. I trust that Dr. Singh’s research along with the recommendations from the National Kidney Foundation’s expert panel will help to inform this matter. 

Once the target has been agreed upon, CMS may wish to consider a pay-for-performance reimbursement policy centered upon that hemoglobin target as follows: 

1. Lower the reimbursement for EPO such that it is cost-neutral to the facility 

2. Reward facilities with a higher reimbursement rate for the dialysis session 

(composite rate) for patients’ whose hemoglobin is in the target range 

CMS might also consider further boosting the composite rate for patients who are 

given subcutaneous EPO (as opposed to intravenous EPO), because administering 

the drug subcutaneously has been shown to require significantly lower dosages.10, 11, 12, 13

It is important to keep in mind, however, that pay-for-performance measures do 

not necessarily reduce costs, and an increase in the base composite rate may be necessary to maintain the supply of dialysis facilities. In other words, some amount of 

monies that would have otherwise been spent on EPO would be re-allocated to dialysis facilities through the composite rate. However, implementation of the policy 

would stimulate dialysis facilities to use EPO more efficiently and would reduce 

their reliance on revenues from the product. 

Conclusion 

In conclusion, the results of our study indicate that EPO use far exceeded what 

was recommended in the KDOQI guideline during the study period. Despite changes 

in the guideline as well as the Medicare reimbursement policy, I believe that EPO 

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12 

is still used in excess today, primarily because dialysis facilities do not have a financial incentive to manage its use. Thank you very much for your consideration and 

I hope that a pay-for-performance based reimbursement policy for EPO will be evaluated as a means of ensuring the safe and efficient treatment of anemia in this vulnerable population. 

f 

Chairman THOMAS. Thank you. I apologize moving you to that, 

but the statement that you have made is based upon data that is 

well known and published. 

Dr. Singh. 

STATEMENT OF AJAY K. SINGH, MBBS, MRCP (UK), MBA, CLINICAL CHIEF, RENAL DIVISION, DIRECTOR, DIALYSIS SERVICES, BRIGHAM AND WOMEN’S HOSPITAL, HARVARD MEDICAL SCHOOL 

Dr. SINGH. Chairman Thomas and distinguished Committee 

members. My name is Dr. Ajay Singh. I am the clinical chief of the 

Renal Division and director of dialysis Services and a physician at 

the Brigham and Women’s Hospital and an associate professor of 

medicine at Harvard Medical School. I practice medicine, teach 

physicians and students, and conduct patient-oriented research. I 

am the first author and one of the principal investigators of the 

CHOIR study. My written remarks will be submitted as part of the 

record, and I wish to just focus on the top conclusions from the 

CHOIR study. 

In the CHOIR study, we tested whether targeting a hemoglobin 

of 13.5 grams per deciliter versus a hemoglobin of 11.3 grams per 

deciliter in patients with chronic kidney disease not on dialysis was 

associated with a survival benefit and lower cardiovascular complications. To our surprise, patients who were randomized with the 

higher hemoglobin group had an excess risk of 34 percent with respect to death and cardiovascular complications compared to those 

patients randomized to the lower hemoglobin group. 

Of note, we also found there were 52 deaths in the higher hemoglobin group versus 36 deaths in the lower hemoglobin group, a 

hazard ratio of 1.48 or a 48 percent higher risk. We also found a 

higher risk for hospitalization for heart failure to 41 percent higher 

risk. We did not find any incremental improvement in quality of 

life for three different parameters of quality of life that we tested, 

and we also found that for cardiovascular risk adverse events, 

there were more adverse events in the higher hemoglobin group 

versus the lower. Therefore, the conclusion was there was both increased risk and no substantive incremental quality of life benefit 

in raising the hemoglobin among patients with chronic kidney disease not on dialysis. 

Now, some have argued that while this study looked at patients 

with chronic kidney disease not on dialysis and this data should 

not apply to patients on dialysis, I would respectfully disagree with 

that. Both the National Kidney Foundation guidelines, the European Best Practice guidelines of anemia as well as the FDA label 

have aggregated patients not on dialysis with kidney disease with 

those on dialysis and have framed guidelines with respect to the 

higher hemoglobin level. Until we get further data, I would argue 

that we should default in the direction of patient safety by aiming 

cnoel on PRODPC60 with HEARING

13 

for hemoglobin levels no higher than 12 grams per deciliter, and 

our recommendation of the paper was 11–12 grams a deciliter of 

hemoglobin. 

The other aspect of this was the issue of what one should do with 

the rising number of proportional patients on dialysis that have hemoglobin levels beyond 12 grams per deciliter. As the Committee 

will note as part of the record information, there are a number— 

there are a number of dialysis providers who have patients who 

have hemoglobin levels above this 12-grams-per-deciliter-range. 

Based on this study and some other controlled studies, I would suggest and agree with the notion that we should adopt a bundling for 

epoetin because it confers with the potential of benefit without incentives, financial incentives, to use higher levels of epoetin or aim 

for higher hemoglobin levels. The only caveat I would suggest, 

there would be some form of risk assessment in the patient population so that providers are not disincentivized to treat sicker patients. 

So, in conclusion, our study as well as studies that have been 

published prior to this suggest increased risk in raising the hemoglobin level beyond 12 grams. I believe that this will further reinforce the FDA label, which is clear, and a new alert was published 

recently. I believe that this recommendation should apply to both 

dialysis patients as well as pre-dialysis patients until we have 

more evidence from studies that hopefully will be funded in the future. I believe that the best recourse to try and prevent hemoglobin 

levels rising in both the dialysis population is to take the approach 

of bundling of services so that there is—we remove the financial incentives to use larger doses of EPO and aim for higher hemoglobin 

levels. 

[The prepared statement of Dr. Singh follows:] 

Statement of Ajay K. Singh, Associate Professor of Medicine, Brigham and 

Women’s Hospital, Harvard Medical School, Boston, Massachusetts 

I am Dr. Ajay K. Singh, Clinical Chief, Renal Division and Director, Dialysis Services and a physician at the Brigham and Women’s Hospital and an Associate Professor of Medicine at Harvard Medical School. I practice medicine, teach physicians 

and students, and conduct patient-oriented research. I am the first author and one 

of the Principal Investigators of the CHOIR study. This study examined the effect 

of normalizing the hemoglobin with epoetin alfa in patients with chronic kidney disease not receiving dialysis. My comments today solely reflect my own views. I plan 

to discuss 3 issues: 

(1) The importance of treating anemia in kidney disease patients, (2) the optimal 

hemoglobin in patients with kidney disease, and (3) My support for bundling of 

epoetin and other injectibles into the dialysis composite rate to remove incentives 

for over-treatment. 

1. Anemia of Chronic Kidney Disease 

Anemia is highly prevalent among patients with chronic kidney disease (CKD). By 

the time patients develop advanced kidney disease over 60% are anemic and need 

treatment with an erythropoiesis stimulating agent (ESA). On dialysis, over 95% of 

patients require an ESA. Erythropoetin is the most costly drug for CMS/Medicare— 

accounting for over $2 billion. 

There is a good body of evidence that supports anemia treatment—fewer transfusions and improved quality of life, upto a hemoglobin of 10 to 11 grams per deciliter. The recommended strategy for treatment of anemia is based on guidelines disseminated by the National Kidney Foundation and the FDA label for epoetin and 

darbepoetin. 

cnoel on PRODPC60 with HEARING

14 

2. The Optimal hemoglobin in patients with kidney disease, based on current evidence, should be no higher than 12 grams per deciliter, conforming to the FDA label. 

Several randomized controlled studies, both in dialysis and in predialysis patients, 

demonstrate at best only modest benefit in quality of life and increased risk of cardiovascular complications and death in patients treated to a hemoglobin level that 

exceeds 12 grams per deciliter. 

It is important to note: 

a.) Studies that have shown benefit for cardiovascular outcomes or survival are 

retrospective and observational in design. There is broad consensus that even the 

best designed and conducted retrospective observational studies are inferior to randomized controlled studies. 

b.) Randomized controlled studies that have looked at patients with kidney disease, whether on dialysis or not, i.e., in the aggregate, have demonstrated increased 

risk. 

• The normal hematocrit study—increased risk for clotting of dialysis access, and 

risk of death or heart attack 

• The Canada-Europe study—increased risk of stroke 

• The CHOIR study: a hazard ratio of 1.34 (or a 34% higher risk) of death and 

cardiovascular complications. 

The higher rate of composite events was explained by a higher rate of death (48% 

higher risk, P=0.07) and heart failure hospitalization (41% higher risk, P=0.07). 

While quality of life showed improvement from baseline values in both groups it was 

similar between the two groups. However, more patients in the high hemoglobin 

group experienced least one serious adverse event compared to the low hemoglobin 

group. 

• The CREATE study: an absolute increase in cardiovascular events and in the 

time to dialysis. 

Whether one looks at studies focused narrowly on the dialysis population or on 

predialysis patients, signals for increased risk are evident with only very modest 

benefit in quality of life.The National Kidney Foundation (NKF) Kidney Disease 

Quality Initiative (KDOQI), the European Best Practice Guidelines for Anemia and 

the FDA have all considered both dialysis and pre-dialysis patients together. The 

data on the optimal hemoglobin level has been considered in the aggregate and applied to both populations. 

Collectively, these studies demonstrated risk with normalizing the hemoglobin in 

patients with kidney disease on dialysis. The results reinforce the FDA label for 

epoetin of not recommending hemoglobin levels of greater than 12 grams per deciliter in patients with kidney disease. A final point, it is reassuring that the FDA 

is empowered with evaluating the efficacy and safety of drugs in the United States. 

The primacy of the FDA in regulating epoetin therapy in the United States should 

be maintained. 

Hemoglobin levels among Dialysis Patients in the United States 

Despite the FDA label, the United States Renal Data System (USRDS) a large 

federally funded registry of patients on dialysis, in its 2006 report indicates that 

more than 40% of dialysis patients have a hemoglobin level greater than 12 g/dL. 

Over 20% have hemoglobin levels above 13 g/dL. 

The explanations provided for this include the inability to target a narrow range 

of hemoglobin because of a phenomenon termed hemoglobin cycling and that patients have excursions in hemoglobin levels beyond the 12 grams per deciliter range 

for only a very brief period of time. However, achieving the FDA recommended 

range is achievable by some dialysis chains. Only 30% of patients dialyzed at Davita 

facilities have hemoglobin levels of less than 12 grams per deciliter, whereas over 

80% of DCI patients are able to maintain their hemoglobin level at less than 12 

grams per deciliter. As well, USRDS data suggests that excursions over 12 g/dL may 

occur for 3 or more months. The strategy of targeting patients using higher epoetin 

doses to a higher hemoglobin with these transient excursions could be harmful. 

The use of subcutaneous epoetin has been clearly shown to result in the use of 

approximately 1/3rd less epoetin yet only a small minority of dialysis facilities use 

the subcutaneous route for epoetin administration. 

Despite CMS reimbursement changes, or because of them, data suggests that the 

proportion of patients outside of the FDA label appears to be increasing—some have 

termed the reason for this as being driven by ‘‘perverse incentives’’. 

cnoel on PRODPC60 with HEARING

15 

3. Bundling of injectibles, including epoetin, offers several benefits and 

ought to be adopted. 

The bundling of injectible drugs into the reimbursement of the dialysis procedure, 

i.e., into the composite rate offers several benefits and should be adopted. 

a.) It removes incentives for over-treatment—aiming for higher hemoglobin levels 

using higher and higher doses of epoetin. 

b.) It will likely reduce the escalating costs for injectible drugs, particularly 

epoetin, in the treatment of dialysis patients. 

c.) It will encourage the use of subcutaneous administration of epoetin—a practice 

widely used in Europe, Canada, and in our own VA system. This should facilitate 

lower doses of epoetin in the treatment of anemia. 

Summary: 

I recommend that the importance of following the FDA label for epoetin 

in the treatment of anemia of kidney disease should be followed. 

a.) The hemoglobin target should not be greater than 12 grams per deciliter as iterated in the FDA label. 

b.) Medicare should modify its reimbursement policy to comply with the 

FDA label. Adopting a bundled reimbursement schedule will likely remove 

the incentive for higher epoetin use and should increase subcutaneous administration of epoetin. 

The Target Hemoglobin in Patients with Chronic Kidney Disease 

Introduction 

Anemia is highly prevalent among patients with chronic kidney disease (CKD) (1). 

Treatment of CKD anemia with erythropoietin has been shown to enhance quality 

of life (2,3), however, evidence supporting a benefit of anemia correction in improving cardiovascular morbidity and mortality has been limited and based largely on 

observational studies and smaller interventional trials (4–6). These studies have 

demonstrated an association of high hemoglobin (>12.0 g/dL) with a lower rate of 

cardiovascular morbidity and death (5,6). However, as others have pointed out elsewhere, observational studies have limitations (7,8). Primarily, observational designs 

are unable to easily adjust for the effect of confounding. Indeed, Parfrey has recently 

pointed out that survivor bias could be an important reason for explaining the discordant findings between observational studies and randomized controlled trials in 

anemia (7). Related to this, Cotter and colleagues have also presented data suggesting that the hemoglobin level per se may not be a valid surrogate outcome in 

assessing the true effect of anemia correction in kidney disease patients (8). A further problem with the published studies has been that assessment of quality life 

may be limited by the open label design of some studies or have used quality of life 

instruments that have not been adequately validated in kidney disease patients (9). 

The purpose of this article is to critically appraise these studies in an attempt to 

arrive at some conclusions about the optimal target hemoglobin in CKD patients. 

Randomized Studies show No Benefit of a Higher Hemoglobin level 

Several randomized controlled studies have been published thus far (10–15). With 

the exception of two studies, the Normal Hematocrit Study (10) and the CanadaEurope Study (11), observations have been limited by the sample size used or premature discontinuation of the study. The Normal Hematocrit study was a randomized controlled study of hemodialysis patients with established heart disease comparing a hematocrit target of 42% to 30%. The study was stopped by the Data Safety Monitoring Board because of a higher rate of vascular thrombosis in the patients 

randomized to the higher hematocrit group. However, the patients in the higher 

hematocrit group also had a higher, although not statistically significantly higher, 

rate of non-fatal myocardial infarction (MI) and death. Several explanations were 

entertained to explain these findings. These included: the possibility of very high 

hematocrit’s in the higher hemoglobin group resulted in hemoconcentration and 

therefore thrombosis, greater use of iron, and a lower dialysis dose. The CanadaEurope study also randomized hemodialysis patients to a higher versus lower hemoglobin (hemoglobin values of 13.0 versus 11.0 g/dL, respectively). However, in contrast to the Normal Hematocrit Study, Parfrey et al selected patients that were not 

at high risk of cardiovascular disease by excluding patients with symptomatic heart 

disease as well as those with left ventricular dilatation at baseline. Moreover they 

enrolled incident dialysis patients. While they did not evaluate hard endpoints such 

as death, or myocardial infarction, or stroke, they did evaluate changes in cardiac 

geometry (left ventricular volume index (LVVI) and left ventricular mass index 

cnoel on PRODPC60 with HEARING

16 

(LVMI). Moreover, they assessed heart failure and quality of life. No significant benefit in either of the cardiac structural or functional parameters was observed in the 

high versus low hemoglobin groups. However, a statistically significantly higher rate 

of cerebrovascular accident in the higher hemoglobin group was observed on secondary analysis. Quality of life did show an important difference in the high versus 

lower hemoglobin group with respect to the Vitality score, which was improved over 

time in patients randomized to the higher hemoglobin. In this regard, the CanadaEurope results were concordant with the Normal Hematocrit Study that also 

showed improvement in specific quality of life domains in the high versus low hematocrit groups. 

Hemoglobin Variability Necessitates a Broader Hemoglobin Range 

An important problem with setting hemoglobin targets has become apparent from 

recent studies that have evaluated the variability of hemoglobin levels in patients 

on epoetin treatment in the dialysis setting. Three studies collectively suggest that 

it is difficult to maintain the hemoglobin level in the 11 to 12 g/dL range (16–18). 

In the study by Fishbane et al >90% of dialysis patients studied experienced hemoglobin cycling (16). These investigators reported that the mean number of hemoglobin excursions was 3.1 ±1.1 per patient/year. The mean amplitude per hemoglobin excursion was 2.51 ±0.89 g/dL, and the mean duration of hemoglobin excursions was 10.3 ±5.1 weeks. Indeed, the NKF Work Group has ‘‘rejected, identifying 

a target hemoglobin level bounded by narrow upper and lower values (e.g., 11.0 to 

12.0 g/dL) (15). Such a target affords neither clarity nor simplicity, is possible to 

achieve in only a minority of patients, discourages flexibility in managing individual 

patients, and likely promotes cycling of hemoglobin results greater than and less 

than the target.’’ 

Recent New Data from Randomized Controlled Trials 

The recent publication of the CHOIR and CREATE studies informs the debate regarding the target hemoglobin level in CKD patients (19,20). CHOIR was an openlabel,randomized trial that studied 1432 patients with CKD: 715 patients randomized to receive epoetin alfa targeted to achieve a hemoglobin of 13.5 g/dL, and 717 

were randomized to receive epoetin alfa targeted to achieve a hemoglobin of 11.3 

g/dL (19). The median study duration was 16 months. The primary end point was 

a composite of death, myocardial infarction, congestive heart failure (CHF) hospitalization (excluding hospitalization during which renal replacement therapy occurred), and stroke. Two-hundred-twenty-two composite events occurred: 125 events 

among the high hemoglobin group and 97 events among the low hemoglobin group 

P=0.03, hazard ratio of 1.34; with 95 percent confidence interval of 1.03 and 1.74. 

The higher rate of composite events was explained largely by a higher rate of death 

(48% higher risk, P=0.07) or CHF hospitalization (41%, P=0.07). Although neither 

death nor CHF hospitalization were statistically significantly higher in the higher 

versus lower hemoglobin group, the study was not powered for this purpose. While 

quality of life showed improvement from baseline values in both groups and were 

similar between the two groups. However, more subjects in the high hemoglobin 

group experienced least one serious adverse event compared to the low hemoglobin 

group. The Cardiovascular Risk Reduction by Early Anemia Treatment with Epoetin 

beta (CREATE) study enrolled approximately 600 patients. Subjects were randomized to an early anemia correction or a late anemia correction group (20). The early 

anemia correction group received epoetin beta therapy immediately for a target hemoglobin 13–15 g/dL. The late anemia correction group did not receive treatment 

until their hemoglobin is >10.5 g/dL; their target hemoglobin was 10.5–11.5 g/dL. 

The study showed that ‘‘complete correction’’ was not associated with a statistically 

significantly higher rate of the first cardiovascular event (58 events in the high hemoglobin group versus 47 events in the low hemoglobin group; hazard ratio of 0.78, 

95% confidence interval, 0.53 to 1.14; P=0.20). However, left ventricular mass index 

remained stable in both groups but dialysis was required in more patients in the 

higher versus lowed hemoglobin group (127 vs. 111, p=0.03). On the other hand, unlike CHOIR, in CREATE a quality of life benefit, at least in year 1 of the study, 

was observed for the higher versus lower hemoglobin group. 

Therefore, both studies showed either risk or no benefit in aiming to completely 

correct the hemoglobin in CKD patients, not receiving dialysis. The CHOIR study 

was larger and showed a statistically significant difference for the primary endpoint, 

whereas the CREATE study was much smaller and showed a trend for increased 

risk but did not reveal statistically significant differences for the primary endpoint. 

It is important to note that, unlike the Normal Hematocrit or Canada-Europe studies, both CHOIR and CREATE evaluated pre-dialysis CKD patients and so the results may not be generalizable to the dialysis community. However, both the Normal 

cnoel on PRODPC60 with HEARING

17 

Hematocrit and the Canada-Europestudies in dialysis patients also demonstrated either no benefit or increased risk. Collectively, this data strongly suggests that the 

most prudent course is to partially correct the hemoglobin in all chronic kidney disease patients, whether on dialysis or not, until more data is available in future studies. 

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16. Fishemoglobinane S, Berns JS: Hemoglobin cycling in hemodialysis patients treated with 

recombinant human erythropoietin. Kidney Int 68:1337–1343, 2005 

17. Lacson E Jr, Ofsthun N, Lazarus JM: Effect of variability in anemia management on hemoglobin outcomes in ESRD. Am J Kidney Dis 41:111–124, 2003 

18. Berns JS, Elzein H, Lynn RI, Fishemoglobinane S, Meisels IS, Deoreo PB: Hemoglobin 

variability in epoetin-treated hemodialysis patients. Kidney Int 64:1514–1521, 2003 

19. Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, Reddan D: Correction 

of Anemia with epoetin alfa in chronic kidney disease. New Engl J Med 2006; 355: 2085–98 

20. Drueke TB, Locatelli F, Clyne N, Eckhardt KU, Macdougall IC, Tsakiris D, Burger HU, 

Scherhag A. Normalization of hemoglobin levels in Chronic Kidney Disease and Anemia. New 

Engl J Med 2006; 355: 2071–84 

f 

Chairman THOMAS. Thank you very much, Dr. Singh. 

Mr. Cotter. 

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18 

STATEMENT OF DENNIS J. COTTER, PRESIDENT, MEDICAL 

TECHNOLOGY AND PRACTICE PATTERNS INSTITUTE, 

BETHESDA, MARYLAND 

Mr. COTTER. Chairman Thomas, Congressman Rangel, Congressman Stark, distinguished members. Good morning. I am Dennis Cotter, President of the Medical Technology and Practice Patterns Institute. I appreciate the opportunity today to talk about patient safety and quality issues. We have studied clinical outcomes 

of ESRD patients for more than 10 years. For almost two decades 

great controversy has surrounded the anemia treatment management goal; that is the target hematocrit. During this time, they 

have increased hematocrit from 33 percent to 37.5 percent; most recently to 39 percent and higher. Were these charges warranted? 

The answer to this question became clear when results of new clinical trials joined with earlier clinical trials demonstrated that patients targeted to higher hematocrit levels have increased mortality 

and many other adverse side effects. Through the current rules 

which endorse expanding EPO reimbursement to allow hematocrit 

to be targeted to any level, CMS has implemented a policy that can 

be harmful to its beneficiaries and will cost hundreds of millions 

of dollars in additional expenditures. 

For some patients, it takes a small amount of EPO to elevate 

EPO hematocrit. For others, it takes a large amount. Clinical trials 

have shown that those targeted to high hematocrits and high EPO 

doses have higher mortality rates to those targeted to low hematocrit and low EPO doses. Because the population is made up of both 

EPO responders and EPO non-responders, the question remains 

whether patients who experience higher mortality rates were predominantly EPO responders or non-responders. 

It is unlikely that industry sponsored research will answer this 

important question. Answering this question is the subject of our 

ongoing NIH funded research that addresses the concern that EPO 

therapy itself might contribute to harmful outcomes. Current CMS 

policy and industry sponsored clinical practice guidelines support 

both high target hematocrit and high EPO doses, assuming that 

high hematocrits improve outcomes, an assumption that is contrary 

to clinical trial. To date, no normal assessment of the appropriate 

dosing level has been conducted nor has a payment policy been implemented to encourage optimal dosing. Removal of a profit incentive by adding EPO to the composite rate should reduce over utilization and would also encourage research to determine optimal 

dosing. CMS policy appears to be heavily weighted on both the 

opinion and the notion that hematocrit variability is the overriding 

problem. As a result, this has encouraged EPO over-utilization, 

driving higher Medicare payments. Given the new policy, which 

opens up the upper limit of the target hematocrit, it is anticipated 

that providers will respond to the financial incentive with even 

more aggressive use of EPO. 

Our recommendations: Adhere to the FDA label until further 

studies clarify the causal link between EPO, hemocrit and patient 

outcomes. Following FDA dose titration recommendations should 

be sufficient to maintain hematocrits within the 30-36 percent 

hematocrit range, deemed to be the safest range for all patients. 

cnoel on PRODPC60 with HEARING

19 

Treatment guidelines and reimbursement policies must put restrictions on the level of EPO dose, if necessary. 

Further studies are needed to study patients that are 

hyporesponsive to high EPO doses. Regarding EPO and for all future drug evaluations, avoid the over reliance on observational 

studies, often industry sponsored as opposed to rigorously controlled randomized clinical trials. It is imperative that EPO coverage decisions adhere to established hierarchy of evidence that focuses primarily on RCTs and systematic reviews. 

Finally, promote research which is independently funded rather 

than industry sponsored for the development of treatment guidelines and payment policies. 

Thank you for your consideration of our concerns. 

[The prepared statement of Mr. Cotter follows:] 

Statement of Dennis J. Cotter, President, Medical Technology and Practice 

Patterns Institute, Inc., Bethesda, Maryland 

Chairman Thomas, Congressman Stark, distinguished Committee members, good 

morning. I am Dennis J. Cotter, President of the Medical Technology and Practice 

Patterns Institute. I appreciate the opportunity to talk about patient safety and 

quality issues. We have studied clinical outcomes of ESRD patients for more than 

10 years. 

For almost two decades, great controversy has surrounded the anemia management treatment goal, that is, the target hematocrit. During this time, CMS has increased hematocrit targets, from 33% to 37.5%, and most recently, to 39% and higher. Were these changes warranted? The answer to that question became clear when 

results of new clinical trials, joined with earlier trial results, demonstrated that patients, targeted to higher hematocrit levels, have increased mortality and many 

other adverse side effects. Through the current rules which endorse expanding EPO 

reimbursement to allow hematocrit to be targeted to any level, CMS tacitly has implemented a policy that can be harmful to its beneficiaries and will cost hundreds 

of millions of dollars in additional expenditures. 

THE SCIENCE 

For some patients, it takes a small amount of EPO to elevate the hematocrit (EPO 

responders) and, for others, its takes a large amount (EPO non-responders). Clinical 

trials have shown that those targeted to high hematocrits and high EPO doses have 

higher mortality rates than those targeted to low hematocrits and low EPO doses. 

Because the population is made up of both EPO responders and EPO non-responders, the question remains whether patients who experienced higher mortality rates 

were predominately EPO responders or EPO non-responders. It is unlikely that industry-sponsored research will answer this important question. Answering this 

question is the subject of our on-going NIH funded research which addresses the 

concern that EPO therapy, itself, might contribute to harmful outcomes. Current 

CMS policy and industry-sponsored clinical practice guidelines support both high 

target hematocrit and high EPO doses, assuming that high hematocrits improve 

outcomes, an assumption that is contrary to clinical trial results. To date, no formal 

assessment of the appropriate dosing levels has been conducted, nor has a payment 

policy been implemented to encourage optimal dosing. Removing the profit incentive, by adding EPO to the composite rate should reduce over-utilization and would 

also encourage research to determine optimal dosing. 

THE POLICY 

CMS policy appears to be heavily weighted both on opinion and on the notion that 

hematocrit variability is the over-riding problem. As a result, over the years this 

policy has encouraged EPO over-utilization, driving higher Medicare payments. 

Given the new policy, which opens the upper limit of the target hematocrit, it is 

anticipated that providers will respond to the new financial incentive with even 

more aggressive use of EPO. 

WHERE WE GO FROM HERE 

Our recommendations are the following: 

• Adhere to the FDA-approved label until further studies clarify the causal link 

among EPO, hematocrit, and patient outcome. Following FDA dose titration reccnoel on PRODPC60 with HEARING

20 

ommendations should be sufficient to maintain hematocrits within the 30–36% 

hematocrit range, deemed to be the safest range for all patients. • Treatment guidelines and reimbursement policies must put restrictions on the 

level of EPO dose, if necessary. Further studies are needed of patients who are 

hypo-responsive to high EPO doses. • Regarding EPO, and for all future drug evaluations, avoid over-reliance on observational studies, often industry-sponsored, as opposed to rigorously controlled randomized clinical trials. It is imperative that the EPO coverage decisions adhere to established hierarchy of evidence that focuses primarily on 

RCTs and systematic reviews. • Promote research which is independently funded, rather than industry-sponsored, for the development of treatment guidelines and payment policies 

Thank you for your consideration of our concerns. 

f 

Chairman THOMAS. Thank you all very much. 

I will ask a couple of questions and urge my colleagues to focus 

their responses as well. History is history, but we now have some 

fairly clear evidence. Can you think of a worse system to treat patients with End Stage Renal Disease than having facilities offering 

the service not getting updates or cost-of-living adjustments but in 

fact a fixed dollar payment for years and having a drug which is 

a significant assistance in a monopoly situation with no competitive 

pricing structure being available and, in fact, encouraged in terms 

of increased uses. Now we see clearly beyond what most people are 

now beginning to believe would be appropriate standards. What 

would we add to that to make it worse than the structure we now 

have? Is there anything we are missing in terms of policy that 

could make sure that we don’t endanger these people even more? 

Mr. COTTER. This is a recipe for disaster. That is why we are 

here today. EPO dosing is a—it is done under the notion that the 

drug does no harm. Because of that notion, there is a very aggressive attitude toward using high doses of EPO to continue. 

Chairman THOMAS. That, my understanding, is the way it is 

administered, in terms of not allowing any new or inventive approaches, for example subcutaneous, in terms of advantages. There 

is no ability to continue to move toward better practices within the 

structure that we have established, i.e., there is no incentive and 

I don’t think anyone should focus on the people who are running 

these services and who are doing the best job they can. It is the 

structure under which they are operating these services that don’t 

allow them to move into those. Is that an appropriate statement? 

Mr. COTTER. This is viewed as an income stream. If it was 

viewed by providers as a cost, then the incentive would be to provide optimum dosing as does the VA. The VA doses using the subcutaneous route, and that, within the VA, EPO treatment is viewed 

as a cost. So, if you change the incentives around, you will motivate 

providers to become much more efficient. 

Chairman THOMAS. Dr. Singh, you made a statement about 

your study about comparisons with people who are not in end stage 

renal but obviously chronic kidney disease and other patients. Notwithstanding the exclusivity of drugs used in each of these areas, 

i.e. monopoly, did you find any difference, any significant difference 

that would require a maintenance of drugs dealt with in a different 

way for those populations, or was there sufficient commonality 

from your study that we should look at that was more of a comcnoel on PRODPC60 with HEARING

21 

bined group and therefore possibly have an opportunity to deal 

with what is now a monopoly in the End Stage Renal Disease of 

administering of drugs? 

Dr. SINGH. I agree with you. I think the study that we published as well as other studies do not provide sufficient evidence at 

the present time to distinguish treatment in one population versus 

the other. In other words, at this moment I think, like the approach taken by the FDA as well as by the National Kidney Foundation, it seems reasonable to consider these populations and studies on these populations in the aggregate and nothing—there has 

been no convincing evidence that has supported the idea of separating these populations out. There is no reason in my mind to 

think that the dialysis population will benefit from higher doses of 

EPO or from higher hemoglobin levels beyond what we have found 

in our studies. In fact two other randomized controlled studies support the notion of increased risk in the dialysis population. 

Chairman THOMAS. Why was the CHOIR trial terminated? 

Dr. SINGH. It was terminated because the Data Safety Monitoring Board saw evidence for increased risk for adverse risk in the 

higher hemoglobin group, and they found that there was going to 

be no likelihood of showing any benefit, and therefore, the DSMB 

terminated the study. We followed that recommendation. 

Chairman THOMAS. The policies that were currently advocating 

under CMS are which end of the spectrum vis-a-vis the CHOIR 

trial? At the high end or the low end? 

Dr. SINGH. The Medicare policy recommends there be a 25-percent reduction in the epoetin dose when the hemoglobin level hits 

13 grams or hematocrit at 39 percent what’s remarkable is that as 

recent, as the same week as the CHOIR study was published, one 

of the largest dialysis providers circulated a guideline for protocol 

for hemoglobin management which recommended only a 10-percent 

reduction in epoetin dose when the hemoglobin level reaches 13 

grams and a 25-percent reduction when it reaches 14 grams or 

higher, so, clearly, even beyond what Medicare recommends and 

certainly well beyond what the CHOIR data suggests, which is considered safe. So, you are absolutely right. There is—not only does 

this study suggest increased risk beyond 13, beyond actually 12.5 

because that was the achieved hemoglobin level. But Medicaid 

guidelines are at 13, where there is a reduction and dialysis providers are even flaunting that and going for higher levels still. 

Chairman THOMAS. It is in large part because of the payment 

system and the structure we are dealing with and some incentives 

of the structure. 

Can you give us—is there agreement between the three of you 

and more than the decade long study and others that would give 

us one, two, three fairly simplified steps that we could take that 

could at least get us significantly in a different direction? Can you 

give it to me in just a few terms? Obviously, you have advocated 

bundling. Are there any other suggestions? 

Dr. SINGH. I would recommend they should be—risk adjustment 

of the population has been recommended by CMS because these are 

complicated sick dialysis patients and we do not want to actually 

disincentivize the treatments of patients who are sick. 

cnoel on PRODPC60 with HEARING

22 

Chairman THOMAS. I understand that. Have you read the GAO 

study? 

Dr. SINGH. Yes. 

Chairman THOMAS. One of the concerns that we have that we 

will be presented shortly is we have made recommendations; we 

have demanded certain aspects. The argument has been that we 

have not been able to develop them. 

Thank you very much. 

Mr. Rangel. 

Mr. RANGEL. Thank you so much for sharing your views with 

us. 

Could you tell us, why in the world would the CMS have a policy 

that differs from with the GAO, the FDA, the National Kidney 

Foundation, the National Institutes of Health, the providers of 

health care, as to why they would want to encourage through policy 

the overuse of a drug that places peoples’ lives at risk and even 

death and is more costly to the Federal Government? Now just try 

to think of any reason why any agency or department of the Federal Government would want to do this. 

Mr. COTTER. Yes, I think, from my understanding of this, we 

wrote a policy analysis of this and published in the Health Affairs 

Journal, is that there is a notion that the policy must impress hematocrit variability. However, that is driven by aggressive dosing so 

it is a self-fulfilling prophecy. If you raise the hematocrit target, 

you encourage more aggressive dosing which in turn raises more 

variability. That is the only argument that CMS has had that they 

have claimed that the policy is based on. They have claimed that 

there is no science to support these high levels. It is only this issue 

that is non-scientific of hematocrit variability. 

Dr. PIZZI. Mr. Cotter used the word notion. The notion has been 

in the dialysis community for several years that the higher the 

hemocrit, the better the outcome. Even the National Kidney Foundation updated their guideline this year to increase the upper hemoglobin limit to 13 without founded evidence to support that. Now 

the results of the trials testing these levels doses are starting to 

come back, and, in fact, we have found out that 13 is too high. 

CMS, as well as the National Kidney Foundation, I believe and I 

agree with Mr. Cotter and Dr. Singh that it is time to revert back 

to the label, which is a hemoglobin of 10 to 12. 

Dr. SINGH. I think we have limited presentation at the present 

time as to why this occurs and whether it is related to factors such 

as high dosing or frequent measurement of hemoglobin. Nevertheless, we certainly should seek increased risk of hemoglobin levels 

that are beyond the current label of the drug and my advice would 

be that we take greater pains and I think CMS takes greater pains 

to ensure that the population of dialysis patients that this represents a vulnerable population of hemoglobin levels that are below 

that level until we get more data, until more studies are published 

to indicate this is a—that the alternative is a reasonable strategy. 

Mr. RANGEL. Thank you. Mr. Chairman, I want to congratulate 

you for the order of the witnesses, to have the experts testify early. 

Whether we can establish this as some kind of a policy, that makes 

it easier for us. 

cnoel on PRODPC60 with HEARING

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Chairman THOMAS. I appreciate the gentleman. I am doing this 

for pure convenience of members in a very extreme time, and I 

don’t intend to make any kind of a precedent. I am walking out the 

door in a few days, and you can deal with it on your own time. 

The gentlewoman from Connecticut wish to you inquire. 

Ms. JOHNSON OF CONNECTICUT. How easy is it to achieve 

stability in a patient to—how big an issue is this hematocrit variability? I gather from you that we really don’t know enough to actually keep a patient stable at 12, or we would be doing it. 

Mr. COTTER. We have done a study of this because we wanted 

to prepare something for this hearing. It is simply that if you maintain a prudent dosing strategy as recommended in the FDA labeling, you start off in small doses and you tritiate up until the patient responds to the drug, you do not have this variability. What 

providers are doing now, they are starting with very high doses beyond the FDA label and these patients, some of them overshoot. 

Some don’t. Remember, I said we have responders and non-responders to EPO therapy. So, for those both responders and nonresponders, they get the same dose. 

Ms. JOHNSON OF CONNECTICUT. Thank you. So, the variability issue can be addressed by titrating up, and if you do that, 

then there is no difference in frailty or nature of the patient as to 

how variable, how much their swings and their hemocrit levels as 

you dose. 

Mr. COTTER. That is why you want to titrate up. 

Ms. JOHNSON OF CONNECTICUT. Once you get there, are 

there still those swings? 

Mr. COTTER. There could be swings, sure. But the FDA label 

says that the target should be 30 to 26, so that allows the swings. 

Ms. JOHNSON OF CONNECTICUT. So, you think the swing 

being allowed to go up to 13 is too big a swing? 

Mr. COTTER. Absolutely. 

Ms. JOHNSON OF CONNECTICUT. How effective has the CMS 

new payment policy adopted in April been in at least bringing 

down dosing above 13? 

Mr. COTTER. Well, according to the GAO report, I will let them 

tell you about that, but it looks like dosing is migrating up slightly 

right now, but they are reporting an average dose. That means 

there are some patients on the high end of that average are getting 

very high doses. 

Ms. JOHNSON OF CONNECTICUT. On the bell curve, their 

new payment policy penalizes high doses of patients that are at 12/ 

13, and my understanding is, we will hear more from the next 

panel, but that has brought down the outliers. Is that your understanding? 

Mr. COTTER. I would like to hear CMS defend that because, in 

October of this year, they virtually annihilated that restriction. It 

is basically not there any longer. 

Ms. JOHNSON OF CONNECTICUT. The 25 percent payment 

cut? 

Mr. COTTER. I don’t know how a contractor could implement 

that direction that they are giving him, and by the way, the target 

is not even 39 percent. It could go higher. It can go to 42. It can 

go to 50. There is no higher bound. 

cnoel on PRODPC60 with HEARING

24 

Ms. JOHNSON OF CONNECTICUT. But there are payment 

cuts—— 

Mr. COTTER. The only payments cut is that, if a monthly dose 

goes over 500,000 units per or more, which is 5 to 10 times above 

the FDA label; it is bizarre. 

Chairman THOMAS. Thank you. 

Mr. Stark, do you wish to inquire. 

Mr. STARK. I want to thank the panel for all of the work they 

have done in this area. I have a couple of, I guess, less technical 

questions. 

But my understanding is that if we—I can’t pronounce subcutaneous, but I am going to ask Dr. Pizzi, if we inject the drug, then 

we might be able to use about 30 percent less; is that correct? 

Dr. PIZZI. That is true. There are numerous studies that indicate that. That is one of the standard ways to introduce savings because the drug essentially acts as a depot. 

Mr. STARK. Could the makers of the drug make it more comfortable for us who don’t like getting stuck? 

Dr. PIZZI. The key is that to make it more comfortable, the clinics have a multi-dose vial which has a benzyl-alcohol in it, and that 

reduces some of the stinging. There are other techniques that can 

be used to reduce discomfort, too. 

Mr. STARK. I am all for that. 

Then the other question is, would it make any sense, Dr. Singh, 

if you know, in paying for the application of this drug as it is now 

used in the dialysis system, why we should pay more than a dollar 

per application, not counting the cost of the drug? It is just dumped 

in the system, I gather, and takes no particular—nothing more 

than adding it to the mix. Is that a fair layman’s description of how 

you would add this if you are not injecting it? 

Dr. SINGH. I think that is, sir. It is a little bit more complicated 

than just adding it. I think that there is a significant—there is a 

significant amount of work that goes in to the administration in a 

safe manner to prevent—— 

Mr. STARK. Even when it is done as—— 

Dr. SINGH. Even when it is done as part of it. So, I don’t think 

I would advocate the idea that we just add it in a sort of routine 

manner. However, I would just add that the notion that we can 

give it subcutaneously is not a bad idea. After all, our veterans in 

this country received this drug subcutaneously largely. People in 

Europe and people in Canada. So, I do agree that it is—there is 

some discomfort giving it subcutaneously, but it is certainly good 

enough for some of our finest people. 

Mr. STARK. We are talking about saving 600 million bucks a 

year, which is not chump change. 

Final question, Dr. Singh. With all of this recent information 

about overdosing things, how have you changed both your own 

practice, and at Brigham Young, how are you changing what you 

teach your residents or interns? 

Dr. SINGH. I am the medical director of a dialysis unit in Boston. We have instituted a new protocol to ensure that the patients’ 

hemoglobin levels stay below the—to the degree we can help it 

below 12 grams per deciliter. The USRDS shows that chain in 

which I practice has 80 percent of their patients that are below 12 

cnoel on PRODPC60 with HEARING

25 

grams per deciliter in contradistinction to other dialysis providers 

who have higher proportional patients. 

We have also instituted modifications for our health care system 

partners, health care in Boston, to try to ensure that we follow the 

FDA label. Certainly teaching people out there both at the American Society of Nephrology and elsewhere, I certainly advocate the 

notion that we should follow the FDA level and stay below 12 

grams per deciliter. 

Mr. STARK. There is always the danger of underdosing. We certainly don’t want to have payment practices that would encourage 

that. But in the general practice in dialysis today, how would you 

rank the danger of overdosing as a—or underdosing? Is there as 

much danger in underdosing as overdosing? 

Dr. SINGH. I think the biggest problem currently is the fact that 

patients are coming to dialysis still who have never ever been 

treated with epoetin and should be. So, certainly, we could increase 

the awareness with the population with increasing treatment well 

before they start dialysis. However, I do not believe that underdosing will be as much of an issue as much as overdosing, especially since the studies now show continued increased risk. 

Chairman THOMAS. Did I hear you say, Dr. Singh, given the 

current payment system and the structure of the monopoly drug, 

that you are following a policy which reduces the income to those 

dialysis centers that you are involved with? 

Dr. SINGH. We have taken the approach that we will follow 

what is appropriate from a clinical standpoint, and if that means 

that we get paid less, that is appropriate. But we want to make 

sure that we treat patients to a level of hemoglobin—— 

Chairman THOMAS. I understand that, but what you have done 

is made a conscious decision based upon your knowledge not to follow a system which you could easily follow. Wouldn’t it make a 

whole lot of sense to change the system so you don’t have to make 

that decision? 

Dr. SINGH. Yes, sir. I agree with you. 

Chairman THOMAS. Any additional questions? 

Mr. CAMP. I don’t have a question. I want to associate with your 

remarks. 

Mr. LEWIS OF GEORGIA. Mr. Singh, I understand that 30 percent of dialysis patients are African-American, but yet we are only 

8 to 12 percent of the total population. These numbers are not improving, and we are not seeing any improvement in keeping patients off of dialysis. What do you need from Congress to help prevent patients from going on dialysis? In the minority community, 

what needs to be done to address this disparity. 

Dr. SINGH. Thank you, sir. Recent data from the—published 

from the United States Renal Data System from the NIH suggest 

there may be a leveling off of the incident rate of patients starting 

dialysis. But the—but your point is well taken. We still have an 

unsatisfactory number of people starting dialysis in the United 

States, and it is over-representative of minorities, particularly African-Americans. We also have no change in the mortality or no significant change in the mortality of patients on dialysis. 

If you ask me, what we need to do is to increase the greater 

funding to the NIH so that independent research can be performed 

cnoel on PRODPC60 with HEARING

26 

by investigators in the United States to understand what factors 

increased the risk of progression of patients, particularly AfricanAmericans, to dialysis; what are the factors that account for this 

very high risk of cardiovascular disease among dialysis patients; as 

well as studies on anemia, to try and truly understand this issue 

of hemoglobin cycling and why there is this excess risk should be 

funded by Congress. I think we need—we certainly need more 

money funded through the appropriate channels through the NIH 

to fund more studies. 

But I certainly agree with you that African-Americans represent 

a disproportionate amount of people on dialysis, and the mortality 

of these people have not changed significantly over the past decades. So, we do need help, and we need help in terms of funding 

in the research community to gain a great understanding and develop better strategies. 

Chairman THOMAS. Thank the gentleman. We are calling it 

End Stage Renal Disease, and what we really need to put emphasis 

on is prevention and education so they never reach the end stage 

along with the additional study that you are making, and frankly, 

that doesn’t take an NIH study. That takes talking about diet, lifestyle and the rest. 

Thank you very much for your research. 

Again, it is quite amazing that, all of a sudden, in a couple of 

months, significant research is coming out focusing on this issue. 

I assume that there is going to be continued examination of this. 

Obviously, we need all the help we can get in terms of not only understanding the application of these drugs that are literally miracle 

drugs but the manner in which we provide it to people who provide 

the service and in fact the taxpayers pay for it. Thank you very 

much. 

I would now ask the second panel to please come before us. The 

Chair is conscious of the time restraints on very busy people. 

The Chair is pleased to have, once again, the Honorable David 

M. Walker, and I would like to welcome Leslie Norwalk, who is the 

new Acting Administrator for the Centers for Medicare and Medicaid Services. Thank you very much for attending. 

Dr. Walker, obviously, you have just concluded the study. Again, 

interestingly, all of this is coming together at the same time, and 

we have it available if anyone hasn’t seen a copy of it. I do think 

it is very useful, and as is customary, any testimony that you have 

written will be made a part of the record, and you can address us 

in any way you see fit in terms of what we now have before us in 

the GAO study. 

STATEMENT OF THE HONORABLE DAVID M. WALKER, COMPTROLLER GENERAL, U.S. GOVERNMENT ACCOUNTABILITY 

OFFICE 

Mr. WALKER. Thank you, Mr. Chairman. I appreciate the opportunity to be here today to participate in the hearing on Medicare 

patients with End Stage Renal Disease. Let me also note, happy 

birthday and all of the best to you in retirement from the Congress. 

As you know, from a broader perspective, the level and growth 

of Medicare spending combined with the over $30 trillion-plus 

amount of unfunded obligations for Medicare serves as evidence 

cnoel on PRODPC60 with HEARING

27 

that the current program is unsustainable in its present form. Furthermore, Medicare’s sheer size and complexity make it vulnerable 

to improper payments and inefficient payment systems. Over the 

years, the GAO has worked with this Committee to try to address 

these challenges. CMS has taken a number of related efforts, and 

some progress clearly has been made, but as most GAO reports 

note, more remains to be done. 

With regard to End Stage Renal Disease drug reimbursements, 

the GAO report which you held up—and I have a copy as well that 

you requested—points to ways to improve the efficiency of Medicare’s payments in connection with the End Stage Renal Disease 

program. Over the years, we have observed that bundled payments 

tend to be more efficient than paying for services one at a time. 

Bundled payments cover a range of services delivered to the patient. As such, they give providers an incentive to furnish only 

those services that patients truly need because providers can not 

prosper by providing extra services. 

Today’s hearing focuses on End Stage Renal Disease paid under 

part B of Medicare. But one has to look at the whole part of part 

B to see the inefficiencies inherent in paying for services one at a 

time. Spending for physician services and other part B services 

over the past several years has been growing at an alarming rate. 

It is essential that Congress find ways to restructure payments to 

institute necessary efficiencies and control spending growth while 

maintaining quality and assuring patient safety. 

Our report on End Stage Renal Disease drug payments observes 

that the current method of setting drug payment rates is an improvement over the previous system. However, it does not provide 

appropriate incentives. It does not control the incentive to over-utilize such drugs. The system in place pays providers the manufacturers’ average sales price for the drug, plus 6 percent. Any system 

that provides for cost-plus payments provides an incentive for related parties to provide unnecessary care and extra services. Indeed, this is one of the reasons that the Congress changed Medicare’s inpatient hospital payment to a bundle payment system in 

the mid-eighties. 

We also observed in our report that Medicare’s End Stage Renal 

Disease drug payment is dominated by a single drug, Epogen, 

which for several years has been Medicare part B’s highest spending drug, approximately $2 billion in 2005. We also expressed concerns that there are currently no direct competitor drugs in the 

End Stage Renal Disease market. The lack of effective price competition could be having considerable adverse effects on Medicare’s 

overall spending. Furthermore, the lack of significant efforts to 

verify the accuracy of the average sales price for drugs that are 

separately billable under part B is also a matter of concern, and 

that goes beyond End Stage Renal Disease. 

Finally, returning to the bundling theme. We observed that, currently, congressionally mandated research on creating a bundled 

system for End Stage Renal Disease services, including drugs, has 

been delayed. The research being conducted by CMS would, among 

other things, ensure that providers are appropriately compensated 

for variations of complexity in patients’ treatment. While this is important, we do not believe it is necessary or desirable to delay 

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1GAO, End-Stage Renal Disease: Bundling Medicare’s Payment for Drugs with Payment for 

All Services Would Promote Efficiency and Clinical Flexibility, GAO–07–77 (Washington, D.C.: 

Nov. 13, 2006). 2These drugs are covered under Medicare Part B, the part of Medicare that covers a broad 

range of medical services, including physician, laboratory, and hospital outpatient services and 

durable medical equipment. Part B-covered drugs are typically administered by a physician or 

other medical professional rather than by patients themselves. In contrast, drugs covered under 

the new prescription drug benefit, known as Part D, are generally self-administered by patients. 3Pub. L. No. 108–173, 117 Stat. 2066. 

4 Epogen, one of the separately billable drugs, was not paid under the AWP method. The 

method Medicare used to pay for Epogen was an amount set in statute for a single year—$10.00 

per 1,000 units in 1994. CMS continued to pay this rate at its discretion until 2005. 

movement to a bundled rate for End Stage Renal Disease services 

any longer than absolutely necessary. For this reason, we have suggested that Congress consider mandating the establishment of a 

bundle payment system for all ESRD services, including drugs, as 

soon as possible. 

Mr. Chairman, this concludes my prepared remarks. I look forward to responding to your questions. 

Thank you. 

[The prepared statement of Mr. Walker follows:] 

Statement of The Honorable David M. Walker, Comptroller General, 

U.S. Government Accountability Office 

Mr. Chairman and Members of the Committee: 

I am pleased to be here to discuss highlights from our report entitled End-Stage 

Renal Disease: Bundling Medicare’s Payment for Drugs with Payment for All ESRD 

Services Would Promote Efficiency and Clinical Flexibility.1 The report examines 

Medicare payments for certain drugs provided to patients with end-stage renal disease (ESRD), a condition of permanent kidney failure.2

Through Medicare’s ESRD benefit, patients receive a treatment known as dialysis, 

which removes excess fluids and toxins from the bloodstream. Patients also receive 

items and services related to their dialysis treatments, including drugs to treat conditions resulting from the loss of kidney function, such as anemia and low blood calcium. The Centers for Medicare & Medicaid Services (CMS), the agency that administers the Medicare program, divides ESRD items and services into two groups for 

payment purposes. In the first group are dialysis and associated routine services— 

such as nursing, supplies, equipment, and certain laboratory tests. These items and 

services are paid for under a composite rate—that is, one rate for a defined set of 

services. Paying under a composite rate is a common form of Medicare payment, 

also known as bundling. In the second group are primarily injectable drugs and certain laboratory tests that were either not routine or not available in 1983 when 

Medicare implemented the ESRD composite rate. These items and services are paid 

for separately on a per-service basis and are referred to as ‘‘separately billable.’’ 

Over time, Medicare’s composite rate, which was not automatically adjusted for 

inflation, covered progressively less of the costs to provide routine dialysis services, 

while program payments for the separately billable drugs generally exceeded providers’ costs to obtain these drugs. As a result, dialysis facilities relied on Medicare’s 

generous payments for separately billable drugs to subsidize the composite rate payments that had remained nearly flat for two decades. In addition, the use of the 

separately billable drugs by facilities became routine, and program payments for 

these drugs grew substantially. In 2005, program spending for the separately 

billable drugs accounted for about $2.9 billion. Medicare’s payment for these separately billable drugs is the focus of my remarks today. My remarks are based on 

the information included in our aforementioned report. 

Background 

Since the Medicare Prescription Drug, Improvement, and Modernization Act of 

2003 (MMA) was passed,3 how separately billable drugs are paid for has changed— 

from payment based on each drug’s average wholesale price (AWP),4 to payment 

based on each drug’s average acquisition cost, to payment based on the manufacturer’s average sales price (ASP) for each drug. Specifically, beginning in 2006, payment for each drug is set at ASP + percent. 

In recent years, CMS has been exploring, as required by the Congress, the creation of a bundled payment for all ESRD services, including the drugs that facilities 

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5Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Pub L. 

No. 106–554, app. F, § 422(b),(c), 114 Stat. 2763A–463, 2763A–516–517. 6Pub. L. No. 108–173, § 623(e),(f), 117 Stat. 2066, 2315–2317. 

7 In the case of the composite rate, one dialysis session constitutes an episode of care. Unlike 

the current composite rate payment method, a newly designed payment bundle could define the 

Continued 

currently bill for separately. In response to a mandate that CMS study the feasibility of creating a bundled payment,5 the agency issued a study in 2003 concluding 

that developing a bundled ESRD payment rate was feasible and that further study 

of case-mix adjustment—that is, a mechanism to account for differences in patients’ 

use of resources—was needed. In the MMA, the Congress required that CMS report 

on the design of a bundled prospective payment system for ESRD services, including 

a case-mix adjustment methodology, and conduct a 3-year demonstration to test the 

design of a bundled ESRD payment system.6

New Payment Provisions Reduced Subsidy from Separately Billable Drugs 

but Did not Eliminate Incentives to Ovceruse These Drugs 

The effect of several legislative and regulatory changes since 2003 has been to 

raise the composite rate for dialysis services while reducing Medicare’s pre-2005 

generous payments for separately billable ESRD drugs. Under the first legislative 

change in 2005, Medicare expenditures for certain of these drugs dropped 11.8 percent. Under the current payment method, based on the ASP for each drug, Medicare’s payment rates have varied from quarter to quarter but have remained relatively consistent with the lower 2005 payment rates. 

The ASP-based rates are an improvement over the pre-MMA method, as ASP is 

based on actual transactions. However, certain unknowns about the composition of 

ASP and the ASP-based payment formula make it difficult for CMS to determine 

whether the ASP-based payment rates are no greater than necessary to achieve appropriate beneficiary access. For one thing, CMS has no procedures for validating 

the accuracy of a manufacturer’s ASP, which is computed by the manufacturer. For 

another, CMS has no empirical justification for the 6 percent add-on to ASP. Regardless of how payment for these drugs is calculated, as long as facilities receive 

a separate payment for each administration of each drug and the payment exceeds 

the cost of acquiring the drug, an incentive remains to use more of these drugs than 

necessary. 

The ASP payment method is of particular concern with respect to Epogen, which 

in 2005 accounted for $2 billion in Medicare payments and is Medicare’s highest 

Part B expenditure drug. Introduced in 1989, Epogen—the brand name for epoetin 

alpha—was an expensive breakthrough drug used to treat anemia in patients with 

ESRD. Most ESRD patients receive injections of Epogen at nearly every dialysis 

treatment. Preliminary data for 2006 suggest that Epogen use, which grew rapidly 

in the years before the MMA provisions took effect, continues to grow, although at 

a slower rate than previously. Epogen is the only product available in the domestic 

ESRD market for anemia management. However, the ASP method relies on market 

forces to achieve a favorable rate for Medicare. When a product is available through 

only one manufacturer, Medicare’s ASP rate lacks the moderating influence of competition. The lack of price competition may be financially insignificant for noncompetitive products that are rarely used, but for Epogen, which is pervasively and 

frequently used, the lack of price competition could be having a considerable adverse 

effect on Medicare spending. 

Bundled Payment System for ESRD Services, Including Injectable Drugs, 

Would Promote Efficiency and Clinical Flexibility 

Medicare’s approach to paying for most services provided by health care facilities 

is to pay for a group—or bundle—of services using a prospectively set rate. For example, under prospective payment systems, Medicare makes bundled payments for 

services provided by acute care hospitals, skilled nursing facilities, home health 

agencies, and inpatient rehabilitation facilities. In creating one payment bundle for 

a group of associated items and services provided during an episode of care, Medicare encourages providers to operate efficiently, as providers retain the difference 

if Medicare’s payment exceeds the costs they incur to provide the services. Medicare’s composite rate for routine dialysis and related services was introduced in 

1983 and was the program’s first bundled rate. 

Experts contend that a bundled payment for all dialysis-related services would 

have two principal advantages. First, it would encourage facilities to provide services efficiently; in particular, under a fixed, bundled rate for a defined episode of 

care,7 facilities would no longer have an incentive to provide more ESRD drugs than 

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episode of care more broadly. For example, the new payment bundle could cover dialysis and 

related items and services for 1 month. 8The MMA specified that drugs billed separately at the time the legislation was enacted continue to be billed separately and not bundled in the composite rate. MMA sec. 623 (d)(1), § 1881 

(b)(13)(B), 117 Stat. 2314–15 (to be codified at 42 U.S.C. § 1395rr(b)(13)(B)). 

clinically necessary. Second, bundled payments would afford clinicians more flexibility in decision making because incentives to prescribe a particular drug or treatment are reduced. For example, providers might be more willing to explore alternative methods of treatment and modes of drug delivery if there were no financial 

benefit to providing more services than necessary. 

In the MMA, the Congress required CMS to issue a report and conduct a demonstration of a system that would bundle payment for ESRD services, including 

drugs that are currently billed separately, under a single rate. Any payment 

changes based on CMS’s report or demonstration would require legislation.8 Both 

the report, due in October 2005, and demonstration, mandated to start in 2006, are 

delayed, and CMS officials could not tell us when the report or results from the 

demonstration would be available. 

In light of these circumstances, we have asked the Congress to consider establishing a bundled payment for all ESRD services as soon as possible. In our view, 

Medicare could realize greater system efficiency if all drugs and services were bundled under a single payment. A bundled payment would encourage facilities to use 

drugs more prudently, as they would have no financial incentive to use more than 

necessary and could retain the difference between Medicare’s payment and their 

costs. To account for facilities’ increased or decreased costs over time, a periodic reexamination of the bundled rate may be necessary. This would ensure that facilities 

would be paid appropriately and that Medicare could realize the benefit of any cost 

reductions. 

Mr. Chairman, this concludes my prepared statement. I will be happy to answer 

any questions you or the other Committee Members may have. 

f 

Chairman THOMAS. Thank you. 

Prior to going to Ms. Norwalk, because I know you have an important meeting to go to, if it is okay, and we will determine the 

length of the questioning perhaps like to just draw you out a bit 

in terms of your statement prior to moving to the CMS testimony. 

As you know, I am very loathe to have Congress attempt to legislate the ways in which services are offered, but I want to understand in your underscore in your GAO in page 6 that in 2003 the 

Medicare Modernization Act required CMS to design a system that 

would no longer pay for each injectable ESRD drug in a separate 

rate. You then go on in the same paragraph to conclude CMS report is designing a report for bundled ESRD payment was due in 

September 2005. However, as of November of 2006, CMS officials 

could not tell us when the report would be issued. The demonstration testing the feasibility of a bundled rate mandated to start in 

July 2006 is also delayed. 

If in fact this is what CMS has been doing, what is it that we 

are going to do as a Congress to put together a package which 

would answer those issues? You said perhaps it isn’t as complicated 

as other others are talking about. What we heard from the previous panel is, there are drugs, and my understanding is they are 

identical, notwithstanding the fact they are used in separate purposes. The separate purposes are far closer together, if we can believe Dr. Singh’s testimony, than we would have thought and that 

could possibly create a competitive model rather than a monopoly. 

Notwithstanding—since 2003—CMS can’t put together a bundling 

package and present it to us based upon our requirements in 

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MMA, what is it that you would be suggesting that we might do? 

That is what I am looking for. 

Mr. WALKER. What I am suggesting is, there appears to be 

agreement that it makes sense to move to a bundled approval for 

payment for these drugs. And—— 

Chairman THOMAS. I believe the Congress certainly believes 

that. 

Mr. WALKER. I believe that CMS believes that as well, and I 

think it is important that it is the Congress’s will to say that while 

CMS needs to do demonstration work and while I think additional 

consideration needs to be given to drugs that are essentially identical or similar to Epogen that are not used in End Stage Renal 

Disease but are used for other purposes, I think it is important 

that the Congress’s will be noted to say we expect you to move to 

bundled services by X date and you have to decide what X date is. 

Chairman THOMAS. But we did, in essence, in 2003, while leaving it to the professional competence of CMS to move forward with 

that. 

Mr. WALKER. My understanding is that you required something 

be done and a report be issued by a date certain rather than necessarily move to the bundled services by a date certain. 

Chairman THOMAS. Okay. I think, possibly given the commonality of our position here, a more insistent direction with the 

specific date could produce something, but I will go back to the recent attempt to get letters answered and the dateline in terms of 

answering simple letters. So, to a certain extent, I appreciate the 

requirement to put a firm date, but I will tell you, I have no assurance that any firm date will be met.[11:45 a.m.] 

Chairman THOMAS. If they cannot answer letters, I doubt if 

they are going to give us a program. That is my concern. Therefore, 

I also want to focus on how we can create a degree of competition 

and how we can create an opportunity to allow dialysis facilities to 

utilize various methods of infusion, injection, subcutaneous, others 

that are not absolutely dictated to by a policy that controls price 

and circumstances; and that perhaps is an area we might be able 

to move with, as well as bundling. 

Mr. WALKER. Well, as you know, there is another drug company 

that is proposing to bring a drug to market that potentially would 

be used for End-Stage Renal Disease. There is litigation that is 

currently pending with regard to that. That was obviously beyond 

the scope of our study, but it is a fact, and so that is one possibility 

for competition. 

Another thing that you touched on, Mr. Chairman, which I think 

is appropriate, is there are at least two drugs that are used, one 

of which is identical to Epogen and one of which is similar but not 

identical to Epogen. They are not used for End-Stage Renal Disease, but they are used for chronic kidney disease, and one would 

think that you could look at some of the pricing arrangements and 

other types of activities going on there. You are not requiring them 

to be used for End-Stage Renal Disease, but there is information 

there that I think would be relevant in determining, in effect, what 

should be paid for these drugs. 

Chairman THOMAS. Thank you. 

The gentleman from New York. 

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Mr. RANGEL. I have no questions. I just would like to thank 

you, Mr. Walker, for the dedicated service that you have provided 

over the years for the Congress and the country. 

Chairman THOMAS. The gentlewoman from Connecticut, the 

Chairman of the House Subcommittee. 

Ms. JOHNSON OF CONNECTICUT. Mr. Walker, did you look at 

the policy that CMS adopted in April? 

Mr. WALKER. I apologize, Mrs. Johnson. My staff tells me that 

we looked primarily at the payment methodology. We looked at the 

policy, but we did not look at anything in depth other than the payment methodology. That is the really the only thing. 

Ms. JOHNSON OF CONNECTICUT. Did you also look at why 

the demonstration has been slow to come together and the issue of 

risk adjusting in the demonstration? Dr. Singh did indicate that he 

thought risk adjustment was important. My understanding is that 

risk adjustment in a demo setting is an easy—I could be misinformed about that. I have not had time to do an in-depth development of my knowledge based on this issue. But I need to know why 

the demo has been hard to come together. While I will ask CMS 

that later on, since you are here and you gave this report I want 

to know, did you look at that? 

Mr. WALKER. It is clear that the delay has in large part been 

due to considerations of looking at risk adjustment. We are not saying that that should not be done. We are not saying that you 

should discontinue the demonstration project either. We think it is 

important that that be done. 

The bottom line point is this: It seems clear that Congress intended our work supports, and it is my understanding that CMS 

agrees, that we need to move to a bundled payment system as 

quickly as possible. I think the administrator is in a better position 

to answer why it has been delayed and when she thinks it is going 

to be completed. But for the interests of the patients and the interests of the taxpayers, I think we need to move to a bundled payment system as soon as possible. 

Ms. JOHNSON OF CONNECTICUT. Thank you. 

My concern is that the express purpose of the demonstration 

project was to demonstrate a bundled payment solution; and if risk 

adjustment is difficult, that will affect patients. So, we want a system that not only pays appropriately but makes the drugs available 

for treatment appropriately. If risk adjustment is the problem, why 

would we want to implement a bundled payment without having 

the ability to risk adjust it? 

So, I do not differ on the goal at all. I am just a little mystified. 

I want to learn more about how we are going to achieve that goal, 

and I want to be sure that the knowledge base is firm before we 

make a national change in our National payment system. That is 

my only concern. 

Chairman THOMAS. Will the gentlewoman yield in terms of that 

concern? 

Ms. JOHNSON OF CONNECTICUT. Certainly. 

Chairman THOMAS. Notwithstanding the obvious difficulty, 

given the time lag, does it make any sense at all in focusing on this 

that we could at least begin to nail down a couple of specifics that 

does not involve the universal concerns that are being discussed? 

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Number one, at what point do we begin to focus on the question 

of the percentage dosage? When you have got an FDA rate, you 

have got a label recommendation, you have got a manufacturer 

putting out a warning label, you have got studies that produce it, 

and you have CMS continuing to increase the percentage, at least 

that could be reconciled. 

Secondly, if you have other drugs that could possibly provide or 

a structure in which when you do not have—and a lot of times 

what we have done is, when you do have a monopoly, you can create Government as a surrogate competitor and create a price which 

would control the amount, rather than leaving it to open market 

and incentives which are designed to require people to continue to 

use larger amounts. 

Within the current structure, you have at least several, I would 

think, abilities to adjust payment arrangement competition and 

come to some agreement at least on the conservative do-less-harm 

side about the dosage question. 

Could not we at least do those while they are trying to complement risk factors and other arrangements? 

Mr. WALKER. We are saying similar things, Mr. Chairman, just 

in different ways. 

The other thing I would suggest is, it seems to me that there is 

also a possibility to continue the demonstration project, move to 

some type of a bundled payment system with the consideration 

that there might be some adjustment in payment at some future 

date depending upon the results. But I would leave that to the 

CMS administrator. 

Ms. JOHNSON OF CONNECTICUT. Reclaiming my time. Let 

me also put one other thing on your agenda, because I was not 

aware of that until this hearing. If you can titrate up to a stable 

dosage or if you can deliver this treatment more cheaply through 

injection, why are we not looking at those things, too? Because our 

bundled payment ought to take into account the lower cost of a different delivery system. Did you look at those issues? 

Mr. WALKER. We did. One of the things that is included in our 

report is our point about the need for clinical flexibility to consider 

alternative means to be able to achieve the desired result, which 

includes what you said, Mrs. Johnson. 

Ms. JOHNSON OF CONNECTICUT. We certainly do want that 

clinical flexibility if the patient is going to be served. That goes to 

the bundling issues and the risk. 

Chairman THOMAS. Yes, obviously, if in fact another portion of 

the Government is using the subcutaneous method, you would at 

least think that that could be an option that you would look at, 

given the cost deferential. 

The gentleman from California. 

Mr. STARK. General Walker, thank you for this report. 

You indicate that CMS has no procedure for validating the accuracy of the manufacturer’s average sale price, which the manufacturer computes. I mean, they say, here is our average sales price, 

and we have no way to verify that, as I gather. 

So, if I said what you are suggesting is that Amgen tells CMS 

what the average sales price is for Epo and then they go out and 

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sell it at whatever price they want to sell it, perhaps there are deep 

discounts to volume purchasers. 

Do we know? Is that transparent to you? Do you know, are there 

big discounts? Do we have any idea how this pricing system works? 

Mr. WALKER. Mr. Stark, we know what the statute says. The 

administrator may want to address what, if any, concerns they 

have about what they can do, given the statutory language. But 

what we can tell you is this, is we do not think there is adequate 

transparency and we don’t think there is adequate work being done 

to verify the average sales price. 

I reflect back—I am a Ronald Reagan, George Herbert Walker 

Bush and Bill Clinton Presidential appointee. We can all remember 

President Reagan saying: Trust but verify. That applies to drug 

prices, too. 

Mr. STARK. Thank you very much. 

Chairman THOMAS. We have been discussing bundling in terms 

of the Government’s ability to create a structure which would limit 

controlling. It is my understanding that the private sector has had 

an ability to create bundling in terms of the purchase of drugs that 

are used. Is that—did you examine that at all, the way in which 

the provider, the manufacturer of the drugs is bundling the use of 

particular drugs as an incentive? 

Mr. WALKER. We did not look at that in the context of this report. 

Chairman THOMAS. Are you aware of it? 

Mr. WALKER. Somewhat, yes. 

Chairman THOMAS. We will ask that question. 

Mr. WALKER. There is unbundling that occurs, too, in order to 

affect pricing. 

Chairman THOMAS. Absolutely. So, bundling is on both sides. 

Any additional questions? Thank you very much, and I apologize 

for causing you some problem in trying to get across the bridge. 

Mr. WALKER. Thank you, Mr. Chairman. 

Ms. TUBBS JONES. Mr. Chairman, I want to introduce something for the record. Mr. Chairman, thank you very much for the 

opportunity. 

Mr. Walker, I want to introduce for the record two articles by a 

constituent of mine by the name of Dr. Wish. Dr. Wish is a physician at University Hospital in Cleveland; and, in that capacity, he 

is a Professor of Medicine and the Medical Director of Hemodialysis 

Services at University Hospital. 

Among other things, Dr. Wish is the President of the End-Stage 

Renal Disease Network, and he is on the CMS Advisory Board, and 

he asked me to specifically introduce into the record two of his articles: One of them, The Economic Realities of Erythropoiesis-Stimulating Agent Therapy in Kidney Disease, and another one, an editorial, Can Evidence Drive the Development of a Sound National 

Epo Reimbursement Policy for the United States? 

I am assuming you know Dr. Wish and his prominence in this 

area. I thought as long as we were discussing these issues it would 

be important that we have some information from his background 

into the record. 

Mr. Chairman, I thank you very much for the opportunity. 

Chairman THOMAS. Thank you very much. 

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Thank you, Mr. Walker. 

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Chairman THOMAS. Let me say at the outset, any written testimony you have will be made part of the record. Ms. Norwalk, notwithstanding the fact that you are sitting here now as someone 

who is newly arrived in the position, filling a slot from someone 

who had been the head of the FDA and was a medical doctor, we 

are completely aware of the fact that these policies and decisions 

were ongoing and that for us to ask you with the expectation or becnoel on PRODPC60 with HEARING


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lief that you might be able to respond in depth, not saying that as 

you spend some time in that position you would not be able to but 

that at the onset and given the timing that we have, I want to encourage you, if we move into a questioning session, to feel perfectly 

comfortable asking any person who is part of the CMS support 

structure to identify themselves and come to the table so that you 

do not have to turn around and ask them the question and have 

them provide you the answer. Because that is a perfectly legitimate 

and proper way to operate, given how long you have been on the 

ground even in an acting capacity. 

Ms. NORWALK. Thank you, Mr. Chairman. 

Chairman THOMAS. It is not personal, and it is not directed toward you. You just happen to have currently moved very briefly 

into a position in which we expect you to know everything about 

everything, and that is not fair. 

So, with that, the time is yours. 

STATEMENT OF LESLIE V. NORWALK, ESQ., ACTING ADMINISTRATOR, CENTERS FOR MEDICARE AND MEDICAID SERVICES 

Ms. NORWALK. Thank you, Chairman Thomas, distinguished 

Members of the Committee. Thank you for the opportunity to appear before you today. 

Mr. Chairman, I also would like to wish you a happy birthday. 

As the Acting Administrator of CMS, this has special meaning in 

my heart, given that you are now an official Medicare beneficiary, 

entitled to all of the benefits that you helped create and improve 

during your service in Congress. 

You asked me to be here today to discuss a very important issue, 

safety and quality in the treatment of patients with End-Stage 

Renal Disease, or ESRD. Roughly 400,000 Americans suffer from 

ESRD and are entitled to Medicare coverage on the basis of that 

diagnosis, regardless of age or disability. 

The ESRD population has grown steadily in recent years. Although better management of diabetes and hypertension could help 

stem the growth, initiatives to promote efficient, high-quality 

ESRD care are integral to CMS’s overall agenda and value-based 

payment reforms. 

This administration has demonstrated a strong commitment to 

promoting quality across the board. CMS launched the Medicare 

Quality Initiative in 2001, promoting greater accountability in consumer choice through unprecedented public disclosure of provider 

performance on a range of quality measures. 

To date, CMS has implemented initiatives focused on nursing 

homes, home health agencies, hospitals and dialysis facilities. We 

announced the ESRD Quality Initiative in 2004 to stimulate and 

support improving quality of dialysis care. For these and other efforts CMS was recognized earlier this year by the American Association of Kidney Patients for dedication to improving lives of kidney patients and strong leadership in health care for all Americans. 

Projects such as Dialysis Facility Compare on the Web site and 

the Fistula First Breakthrough Initiative are just two examples of 

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the many steps CMS has taken to promote high-quality care for 

people with ESRD. 

The Fistula First Breakthrough Initiative aims to increase the 

use of fistulas in hemodialysis treatment of patients with ESRD. 

Fistulas are considered to be the gold standard for establishing access to a patient’s circulatory system as is required during hemodialysis. 

Fistulas last longer, require less rework and repair and are often 

associated with lower rates of infection, hospitalization and death. 

Simply put, appropriate use of fistulas optimizes patient care, including a possible reduction in Epo dosing. 

CMS also contracts with the End-Stage Renal Disease Networks 

across the country to help monitor and improve the quality of care 

for ESRD patients. The ESRD Networks are similar to the QIOs, 

which work with hospitals, physicians and other Medicare providers to promote quality and best practices. 

Our networks focus on quality treatment, quality improvement 

and promoting transparency in renal dialysis treatment. Their efforts are complemented by our survey and certification process for 

ESRD facilities, which enforces compliance with regulations prescribing minimum standards for Medicare-approved dialysis facilities with respect to quality, patient safety and access to Medicare 

benefits. 

I know that many of you share my strong interest in a more rational payment system for ESRD care, requiring a CMS report to 

Congress and demonstration under the Medicare Modernization 

Act of 2003 to advance a fully bundled ESRD prospective payment 

system. As you know, the GAO recently reported that such a payment structure would promote quality, safety and savings in the 

ESRD benefit; and I want to be clear that I completely agree. 

While the MMA-required report is now overdue, I want to assure 

you that CMS is fully committed to completing the analytical 

groundwork relevant to a fully bundled payment system. CMS completed an initial round of research in mid-2006, but developing a 

payment model that adequately captured variation of dosage of Epo 

was a key, but difficult, area of this research. CMS felt that the 

approach examined in the initial round too closely linked the payment to actual drug utilization and so began a new phase of research to address this and other areas of our new payment structure. 

Our current research, which is nearing completion, focuses on 

predictors used in the current basic system augmented by other adjusters such as comorbid conditions and other patient characteristics. I expect to receive the research findings from our contractor 

early next year and hope to detail those findings in our official report to you by next summer. 

With the benefit of those findings and recent work of the GAO, 

MEDPAC and others, I look forward to working with you to develop an effective bundling proposal. I believe that payment reform 

is critical to improving ESRD patient care. 

Finally, I have heard recently from you, Mr. Chairman, and from 

you, Mr. Stark, regarding a monitoring policy that we have in place 

to encourage appropriate use of anti-anemia agents in the ESRD 

population. Anemia can be severe and debilitating in ESRD pacnoel on PRODPC60 with HEARING

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tients if left untreated, but, fortunately, drug compounds with Epo 

in this context can largely alleviate the symptoms. 

Anemia’s severity is monitored by a patient’s hematocrit, the proportion of red blood cells in whole blood. Scientific evidence and, indeed, FDA labeling for Epo indicate that patient hematocrit should 

be maintained between 33 and 36 percent for optimal results. 

In a recent letter, you noted that CMS’s hematocrit monitoring 

policy does not reduce provider payment for Epo until a patient’s 

hematocrit reaches 39 percent. While this is accurate, we believe 

it is important to keep in mind the distinction between regulating 

the safety and effectiveness of a particular drug versus determining 

the amount a provider should be paid for administering that drug 

to a patient. 

Our provider and contractor manuals specifically require providers to target a hematocrit range of 30 to 36 percent consistent 

with the FDA label. Moreover, we require that patient records reflect the clinical reason for dose changes and hematocrit levels outside of the 30 to 36 percent range. 

Medicare contractors currently may review medical records to ensure appropriate dose reductions are applied and maintained and 

hematological target ranges are maintained. Hematocrit levels can 

change unexpectedly for a multitude of reasons. Our instructions to 

carriers about reviewing claims takes this into account. 

Our monitoring policy for carriers is not establishing a therapeutic hematocrit target, which we believe is a clinical judgment 

appropriately left to a treating physician. Our monitoring threshold 

for carriers is slightly above the FDA label to avoid penalizing providers that make appropriate dose reductions in response to unexpected increases in their patients’ hematocrit levels. Rather, 39 

percent is a marker of the point at which a Medicare carrier must 

reduce payment to a provider because the reported hematocrit was 

not maintained at a level consistent with the FDA label. CMS developed this policy after considering the body of available scientific 

evidence as well as public comments received in response to our 

proposed policy issued in 2004. 

We are, of course, very interested in recent research findings regarding Epo use in patients with chronic kidney disease. Following 

publication, a study of this nature typically is subject to international scrutiny and examination. Experts will review the study 

design, methodology results and conclusions. In fact, it would be 

very useful for CMS to have access to the raw data behind the 

CHOIR and other similar studies so we may take them into account as we continue to review our policies. 

We look forward to further research developments on this issue. 

Like Congress, we are concerned about overuse and improper use 

of any drug we cover. We are always reassessing our policies to see 

if we can strengthen our programs to ensure the best possible patient outcomes. 

I would be happy to answer any questions you may have. 

[The prepared statement of Ms. Norwalk follows:] 

Statement of Leslie V. Norwalk, Acting Administrator, Centers for 

Medicare and Medicaid Services 

Chairman Thomas, Representative Rangel, thank you for the opportunity to appear before you today regarding important safety and quality issues in the treatcnoel on PRODPC60 with HEARING

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ment of Medicare patients with kidney failure, or End Stage Renal Disease (ESRD). 

Roughly 400,000 Americans suffer from ESRD and require either kidney dialysis or 

transplantation to live. ESRD is Medicare’s only disease-specific program; it entitles 

people of all ages to Medicare coverage on the basis of their ESRD diagnosis. The 

number of individuals covered under Medicare by virtue of their ESRD diagnosis 

continues to grow steadily. Estimates suggest that as many as 20 million Americans 

currently are afflicted by some stage of Chronic Kidney Disease (CKD). Many will 

progress to ESRD and the need for some form of renal replacement therapy unless 

new ways of treating CKD are found. 

The Centers for Medicare and Medicaid Services (CMS) believes that in general, 

treatment decisions for ESRD patients are best left to the clinical judgment of treating physicians. The CMS is charged with determining appropriate coverage and payment for services to Medicare beneficiaries. In recent years, CMS has worked hard 

to ensure its coverage and payment policies promote high quality care, which is in 

the best interests of the beneficiaries we serve as well as the long-term financial 

health of the Medicare program. 

Quality and safety initiatives have been at the center of the Administration’s 

health care agenda for more than five years. We have made significant strides in 

promoting greater transparency in the health care industry, giving Medicare beneficiaries and all consumers unprecedented access to information that supports meaningful choices. Whether considering dialysis facilities, hospital services, skilled nursing providers or prescription drug benefits, people with Medicare can find the information they need to identify the best quality and value among available options. 

The CMS has devoted significant resources to ESRD quality and patient safety 

issues, with a comprehensive Quality Roadmap, the ESRD Quality Initiative, and 

ongoing research to explore ESRD payment reforms, among other efforts. 

The Congress also has been an important partner in these achievements. Efforts 

such as the Care Management for High Cost Beneficiaries Demonstration create a 

platform for research to improve quality care and reduce the costs of caring for feefor-service beneficiaries with one or more chronic diseases, who generally incur high 

Medicare costs. CMS has selected six sites under the demonstration, including one 

in New York state that focuses on beneficiaries with chronic kidney disease. Programs under the demonstration are testing ways to increase adherence to evidencebased care, reduce unnecessary hospital stays and emergency room visits, and help 

participants avoid costly and debilitating complications. 

The CMS Quality Roadmap & Medicare’s ESRD Quality Agenda 

In 2005, CMS issued the ‘‘CMS Quality Roadmap,’’ to promote the right care for 

every person, every time. The Quality Roadmap builds on the Institute of Medicine’s 

six aims for healthcare: Patient-centered; Safe; Accessible; Effective; Efficient; and 

Equitable. 

The CMS Quality Roadmap presents five strategies to achieve its vision: 

• Partnering and collaborating with other healthcare stakeholders; 

• Collecting and publicly reporting data that measures the quality, efficiency and 

cost of healthcare; 

• Striving to reform healthcare reimbursement systems to promote quality and efficiency, while avoiding unnecessary costs and complications; 

• Promoting the use and availability of clinical information for providers and 

Medicare beneficiaries, particularly through the adoption of health information 

technology, to assist them in providing and receiving high-quality and efficient 

care; and, 

• Promoting the use of evidence-based healthcare information, in clinical, coverage, and payment systems, ensuring that the latest treatments, medical devices and services are available to clinicians and their patients, while avoiding 

inappropriate or wasteful use of those treatments. 

Significant work and leadership in clinical quality initiatives also preceded the 

adoption of the CMS Quality Roadmap. In 2001, the Administration launched the 

Medicare Quality Initiative in pursuit of quality health care through accountability 

and public disclosure not just for Medicare patients, but for all Americans. Following the implementation of specific initiatives focused on nursing homes, home 

health, and hospitals, CMS announced the ESRD Quality Initiative in 2004. 

Specific objectives of the ESRD Quality Initiative, which focuses on dialysis facilities, reflect an array of goals to stimulate and support improvement in the quality 

of dialysis care: 

• Refining and standardizing dialysis care measures, ESRD data definitions, and 

data transmission to support the needs of Medicare’s ESRD program; 

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1 Anemia severity is monitored by measuring the hematocrit with a simple blood test that reveals the proportion of red blood cells in whole blood. The hematocrit result is expressed as a 

percentage. Alternatively, the hemoglobin concentration in whole blood may be used to monitor 

anemia. The numeric value of the hematocrit is generally three times the value of the hemoglobin measured simultaneously, though they are expressed using different units. Thus, for example, a hematocrit of 30 percent corresponds to a hemoglobin concentration of 10 g/dl. 

• Empowering patients and consumers by providing access to facility service and 

quality information; 

• Providing quality improvement support to dialysis providers; 

• Assuring compliance with conditions of coverage; and, 

• Building strategic partnerships with patients, providers, professionals, and 

other stakeholders. 

While all efforts under the ESRD Quality Initiative are significant, the Fistula 

First Breakthrough Initiative is particularly noteworthy. Under the initiative, facilities submit data to Medicare contractors charged with quality review of dialysis facilities (‘‘ESRD Network Organizations’’) to facilitate a more coordinated approach 

to care. The initiative has led to a significant increase in the use of AV Fistulas 

in treating dialysis patients—a measure associated with considerable reductions in 

avoidable hospitalization and death for ESRD beneficiaries. 

The ESRD Quality Initiative also supports the annual collection of Clinical Performance Measures (CPMs) for a random sample of dialysis patients nationwide. 

With these measures, CMS can identify and track opportunities for improvement in 

areas such as the adequacy of hemodialysis and peritoneal dialysis, anemia management, and vascular access management. The Quality Initiative also includes the Dialysis Facility Compare resource on www.medicare.gov, which contains quality information for all Medicare approved dialysis facilities in the United States. Patients 

and consumers are able to search and compare facilities on this site and choose a 

dialysis facility that best meets their needs. 

In addition to various efforts under the ESRD Quality Initiative, CMS partners 

with states to conduct regulation and enforcement activities to ensure that dialysis 

facilities comply with federal safety and quality standards. Under this survey and 

certification program, CMS establishes standards for safe and effective operation of 

dialysis facilities; develops guidelines and procedures; provides training for surveyors; and coordinates state activities. Currently, dialysis facilities are surveyed 

roughly every 36 months. State survey agencies also will investigate specific complaints on an as needed basis, outside of the regular survey cycle. 

Finally, nearly all patients with ESRD suffer from debilitating anemia. Much of 

this anemia can be managed through drug therapy. CMS has had a quality initiative for years to encourage appropriate management of anemia in ESRD patients, 

including an active monitoring policy for patients being treated with erythropoietin. 

All of these examples demonstrate a commitment by the Administration and CMS 

to ensuring and improving high quality care for the ESRD population. We have 

made significant strides over the last 5 years, and will continue to work to increase 

the availability of consistent, standardized core data elements that promote greater 

transparency and better care outcomes for ESRD patients. 

Anti-Anemia Agents Used in ESRD Patients 

Two prescription drugs commonly are used for anemia management in patients 

with ESRD who are dialyzed in renal facilities: epoetin alfa (Epogen) and 

darbepoetin alfa (Aranesp). These products rely on erythropoietin to help control 

anemia. To promote appropriate usage, CMS has in place a monitoring policy that 

considers both hematocrit levels and erythropoietin dosage levels.1

Current kidney disease clinical guidelines, determined through national consensus 

processes by multiple ESRD experts and stakeholders, call for maintaining the hematocrit level of patients receiving erythropoietin within a narrow target range of 33– 

36 percent. Because many factors such as nutritional status, infection, and bleeding 

may cause the hematocrit to fluctuate, it is not easy to manage patients to this narrow range. Some patients might be above (or below) the target in one month, for 

example, but below (or above) it in others. If one superimposes frequent and significant changes in doses of anemia management drugs on these existing fluctuations, 

patient hematocrit fluctuations can become even more variable and difficult to interpret and manage, particularly within the narrow target range of 33–36 percent. 

Promoting Appropriate Payment through Hematocrit Monitoring 

ESRD treatment facilities submit claims to CMS monthly for erythropoietin, 

which is billed separately from other dialysis services. The claim form includes 

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2The FDA labeling for Epogen and Aranesp notes that as the hematocrit approaches a 

reading of 36, the dose of the drug should be reduced by 25 percent. 

fields where the facility must report the beneficiary’s hematocrit test result. Commonly, a dialysis patient’s hematocrit level is tested many times during a month. 

CMS is committed to establishing and maintaining policies in all areas of the 

Medicare program that protect beneficiaries, promote efficient and appropriate use 

of medical interventions, and enable providers to render excellent care. The newly 

revised CMS monitoring policy for erythropoietin used in ESRD patients instructs 

providers on how to submit claims, and instructs CMS contractors on how to adjudicate the claim. Under the policy, Medicare expects a 25 percent reduction in the 

dosage of erythropoietin for patients whose hematocrit exceeds 39.0. If the dosage 

is not reduced, payment is made for the drugs as if the reduction occurred. 

The new monitoring policy is not a national coverage determination, and thus it 

is not a determination of the reasonableness and necessity of using an anti-anemia 

agent to maintain hematocrit levels above 36 percent. The monitoring policy clearly 

articulates that providers should adhere to the FDA label instructions for erythropoietin, i.e, seeking to achieve a hematocrit of 30–36 percent. The instruction to carriers to initiate monitoring when the hematocrit reaches 39 percent is not a new 

hematocrit range policy, but instead establishes a marker of the point at which payment must be reduced because the reported hematocrit was not maintained at levels 

consistent with FDA labeling. 

The value 39 percent is not a therapeutic hematocrit target, which CMS 

believes is appropriately left to a treating physicians’ clinical judgment. 

Rather, it is the target to initiate reduction in payment, a function appropriate to the mission of CMS. To be clear, it recognizes the difficulty in the clinical setting of maintaining the hematocrit in the narrow clinical guideline range of 

33–36 percent, and therefore does not immediately cut off payment for a single hematocrit value that fluctuates above this narrow range. However, it does set in motion 

a policy that will reduce reimbursement if the hematocrit level remains above 39 

and the provider does not reduce erythropoietin dosage as FDA labeling and national clinical guidelines indicate.2

A provider submitting a claim for erythropoietin in an ESRD patient with a hematocrit above 39 may inform CMS that a dose reduction has occurred, despite the 

continued high hematocrit, using a modifier on the claim form. If the provider has 

not reduced the dose or informed CMS that a dose reduction has occurred, however, 

Medicare’s payment systems will apply a 25 percent reduction in payment. The provider is given appropriate notice of the payment reduction and may appeal the determination. 

Promoting Ptient Savety through Hematocrit Monitoring 

Consistent with the approach taken to advance all of its quality and transparency 

initiatives, CMS worked closely with the ESRD community and other stakeholders 

in developing the revised hematocrit monitoring policy. CMS announced its intent 

to develop the new policy in fall 2003, along with a solicitation of scientific literature 

from the industry. In the interest of promoting quality and efficiency in the care 

of ESRD patients, CMS was determined to develop a permanent, evidence-based policy for erythropoietin payment and hematocrit monitoring. 

Scientific literature submitted to CMS demonstrated that patients with hematocrit levels within the target range had better health outcomes than those with 

hematocrits below the target level. The data also demonstrated that there is considerable natural variability in individual patient hematocrit levels, making it difficult 

to consistently maintain a hematocrit within the narrow range of 33–36 percent. 

After analyzing the literature CMS developed a proposed policy, published in July 

2004. The CMS reviewed available scientific evidence along with a large volume of 

public comments from the stakeholder community in developing the final policy. The 

final policy issued in November 2005 reflected a careful balance to ensure proper 

patient care while allowing appropriate payment for services rendered by treating 

physicians. In attempting to implement this policy, CMS became aware that there 

were process issues in collecting the claims-based information necessary to adjudicate these claims and, after working with stakeholders and CMS contractors, a revised erythropoietin monitoring policy was issued in April, 2006. 

Appropriate interpretation of the evidence for erythropoietin treatment of anemia 

in the ESRD population is disputed within the stakeholder community. Several reasons for this dispute are not readily amenable to correction by CMS. In addition, 

many clinical trials have methodological restrictions that limit the degree to which 

their findings can be generalized among the Medicare population. Other published 

reports of clinical trials do not necessarily present all of the available data due to 

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limitations of space and other factors. It is possible that some of the outstanding 

questions could be addressed in part by analyzing collected but unpublished data. 

CMS believes that, in general, medical decisions are best made by the treating 

physician. The human physiologic response to erythropoietin is not immediate, and 

the effect of a given dosage on the hematocrit or hemoglobin of a given individual 

can vary widely. This variation also is reflected in the wide and unpredictable variation in the dosage needed to achieve and maintain hematocrit within the target 

range, although other factors also contribute to variation in dosage. Current accepted medical practice may also include the use of drugs for indications that are not 

covered by an FDA label, but that are supported by clinical evidence in peer reviewed medical literature. Medicare may provide coverage for off-label uses of drugs 

and biologics when those items are considered reasonable and necessary. 

Mainstream press has recently focused on two trials published in the New England Journal of Medicine (NEJM) regarding erythropoietin use in chronic kidney 

disease (CKD) patients. However, the study populations for these trials do not necessarily reflect the Medicare ESRD patient population. Both studies addressthe optimal target level for hemoglobin in CKD patients who do not yet need dialysis. It 

is possible, if not probable, that many of the study subjects were not Medicare beneficiaries because they were too young to qualify for Medicare and were not disabled. 

Only patients with ESRD, who require dialysis or transplant, are eligible for Medicare regardless of age or disability; other patients with CKD are not Medicare beneficiaries (unless their age or a disability qualifies them). This distinction is important. 

Anemia management for patients with ESRD cannot be assumed to be the same 

for patients, often younger, with CKD (who do not yet require dialysis). The NEJM 

study authors did not generalize their findings to the ESRD population. Patients receiving dialysis are exposed to clinical situations that patients with CKD not requiring dialysis are not exposed to, including: artificial kidney membrane exposure; 

large fluid shifts during dialysis; anti-coagulation received while on dialysis; different medications or other treatments. Finally, the NEJM studies looked at patients who were intentionally maintained at high hematocrit levels (the clinical study, research goal), as opposed to the typical ESRD patient who may 

fluctuate periodically above a hematocrit of 39 percent, but is not maintained at that level (the clinical practice situation). 

In spite of the NEJM studies’ focus on patients with CKD, not ESRD, CMS considers the findings significant. Any scientific study published in a peer-reviewed 

journal such as the NEJM will be subject to international scrutiny and examination. 

Experts review the study design, methodology, results and conclusions. CMS will be 

participating in that scrutiny, which may include the need to design and implement 

further randomized clinical trials. 

CMS is committed to establishing and maintaining policies in all areas of the 

Medicare program that protect beneficiaries, promote efficient and appropriate use 

of medical interventions, and enable providers to render excellent care. In the case 

of ESRD, and specifically the monitoring policy for anti-anemia therapies, CMS is 

exploring a number of approaches to collecting additional data. The current policy 

was developed after carefully analyzing and weighing a significant body of data and 

clinical evidence from a variety of sources; additionally, the policy was reviewed and 

reassessed 6 months after its initial publication. CMS is just now beginning to obtain sufficient claims data to attempt to assess whether the monitoring policy is 

achieving its stated goals: encouraging providers to try to maintain hematocrits in 

the range consistent with FDA labeling and national clinical guidelines, while not 

paying for unjustified dosages that maintain patients outside that range. Additional 

data sources will allow CMS to continue this pattern of vigilant, ongoing assessment 

of the monitoring policy. Further data also could support the possibility of an alternative CMS policy for anemia management and treatment. 

The current monitoring policy relies on data submitted on the claims form. This 

effort could be expanded; in fact, CMS already is pursuing a number of enhancements. Currently, claims data do not provide either the route of administration for 

erythropoietin or the size of individual doses. CMS is implementing changes that 

will introduce a 100 unit code to capture dosing information with greater precision 

and, in conjunction with line item billing, will permit tracking of individually prescribed doses versus an aggregate monthly total for facilities. 

In addition, CMS is implementing requirements to include the route of administration on claims for erythropoietin administered to ESRD beneficiaries (not chronic 

kidney disease patients). Existing CMS survey data suggest that subcutaneous administration is employed in only 7 percent of hemodialysis patients, differs by geographic location (more likely in the Midwest and West), and differs by dialysis facility ownership. Inasmuch as studies have suggested that subcutaneous may be a precnoel on PRODPC60 with HEARING

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ferred route of administration, potentially requiring lower levels of erythropoietin to 

achieve the desired therapeutic effect, data of this nature is critical to continuous 

evaluation of the hematocrit monitoring policy. 

Using the information currently collected, CMS also is able to quantify monthly 

utilization of erythropoietin, though the accuracy of these data is limited to what 

providers report on the claims—typically including quantities of the drug that have 

been opened but not necessarily provided to any patient (referred to as wastage). 

These and other limitations result in current claims data providing only a limited 

picture of erythropoietin utilization and anemia management. Additional data would 

be helpful. 

One possible approach is to collect data—such as the dosage of erythropoietin actually administered or additional hemoglobin / hematocrit measurements—through 

clinical trials. Such an approach is a challenge to implement, however. The CMS’ 

authority to condition Medicare coverage on participation in clinical trials and collection of data is could be constrained by the Health Insurance Portability and Accountability Act, the Privacy Act, and other concerns. 

Another approach might be to create registries of data submitted by hospitals and 

other facilities. Such registries could be a robust data collection mechanism, pursuing elements beyond what can be collected on the claim form. Before such an approach could be adopted, however, CMS must assess potential restrictions to requiring hospitals and facilities to report information to a registry. Provider burden also 

would be an important consideration. 

CMS could consider requiring additional Clinical Performance Measures through 

the existing Quality Initiative. The CPM project collects clinical information on dialysis patients in order to measure and track quality of care received by patients 

in dialysis facilities. However, CPMs currently are collected on just a 5-percent sample of dialysis patients nationwide. It will take a number of years before CPMs can 

be collected more broadly—ideally for all dialysis patients—due to limitations in facilities’ and with CMS’ own data collection systems. 

Bundled Payment 

In addition to significant quality efforts, CMS is committed to efficient and appropriate payment for all Medicare providers. In the context of ESRD care, many have 

urged a shift from the current model of paying independently for dialysis treatments 

and separately billable drugs, to a system of bundled payment. CMS is generally 

supportive of such reforms, and has devoted resources to research and development 

of a system that encourages high quality and efficient care through mechanisms 

such as value-based purchasing. 

The CMS believes that a bundled payment system should promote efficiency and 

clinical flexibility for ESRD facilities. The system should guard against incentives 

to under-treat patients or to ‘‘cherry-pick’’ patients in order to maximize facility 

profits. Accomplishing these goals will require (1) research to support the development of an adequate case mix adjustment for a fully bundled system, and (2) mechanisms to ensure beneficiary protections and promote quality care. 

The CMS has made significant accomplishments towards implementing a basic 

case mix adjusted composite rate system, as required by the Medicare Modernization Act of 2003 (MMA). Following the MMA’s enactment, CMS funded research activities to develop new case-mix adjustments, which were implemented in April 

2005. Since then, CMS has pursued several research approaches that could be used 

in a demonstration of a bundled PPS for ESRD facilities. 

At this point, CMS is continuing its research on approaches that achieve our goals 

related to quality and payment accuracy. Development of a payment model that addresses the substantial variation in the dosage of erythropoietin has been a key area 

of this research. We continue to devote a considerable amount of time and resources 

to developing an appropriate ESRD payment system, including further research on 

targeted case-mix adjusters and quality incentives. We expect to detail the results 

of this work in the report to Congress required by section 623 of the MMA and move 

forward with a demonstration to further test these approaches, as the law requires. 

We expect these efforts, coupled with prior research, will provide a well-informed 

basis for comprehensive ESRD payment reform in the future. 

Conclusion 

This Administration has made significant strides in promoting and ensuring quality care for ESRD patients. From the CMS Quality Roadmap and efforts under the 

ESRD Quality Initiative like Fistula First, to selecting a Chronic Kidney Disease— 

focused site under the Care Management for High Cost Beneficiaries Demonstration, to ongoing research in support of comprehensive ESRD payment reform, CMS 

is helping to improve quality and efficiency in the care of ESRD patients. The sigcnoel on PRODPC60 with HEARING

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nificant strides made over the last 5 years have laid important groundwork for further improvement. The CMS will continue to build on these efforts, and looks forward to further work with the Congress and the ESRD community to achieve our 

common goals. 

f 

Ms. NORWALK. Before we start, if I might ask my colleague, the 

Chief Medical Officer of CMS, who is a nephrologist, Barry 

Straube, to sit with me, that would be great. 

Chairman THOMAS. Welcome, Dr. Straube. 

You indicated—and all of us, obviously, have been interested in 

this focus at the continuing increase percentage, now to 39; and 

your argument, as I heard it, was that this was done in an attempt 

to provide a payment regulation structure. Because, obviously, a 

physician should be the one to determine that level. 

I guess the difficulty I have in responding to that is that, notwithstanding the FDA label position, the manufacturer itself responding to concerns about that, the studies that we now have, 

which certainly any scientific method needs to be duplicated, followed up, examined, CMS continues to increase the percentage; 

and the argument for it, as I hear from you, is that it is a payment 

construction. 

Of course, we understand your need to create systems that assist 

you in making payments. In fact, the whole discussion of bundling 

is to try to change the payment system. I guess, based upon the 

studies that we have seen, which certainly have to be validated and 

duplicated, this is something that probably should not be looked at 

as a payment question, absent pretty clear evidence of what is happening on overdosage, which if you had kept the policy at, say, the 

FDA label which it was at one time of 33 percent we would not be 

having those consequences. 

So, it is difficult for me to listen to a justification for a level driven by a payment policy, when all of the evidence I have heard is 

focusing on the medical. I understand you are not supposed to 

make the medical decision. But if that is the case, why would you 

then go ahead and change the FDA labeling? For payment purposes? 

Ms. NORWALK. I think there are a couple of different points I 

would make, Mr. Chairman. 

The first is that the change in monitoring policy over this past 

year was critically important because our prior policy was not 

doing an effective job in reducing the dosage of Epo. At 37.5 and 

a 3-month rolling average, it was phenomenally difficult for our 

carriers to implement and actually go after those providers who 

were actually overdosing on Epo. It was difficult for the providers 

to follow that rolling average. 

So, we felt it important, in order to keep the dosage down, to readjust our policies so that carriers could follow as well as the providers; and I can—I will talk in a second about how exactly that 

policy works. 

But I would like to point out a couple of things in the FDA label, 

because I think it is important for this discussion as we focus on 

the clinical need. Of course, understanding that this is something 

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that we have asked providers to follow, there are a number of 

things. 

One, the label talks about the idea that sufficient time should be 

allowed to determine a patient’s responsiveness to a dosage of Epo 

before adjusting the dose. In fact, the label talks about an interval 

of 2 to 6 weeks that may occur between the time of dose adjustment and a significant change in hematocrit levels. That is important because our payment systems are on a monthly basis. 

Since it may take 2 to 6 weeks—in fact, at the longer weeks, 6 

weeks—for that to adjust, we did not want to have a payment system that penalized a provider who was actually doing the right 

thing, because the patient, for whatever reason, has his own physiological change to the drug which had not yet gone into effect. 

Moreover, the label talks about dose adjustment as saying that 

if the hematocrit level exceeds 40 percent, the dose of Epo should 

be withheld until the hematocrit falls to 36 percent. So, one thing 

that the label does do in terms of a number is not actually 39, 

which is our level for payment changes, but is in fact 40 before the 

dose would be withheld. 

Chairman THOMAS. I understand that. That gets back, I guess, 

to an earlier question that still perplexes a number of us. 

In dealing with the payment concerns in allowing for an adequate leeway for the medical decisions, was there any discussion at 

all about trying to go public and push the idea that perhaps no update for this particular area of Medicare services, as opposed to 

skilled nursing, as opposed to any of the others, would be one of 

the fundamental changes that you could make and that income 

from drug usage which is used to try to augment the fact that 

there is no update could easily be changed, which would be payment questions—instead of dealing with the dosage on payment 

questions, which continues the perverse aspect of a monopoly drug 

being overused to help compensate for the cost structure in what 

you are monitoring says is important for payment purposes? 

Ms. NORWALK. I think—— 

Chairman THOMAS. In other words, you created a trough—not 

you, CMS—and CMS is staying in this trough in trying to control 

the payment structure. When all you had to do is take a step back 

and say they are not getting an update. They should be updated 

regularly like everyone else, and it should not be a monopoly drug. 

For example, I would be interested in asking a question along 

this line, and that is that what we did with the part B drugs in 

MMA was to require a single rate based on sales across all settings. So my question then, going to this issue, would be: Why does 

Medicare and the beneficiaries pay more for Epogen Alpha per 

1,000 units to treat anemia in a dialysis center, compared to the 

same 1,000 units administered to cancer patients in the physician 

office setting? 

Clearly, part of Dr. Singh’s and other testimony is that there is 

a whole lot more of an analogous relationship than it appears to 

be and that that goes to the payment question again on a monopoly 

structure. Why are you paying two different rates for similar usages? 

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Ms. NORWALK. One of the things that the MMA does under section 303(c) is require that single-source drugs be paid by ASP plus 

6. That is in the physician office setting. 

The interesting piece here is that when we looked at the OIG 

study—and I think the GAO has a table of this in its report—that 

if you look at the OIG study, the OIG study details what the acquisition costs were for Epo in 2005. The ASP plus 6 percent is slightly lower, depending on the quarter, relative to the acquisition cost. 

For CMS to update—actually, we found this actually going down. 

So, in terms of whether there was an update, I am not sure that 

an update was necessary, that ASP plus 6 has actually come in 

slightly lower than the OIG’s. 

Chairman THOMAS. First of all, that is an arbitrary structure 

in dealing with a noncompetitive drug, for which I thought was inadequate at the time we wrote the bill. That is okay. My question 

is simply why, in two different settings, for similar uses, identical 

drugs are paid at different prices? 

Ms. NORWALK. Well, they are both paid at ASP plus 6 percent. 

In terms of why is really an issue between the companies and their 

marketing side. 

Chairman THOMAS. One arena is a competitive one and the 

other is not. Would that be one of the reasons? 

Ms. NORWALK. It may well be that ASP plus 6 in the nonESRD market is competitive and may reduce the rate. But at the 

end of the day for this, to solve this problem, I agree with the GAO 

and, clearly, members of this Committee who think that a bundled 

payment, including everything, including currently separately payable drugs, makes the most sense, provided that we can get it right 

to provide the quality for beneficiaries and appropriately risk adjusted. 

Chairman THOMAS. Appreciate that position. 

I do believe that I do want to communicate, notwithstanding the 

fact that you are new on the job, to those who have been dealing 

with this decisionmaking and who have been less than timely in 

responding to letters that Congress has written that you have had 

since 2003. You are moving forward on it. I believe the Congress 

will move if you do not. I am urging that you do. 

Does the gentlewoman from Connecticut have any questions. 

Ms. JOHNSON OF CONNECTICUT. Let me just inquire a little 

bit more about the demonstration project that you are working on 

and the apparent difficulty of establishing an appropriate case mix 

adjuster. Could you talk about that a little bit? 

Then, also, could you talk about the issues raised by the preceding panel that implied that if you titrate up you can get to stability—I do not want to paraphrase them too flippantly, but it 

sounded like easily and reliably. If that is the case, does Medicare 

reimbursement policy encourage titrating up and does Medicare reimbursement policy take any position in regard to what is apparently a more cost-effective delivery system that is widely used of 

injection? 

Ms. NORWALK. To your first question, Mrs. Johnson, in terms 

of the demo, one of the things that we have been struggling with 

internally with our report to Congress in putting this together, we 

have had an expanded bundle demo where we are working with 

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members of a FACA Committee that represents patient groups, clinicians and other stakeholders. 

But we have struggled with the ability to predict resource utilization, which in a sense gets to some of the other questions that you 

are asking. Since that is the basis of a prospective payment system, 

we have taken longer than we would like to take. But given that 

93 percent of this population is covered by Medicare, it is so critical 

that we get it right. For that reason and because so many of these 

patients are disproportionately either African American, Hispanic 

or American Indian, this is critical to be accurate, to get it as close 

to right as possible before it is implemented. 

It is also important because of the small size of some of the facilities. There are a couple of very big chains here, but not all of them 

are big. Consequently, we want to ensure that we do not put the 

small companies out of business with our payment policies. 

I think that the FACA Committee will be meeting again early 

next year; and, hopefully, we will be moving forward. As we get the 

research back, we will be working on our demonstration project at 

the same time we are writing our report to Congress as to not 

waste any time with either of those so we can get them done as 

quickly as possible to you. 

In terms of titration—and one of the things I will ask, if it is 

okay, my colleague, Dr. Straube, to speak on the more clinical 

issues. But in terms of titration, generally one of things that the 

label talks about is the variability among patients. In the label it 

talks about one of the largest clinical trials, that approximately 65 

percent of the patients required doses of 100 units or less to maintain their hematocrit levels at approximately 35 percent, almost 10 

percent of patients required a dose of 25 units or less, and approximately 10 percent required a dose of more than 200 units to maintain their hematocrit at this level. So, there is a pretty significant 

amount of variability there. 

You also asked about subcutaneous administration or—something that I was talking about in my opening statement—about the 

use of fistulas, and the fistula first policy. Very, very important. 

We would like to see more patients have access to this. We have 

been promoting that policy. 

I would anticipate under a bundled payment system that we 

would see more use of this use of fistulas rather than being as a 

apart of the whole dialysis treatment. It may be better for patients, 

and I would anticipate that it would also reduce the amount of Epo 

that needs to be administered. So, that is why we have been supporting it. 

Finally, if I may, Mrs. Johnson, I think that—I do not know if 

we have got copies of this, but one of things when we are talking 

about the payment policy here that we in no way at CMS would 

like patients to stay at a hematocrit level of 39. That is not our policy. But what happens is these patients may be at 39—the hematocrit level may be at 39 for between 2 and 6 weeks; and then they 

come down to a more reasonable range where we like to see it because of dosing changes, for example. 

Over time—this is something in the American Journal of Kidney 

Disease—nearly 30 percent of patients in the first quarter of the 

year 2000 were at a hematocrit level that was over 12. But by the 

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57 

end of the year only 5 percent from that initial group. So, the numbers actually decreased very significantly. So, that, over time, the 

number of patients who were persistently above 12 in hemoglobin 

levels had come down significantly. 

You simply have a great deal of variability from one quarter to 

the next. That is something that we thought was important that 

our policy take into account. 

Ms. JOHNSON OF CONNECTICUT. That issue of variability 

that you have just described, does that—in other words, if you are 

aiming for—if your policy is 33 to 36 percent, any bundled—any 

policy has to take into account that you can go above that and 

below that and not we lower quality treatment. Am I understanding you correctly? 

Ms. NORWALK. That is exactly the point that we were concerned about. 

One of the things that initially this Committee brought to CMS’s 

or then HCFA’s attention in the late nineties was in fact underdosing and that we have a policy that does not promote underdosing because we cut off payment too soon. 

Likewise, I appreciate that there is a concern about overdosing, 

both for clinical reasons and I want to be sure that we are walking 

that very narrow line so that physicians can follow the label and 

do what is best for the patients and not be adversely impacted, 

that the patient not be adversely impacted by our payment requirements, something that is reasonable and necessary versus what 

might be safe and efficacious as the FDA determines. 

Dr. STRAUBE. Mrs. Johnson, I think—just to reiterate a few of 

the points that Leslie made, and you have asked some important 

questions here. I think when I look back historically—and I have 

taken care of many patients with eopetin myself as a 

nephrologist—the first focus back in the late nineties was the fact 

that 42 percent of patients had a hemoglobin of 11 grams per deciliter or greater. So, there was a preponderance of patients who 

were very low, and research studies at that time clearly showed an 

association with increased morbidity and increased mortality for 

people under a hemoglobin of 11. 

So, the trend of everybody involved with this, including Congress, 

recommended CMS at the time increase its hematocrit; and the 90- 

day rolling average monitoring policy that was put into effect then 

was to get people—and has gone from 42 percent to 82 percent in 

2005 now—— 

Ms. JOHNSON OF CONNECTICUT. Eighty-two percent complying? 

Dr. STRAUBE [continuing]. that are over 11 grams per deciliter. 

The slide that Leslie has distributed to the Committee is very, 

very important. Because people who are correctly reporting that— 

at any given point in time there may be 30 or more percent of people who exceed the 12 grams per deciliter of the FDA label. 

If you look at those patients who consistently stay above that 

label, as opposed to occasionally going above it, it does come down 

to only 5 percent. 

Ms. JOHNSON OF CONNECTICUT. In other words, you do not 

want your payment policy to penalize some variation but just to penalize staying at high levels? 

cnoel on PRODPC60 with HEARING

58 

Dr. STRAUBE. Correct. Those patients who consistently exceed 

that level. Because most patients do have some variability; some 

patients considerable variability. It is in contrast to perhaps some 

of the comments in the first panel. I believe it is very difficult to 

maintain patients particularly in that narrow range of 33 to 36 

percent hematocrit or 11 to 12 grams per deciliter hemoglobin. 

Ms. JOHNSON OF CONNECTICUT. So, you are saying it is 

very difficult to maintain them. Because I tried to bring that out. 

How easy is stability? They basically all said it is easy. 

Dr. STRAUBE. I think it is more easy in the chronic kidney disease patients who have less factors going on compared to dialysis 

patients. But that narrower range, 11 to 12, is difficult; and some 

patients just naturally will go in and out without actually doing 

anything. 

When you are changing doses of erythropoietin, when you are 

being exposed to an artificial kidney membrane in a dialysis machine, when they have other illnesses going on with chronic inflammation and acute inflammation affecting the possible dose of 

Epogen, it is not easy. 

Ms. JOHNSON OF CONNECTICUT. So, different categories of 

patients may need to be looked at slightly differently, or at least 

your payment system wants to be able to take into account case 

mix? 

Dr. STRAUBE. Yes, indeed. 

Ms. JOHNSON OF CONNECTICUT. Thank you. Thank you for 

these charts. 

Mr. STARK. Thank you, Mr. Chairman. 

Welcome to the Committee, Ms. Norwalk. 

Ms. NORWALK. Thank you. 

Mr. STARK. I just wanted to know, is there any—I do not know 

what a valid clinical study would be, but is there a valid clinical 

study—I will use that word—that provides clinical justification for 

not reducing the dosage until it gets to 39? 

Ms. NORWALK. I think our point—— 

Mr. STARK. Is there any study that would support that that you 

know of? 

Ms. NORWALK. To not reducing it? 

Dr. STRAUBE. Mr. Stark, I do not believe for a general population there probably is such a study. I would agree. I think for individual patients there might be indications for not reducing it. 

Mr. STARK. But you do not know of a clinical study? 

Dr. STRAUBE. Not in terms of a general population, no. 

Mr. STARK. Ms. Norwalk, it is my understanding that CMS created something called the Epo Monitoring Policy Group, right? 

Ms. NORWALK. Yes. 

Mr. STARK. They were supposed to advise CMS on policies dealing with Epo, right? Now what troubles me is that of the 24 members—I am looking at the list here of maybe 22—18 of them disclosed financial associations with Amgen or Johnson & Johnson. 

Would not that, in fact, indicate that there might be some prejudice 

on the part of the people that you picked to advise you on this policy? 

Ms. NORWALK. Either that or they happen to know a fair 

amount about the topic. At the end of the day—— 

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Mr. STARK. I know they did. But let’s talk about DaVita, Incorporated and AAMA and Gambro Health Care. They are also putting a lot of our taxpayers’ money in their pockets. When you got 

two-thirds of your supposedly independent advisors—if I may use 

term loosely—on the take from the people that we are paying $2 

billion a year to, does not that raise the issue that maybe you are 

not getting the straight skinny? 

Ms. NORWALK. I think it is important—and one of the reasons 

you have seen our monitoring policy, that it be put out publicly, it 

is important to get comment from across the board. 

Mr. STARK. Oh, come on. 

Ms. NORWALK. Whether it is that group or whether there is another group, and at the end of the day—— 

Mr. STARK. You and I are not doctors, but you are a very good 

lawyer. You would tear these guys apart on the witness stand in 

2 seconds, if you found out how much money they were getting 

from Amgen. Look, you got the American Kidney Fund. Amgen 

funds their clinical fellowship program. 

You have got DaVita—that is self-explanatory; the Kidney Care 

Partners, a lobbying group for all of the dialysis guys; the National 

Kidney Foundation; 19—almost $20 million in corporate donations 

from the platinum friends, Amgen, DaVita. 

Ms. NORWALK. It is clear that you—how you feel about how 

much we pay them. 

Mr. STARK. It is a cozy club, isn’t it? 

Ms. NORWALK. That is one of the reasons why it is so important that our Chief Medical Officer is a nephrologist. Barry is not 

allowed to be paid by any of these groups. 

Mr. STARK. I understand. But he is getting advice from these 

guys. It just seems to me that the time has come to understand, 

you know, these guys are not Bechtel in Iraq, and we should be 

getting reasonable and decent advice. 

It just seems to me that it is difficult to support, when you 

empanel this group, knowing that most of them, your organization—I am sure you had nothing to do with selecting them, but it 

does lead us to become somewhat suspicious that we are not—— 

Now I might say there is probably no nephrologist in the United 

States—I will give Dr. Singh a chance to get out of this—that has 

not received something from Amgen, a golf ball or a dinner or 

something over time. So, it might be very hard—— 

Ms. NORWALK. Absolutely. 

Mr. STARK [continuing]. to find. Billy Bud would have been a 

good three-act play if he had not jumped in the first act. But, nonetheless, this does seem rather suspect, overloaded with lobbyists 

and people who stand to benefit financially, tremendously, just to 

be selected. 

Chairman THOMAS. I do understand the normal reaction would 

be dollars paid to entities as a link that might occur. 

I think you also have to take into consideration the fact that you 

are dealing with a monopoly drug; and, notwithstanding it is a monopoly, the Government, unwilling to create a surrogate monitor 

for those prices and the fact that their business is focused solely 

on use of that drug and the ability to put pressure on the availability, the cost or the linkage of that drug, may have as much to 

cnoel on PRODPC60 with HEARING

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do with the positions that people take than the dollar amounts 

paid—— 

That is just the other side of the coin, on allowing a monopoly 

not only in the private sector but in terms of those in Government 

positions making decisions. 

I thank you for yielding. 

Mr. STARK. I hope we will have a chance to explore this further 

in the months ahead; and we will have ask Chairman Thomas if 

he will agree, on a pro bono basis, to continue advising us for all 

of the work that he has done on this. Maybe we can come to a conclusion which would have us, I think, and what I think my principal concern is is that CMS is the only group here that we have 

heard from today—and this is the troubling part—that has not 

erred on the side of caution. 

I do not buy—and you are the only one who suggests the lower 

limits are a danger. Dr. Singh says it is much less of a danger than 

going over. So, that I would hope that that could be the principal 

change in policy as we try and revise these payment standards. 

Ms. NORWALK. Well, I would be interested in hearing Dr. 

Straube talk a little bit about the underdosing of this, which clearly was a problem once upon a time, as you wrote to us about it. 

It may well be that the literature has changed since then, but in 

terms of the side of caution I think that we are cautious. 

We do require that providers use the FDA label as a policy. We 

tell our contractors that they can, in fact, perform medical review 

at lower levels than 39. I think we are working with what is reasonable and necessary with a patient population that even the FDA 

label admits to having variability and want to ensure that those 

patients who for whatever reason in a particular month or 6-week 

period may find their hematocrit level above 39 and the doctor does 

the right thing in reducing the Epo dosage, not wanting to penalize 

that doctor. 

On the flip side of that, it is not reasonable and necessary to 

have a patient persistently at that hematocrit level of 39; and, consequently, that is why we are taking the payment reductions there. 

I just want to be clear that our policy is: Follow the FDA label. 

Now I appreciate we may have—this CHOIR study is a new 

study. It is something that we would like to take into account, like 

to look at the data there. In particular, I would be interested in reviewing the data around the 11.3 population, because they, too, are 

going to have a bell curve, where they will have people on the bell 

curve that are above a certain number—above 12, I would suspect—and perhaps maybe at any point in time a number of patients that may be above 13 or 39, and not wanting to penalize 

even in that study—when the target was the appropriate target, 

not wanting to penalize physicians because a patient physiology 

was such that for a particular moment in time, a static moment, 

that patient was above 39. 

Mr. STARK. Thank you. 

Dr. STRAUBE. Mr. Stark, I think we do very seriously take Dr. 

Singh’s study, for instance, and are considering that. 

As you know, when a scientific study is presented in the peer review literature, it has to get first by the review board of the journal 

of which it is published. But, subsequently, the medical community 

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has to look at that article and put it into context, having scrutiny 

of the whole methodology behind it, as well as the conclusions. 

We are going to be participating with that. I have already talked 

with Dr. Singh. We would like some more of his data. But we 

should also have caution against jumping to one—to taking action 

that might have perverse consequences if we jump too soon. 

The bell curve—there is evidence that the bell curve that we 

have described in terms of what dosage patients require, when you 

shift patients from the high end to the left, that is, to lower hemoglobins, you drive other patients down below 11. As we talked 

about earlier, it is just as dangerous, if not more so, to have low 

hemoglobin and hemocratics. So, we do not want to have unintended consequences from jumping to take action from a study that 

has just come out and has not had full scrutiny yet. 

Just to end, there was a report in the last week, as an example, 

reiterating some reports that have come out over the years that, for 

instance, patients who were End-Stage Renal Disease patients and 

are obese do better than non-obese dialysis patients. If we were to 

respond to that and say, gee, we ought to recommend obesity in all 

of our dialysis patients because their outcomes are better, I think 

people would not think that was a smart thing to do. 

So, I think that we have to have some caution, although we are 

very seriously looking at Dr. Singh’s research. 

Chairman THOMAS. Thank you. 

Dr. Straube, your last statement was, as far as I am concerned, 

absolutely insulting, coming from a doctor, indicating an example 

of what you would not do, okay? 

Number one, I think you need to seriously consider that your 

payment policy is killing people, okay? 

The gentleman from California introduced a letter in the record 

from 1997 because there is a whisper campaign going on utilizing 

data from statements from that long ago to try to intimidate, which 

is a typical practice in this area. 

I did not even bother to introduce my letter from 1998, which is 

also being used. Because, frankly, there was a problem then. It was 

too low. At some point somebody has got to consider that perhaps 

it is now too high, okay? 

Ms. Norwalk, for you to say it may well be that literature has 

changed since that time, what do you think that whole first panel 

consisted of? 

Ms. NORWALK. That is my point. The point I have is that both 

underdosing and overdosing is something that is important. 

Chairman THOMAS. Absolutely. Now we are focusing on overdosing, whereas letters from 1997 or 1998 were focusing on underdosing. In between those two periods, we have turned a monopoly 

into a multi-billion dollar proposition. 

I will tell you, as far as the Chair is concerned and other Members of the Committee who are not here—and I can assure you that 

it is shared broadly by the Committee, perhaps not as vocally as 

the Chairman would present it—it is absolutely unconscionable for 

CMS to allow a monopoly drug to be bundled with other drugs in 

an attempt to force usage; and that is what is going on. 

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Ms. NORWALK. Well, I look forward to our report to Congress 

coming to you and be able to come up with a bundled system where 

payment—where we do not have separate payment. 

Chairman THOMAS. I am not talking about that. I am talking 

about current practice in which we pointed that out to CMS, and 

I haven’t gotten an adequate response. Why would you allow anyone to take a monopoly product—monopoly by the decision of policy, not by the uniqueness in the industry—to be bundled with 

other drugs that are also necessary, to create an artificial demand 

for a product in which they control the absolute existence of the 

business? That is what is going on right now. 

Ms. NORWALK. So, your point is, the payment rate should be 

the same in the ESRD facility as the ASP plus 6 is in other payments? 

Chairman THOMAS. No. My only point was, why would you take 

a drug which is a monopoly and allow the industry, the person who 

produces it, to bundle it with other products they are using to influence how much they can use and when, based upon a pure pricing policy that we have created? That is what we are doing right 

now. 

Ms. NORWALK. So, when you talk about the monopoly—are you 

referring to the Neulasta and the bundling? Is that what your concern is? 

Chairman THOMAS. I am concerned with any monopoly drug accompanied with others that are not in which there could be a control of supply, utilizing the monopoly drug as the key. 

Ms. NORWALK. I misunderstood your original question. I apologize. 

Chairman THOMAS. I am not trying to not to get into very narrow, particular examples. I would have that same feeling about any 

monopoly drug being allowed to be combined with others in which 

you can control the market and the purchase of other drugs, and 

CMS has not addressed that. We have pointed it out, we have 

asked you to respond, and we haven’t had an addressing on that. 

Ms. NORWALK. I think it is something that we will clearly continue to review. It is something that I would imagine that the Antitrust Division at Justice and the FTC should be reviewing. I also 

imagine that it is something that—it may have other implications 

for fraud and abuse. 

Chairman THOMAS. I do not think we have to go through the 

Justice Department when all you have to say is, if we have created 

a monopoly by virtue of our decisions, you do not get to do that. 

You do not need the Justice Department to make the decision. Perhaps your lawyer side is genuflecting in that directing. Your medical side, which you are now beginning to learn, ought not to go in 

that direction, but simply say, if we are creating an artificial monopoly for you, you ought not to be able to do those sorts of things, 

or it won’t be a monopoly. In fact, I think it should have a surrogate price, anyway. 

Ms. NORWALK. We will go ahead and take a look at that particular issue and ensure, as we always do, that whatever our policy 

is it does not have impacts to the patient that are in any way, 

shape or form a negative, and appreciating, of course, that we want 

to always want to watch the public fisc, as we are required to do. 

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Chairman THOMAS. Where we are now is we have a payment policy that perhaps is killing people; and we are using $2 billion, 

the highest price paid in a relatively narrow area for the use of the 

drug through the payment policy, that may in fact be doing that. 

That is exactly where we are today. 

Ms. NORWALK. Well, I will not quibble with your last part of 

the statement. I will look at that. 

I would disagree that, respectfully, Mr. Chairman, I do not believe our payment policy in any way, shape or form is out to kill 

people. In fact, what it is intended to do is ensure that the physician has the ability to monitor where the patient is so that the physician can appropriately titrate the dose for that patient, for that 

patient’s best interest. 

Chairman THOMAS. I put it in that phrase because I have 

learned over the years—and this is the only way you can do it— 

that somebody is actually going to pay attention to what I say if 

I put it in that extreme position. 

But just as we were not doing a medical service to those patients 

when we were underdosing, the argument that somehow we do not 

want to take away the opportunity on the upper end, with the understanding, not just the doctor making a decision but a perverse 

payment system in which the providers of the services are not 

given any kind of an ongoing periodic update, and that they have 

gone for literally decades without a payment, and that the only 

way they make the margin of the income is on a drug which is an 

artificial monopoly imposed by Government itself. 

When you begin building that kind of a structure, to argue that 

you are not going to examine the upper level because you want to 

leave it to the physicians is to ignore the entire dynamic and let 

me say also ignore the kind of business practices that have been 

carried out by these people in the shadows for a number of years. 

One of the reasons I want to compliment the people who are now 

putting out the kinds of studies which you are going to look at and 

are going to find they are good is the fact that within a 3-month 

period we have turned completely around that shadowy area in 

which various pressures have been carried on for years in which 

they cannot now be done, because it is clearly public, and that if 

that kind of behavior continues it will be exposed more in the popular press. 

But we now have a series of studies I expect you to look at. You 

are new. It was 8 months that you were not there, that you did not 

respond to the letters that we wrote. But I expect to see where you 

are on your bundling package. 

As the gentleman from California indicated, it will be pro bono, 

but he means I am going to be able to participate. I do not believe 

in life after death, but I do not believe retirement is death, either. 

We are going to continue to look at this area for two fundamental 

reasons: I am very much concerned about the health of these patients, and I am very much concerned about the enormous dollar 

amount that will produce the kind of behavior in both the manufacturers of this and the users of it if we do not create an opportunity 

for medically appropriate alternate patterns to live. 

We have a monopoly on the structure, we have a monopoly on 

the drug, we have a monopoly on what they are required to do becnoel on PRODPC60 with HEARING

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cause of the payment system. We have got to free it up, even if we 

free it up with an artificial competition structure; and, in my opinion, we are a little overdue from the Medicare Modernization Act 

of 2003. 

You may not be able to get your risk adjustment right. You can 

deal with something like the monopoly payment structure. You can 

deal with something like—and I really applaud you on the fistula 

first. As far as I am concerned, that ought to be an incentive in the 

payment structure to allow those various functions. 

All of those can be put in place without waiting for a risk assessment structure. Those are pure payment policies devoid of any concern about the dosage structure and the rest. I do not know why 

those are not done already. 

Ms. NORWALK. We will take a look at that. 

Chairman THOMAS. I appreciate every time you said, ‘‘We will 

take a look at that.’’ What we are trying to tell you is we directed 

you in MMA. Taking a look at it is not enough. We expect behavior 

on a relatively short timeframe or I might be able, in a pro bono 

way, to convince Congress that we perhaps begin to move from a 

legislative point of view. That would not be the desired choice, but 

it will be a choice if we do not begin to see in the ancillary areas, 

not the core, changes. 

Ms. NORWALK. As I noted, we hope to have the report to Congress research to us where we will be building the demo and the 

actual report to Congress itself in short order; and I hope to have 

the report to the Committee by the summer. 

Chairman THOMAS. Thank you very much. 

With that, the Committee stands adjourned. 

[Whereupon, at 12:45 p.m., the hearing was adjourned.] 

[Questions submitted from Mr. Johnson of Texas and Mr. Weller 

to Ms. Norwalk, and their responses follow:] 

Question from Mr. Johnson of Texas to Ms. Norwalk 

Question: As someone who is vigilant over taxpayer dollars, I appreciate 

the GAO being here today, and the way CMS has taken steps to check the 

economic incentives for the utilization of drugs in the ESRD program. But 

while removing incentives that might encourage the over-utilization of 

drugs may benefit the taxpayer, it’s also very important to focus on ways 

to improve the quality of care provided to beneficiaries. 

I have here a list of clinical studies [attached below] that suggest that 

more frequent dialysis—which is often provided in one’s own home—may 

significantly reduce the need for Epogen and other costly medications. 

Earlier this year, MedPAC raised some issues with the payment surrounding home dialysis in its March report to Congress. Is CMS exploring 

other potential policy changes that support more frequent dialysis, which 

may reduce the clinical need for Epogen while improving the quality of life 

for the patient? 

[The studies referred to by Mr. Johnson of Texas are being retained in the Committee files.] 

Answer: Yes, the Centers for Medicare & Medicaid Services (CMS) is exploring 

other potential policy changes that support more frequent dialysis. Currently, there 

are two clinical trials in frequent dialysis sponsored by National Institutes of Diabetes and Digestive and Kidney Disease (NIDDK) and CMS. The goal of these trials 

is to test the clinical outcomes relative to daily hemodialysis (five or six times per 

week) compared to conventional hemodialysis (three times per week). The trials are 

expected to be completed in 2010 at the earliest. Data collection has already begun, 

starting in 2005. 

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Question from Mr. Weller to Ms. Norwalk 

Question: The Hearing Notice cited that ‘‘Between 1998 and 2003, ESRD 

treatment spending increased by almost 50 percent.’’ Obviously, we want 

and need to be good fiscal stewards of the Medicare Program. My concern 

is that we’re jumping to conclusions on over-utilization of EPOGEN with 

no accounting for ESRD patient growth, how co-morbidities affect the 

treatment (for instance, diabetes is a major contributing factor to ESRD— 

does that affect spending), the increased frequencies of those comorbidities, and the fact that the ASP system has driven down Medicare 

payments for drugs and biologics since 2003 (including for EPOGEN). Further, the EMP is now in place to catch any doctors who are dosing patients 

to maintain them above the target hemoglobin levels. Don’t you think we 

need to move slowly and be fully informed prior to legislating on the ESRD 

program? 

Answer: Yes, we agree that additional information on the appropriate use of 

erythropoietin stimulating agents (ESAs) in the treatment of anemia is needed to 

develop a more complete picture of its effect on different patient populations. Precipitous action could actually harm patients unless we are clear regarding the benefits to be gained from policy changes in this area. 

The recent FDA black box warning for erythropoietin and darbepoietin clearly indicates that there is significant concern that Medicare beneficiaries may be harmed 

by these drugs. This warning was precipitated by a number of new clinical studies 

relevant to the use of ESAs to treat anemia in cancer patients. In light of this recent 

research and the FDA warning, we have taken immediate steps to address patient 

safety concerns for the non-ESRD Medicare population, such as opening a national 

coverage analysis on the use of ESAs for conditions other than ESRD. In addition, 

we made sure that Medicare’s local claims processing contractors were aware of the 

FDA warning. We understand that, following the FDA warning and the subsequent 

revision of the compendium citation, most if not all local Medicare contractors have 

reviewed their policies on the use of ESAs in beneficiaries whose anemia is related 

to cancer 

For Medicare beneficiaries with ESRD, we are working closely with the FDA to 

better understand potential patient safety concerns associated with the use of ESAs 

to treat this patient population. In May, the FDA will be holding an advisory Committee meeting to discuss the use of ESAs in cancer treatment. CMS is working 

with the FDA to plan a similar advisory Committee meeting on the use of ESAs 

for patients with chronic kidney disease and ESRD to be held later this year. In 

addition, we have been discussing safety concerns regarding the use of ESAs in 

ESRD patients with renal professional associations, large dialysis organizations, 

academic medical centers, pharmaceutical companies, and other interested parties 

to gather as much information as possible. In the course of gathering this information, it has become apparent that additional research is needed to address all of the 

questions being raised about the use of ESAs for this patient population. As a result, CMS has begun preliminary discussions with the National Institutes of Health 

about the possibility of collaborating on a large clinical trial of ESA effects in ESRD 

patients to assess these patient safety issues. At the same time, CMS is reviewing 

its recently improved ESA monitoring policy and is in the process of implementing 

a requirement for the use of modifiers to identify the route of administration of 

ESAs. All of these actions will help produce the information that is needed to support more definitive conclusions in this area. 

Question: At the end of the day, aren’t physicians responsible for hemoglobin levels and the EPO doses? 

Answer: Yes. Medicare policy for the ESRD setting is intended to ensure that 

medical decisions are made by physicians, generally adhering to national guidelines 

and expert recommendations, such as the Kidney Dialysis Outcomes Quality Initiative (KDOQI) guidelines. However, our payment policy takes the FDA label safety 

issues into account. 

Question: In a recent New England Journal of Medicine article there was 

reference to patients being treated with Procrit in the CHOIR study at an 

average hemoglobin level of 12.6 grams per deciliter. From the testimony 

today, it is clear that CHOIR was a clinical trial and that patients were 

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1 American Journal of Kidney Diseases, S90–S92 (May 2006). 

being treated toward a target hemoglobin that exceeds the FDA label for 

EPOGEN. 

Another problem I’m having with details of this study is that these were 

non-dialysis patients that were treated as part of a clinical trial. Lastly, I 

understand that CHOIR study did not follow the gold standard of a double 

blinded design. Therefore, I don’t see how findings from a clinical trial on 

non-dialysis patients can be linked across to ESRD patients. If Medicare dialysis patients were being maintained at this level, wouldn’t these patients 

be flagged by the EMP and their doses reduced per the new CMS policy? 

Answer: The new Medicare policy was not in effect during the CHOIR study. As 

mentioned earlier, the Medicare policy is intended to ensure that medical decisions 

are made by physicians and is consistent with the FDA label and current kidney 

disease industry guidelines to maintain a target hemoglobin level in the range of 

10 g/dl to 12 g/dl. 

[Submissions for the record follow:] 

Statement of American Society of Pediatric Nephrology, 

Indianapolis, Indiana 

The American Society of Pediatric Nephrology (ASPN) appreciates this opportunity to submit testimony for the record of the Committee on Ways and Means 

hearing on ‘‘Patient Safety and Quality Issues in End-Stage Renal Disease Treatment.’’ The ASPN is a professional society composed of pediatric kidney specialists 

whose goal is to promote optimal care for children with kidney disease and to disseminate advances in the clinical practice and basic science of pediatric nephrology. 

The ASPN currently has over 600 members, making it the primary representative 

of the pediatric nephrology community in North America. 

Background 

Anemia is a complication of kidney disease, known as Chronic Kidney Disease 

(CKD) or kidney failure, and End Stage Renal Disease (ESRD) or Stage V CKD. Patients with kidney failure suffer from anemia because their kidneys do not produce 

a hormone (erythropoietin) that regulates red blood cell production. Anemia directly 

affects a pediatric patient’s quality of life, including neurocognitive development, 

school attendance, exercise capacity and family support,1 making proper anemia 

management critical to a patient’s well-being. One of the key medications used to 

treat anemia in this population of patients is recombinant human erythropoietin 

(rHuEPO), commonly referred to as EPO. 

Doctors determine a patient’s degree of anemia with simple blood tests, measuring 

the hemoglobin level. The hemoglobin levels that define anemia in children with 

kidney disease differ from those in adults, as they depend on the age and gender 

of the patient. In the case of those patients who are then treated with EPO, the 

existing National Kidney Foundation Kidney Disease Outcomes Quality Initiative 

(NKF KDOQI TM) or KDOQI TM opinion-based guidelines recommend a target hemoglobin level of 11.0 to 13.0 g/dl, for children up to 19 years of age. Treatment thresholds in anemia management should always be individualized to the needs of the patient, allowing a trained professional, in consultation with the patient, to determine 

the optimal dosing of EPO. 

In light of the recent studies published in the New England Journal of Medicine, 

ASPN agrees that it is essential for the kidney care community to continue examining all available data to ensure that public policies reflect appropriate anemia 

management for all patients, both children and adults, with kidney disease and kidney failure. However, it is important to point out that no reliable scientific studies 

have been published that examine optimal hemoglobin levels for children with CKD. 

For this reason, the ASPN requests that Congress commission a study through the 

National Institutes of Health to test and evaluate optimal hemoglobin levels specific 

to children with kidney disease. Armed with this scientific literature, the kidney 

community and government can work to promote the safest practices with the highest quality of care for children with this chronic disease. ASPN is committed to 

working with clinical researchers to carry out such scientific studies. 

Children Are More Vulnerable Than Adults 

It has been said that children are not little adults, and this is especially pertinent 

in the treatment of children with both CKD and ESRD. Proper EPO dosing must 

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take the age of the patient into consideration. Furthermore, and in contrast to the 

adult patient, the developing minds and bodies of children with kidney disease 

places them at a disproportionate risk in the event of inappropriate anemia management. Poor statural growth, impaired nutrition and abnormal cognitive development 

are all potential adverse outcomes of poor anemia management that mandate prospective study. 

Children Have Unique Treatment Needs 

Once children are diagnosed with CKD or ESRD, it is critical that the pediatric 

nephrologist be able to adequately target the proper hemoglobin level for the patient. Due to their size and age, a child’s body will respond differently than adults 

in similar stages of CKD or ESRD. Consequently, pediatric treatment needs are 

unique in several ways: 

• Children need different dosages of erythropoietin than adults—not only because 

they are smaller, but also because the way their bodies metabolize the drug 

may be different than what occurs in adults. 

• Children sustain unique developmental and psychological responses to kidney 

disease and kidney failure. The identification and optimal management of these 

disorders in children and their relationship to anemia management requires 

professionals with expertise in pediatric nephrology. 

• Most importantly, there are distinct differences in the frequency and type of coexisting illnesses that characterize the adult and pediatric CKD populations 

which may result in the optimal hemoglobin targets for children and adults receiving EPO to be different. 

Conclusion 

ASPN appreciates the opportunity to provide these comments to the Committee. 

The kidney community is largely unified in communicating a concern that actions 

taken by Congress and the Centers for Medicare and Medicaid Services (CMS) to 

revise anemia management guidelines must be based on all available scientific literature. The recent studies published in the New England Journal of Medicine only 

address the adult chronic kidney disease population. For this reason, it is imperative that further anemia management studies be conducted in all CKD and ESRD 

populations, including children, to ensure that revised government policies reflect 

sound scientific evidence. 

The Society remains dedicated to providing the highest standard of care and ensuring patient safety for our nation’s pediatric kidney disease patients. 

f 

Statement of Amgen 

Mr. Chairman, Mr. Rangel and Members of the Committee, 

Amgen is pleased to submit this testimony for the record of the Committee on 

Ways & Means Hearing on patient safety and quality of care for Medicare beneficiaries with End Stage Renal Disease (ESRD). 

Amgen, one of the biotechnology industry’s founders and pioneers, delivers vital 

medicines to fight serious illness. Amgen scientists have discovered and brought to 

market novel therapies that have helped millions of patients. Today, with a robust 

pipeline of potential new medicines, Amgen is investing billions of dollars in research and development to bring promising new therapeutics to patients. 

I. The Benefits of EPOGEN (epoetin alfa) for Treating Anemia in KIDNEY 

DISEASE 

Chronic kidney disease is an increasingly recognized and important public health 

issue, affecting approximately 20 million Americans. The most advanced stage of 

chronic kidney disease is ESRD. Patients at this stage have inadequate kidney function to rid the body of harmful toxins, and it is fatal unless treated with dialysis, 

an artificial means of filtering the blood. In 1972, Congress enacted legislation ensuring that people with advanced kidney failure would be able to receive dialysis 

and other potentially life-saving treatments under Medicare. 

ESRD patients are highly vulnerable, and there are more than 300,000 people 

with kidney failure being treated with dialysis in the United States today. Approximately one-third are African-American, and 1 in 5 are Hispanic. The mean age of 

dialysis patients in the U.S. is approximately 65. Dialysis patients typically carry 

a heavy burden of other medical conditions, including high blood pressure, diabetes, 

heart disease and anemia. Given these facts, it is not surprising that the survival 

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68 

1 USRDS 2006 Annual Data Report 

2 Collins AJ. Li S. Ebben J. Ma JZ. Manning W. Hematocrit levels and associated medicare 

expenditures. American Journal of Kidney Diseases. 2000 36(2):282–293. 3 Collins AJ, Li S, St Peter W, Ebben J, Roberts T, Ma JZ, Manning W. Death, hospitalization, 

and economic associations among incident hemodialysis patients with hematocrit values of 36 

to 39%. J Am Soc Nephrol. 2001 Nov;12(11):2465–73. 4 Roberts TL, Foley RN, Weinhandl ED, Gilbertson DT, Collins AJ. Anaemia and mortality 

in haemodialysis patients: interaction of propensity score for predicted anaemia and actual 

haemoglobin levels. Nephrol Dial Transplant. 2006 Jun;21(6):1652–62. 5Lietz K, Lao M, Paczek L, Gorski A, Gaciong Z. The impact of pretransplant erythropoietin 

therapy on late outcomes of renal transplantation. Ann Transplant. 2003;8(2):17–24. 6 Eschbach JW, Abdulhadi MH, Browne JK, Delano BG, Downing MR, Egrie JC, Evans RW, 

Friedman EA, Graber SE, Haley NR, et al. Recombinant human erythropoietin in anemic patients with end-stage renal disease. Results of a phase III multicenter clinical trial. Ann Intern 

Med. 1989 Dec 15;111(12):992–1000. 7 Evans RW, Rader B, Manninen DL. The quality of life of hemodialysis recipients treated 

with recombinant human erythropoietin. Cooperative Multicenter EPO Clinical Trial Group. 

JAMA. 1990 Feb 9;263(6):825–30. 

rate of dialysis patients is quite low. In fact, approximately 1 in 5 dialysis patients 

die every year—a death rate as high as that seen with many cancers. Indeed, patients who require dialysis are very sick, and the health care professionals who care 

for them are highly specialized in their understanding of how best to treat this precarious patient population. 

Over 90% of ESRD patients develop anemia, a serious health condition that places 

patients at increased risk of hospitalization and mortality. 

The kidneys produce a hormone called erythropoietin, which signals the body to 

make red blood cells in the bone marrow. Red blood cells carry life-sustaining oxygen from the lungs to all the vital tissues in the body. Without enough erythropoietin, patients develop anemia, or low numbers of red blood cells. Anemia is measured by a lab test called hemoglobin. Healthy people have hemoglobin levels in the 

14–16 grams per deciliter (g/dL) range. If untreated, dialysis patients have hemoglobin levels that are much lower, often in the range of 8–10 g/dL or lower. 

Anemia affects approximately 9 out of every 10 dialysis patients.1 Patients with 

anemia suffer from severe fatigue and markedly reduced quality of life. Anemia increases the likelihood of being hospitalized and using more health care resources.2,3

In addition, dialysis patients with anemia are at risk for cardiovascular events like 

heart attack or stroke. And dialysis patients with anemia are more likely to die 

than those without anemia.4

Before the advent of EPOGEN more than a decade and a half ago, physicians 

had few options for treating anemia in ESRD patients, and had to rely on blood 

transfusions. Unfortunately, blood transfusions put patients at risk for complications such as blood-borne infections and iron overload. Blood transfusions also limit 

the chances for patients to successfully receive kidney transplants.5

EPOGEN has reduced the need for blood transfusions and improved health-related quality of life in dialysis patients. 

Amgen has pioneered the development of innovative medicines that safely and effectively treat anemia. EPOGEN was developed by Amgen scientists using recombinant DNA technology, and has the same biological effects as naturally occurring 

erythropoietin. EPOGEN was approved by the FDA in 1989 for the treatment of 

anemia in patients on dialysis. 

The availability of EPOGEN as a medicine to treat anemia has been one of the 

major breakthroughs in treatment for dialysis patients. Patients who are treated 

with EPOGEN have a dramatic reduction in the need for red blood cell transfusions, and their quality of life is markedly improved by reducing fatigue symptoms, increasing energy level, improving physical function, and improving sleep.6,7

II. Quality of care and Safety profile of EPOGEN in esrd 

In its hearing notice, the Committee appears to have specific concerns about safety and quality of care with regard to anemia treatment in ESRD. Amgen shares the 

Committee’s concerns for patient safety and quality of care and appreciates this opportunity to respond and to correct misinformation that the Committee has received. 

EPOGEN has enabled the safe and effective treatment of anemia in patients with ESRD. 

EPOGEN has been shown to be safe and effective in multiple clinical trials and 

has over a decade and a half of safety monitoring of real world use in more than 

1.5 million dialysis patients. When used according to its FDA-approved label, 

EPOGEN’s safety profile is well-established and widely known. The most frequently reported adverse events are detailed in the product’s label, which accomcnoel on PRODPC60 with HEARING

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8KDOQI; National Kidney Foundation. Clinical practice guidelines and clinical practice recommendations for anemia in chronic kidney disease in adults. Am J Kidney Dis. 2006 May;47(5 

Suppl 3):S16–85. 9 Roberts TL, Foley RN, Weinhandl ED, Gilbertson DT, Collins AJ. Anemia and mortality in 

haemodialysis patients: interaction of propensity score for predicted anemia and actual hemoglobin levels. Nephrol Dial Transplant. 2006 Jun;21(6):1652–62. KDOQI; National Kidney Foundation. Clinical practice guidelines and clinical practice recommendations for anemia in chronic 

kidney disease in adults. Am J Kidney Dis. 2006 May;47(5 Suppl 3):S16–85. 10Slides presented by Allen Nissenson, MD. Professor, David Geffen School of Medicine at 

UCLA at the 36th Annual American Society of Nephrology Meeting. San Diego, CA. November 

2006. 11Wolfe RA, Hulbert-Shearon TE, Ashby VB, Mahadevan S, Port FK. Improvements in dialysis patient mortality are associated with improvements in urea reduction ratio and hematocrit, 

1999 to 2002. Am J Kidney Dis. 2005 Jan;45(1):127–35. 12Locatelli F, Pisoni RL, Combe C, Bommer J, Andreucci VE, Piera L, Greenwood R, Feldman 

HI, Port FK, Held PJ. Anemia in haemodialysis patients of five European countries: association 

with morbidity and mortality in the Dialysis Outcomes and Practice Patterns Study (DOPPS 

Nephrol Dial Transplant. 2004 Jan;19(1):121–32. 13 Volkova N, Arab L. Evidence-based systematic literature review of hemoglobin/hematocrit 

and all-cause mortality in dialysis patients. Am J Kidney Dis. 2006 Jan;47(1):24–36. 14Locatelli F, Aljama P, Barany P, Canaud B, Carrera F, Eckardt KU, Horl WH, Macdougal 

IC, Macleod A, Wiecek A, Cameron S; European Best Practice Guidelines Working Group. Revised European best practice guidelines for the management of anaemia in patients with chronic 

renal failure. Nephrol Dial Transplant. 2004 May;19 Suppl 2:ii1–47. 15 Roger S; Caring for Australians with Renal Impairment (CARI).The CARI guidelines. 

Haematological targets. Iron. Nephrology (Carlton). 2006 Apr;11 Suppl 1:S217–29. 16 Collins AJ, Li S, St Peter W, Ebben J, Roberts T, Ma JZ, Manning W. Death, hospitalization, and economic associations among incident hemodialysis patients with hematocrit values of 

36 to 39%. J Am Soc Nephrol. 2001 Nov;12(11):2465–73. 

panies every vial of the product that is sold. Recent safety concerns have arisen 

from experiments which target and maintain hemoglobin levels above those recommended by the FDA (discussed in later section). 

Quality of care for anemia treatment in dialysis patients is measured by the 

percentage of patients whose hemoglobin level is maintained > 11 g/dL. 

While the FDA label directs clinicians to target a range of 10–12 g/dL, U.S. clinical practice guidelines reflect a review of the totality of evidence8, including United 

States Renal Data System (USRDS) data showing that dialysis patients who have 

hemoglobin levels of 10–11 g/dL have an 18% increase in their risk of death and 

an 8% increase in their risk of being hospitalized when compared to patients with 

hemoglobin levels between 11–12 g/dL.9 At the recent annual meeting of the American Society of Nephrology in San Diego last month, Allen Nissenson, M.D., Professor of Medicine at UCLA reminded the community that clinical practice guidelines state that ‘‘. . . Hemoglobin should be 11.0 g/dL or greater.’’ He noted that 

this evidence-based recommendation was the result of review of 22 randomized, controlled clinical trials and evaluated a number of key clinical outcomes such as mortality, cardiovascular events, hospitalization and quality of life.10

It is well documented, in both domestic and international studies, that maintaining patients with a hemoglobin of less than 11 g/dL is associated with increased hospitalization, healthcare expenditure, and mortality.11,12,13 This finding has been reflected in the National Kidney Foundation (NKF) 2000 and 2006 K/DOQIT Guidelines. Moreover, CMS has developed and implemented clinical performance measures (CPM), which can be used to assess the quality of care in dialysis facilities 

across the U.S. One CPM (or quality indicator) has been defined as the percentage 

of patients with a hemoglobin level greater than 11 g/dL. This same quality indicator has been employed in Europe through the European Best Practices Guidelines 

(EBPGs) and in Australia through Australian guidelines.14,15

In addition to the wealth of clinical data that supports maintaining hemoglobin 

levels above 11 g/dL, there is strong evidence that this is also cost-effective. Data 

from the USRDS demonstrate that patients who achieve hemoglobin levels between 

11–12 g/dL save the Medicare system approximately $675 per member per month 

as compared with patients who achieve hemoglobin levels between 10–11 g/dL.16

Importantly, there have been tremendous improvements in the quality of care for 

dialysis patients over the past decade. According to the USRDS 2006 Annual Data 

Report and the CMS 2005 Annual Report for ESRD Clinical Performance Measures 

Project, the percentage of patients with hemoglobin < 11 g/dL has decreased from 

84% in 1991 to 17% in 2004, a remarkable achievement by the nephrology community for patients. In the past, efforts to modify policy to control utilization of 

EPOGEN at the upper values of the hemoglobin range have actually increased the 

number of patients with hemoglobins below 11 g/dL. As a result, extreme caution 

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17 Ebben JP, Gilbertson DT, Roberts TL, Foley RN, Collins AJ. Hemoglobin Level Variability: 

Associations with Comorbidity, Intercurrent Events, and Hospitalizations. Clin J Am Soc 

Nephrol 2006 1(6):1205–1210. 18Lacson E Jr, Ofsthun N, Lazarus JM. Effect of variability in anemia management on hemoglobin outcomes in ESRD. Am J Kidney Dis. 2003 Jan;41(1):111–24. 19 Collins AJ, Brenner RM, Ofman JJ, Chi EM, Stuccio-White N, Krishnan M, Solid C, 

Ofsthun NJ, Lazarus JM. Epoetin alfa use in patients with ESRD: an analysis of recent US 

prescribing patterns and hemoglobin outcomes. Am J Kidney Dis. 2005 Sep;46(3):481–8. 20Zhang Y, Thamer M, Stefanik K, Kaufman J, Cotter DJ. Epoetin requirements predict mortality in hemodialysis patients. Am J Kidney Dis. 2004 Nov;44(5):866–76. 

must be exercised when considering any policy changes that may affect this precarious population. 

Hemoglobin levels fluctuate and must be measured repeatedly over time. 

When targeting hemoglobin in the 10 to 12 g/dL range, hemoglobin values will 

fluctuate. Because of the constantly changing environment of a dialysis patient’s 

body, the same individual will be more or less anemic and will sometimes react 

more strongly to EPOGEN and sometimes less, thus having excursions above and 

below the target hemoglobin range. For example, infections are known to lower hemoglobin and erythropoietin responsiveness, while iron supplementation will help 

increase both. Thus, the physician must monitor hemoglobin and adjust the 

EPOGEN dose as needed with the goal of keeping the patient’s hemoglobin level 

in the target range for as much time as possible. These temporary hemoglobin fluctuations are universally understood by practicing nephrologists, and have been described in multiple publications using USRDS and other data.17,18

The USRDS data cited in the Committee hearing notice states that 40% of 

dialysis patients have hemoglobins over the FDA approved label of 12 g/ 

dL. However, this USRDS estimate is at a single point, or ‘‘snapshot’’, in 

time, which does not give an accurate picture of anemia management. 

Dr. Collins, who leads the analysis of USRDS data, describes the percentage of 

patients at a single point in time that have a hemoglobin level above 12 g/dL or 

above 13 g/dL. The recently reported figures appear to have raised concerns that 

physicians may be targeting higher hemoglobin levels than those recommended by 

the FDA or established guidelines. However, because of the routine and expected 

fluctuations in hemoglobin levels, it can be extremely misleading to draw any conclusions from a single hemoglobin measure without considering how physicians respond to the hemoglobin level. 

Dr. Collins and colleagues state ‘‘. . . hemoglobin levels in almost 90% of patients 

seem to be in flux across the K/DOQI target boundaries such that a cross-sectional 

assessment of anemia management cannot give an accurate picture of anemia treatment.’’ 

In 2005, Dr. Collins published a paper demonstrating that in the vast majority 

of cases, providers responded promptly to temporary elevations in the hemoglobin 

level by appropriately adjusting the dose and bringing patients back into the target 

range.19

III. existing scientific evidence does not provide justification for congress 

to introduce new legislation 

Several recent studies have raised concerns regarding the benefit-risk profile of 

EPOGEN. 

Recently published studies do not provide the definitive information needed 

to guide policy decisions. 

The first paper, by Zhang and Cotter et al, is an article that analyzes medical 

claims data generated by Medicare in an attempt to link greater EPOGEN use 

with higher hematocrit levels and increased mortality.20 Zhang and Cotter conclude 

that high EPOGEN doses are associated with an increased risk of death. This 

analysis suffers from a distortion commonly referred to as ‘‘confounding by indication’’ bias. Confounding occurs when another variable (the confounder) other than 

that being studied affects the outcome and leads to a false conclusion. For example: 

Analysis of Medicare data has shown that people who visit the doctor more often 

are significantly more likely to die. Therefore, it could be concluded that visiting 

doctors causes people to die! Of course, this is not the case. In reality, sicker patients see the doctor more frequently and sicker patients are more likely to die than 

those who are less ill. The same is true for Epoetin utilization. Sicker patients typically require more Epoetin to achieve the desired hemoglobin response, and sicker 

patents are also more likely to die. 

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21Wang et al. Exploring Relative Mortality and Epoetin Alfa (EPO) Dose Among Hemodialysis 

Patients. Poster presented at the 36th Annual American Society of Nephrology Meeting, San 

Diego CA November 2006. 22Drueke TB, Locatelli F, Clyne N, Eckardt KU, Macdougall IC, Tsakiris D, Burger HU, 

Scherhag A; CREATE Investigators. Normalization of hemoglobin level in patients with chronic 

kidney disease and anemia. N Engl J Med. 2006 Nov 16;355(20):2071–84. 23Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, Reddan D; CHOIR Investigators. Correction of anemia with epoetin alfa in chronic kidney disease. N Engl J Med. 2006 

Nov 16;355(20):2085–98. 24Singh AK. The target hemoglobin in patients with chronic kidney disease. Nephrology News 

and Issues. 2006 Dec 20(13): p 29–30. 

Mr. Cotter and colleagues acknowledge this important limitation in their paper 

(p. 874): ‘‘this study has 2 noteworthy limitations. First and most important, when 

interpreting patient outcomes associated with prescribed epoetin dose, treatment-byindication bias may exaggerate hazards and obscure benefits.’’ 

A more recent analysis, presented at the American Society for Nephrology, replicated the Cotter analysis but introduced more comprehensive adjustments for ‘confounding’ using appropriate methods. This study found no association between mortality risk and EPOGEN dose.21

The New England Journal of Medicine (NEJM) recently released the results of 

two studies, CHOIR (sponsored by Johnson and Johnson and CREATE (sponsored 

by Roche).22,23 These studies examined the effects of more aggressive anemia treatment, not consistent with the FDA approved prescribing instructions, in kidney disease patients who were not receiving dialysis. 

The CHOIR study treated anemic patients with chronic kidney disease with 

Procritr (Epoetin alfa), targeting a hemoglobin level of 13.5 g/dL versus a control 

group targeting a hemoglobin of 11.3 g/dl. In the CHOIR study, adverse events, including deaths, were greater in the group with the targeted hemoglobin of 13.5 g/ 

dL. 

Amgen takes the recent results of these trials very seriously. However, there are 

some limitations in the CHOIR study which make drawing definitive conclusions 

challenging. The gold standard in clinical research is the randomized, double-blind, 

placebo controlled trial, and this was an ‘‘open label’’ study where both clinicians 

and patients knew they were receiving Procritr, and the dose of the drug. Importantly, there was an unusually high drop-out rate in this trial (38% of patients), 

raising concerns about the ability to draw conclusions from the data presented. Most 

importantly, this study was not conducted in patients undergoing hemodialysis. 

In a recently published article, the principle investigator for CHOIR, Dr Ajay 

Singh stated: ‘‘It is important to note that, unlike the Normal Hematocrit or the 

Canada-Europe studies, both CHOIR and CREATE evaluated pre-dialysis patients 

and so the results may not be generalizable to the dialysis community.’’ 24

Importantly, this was an experiment conducted to test practices that are not consistent with the FDA label or the way that Amgen promotes the use of EPOGEN. 

The results of this study reaffirm Amgen’s commitment to using the FDA-approved 

prescribing instructions to inform clinicians about how to use EPOGEN. In U.S. 

clinical practice today, there is little evidence that clinicians purposefully maintain 

hemoglobin levels above the FDA-approved target range. Thus, the risks associated 

with persistently elevated hemoglobin levels seen in the CHOIR study and other experiments should not be applied to the transient elevations in hemoglobin levels described in dialysis patients treated under real world conditions. 

Amgen promotes EPOGEN according to the FDA label, and is proactively 

educating the clinical community about a recent FDA advisory for 

erythropoietic therapies. 

In response to the CHOIR study, an FDA advisory was issued. Amgen is actively 

working with the FDA (in cooperation with Johnson and Johnson) to update the 

EPOGEN product label with information about the CHOIR results and to inform 

prescribers. Amgen is proactively sending copies of the FDA advisory to all 

nephrologists, and our sales team is hand-carrying the advisory into physicians’ offices. Amgen continues to recommend, as we always have, that physicians use our 

products in accordance with their FDA-approved labels. Although these studies in 

non-dialysis patients should not readily be generalized to patients receiving hemodialysis, we believe it is important for Amgen to help educate the clinical community 

about new scientific information, even if it is not definitive. 

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25 Hematocrit is a percentage of packed red blood cells in a given volume of blood, and is approximately equal to 3X hemoglobin. Thus, a hematocrit of 36 corresponds to a hemoglobin of 

12 g/dL. 

CMS coverage policy for EPOGEN, as well as its claims monitoring policy 

for EPOGEN, are consistent with the FDA approved prescribing instructions. 

In the announcement for this hearing, concerns about patient safety and Medicare 

spending on anemia treatments in ESRD were raised. Further, the November 15, 

2006 letter to CMS indicates a belief that current CMS policies for EPOGEN establish ‘‘reimbursement incentives for providers to increase hemoglobin doses’’ and that 

these CMS policies are in conflict with FDA labeling. 

Below, Amgen would like to address apparent confusion of the CMS coverage policy for EPOGEN and a claims monitoring policy CMS employs to ensure it is paying for appropriate use. Since its inception, the CMS coverage policy for EPOGEN

has been consistent with the FDA approved label. The claims monitoring policy (also 

known as Erythropoietin Monitoring Policy or EMP) explicitly refers to the coverage 

policy for EPOGEN as well as the FDA label in the manual instructions. 

‘‘. . . While Medicare is not changing its coverage policy on erythropoietin use to 

maintain a target hematocrit level between 30% and 36%, we believe the variability 

in response to EPO warrants postponing requiring monitoring until the hematocrit 

reaches higher levels. For dates of services April 1, 2006 and later, CMS will not require contractors to initiate monitoring until the hematocrit level reaches 39.0 (or hemoglobin of 13.0). This does not preclude the contractors from performing medical 

review at lower levels. The Food and Drug Administration labeling for EPO notes 

that as the hematocrit approaches a reading of 36, the dose of the drug should be 

reduced by 25%. . . . Providers are reminded that CMS expects that as hematocrit 

approaches 36% (hemoglobin 12 g/dL), a dosage reduction occurs.’’ Medicare Claims 

Processing Manual (CMS Pub. 100–04), ch. 8, ° 60.4 

The CMS Erythropoietin Monitoring Policy (EMP) has evolved based on extensive scientific deliberation. The current policy represents an important improvement, focusing on how physicians manage anemia, by monitoring whether physicians appropriately adjust the EPOGEN dose in 

response to elevated hemoglobin levels. 

The EMP has evolved over time to account for the expected temporary fluctuations of hematocrit levels in different patients. When physicians target hematocrit 

levels of 30–36% (consistent with the FDA approved label hemoglobin target 10–12 

g/dL25), the majority of those patients—even on a stable dose of EPOGEN—will 

experience temporary elevations above 12 g/dL, as discussed earlier. 

To account for these frequent temporary elevations, CMS has long recognized the 

need for a monitoring threshold above 36%. In 1997, CMS instituted monitoring for 

a 90-day rolling average hematocrit in excess of 36.5% (in effect, hemoglobins that 

were persistently above 12 g/dL). CMS revised this policy in 1998, implementing a 

90-day rolling average where monitoring would occur when the hematocrit exceeded 

37.5% (hemoglobin of 12.5 g/dL). 

In April of 2006, after several years of extensive deliberation and consultation 

with clinical experts, CMS implemented a revised monitoring policy. Under the 2006 

EMP, providers are still responsible for achieving the target hemoglobin in the FDA 

label range, and CMS expects that providers will follow the package insert and reduce the dose as hemoglobin levels approach 12 g/dL. If providers fail to reduce the 

dose of EPOGEN when the hemoglobin exceeds 13 g/dL they are subject to a payment reduction. 

Comments by former CMS administrator Dr. Mark McClellan, and by the CMS 

Chief Medical Officer Dr. Barry Straube, reiterate the importance of developing an 

appropriate monitoring policy that does not have a negative impact on the health 

outcomes of ESRD patients. 

‘‘Our Agency has worked to review the literature and consult with experts in the 

field to develop a means of monitoring erythropoietin usage without the risk of a negative impact on the healthcare outcomes of this vulnerable population. We are 

pleased to have found a reasonable means for monitoring erythropoietin dosages that 

are in line with the FDA-approved labeling for these drugs.’’ CMS Administrator 

Mark McClellan, November 2005 

‘‘While we have to be concerned with patients who have hemoglobin [HGB] over 

13 . . . Everybody has found that when you treat a group of patients, whatever the 

hemoglobin target is, if you lower that upper target range, you shift the hemoglobin 

levels. If the doctor tries to control everybody below 12, you will have other patients 

on the other end of the bell curve, below 11. And there are multiple studies, done 

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26 USRDS 2006 Annual Data Report, CMS’ 2005 Annual Report ESRD Clinical Performance 

Measures Project 27Pizzi LT, Patel NM, Maio VM, Goldfarb DS, Michael B, Fuhr JP, Goldfarb NI. Economic 

implications of non-adherence to treatment recommendations for hemodialysis patients with 

anemia. Dialysis and Transplantation. 2006 Nov; 35(11):654–732. 

in 1997 and 1998, that were associated with higher mortality rates, higher hospital 

admission rates and much higher complications—cardiovascular complications 

[when the levels dropped below 11].’’ CMS Chief Medical Officer Dr. Barry Straube, 

Inside CMS, November 28, 2006 

Preliminary data indicate that under the new EMP, EPOGEN doses and 

hemoglobin levels have slightly decreased. 

Since the EMP went into effect April 1, 2006, Amgen analysis shows the average 

dose of EPOGEN used in dialysis has decreased 2 percent. The average hematocrit 

has also decreased slightly in the few months since the new policy implementation, 

suggesting that the policy is having its intended effect of enforcing appropriate utilization. CMS’s Dr. Barry Straube states that CMS claims data, as well as data from 

dialysis clinic Fresenius, demonstrate that hemoglobin levels have fallen since the 

implementation of the EMP. The impact of the EMP needs to be assessed over a 

longer period of time, but again, short-term analyses suggest that the policy is enforcing appropriate utilization. 

IV. Medicare Expenditures for EPOGEN

The Committee raised concerns about Medicare spending on EPOGEN in the announcement for this hearing. 

Increased Medicare spending on EPOGEN reflects growth in the ESRD population, and substantial improvements in the quality of care. 

Growth in Medicare spending on EPOGEN results from several factors. One factor is growth in the ESRD patient population, approximately 3% per year. A major 

factor has been the tremendous increase in effective anemia management, reflected 

by improved achievement of the CMS clinical performance measure, reducing the 

percentage of patients with hemoglobin below 11 g/dL. As previously stated, this 

percentage has decreased from 84% in 1991 to only 17% in 2004.26 Finally, the patient profile has changed over time. Today, more ESRD patients have other serious 

conditions which impact anemia and anemia treatment. For example, from 1995 to 

2004 diabetes as the primary cause of renal failure has increased from 36% to 46%, 

and the number of patients with cancer has gone up 30%.1 As expected, this improvement in hemoglobin outcomes is correlated with increased EPOGEN utilization. 

Importantly, increasing Medicare expenditures on EPOGEN are not the result 

of higher prices. In fact, CMS per unit expenditures for EPOGEN have decreased 

14% in recent years, from the statutory rate of $11 per 1,000 units that was in effect 

in the early 1990’s to the current market-based ASP + 6% reimbursement of $9.446 

per 1,000 units in Q4 2006. 

The hearing announcement contained estimates of increased costs associated with the purported overuse of EPOGEN. These estimates are incorrect and based on a flawed study and should not be used as the basis 

for policy-making. Policy based on the model in this study could seriously jeopardize the quality of care for ESRD patients. 

The hearing announcement noted ‘‘a recent study from November 2006 in Dialysis 

and Transplantation27 that found that the population with a red blood cell count 

above industry guidelines also has higher drug costs, specifically, $3,100 per patient 

per year more just on the anemia drug.’’ 

The economic model (the Pizzi model) used in the cited study, while published, 

is seriously flawed. Specifically, the results depend on a flawed assumption that individuals should start and remain on 43,500 units of EPOGEN a month without 

dose adjustments in response to hemoglobin levels. This assumption does not reflect 

K/DOQITTM guidelines and is not consistent with the FDA approved prescribing instructions for EPOGEN nor with published USRDS dosing patterns. Both the 2000 

K/DOQITTM guidelines and FDA label provide a starting range of EPOGEN that 

doctors should use the first time a patient is given EPOGEN, then instructs doctors to adjust the dose of EPOGEN until hemoglobin is in the target range of 11– 

12 g/dL. In most cases, this results in a higher maintenance dose than the actual 

starting dose. The last time the average U.S. EPOGEN dose approached the level 

assumed in the Pizzi model was 1992–1993. At that time, 84% of patients were 

below the recommended hemoglobin level of 11 g/dL. 

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Adopting the dosing patterns portrayed in the Pizzi model could seriously jeopardize patient quality of care and significantly increase the percentage of patients 

with hemoglobin below 11 g/dL, increasing the risk of hospitalization and death and 

raising overall healthcare costs. The $3,100 per patient per year savings are not 

real, and unlikely to be realized given what is known about the current ESRD population. The Dialysis and Transplantation study should not form the basis of any policy decision, as it relies on faulty assumptions, makes projections based on off-label 

use of the product and is not consistent with the best available evidence. 

When rigorously analyzed, the available data show that there is no systemic 

abuse of EPOGEN. 

In the November 15, 2006 letter to CMS, Chairman Thomas and Ranking Member 

Stark raised concerns about ‘‘systemic abuse’’ of EPOGEN. Analysis of cross-sectional or ‘‘snapshot’’ in time analyses may give this appearance, but upon careful 

review of these and other data, EPOGEN use appears appropriate and there is no 

evidence of systemic overuse. 

Amgen has analyzed data from provider datasets that report hemoglobin values 

and EPOGEN dosing on a per treatment basis, allowing for very granular analyses, even more granular than USRDS data that collect monthly information. A recent analysis of approximately 300,000 patients demonstrated that most physicians 

are using EPOGEN in a manner that is safe and consistent with its FDA label. 

In fact, among patients who have ever recorded an elevation of the hemoglobin over 

12 g/dL, over 50% of those excursions over 12 g/dL are managed back into the recommended target range within one month, and over 85% of those excursions within 

three months. These data support previous analyses19 which have demonstrated 

that patient hemoglobin levels are being appropriately managed when assessed over 

time using appropriate methods. 

Moreover, the new EMP is fully aligned with the FDA label and will reinforce appropriate utilization of EPOGEN by financially penalizing providers attempting to 

maintain patients at higher hemoglobin levels. The EMP notes that CMS expects 

that providers will follow the EPOGEN label and reduce the dose as hemoglobin 

levels approach 12 g/dL and then requires an EPOGEN dose reduction when a hemoglobin level exceeds 13 g/dL. If providers fail to reduce the dose of EPOGEN, 

they are subject to a payment reduction. 

Congress should not implement a payment system bundling dialysis services 

with separately billable injectable drugs (referred to as ‘‘bundled’’ payment) until the MMA mandated demonstration project is completed. 

Amgen does not believe that Congress should consider moving to a single bundled 

payment for drugs and dialysis services in dialysis until the MMA mandated threeyear CMS demonstration project is completed. The goal of the CMS project is to determine how best to include separately billable drugs in the dialysis composite payment. 

A bundled payment system could be dangerous for patients, and end up costing 

the federal government more money. This is true for several reasons. First, unless 

bundling is accompanied by a robust scientifically valid risk adjustment system and 

an agreed-upon set of quality safeguards, it may result in perverse incentives to 

undertreat patients. Moreover, as evidenced by the broad and deep opposition of patient groups and medical providers, there are serious risks to rural patients and 

those in dialysis centers in underserved urban areas. 

There are two critical elements necessary for the dialysis composite rate to be successful, and to assure that this vulnerable patient population is not harmed. The 

first is a robust and valid case-mix adjustment method—designing a system than 

can accurately predict which patients are most costly, and then adequately reimburse for those patients (a major goal of the CMS demonstration project). The second is a set of robust quality measures to safeguard patients against under treatment that may result from financial incentives that may limit their access to vitally 

necessary medical care. Congress recognized these requirements, and mandated the 

conduct of a demonstration project before implementing a bundled dialysis composite rate. 

ESRD patients represent a seriously vulnerable patient group, at high risk of 

death. Even among ESRD patients, there are some who are more gravely ill and 

require significantly greater health care intervention. Unless Medicare appropriately reimburses for these patients, even one or two such patients in a single dialysis center can literally ‘‘tip the scales’’ and cause a dialysis center to lose money, 

and even risk closure. Many believe that the risk is highest for the small dialysis 

organizations that serve poor patients in rural areas. 

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28Summary report can be accessed at www.cms.hhs.gov/DemoProjectsEvalRpts/downloads/ 

ESRD_Managed_Care_Summary.pdf 29Farley DO, Kallich JD, Carter GM, et al. Designing a capitation payment plan for Medicare 

end stage renal disease services. Santa Monica (CA), RAND. 1994. 30 Bouchery EE, Gaylin DS, Rubin RJ, M.D., Shapiro JR, Held PJ. Lewin Group: Capitation 

Models for ESRD: Methodologies and Results. Prepared for Renal Physicians Association and 

the American Society of Nephrology. 2000. 

Several models and real world examples have demonstrated this challenge and 

also the significant risk that a poorly designed system of bundled payment could 

have negative consequences for patient care. 

• In 1989 Medicare paid for EPOGEN at a rate of $40 for up to 10,000 units, 

a case rate. When CMS recognized that under this policy EPOGEN doses were 

about half of what was needed, the policy was subsequently changed to pay per 

1,000 units administered rather than at the case rate. This is an example of 

how fixed payments can result in undertreatment. • A Medicare managed care capitation demonstration for ESRD resulted in higher 

costs than the fee for service comparison group. The additional costs to the federal government total approximately $18.5 million across the three years of the 

demonstration.28

An appropriate case-mix adjustment methodology has also been difficult to develop. A 1994 study by RAND and UCLA developed a method that was not shown 

to be adequate for dialysis patients.29 A 2000 report released by the American Society of Nephrology and the Renal Physicians Association also attempted to create a 

case mix adjustment system, but was also found to lack the needed predictive 

power.30

‘‘Capitation contracts put physicians at financial risk.accepting global capitation 

for a small group of patients may entail significant risk on the part of the capitated 

physician or health plan. It would be necessary to spread risk over many patients 

in order to reduce the financial risk faced by the physician or health plan to an acceptable level.’’ 

In summary, eliminating separate payment for dialysis drugs, if not implemented 

thoughtfully, could lead to unintended consequences including: 

• Poorer quality of care, as dialysis units may need to make compromises to offset 

lower overall reimbursement. • Higher overall Medicare costs as a result of poor quality dialysis care. • Threats to access for poor and rural patients treated in small dialysis facilities. 

Small rural clinics may begin to avoid sicker/costlier patients in order to control 

costs, or close as a result of financial burden. 

In conclusion, we want to thank the Committee for this opportunity to submit 

written testimony. We are proud of EPOGEN’s long history of safely and effectively 

treating anemia in ESRD and stand with nurses, physicians, and other healthcare 

providers in supporting the best possible care for highly vulnerable kidney disease 

patients. Given the current state of evidence there does not appear to be justification for the introduction of new legislation. We remain concerned that legislation 

based on an insufficient analysis of scientific data could lead to negative outcomes 

for patients and for health care in the United States. 

f 

Statement of Richard Carrancejie, Birmingham, Alabama 

Please, read the Birmingham news article on 11/18/06 on dialysis. we as patients 

are threatened everyday. the conditions are awful. we have roaches, untrained staff, 

the staff curse the elderly and black patients. our Medicare money doesn’t go for 

or medical care. we are threatened by management and doctors with transfers or 

being taken off dialysis during treatment. most of the patients are afraid to speak 

out because they may be harmed. local officials do nothing because it involves a 

major employer [U.A.B.]. even the president of the college does not care. U.A.B. had 

to pay back millions last year to Medicare, they also lost the transplant records of 

10,000patient.tyis is a nightmare. our state health dept. has not inspected since 

1998. the positive room [blood disease] has been used by regular patients. the positive machines have been used all over the facility and on holidays. the Katrina victims have used our facilities, we do not know their fate, yet. it is a tragedy, a medical nightmare. we need help and protection from congress and the justice department. help us. this tragedy has gone on to long. individuals and company must be 

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punished and serve jail time for the death of so many patients. I have been on dialysis for three years, I have witnessed all these events. i have contacted the chairman 

of DaVita and the president of U.A.B., no reply. stop the Medicare money, have the 

FBI. and Medicare investigate, prosecute and make the companies and hospital 

repay the tax payers and put the worst law breakers away for along time. 

f 

Statement of DaVita Patient Citizens 

Introduction 

As America’s largest dialysis patient organization, we are proud to represent over 

20,000 pre-dialysis and dialysis patients and their families. On a wide variety of 

issues, we seek to ensure that the patients’ point of view is heard and considered 

by policy makers so that continued progress may be made in the quality of care and 

life for patients with kidney disease. We appreciate this opportunity to submit testimony to the House Ways and Means Committee’s Hearing on Patient Safety and 

Quality Issues in End Stage Renal Disease. 

Quality of Life 

Anemia is a serious, life-threatening problem affecting almost all dialysis patients. It causes fatigue, weakness and increased risk of hospitalization and death. 

In most cases, the administration of synthetic replacements for the hormone erythropoietin can manage our anemia and restore our energy. With appropriate anemia 

management, we require less medical attention and hospitalization, and we are better able to lead productive, quality lives. 

The Experts on Quality of Care 

Every dialysis patient’s anemia situation is different. The decision of how to manage our anemia should therefore be made by our physicians in consultation with 

ourselves. Typical physician prescribing practices allow for physicians to use package inserts as a guideline for their prescriptions. Many of us enjoy higher quality 

lives because our doctors prescribe the appropriate amount of erythropoietin for 

each of us individually. This allows each of us to participate in the activities of daily 

living. 

Research Applicable to ESRD Patients is Needed 

Of course, it is critical that we, as well as our physicians, be informed of any increased risks associated with anemia management. The studies cited in recent news 

articles focused on Chronic Kidney Disease (CKD) patients in stages 1–4, who are 

not on dialysis. The studies did not focus on patients with End Stage Renal Disease 

(stage 5)—patients like us, who are on dialysis. We therefore look forward to clinical 

studies of anemia management in the ESRD population to determine the appropriate approach to anemia management for dialysis patients. 

Community Cooperation Improves Quality of Care 

Recognizing the importance of appropriate anemia management, we joined with 

the kidney care community in asking CMS to revise the April 2006 monitoring policy on anemia management to better align with physician prescribing methods and 

to take into consideration the patient’s quality of life. We believe that this revised 

monitoring policy is a vast improvement over the April 2006 policy. 

Conclusion 

DaVita Patient Citizens greatly appreciates this opportunity to comment on ESRD 

patient safety and quality issues. We ask that, before proposing further changes to 

the CMS monitoring policy on anemia management, you take into consideration all 

of the data and the population to which it applies, as well as, the patients’ perspective. 

f 

December 20, 2006 

Dear Mr. Chairman and Members of the Committee, 

The American Society of Nephrology (ASN) appreciates the opportunity to provide 

a written statement for the record regarding the issue of anemia management. We 

commend the Committee for its efforts to learn more about anemia management for 

individual’s with kidney disease and kidney failure. 

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Through the Medicare program, the federal government has assumed primary responsibility for dialysis patients. The landmark 1972 (Medicare) legislation ensures 

that dialysis care is provided to this most vulnerable population. We continue to 

support innovative policy initiatives that reward improvements in care and the attainment of quality benchmarks based on scientific findings. Our Society and its 

members are dedicated to providing the highest standard of care and ensuring patient safety. 

The ASN is a professional association with approximately 10,000 members. Of 

this membership, about 95% are physicians, with the remaining members basic scientists with a primary interest in renal disease. Virtually every licensed 

nephrologist in the United States is a member of the ASN, with an additional 3,000 

nephrologists from 82 other countries comprising the remainder of our membership. 

The Society is focused on promulgating innovative research related to renal disease, 

and on providing continuing medical education to physicians and scientists dedicated to the improved understanding and treatment of renal disease. 

In light of the recent studies published in the New England Journal of Medicine, 

ASN agrees that it is essential for the kidney care community to continue examining all available scientific data to ensure that public policies reflect appropriate 

anemia management for dialysis patients. We also reaffirm our ongoing commitment to work with the Congress and CMS to ensure that Medicare policy reflects 

the best science and ensures the welfare of patients, the public interest, and Medicare’s stewardship of patients with kidney disease. 

Anemia is a complication of kidney failure, also known as End-Stage Renal Disease (ESRD) and is a consequence of kidney disease in patients receiving dialysis. 

Patients with kidney failure suffer from anemia because their kidneys do not 

produce a hormone (erythropoietin) that regulates red blood cell production. Anemia 

has a profound physiological effect on every organ system (including the brain) and 

directly affects patients’ quality of life. Anemic kidney disease patients have more 

difficulty performing every day activities, including maintaining employment. Physicians determine a patients’ degree of anemia with simple blood tests, measuring the 

hemoglobin or hematocrit levels. A healthy man has a hemoglobin level of 15 

(roughly a hematocrit level of45 percent), with slightly lower values in healthy 

women. Before effective treatment was available, a dialysis patient would typically 

have severe anemia with a hemoglobin level lower than 11 (hematocrit level of lower 

than 33 percent). Prior to the introduction of recombinant human erythropoietin 

(EPO) as a therapeutic agent in 1989, anemia management in dialysis patients was 

dependent on transfusions and other approaches which were largely ineffective. 

ASN recognizes that the optimal target hemoglobin/hematocrit level for patients 

with kidney failure may not be straightforward. During the past 10 years, several 

observational studies have suggested that higher hemoglobin levels are associated 

with a lower risk of hospitalization and death, and higher levels of cognitive function. 

However, recently two clinical trials published in the New England Journal of 

Medicine (NEJM) question whether higher hemoglobin targets are optimal for patients with kidney failure and have fostered a great deal of discussion within the 

scientific community. The CHOIR study indicated an association in kidney disease 

patients not yet on dialysis (patients diagnosed with Stages III and IV kidney disease) between higher hemoglobin levels and an increased risk for cardiovascular 

morbidity and death. The CREATE study (which was also published in the same 

November issue of the New England Journal of Medicine), in a similar group of patients with chronic kidney disease not on dialysis, found no significant difference in 

the combined incidence of severe adverse events between the higher and lower hemoglobin groups, although hypertensive episodes and headaches were more frequent 

in the former group. 

A key component to any critical review of the scientific research data examining 

utilization of erythropoietin is patient variability in clinical response. Research has 

indicated that patient comorbidities, intercurrent events including hospitalization, 

and practice patterns contribute to this variability, which is not unique to patients 

with kidney disease. One recent study concluded that the variability in the response 

of hemoglobin levels to etythropoetin treatment over time in individual patients may 

account for moving 28 percent of all dialysis patients above and below the target 

hemoglobin levels during a one-year timeframe. Other studies support this finding 

as well. Because of this variability in patient physiology, optimal anemia management often requires a highly individualized approach to treatment. 

ASN urges that Congress and CMS should take all available studies into account 

when setting Medicare policy. For example, the recent CMS EPO Monitoring Policy 

issued before the publication of the CHOIR and CREATE studies recognizes the 

need for reimbursement policy to take into account patient variability. When reviewcnoel on PRODPC60 with HEARING

78 

ing this policy, it is important to understand that it is not a treatment guideline. 

Rather, it is an auditing tool. Under the policy, if a patients’ hemoglobin reaches 

13 and the dose is not reduced, then CMS will reduce the payment 25 percent. It 

does not call for, nor recommend, that patients’ hemoglobin levels are maintained 

above 12 in accordance with the Food & Drug Administration label. 

Congress should examine all of the available scientific literature before advising 

any policy changes. The recent trials should be reviewed along with those that are 

already a part of the literature, as well as the Food and Drug Administration package insert, to determine the optimal policies to be based on safety and efficacy. Policy should not be based upon the result of a single clinical trial. ASN is committed 

to working with the Congress and CMS to ensure that Medicare policy reflects the 

consensus of the scientific community. 

ASN appreciates the opportunity to provide the Committee this statement for the 

record. ASN cannot emphasis enough that this debate on anemia management is 

about patient safety and quality of life, quality care and policy based and grounded 

in scientific findings. It is imperative that the scientific community and government 

work together to promote the highest quality of patient care. We look forward to 

working with the Committee as we continue to evaluate clinical data. 

Sincerely, 

, M.D. 

f 

President 

Central New Hampshire Kidney Center 

Laconia, New Hampshire 03246 

December 19, 2006 

Chairman and Members of the Committee on Ways and Means 

I am a Nephrologist taking care of patients with End Stage Renal Disease for the 

last twenty years. I am the owner and medical director of Central New Hampshire 

Kidney Center (CNHKC) serving Laconia and the Lakes Region area of New Hampshire since 1990. As a physician, owner and administrator I had to make all the 

decisions that maintain my patient’s safety, health and well being in addition to 

maintaining the financial viability of my dialysis unit. My choice was clear; patients 

and their needs always come first and have priority to any financial interest. Whenever a patient needed a medication he gets it because he needs it not because I will 

make few dollars off my patient. That was reflected in my use of EPO and how I 

was able to use 30—40% less drug than the national average. The following graph 

reflects the average weekly dose of EPO units used at CNHKC compared to the 

USA National average as reported by the USRDS. 

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In 1998 following the early results of the VA study‘‘Subcutaneous Compared with 

Intravenous Epoetin in Patients Receiving Hemodialysis’’ which was then published 

by the New England Journal of Medicine, August 27, 1998 issue. http://content 

.nejm.org/cgi/content/abstract/339/9/578?ijkey=08d84b8e606283b32c14b90c4284b3e 

ba947fa58&keytype2=tf_ipsecsha 

I switched the method of administration of EPO from intravenous to subcutaneous 

and I noticed that my usage has dropped by more than 20%. Since then I continued 

to use this method of administration. Since 1998 I was using an average of 6000 

units per week lower than the national average. This is equivalent to $3120.00 savings per patient per year for the Medicare and tax payers. By doing this I lost income that I could have generated from billing Medicare additional on average of 

$150,000.00 per year for the last 8 years. Also I lost rebates from Amgen because 

I did not achieve their required volume increase!!!! 

As a physician and administrator I would like to share with you my experience 

and few important points that need to be addressed in this forum: 

1. Method of administration of EPO: 

It is a puzzle for me that the subcutaneous method is not the standard method 

up till now. It is the standard method throughout Europe, Canada and the Veterans 

Administration. By the year 2002 about 70% of VA patients were switched to subcutaneous administration according to a VA press release http://www1.va.gov/ 

resdev/news/press_releases/epoetin-022802.cfm 

It is clear in the literature that approximately 20 to 30 percent of patients who 

receive EPO intravenously for the anemia of chronic renal failure may develop an 

elevation in diastolic pressure of 10 mmHg or more. In comparison, the blood pressure is less likely to rise after subcutaneous administration. 

Also it is clear that the main advantage of subcutaneous EPO is its longer halflife: 24 hours versus four to nine hours when given intravenously. 

So just by changing the method of administration this drug becomes safer and 

more effective and as an added bonus we will save the tax payers a lot of wasted 

money. 

Why for all those years this is not the standard of care?? What’s going on?? 

Why Amgen is not promoting a safer efficient way for using its drug?? 

Since August 27, 1998 an Amgen sponsored study was published in the New England Journal of Medicine ‘‘The Effects of Normal as Compared with Low Hematocrit 

Values in Patients with Cardiac Disease Who AreReceiving Hemodialysis and 

Epoetin’’ http://content.nejm.org/cgi/content/short/339/9/584, we learned from this 

study that higher hematocrit can kill dialysis patients. Yes, since 1998 not just in 

2006 we learned that higher hematocrit can be dangerous to our patients. Did this 

prompt Amgen to ensure safety of its drug? On the contrary Amgen and its consultcnoel on PRODPC60 with HEARING


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80 

ants shoved the results of its own study under the rug and promoted achieving higher hematocrit!! 

Why a chronic kidney disease patient receiving the EPO subcutaneously will get 

switched to intravenous once he starts on dialysis? Is this better for the patient or 

better for the bottom line? All of a sudden ‘‘it hurts’’!! Yes, the bottom line!! 

Those issues needs to be addressed and investigated as for the last eight years 

tax payers paid at least 20% more for an expensive drug and patients where unnecessarily subjected to potential worsening of their blood pressure, which is the major 

cause of morbidity and mortality in those patients, and probably was a contributing 

factor to the early death for some of those patients. 

2. Rebates: 

This is a total disgrace to the practice of medicine. It is shameful to allow rebates 

for achieving larger volume for the use of a drug. It is shameful that the physician 

is forced to increase the dose of EPO for a patient who has hemoglobin of 10.8 or 

10.9 so the center can meet the rebate threshold yet he knows that it will not do 

the patient any good. It is a disgrace that we submit patient’s labs to a drug manufacturer so we can get a rebate. 

This should STOP. It should have never been allowed. This is a shameful black 

spot on the practice of medicine. 

3. Average Sale Price + 6%: 

What a joke? It will never cut on the use of drugs; it will make the fat cats fatter 

and it is not just killing patients it will also be killing the small providers and the 

competition or what ever left of it!! If the ASP of a drug is $1.00 this means that 

someone is paying $0.90 and another is paying $1.10 so the large provider will make 

a profit of about 18% and the small independent provider like me will lose about 

5%. I don’t think this is fair and it will never achieve what it is intended for. You 

have to level the field by using the Actual Sale Price or compensate the small provider different than the large provider. It is ridiculous that the small provider will 

end up contributing to the bottom line of Amgen and the large providers!!! That’s 

why Fresenius made a deal with Amgen to be its sole provider of anemia drugs for 

the next five years to guarantee a lower price. This policy did nothing but gave 

Amgen the green light to keep increasing its price and Amgen delivered!! 

4. EPO PRICE and COMPOSITE RATE: 

For each dialysis treatment I get paid an average of $130.00 while Amgen gets 

paid an average of $70.00 considering the current national average use per treatment. It is amazing that the price of this drug is more than 50% of the composite 

rate and yet the government is willing to pay??!!!. I have to provide 3–4 hours of 

nursing care, dietician, social worker, maintain equipment, maintain building and 

grounds, provide supplies, provide labs, insurance . . . etc. and yet on the other 

hand Amgen can decide it’s own price no matter how ridiculous it is and increase 

it whenever it wants, no questions asked!!! The government controls the price for 

health care, the hospitals, clinics and physicians but when it comes to pharmaceuticals, they have a free ride. With the current drugs payment system as a small 

provider I end losing about 5% on EPO which means that I end up contributing to 

Amgen almost $3 every dialysis treatment. I don’t think this is fair, this is nothing 

but ridiculous. It may be appropriate to let the free market work between the provider and the supplier but when the payer fixes the price on the providers that 

messes the whole picture, this economical concept is not an economy of capitalism 

not even economy of communism this is nothing but an economy of terrorism for 

the small provider. It is nothing but the pill of death for small providers. If the government wants to maintain healthy competition between providers then it will have 

to fix the price of EPO or force Amgen to sell it at a declared fixed price which 

is the same to every provider with no rebates or gimmicks. Amgen is a major partner in providing care for the ESRD program, Amgen had a free ride for many years 

and at this stage it needs to step up to its responsibilities and stop its practice of 

greed and back door gimmicks. 

I hope by sharing my concerns and frustrations as a small provider you will have 

a better vision and understanding to what at stakes here as our main goal is providing the best care to our patients in the most efficient way and at the highest 

standards medically and ethically. I will be glad to answer any question. 

Sincerely 

Noshi Ishak, M.D. 

f 

CEO, Medical Director 

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1Morrell Michael Avram, et al., ‘‘Hemoglobin Predicts Long-Term Survival in Dialysis Patients: A 15-Year Single-Center Longitudinal Study and a Correlation Trend between 

Prealbumin and Hemoglobin’’ 87 Kidney Internat’l (Supp.) S6–S11, S9 (2003). 2 Allen R. Nissenson & Lawrence T. Goodnough, ‘‘Anemia: Not Just an Innocent Bystander?’’ 

163 Arch. Intern. Med. 1400 (June 23, 2003). 3 Hans Furuland et. al., ‘‘A Randomized Controlled Trial of Haemoglobin Normalization with 

Epoetin Alfa in Pre-Dialysis Patients’’ 18 Nephrol. Dial. Transplant 353–61 (2003); 4S. Li & A.J. Collins, ‘‘Association of Hematocrit Value with Cardiovascular Morbidity and 

Mortality in Incident Hemodialysis Patients’’ 65 Kidney Int. 626–33 (2004); A.J. Collins, et al. 

‘‘Death, Hospitalization, and Economic Associations among Incident Hemodialysis Patients with 

Hematocrit Levels of 36 to 39%’’ 12 J. Am. Soc. Nephrol. 2465–73 (2001); A.J. Collins, et al., 

‘‘Hematocrit Levels and Associated Medicare Expenditures’’ 36 [ 282–93 (2000); F. Locatelli, et 

al., ‘‘Anemia in Haemodialysis Patients of Five European countries: Association with Morbidity 

and Mortality in the Dialysis Outcomes and Practice Patterns Study (DOPPS) 19 Nephrol. Dial. 

Continued 

Statement of Kidney Care Partners 

The undersigned members of Kidney Care Partners (KCP) appreciate the opportunity to provide written testimony to the Committee regarding the intersection of 

anemia management and Medicare policy. We commend the Committee for its efforts to learn more about anemia management for individuals with kidney disease 

and kidney failure. Through the Medicare program, the federal government has assumed responsibility for the health and safety of dialysis patients. Therefore, it is 

appropriate that the Committee examine the optimum care patients should receive, 

including issues related to drug utilization. 

KCP is a coalition of patient advocates, dialysis providers, physicians, 

nurses, and manufacturers. Our mission, individually and collectively, is to 

ensure: (1) chronic kidney disease patients receive safe and optimal care; 

(2) chronic kidney disease patients are able to live quality lives; (3) dialysis 

care is readily accessible to all those in need; and (4) research and development leads to enhanced therapies and innovative products. 

Our members are dedicated to providing the highest standard of care and ensuring patient safety. The Centers for Medicare and Medicaid Services (CMS), the Government Accountability Office (GAO), the Medicare Payment Advisory Commission, 

and other organization have recognized the improvement of quality by the kidney 

care community during the last ten years. We continue to support innovative policy 

initiatives that reward improvements in care and the attainment of quality benchmarks. As part of our efforts, KCP launched the Kidney Care Quality Alliance, 

which has developed a starter set of quality-related measures that could be used to 

evaluate and reward high quality care in the kidney care community. 

In light of the recent studies published in the New England Journal of Medicine, 

KCP agrees that it is essential for the kidney care community to continue examining all available data to ensure that public policies reflect appropriate anemia 

management for patients with kidney disease and kidney failure. We are committed 

to working with clinical researchers to determine the appropriate hemoglobin levels 

for these patients. We also reaffirm our ongoing commitment to work with the Congress and CMS to ensure that Medicare policy reflects the best science and ensures 

the welfare of patients, the public interest, and Medicare’s stewardship of patients 

with kidney disease. 

Anemia is a complication of kidney disease, which is known as Chronic Kidney 

Disease (CKD) and kidney failure, also known as End Stage Renal Disease (ESRD 

or Stage V kidney disease). Patients with kidney failure suffer from anemia because 

their kidneys do not produce a hormone (erythropoietin) that regulates red blood cell 

production. Anemia has a profound physiological effect 1 on every organ system (including the brain) and directly affects patients’ quality of life.2 Anemic kidney disease patients have more difficulty performing activities of daily living and maintaining employment. They experience lower vitality and may suffer from depression.3

Doctors determine a patients’ degree of anemia with simple blood tests, measuring 

the hemoglobin or hematocrit levels. A healthy man has a hemoglobin level of 15 

(roughly a hematocrit level of 45 percent), with slightly lower values in healthy 

women. Before effective treatment was available, a dialysis patient would typically 

have severe anemia with a hemoglobin level lower than 11 (hematocrit level of lower 

than 33 percent). 

There is a large and extensive peer-reviewed volume of literature discussing what 

the optimal target hemoglobin/hematocrit level for patients with kidney failure 

should be. For example during the past ten years, several observational studies 

have suggested that higher hemoglobin levels reduce the risk of hospitalization and 

death, while increasing cognitive function.4 As one of these studies suggests, these 

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Transplant 121–32 (2004); N. Ofsthun et al., ‘‘The Effects of Higher Hemoglobin Levels on Mortality and Hospitalization in Hemodialysis Patients’’ 63 Kidney Int. 1908–14 (2003); E.G. Lowrie 

et al., ‘‘Medical Outcomes Study Short Form-36: A Consistent and Powerful Predictor of Morbidity and Mortality in Dialysis Patients’’ 41 Am. J. Kidney Dis. 610–9 (2003). 5 Allan J. Collins et al. ‘‘Death, Hospitalization, and Economic Associations among Incident 

Hemodialysis Patients with Hematocrit Values of 36 to 39%’’ 12 J. Am. Soc. Nephrol. 2465–73 

(2001). 6 A. Besarab et. al., ‘‘The effects of normal as compared with low hematocrit values in patients 

with cardiac disease who are receiving hemodialysis and epoetin’’ 339 N Engl J Med. 584–90 

(1998). 7 Ajay K. Singh, et al., ‘‘Correction of Anemia with Epoetin Alfa in Chronic Kidney Disease’’ 

355 N Engl J Med 2085–98 (2006). 8Tilman B. Drueke, et al., ‘‘Normalization of Hemoglobin Level in Patients with Chronic Kidney Disease and Anemia’’ 355 N Engl J Med 2071–84 (2006). 9 E Lacson et al., ‘‘Effect of Variability in Anemia Management on Hemoglobin Outcomes in 

ESRD’’ 41 Am J. Kidney Dis. 111–24 (2003). 10 Norma J. Ofsthun, et al., ‘‘The Impact of the Change in CMS Billing Rules for Erythropoietin on Hemoglobin Outcomes in Dialysis Patients’’ To Be Presented at RRI International Dialysis Conference (January 2007). 11 Norma Ofthun et al., ‘‘The Effects of Higher Hemoglobin Levels on Mortality and Hospitalization in Hemodialysis Patients’’ 63 Kidney Internat’l 1908–14, 1913 (2003). 

outcomes could result in lower costs to the Medicare program. Specifically, it found 

that Medicare patients with hematocrit values of 36 to less than 39 cost the program significantly less than those patients with hematocrit values of less than 30.5

Other prospective clinical trials have not observed benefits with higher hematocrit 

levels.6 The FDA label recommends maintaining patients at a hemoglobin level of 

10–12. 

Two recent studies published in the New England Journal of Medicine, which 

have engendered substantial controversy and discussion,demonstrate the continuing 

debate within the scientific community. The CHOIR study 7 indicated an association 

in kidney disease patients not yet on dialysis (patients diagnosed with Stages III 

and IV kidney disease) between higher hemoglobin levels and an increased risk for 

cardiovascular morbidity and death. The CREATE study 8 (which was also published 

in the same November issue of the New England Journal of Medicine), in a similar 

group of patients not yet on dialysis, found no significant difference in the combined 

incidence of severe adverse events between the higher and lower hemoglobin groups, 

although hypertensive episodes and headaches were more frequent in the former 

group. 

Clinical studies have found that determining optimal hemoglobin levels is also 

complicated by patient variability in their response to the drug. Researchers believe 

patient comorbidities, intercurrent events like hospitalization, and practice patterns 

contribute to this variability, which is not unique to the kidney care community. 

One recent study concluded that the variability in the response of hemoglobin levels 

to epoetin treatment over time in individual patients may account for moving 28 

percent of all dialysis patients above and below the target hemoglobin levels during 

a one-year timeframe.9 Other studies support this finding as well.10 Because of this 

variability in patient physiology, optimal anemia management requires a highly individualized approach to treatment.11

Congress and CMS should take all available studies, as well as the Food and 

Drug Administration (FDA) label, into account when setting Medicare policy. For example, the recent CMS EPO Monitoring Policy, issued before the publication of the 

CHOIR and CREATE studies recognizes the need for reimbursement policy to take 

into account patient variability. When reviewing this policy, it is important to understand that it is not a treatment guideline. Rather, it is a reimbursement auditing 

tool. Under the policy, if a patients’ hemoglobin reaches 13 and the dose is not reduced, then CMS will reduce the payment 25 percent. It does not call for, nor recommend, that patients’ hemoglobin levels should be maintained above 12. 

In addition to the EPO Monitoring Policy, Congress may also consider anemia 

management studies when discussing reforms to the ESRD payment system. If Congress is considering payment revisions that incorporate any or all separately billable 

drugs or biologics into the composite rate, it is vital that an appropriate case-mix 

adjuster be developed that accounts for the variability in patient response to medications and the lack of predictability. Currently, there are no universally accepted 

case-mix adjustors for patients on dialysis that address patient variability in drug 

utilization. In its attempts to develop an ESRD bundle, CMS has recognized the difficulties of accounting for this variability as well: ‘‘Implementation of a revised outpatient ESRD payment system without consideration of this patient specific variacnoel on PRODPC60 with HEARING

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12Department of Health and Human Services, ‘‘Report to Congress: Toward a Bundled Outpatient Medicare ESRD Prospective Payment System’’ 22 (2003). 

bility may compromise patient access to quality of care.’’ 12 In addition, it is critically important that if a bundle is adopted, Congress also provide an annual update 

mechanism that would allow CMS to provide updates to the base rate. Currently, 

the Medicare ESRD program is the only Medicare program without such an update 

mechanism. These challenges must be met before such revisions are made. 

Congress should examine all of the literature before advising any policy changes. 

The recent trials should be reviewed along with those that are already a part of the 

literature, as well as the FDA package insert. Policy should not be based upon the 

result of a single clinical trial. KCP members are committed to continuing their 

work with experts in the kidney care community to determine appropriate hemoglobin levels for patients with kidney failure, as well as with the Congress and CMS 

to ensure that Medicare policy reflects the consensus of the scientific community. 

KCP appreciates the opportunity to provide these comments to the Committee. 

Patient safety and quality care are at the heart of this discussion. It is imperative 

that the community and government promote the safest practices with the highest 

quality of care. We look forward to expanding upon our comments based upon today’s discussion as well. 

Abbott Laboratories 

American Kidney Fund 

American Nephrology Nurses’ Association 

American Regent, Inc. 

American Renal Associates, Inc. 

American Society of Nephrology 

American Society of Pediatric Nephrology 

Amgen 

California Dialysis Council 

Centers for Dialysis Care 

DaVita, Inc. 

DaVita Patient Citizens 

Fresenius Medical Care North America 

Genzyme 

Medical Education Institute 

Nabi Biopharmaceuticals 

National Renal Administrators Association 

Northwest Kidney Centers 

Renal Advantage Inc. 

Renal Physician’s Association 

Renal Support Network 

Satellite Healthcare 

U.S. Renal Care 

f 

Watson Pharma, Inc. 

Statement of National Kidney Foundation, Inc., New York, New York 

The National Kidney Foundation (NKF) is the nation’s oldest and largest voluntary health organization serving the needs of patients with kidney disease (CKD) 

and the health care professionals who care for them. Our role is challenging since 

chronic kidney disease (CKD) patients often have multiple related diseases and complications including cardiovascular disease, hypertension, dyslipidemia, anemia, and 

bone and mineral metabolism problems. NKF appreciates the concern of the Ways 

and Means Committee for the quality of care for and safety of end stage renal disease patients. A similar dedication has driven the NKF’s clinical practice guideline 

development program, known as the Kidney Disease Outcomes Quality Initiative 

(KDOQI). 

Since its inception in 1995, NKF’s KDOQI has transformed medical practice, community and public awareness, healthy policy, and patient outcomes. KDOQI’s 12 

evidence-based clinical practice guidelines have shaped the way we look at kidney 

disease and how it is treated in the United States and around the world. The 

KDOQI process has always relied on a structured review of the evidence and the 

independence of the work group assembled to review each topic. Updates to the 

original KDOQI clinical practice guidelines for hemodialysis, peritoneal dialysis, and 

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vascular access were published as a supplement to the July 2006 edition of the 

American Journal of Kidney Diseases. A new version of the KDOQI anemia guidelines, the Clinical Practice Guidelines for Anemia of Chronic Kidney Disease, was published as a supplement to the May 2006 issue of the American Journal of Kidney 

Diseases. The KDOQI anemia guidelines were originally published in 1997, and updated in 2001. This new guideline has been expanded to cover all stages of chronic 

kidney disease (CKD). Anemia often negatively affects the quality of life for patients 

with CKD. However, among all the potential complications of CKD, anemia is perhaps the most responsive to treatment. 

The National Kidney Foundation has finalized plans for a formal review of new 

information that might have an impact on these recent recommendations from 

KDOQI on anemia management. This confirms KDOQI’s announcement last month 

that it would continue its decade-long process of timely review of new data relevant 

to published KDOQI Clinical Practice Guidelines. The Co-Chairs of KDOQI have 

asked the anemia work group to reconvene on February 3, 2007, to discuss the implications of recently published studies and studies accepted for publication on anemia. 

The first step in this process will be a structured review of the new evidence by 

the NKF Evidence Review Team headquartered at Tufts New England Medical Center in Boston. This evidence will then be examined by the work group to determine 

if it has a material impact on any recommendations made in the KDOQI Clinical 

Practice Guidelines and Clinical Practice Recommendations for Anemia in Chronic 

Kidney Disease published in May, 2006. When the anemia work group and the evidence center complete the analysis of the new studies for both safety and efficacy, 

appropriate announcements or publications will be developed. 

This same concern for patient safety and quality of care for Medicare beneficiaries 

in the End Stage Renal Disease Program leads the NKF to urge Congress and the 

Centers for Medicare and Medicaid Services to analyze with caution the recommendations from the Government Accountability Office for bundled payment for 

dialysis services. We draw the Committee’s attention to a Report that Secretary 

Thompson sent to Congress in 2003. The title of the Report is: ‘‘Toward a Bundled 

Outpatient Medicare ESRD Prospective Payment System.’’ On page 22 there is the 

following statement: ‘‘Implementation of a revised outpatient ESRD payment system 

without consideration of this patient specific variability may compromise patient access to quality care.’’ On page 31, ‘‘The changes in practice patterns resulting from 

a bundled ESRD (Prospective Payment System) will require monitoring to determine whether clinical outcomes improve or decline as a result of the system’s financial incentives.’’ On page 33, ‘‘Several of the K/DOQI clinical practice guidelines provide measures and minimum values of quality dialysis. Efforts to collect and evaluate such measures will be essential in order to ensure that clinical outcomes do not 

decline as facilities respond to the new financial incentives created by a bundled 

(Prospective Payment System).’’ 

The recommendation for a bundled payment for dialysis services reflects a concern 

about the potential for over-utilization that exists under the current reimbursement 

policy. Nevertheless, a bundled system creates incentives for underutilization that 

could negatively affect dialysis patient outcomes. This is of particular concern in 

that higher doses of epoetin are required in the African American population, those 

individuals that have vasculitis as a cause of their kidney failure and cancers such 

as Multiple Myeloma (United States Renal Data System 2003 Annual Data Report). 

Also, patients with chronic infections and dialysis catheters also require more 

epoetin secondary to resistance to the medication. As far as anemia therapy is concerned, the effect of Medicare’s early payment policy suggests that the threat of underutilization is real. Medicare initially provided a flat payment for erythropoietin, 

without regard to dosage. Under that payment system, dosage was low and there 

was little improvement in the anemia experienced by dialysis patients. There was 

also evidence of racial disparities that developed based on the responsiveness to 

treatment noted above (United States Renal Data System 2003 Annual Data Report). We are concerned that these areas need to be given careful consideration. 

There are additional concerns about a bundled payment system that should be addressed. Many patients have bone and mineral metabolism disorders that require 

treatment with active vitamin D analogs. A bundled payment system could result 

in a substitution of oral vitamin D for injected vitamin D preparations. Not only 

would this shift cost from Medicare Part B to Medicare Part D, but the effect of 

vitamin D therapy could be much more dependent upon patient compliance. According to the United States Renal Data System 2006 Annual Data Report, only 65% 

of individuals with Employer Group Health Plan medication coverage routinely took 

their medications. This area should also be given careful consideration. The potential for undertreatment may also lead to elevated parathyroid hormone levels which 

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is associated with epoetin hyporesponsiveness, thereby compromising the bundled 

amount to cover this medication. 

Similarly, we are concerned that a bundled payment system could lead providers 

to revert to the use of blood transfusions to treat anemia in dialysis patients who 

are not responsive to erythropoiesis stimulating agents. Not only would such a 

change in practice patterns expose this vulnerable patient population to unknown 

risks from the nation’s blood supply but it would also make it difficult to consider 

these patients for kidney transplantation since the transfusions introduce antibodies 

that complicate organ matching. 

These are only a few examples of the concerns with bundling. It was stated at 

the hearing that it would be possible to make retroactive adjustments should the 

bundling formula prove to be problematic. However, there will be no way to reverse 

the negative patient outcomes that could result from adoption of a bundled reimbursement policy that does not address these issues. 

The National Kidney Foundation appreciates the opportunity to submit this testimony. The Committee members should consider the National Kidney Foundation as 

a resource while it continues to deliberate these issues. Thank you! 

f 

Statement of the Renal Physicians Association, Rockville, Maryland 

The Renal Physicians Association (RPA) is the professional organization of 

nephrologists whose goals are to ensure optimal care under the highest standards 

of medical practice for patients with renal disease and related disorders. RPA acts 

as the national representative for physicians engaged in the study and management 

of patients with renal disease. RPA greatly appreciates the interest of Committee 

Chair William Thomas and Ranking Member Charles Rangel in the issues surrounding anemia management services provided to patients with kidney disease and 

kidney failure. We welcome the opportunity to offer our perspective on these complex issues. Our testimony will focus on the use of clinical practice guidelines and 

best evidence in healthcare delivery, the role of the nephrologist in the care of patients with kidney disease and the importance of maintaining physician prescribing 

autonomy, the issue of ESRD patient variability related to EPO dose, and common 

misperceptions regarding anemia management and reimbursement for these services. 

Clinical Practice Guidelines and Physician Prescribing Autonomy 

RPA believes that clinical practice guidelines in renal care, like those in other 

medical disciplines, should be evaluated on the basis of the strength of evidence, an 

assessment of harms and benefits, and should benefit from robust physician and 

other multidisciplinary input and review. Guidelines developed with these considerations in mind will enhance the delivery of high quality patient care and help ensure kidney patient safety. RPA also believes that the current body of literature in 

the area of anemia management fulfills these criteria, and forms a solid foundation 

for public policy making efforts such as the Centers for Medicare and Medicaid 

Services (CMS) recently finalized EPO Monitoring Policy (EMP). Further, it is our 

opinion that the CHOIR and CREATE studies recently published in the New England Journal of Medicine, once they have been subject to the full measure of robust 

scientific review, will likely represent an important addition to this already significant body of literature, and should be considered thoughtfully and thoroughly by 

care providers and policymakers. 

However, RPA also feels compelled to note that clinical practice guidelines are in 

fact guidelines, not required protocols, and that the most important determining factor in the care of the patient should be the physician’s clinical judgment considered 

in the context of the physician-patient relationship. RPA believes that it is of paramount importance to maintain the physician’s autonomy and ability to exercise clinical judgment in prescribing for the individual patient. Decisions for the individual 

may and should be permitted to deviate from the norm on the basis of individualized clinical evaluation and specific patient needs. This is a fundamental and wellrecognized clinical principle in medicine, and it is mandatory that it be maintained 

and protected. RPA believes the CMS’ EPO Monitoring Policy accounts for such use 

of the physician’s clinical judgment. 

Variability in ESRD Patient Hemoglobin Levels 

RPA believes that in the recent discourse on national coverage of EPO, the critical 

issue of variability of individual patient response to EPO dose has been understated. 

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ment, attempts to assess or quantify individual sensitivities (i.e. responsiveness) to 

EPO at a narrow level have not been successful. Thus,there is no single, predictable 

response to a given dose of EPO, a fact that accounts for the wide range in individual responses to treatment. As a result, in the aggregate it is physiologically not 

rational to tailor a normal distribution of patient responses to a payment limit: such 

a paradigm cannot be successful in delivering optimaltreatment with sophisticated 

agents to complicated patients. Payment limits structured in this fashion place emphasis on the wrong arm of therapy: emphasis should be placed rather on reducing 

the number of patients with low hematocrits/hemoglobins (>30%/10 gm/dL). At the 

same time, Medicare coverage policy should strive to maintain levels in all patients 

<11 gm/dL, given the ample data disclosing the adverse short and long-term effects 

to patients with persistent anemia. Simply put, overemphasis on monitoring patients at the upper end of the range should not create problems for patients at the 

lower end, and RPA believes that the current CMS EPO Monitoring Policy strives 

to avoid such problems in the broad Medicare ESRD beneficiary population. 

Misperceptions Regarding EPO Requirement 

Finally, RPA would also like to take this opportunity to dispel some common 

misperceptions regarding reimbursement for erythropoietin. There have been articles in both the mainstream and medical trade press implying that nephrologists 

have a financial incentive to prescribe higher doses of erythropoietin to ESRD patients. This is simply not true. Nephrologists prescribe EPO based on their clinical 

judgment of what will optimize the individual patient’s hemoglobin level. Moreover, 

it is the dialysis facility that receives reimbursement for EPO prescribed to ESRD 

patients, not the nephrologist, and thus any inference that the nephrologist will personally benefit from prescribing higher doses of EPO, or any drug, to ESRD patients 

is erroneous. 

Conclusion 

In conclusion, RPA supports the use of clinical practice guidelines in the development of protocols enhancing the delivery of high quality patient care but believes 

they must be considered in the context of the physician’s clinical judgment. RPA believes that physician prescribing autonomy must be maintained, and that the variability in ESRD patient hemoglobin levels must be accounted for in the development 

of national coverage policy for EPO. Finally, the misperception that nephrologists 

have a financial incentive to prescribe high doses of EPO to ESRD patients is erroneous. Once again, RPA appreciates the opportunity to provide our perspective on 

these issues to the Committee, and we make ourselves available as a resource to 

the Committee in its future efforts to ensure the best possible health outcomes and 

quality of life for Medicare beneficiaries with ESRD. 

f 

Statement of Kris Robinson, American Association of Kidney Patients, 

Tampa, Florida 

The American Association of Kidney Patients (AAKP) (www.aakp.org), founded in 

1969, is the nation’s only kidney patient-led and managed education and advocacy 

organization for people with kidney disease. AAKP serves over one million Americans annually who have either lost kidney function (and live with dialysis or transplant) or have chronic kidney disease (CKD). As you may know, the average life expectancy for individuals following initiation of dialysis therapy is short, less than 

5 years. As patients ourselves, we realize the important need to ensure quality of 

care and access for all dialysis and potential dialysis patients. 

AAKP was instrumental in the fight for the enactment of the Medicare ESRD Program. In 1972, Shep Glazer, the Vice President of our forerunner organization, testified before the House Ways and Means Committee while being dialyzed. This effort 

was crowned with success in 1972 when Congress enacted the program that continues to provide Medicare funding for dialysis and kidney transplantation. 

AAKP appreciates the opportunity to provide written testimony to the House 

Ways and Means Committee. We are available to assist the Committee with needed 

information as it continues to review quality of care issues for today’s dialysis patients. AAKP’s written testimony will provide patients’ views on safety and efficacy 

in healthcare and provide insight into what patients need to ensure a high quality 

of life and health. 

AAKP commends the Committee for assessing and reviewing patient safety and 

quality issues for care received by dialysis patients. AAKP’s mission has always 

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been to help all kidney patients achieve the best possible quality of life and longevity. 

Regarding specific issues under review by the Committee, AAKP has developed 

and distributed position papers on the following topics in recent years: 1). Support 

for the continuation of the patient and physician relationship in medical care; 2). 

Support for continuous quality care and improvement and 3). Support for continuous 

safety monitoring. The content of these positions is summarized below: 

Patient/Physician Relationship—AAKP strongly believes the principle that a physician and patient must be permitted to decide a care plan best suited for that patient. Averages and other statistics are fine for certain purposes, but medicine is 

fundamentally about the treatment of a unique individual. In this light, we worry 

that any legislation that mandates particular treatment options may impede the 

doctor/patient decision-making relationship. 

ESRD Continuous Quality Improvement—AAKP supports legislation to provide 

data on outcomes and quality of care for kidney patents. We worry that piecemeal 

approaches to improving quality may not offer the best health outcomes for patients 

and is why we have continuously asked Congress to establish a ‘‘National Commission on Improved Kidney Patient Outcomes.’’ 

Safety Monitoring—AAKP supports legislation to ensure safety in healthcare settings. We applaud Congress, the Centers for Medicare and Medicaid Services (CMS) 

and the renal community as a whole for developing programs to ensure safety for 

all patients. However, we wish to encourage Congress to look at the major safety 

issues that impact all patients. 

With regard specifically to the administration of erythropoietin (EPO) to patients, 

AAKP has previously addressed CMS with comments and questions regarding dosing policies. Though recent clinical studies such as CHOIR have demonstrated mortality in non-dialysis patients, we have asked CMS ‘‘Is there any clinical data that 

demonstrates that dialysis patients—either nationally or regionally—are in fact receiving more EPO than necessary to maintain an appropriate hematocrit level, or 

that inappropriate EPO prescribing by physicians is the driver for increased EPO 

spending?’’ We are awaiting a response. 

Furthermore, AAKP is also interested in how the issues currently being discussed 

about EPO will be affected by the ‘‘Medicare Prescription Drug, Improvement, and 

Modernization Act of 2003’’ (DIMA) (P.L. 108–173). In particular, section 623 of 

DIMA instructs CMS to implement effective January 1, 2005, a new ‘‘basic case-mix 

adjusted composite rate,’’ which would, inter alia, transfer the dollar difference (the 

‘‘spread’’) between acquisition and Medicare payment rates for separately billed 

drugs and biologicals (including erythropoietin) to the per-session composite rate for 

dialysis treatment. Even if there is some current law financial incentive for overutilization of EPO, would not that incentive be eliminated by section 623? We are 

concerned that section 623 has not occurred as scheduled. 

National Commission on Improved Kidney Patient Outcomes—AAKP previously 

wrote to the House Ways and Means Committee calling for a ‘‘National Commission 

on Improved Kidney Patient Outcomes.’’ We believe a global perspective—rather 

than a piecemeal approach—is needed to improve quality and coordination of medical care for dialysis patients, and perhaps even create savings to Medicare. Indeed, 

as payor for the medical care of about 75 percent of all kidney patients receiving 

dialysis in the United States, CMS bears a special responsibility to ensure that dialysis patients not only receive quality medical care—but that care is provided in 

a manner that maximizes positive outcomes. We would note the November 21 report 

by the HHS Inspector General calling for more collection of quality of care date in 

the ESRD program. AAKP believes these issues will become even more urgent as 

the nation’s dialysis population is expected to grow three-fold over the next decade. 

Moreover, in the kidney community today, there is a vigorous debate about the 

adequacy of medical care of dialysis patients, prompted by apparently higher U.S. 

dialysis patient disability, morbidity, and mortality in cross-national studies. Some 

have argued that it is a ‘‘national disgrace that the death rate now solidly stays in 

the region of 24% every year and has more than doubled over the last 30 years’’ 

(Kjellstrand, CM, Blagg, CR, ‘‘Differences in dialysis practice are the main reasons 

for the high mortality rate in the United States compared to Japan,’’ Hemodial Int. 

2003; 7(1): 70). Others believe that cross-national comparisons are flawed for selection reasons (i.e., sicker, older patients are denied dialysis in comparison countries) 

and that the U.S. should take pride in the unique availability of dialysis here (see, 

e.g., Friedman, EA, ‘‘International comparisons of survival on dialysis: Are they reliable?’’ Hemodial Int. 2003; 7(1):59–66). In any case, with the U.S. ranking last 

among industrialized countries in mortality for kidney patients, there is a clear need 

to take a close look at the adequacy of medical care for U.S. dialysis patients. 

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Charged with a comprehensive program review, the agenda for such a National 

Commission might also include patient access to other important renal replacement 

treatments, such as home dialysis and transplantation; nephrologists’ residency 

training; and reimbursement of rural facilities. There are also many other opportunities to improve care and reduce costs to Medicare, including slowing the progression to ESRD among chronic kidney disease patients (CKD), better chronic disease 

management, advances in new technology and biomedical solutions, more transplantation, and improved patient education. AAKP stands ready to assist the Committee 

on ways to implement such a Commission. 

AAKP commends the Committee for addressing the issues of quality of care as 

currently delivered to the over 300,000 dialysis patients. We appreciate the opportunity to provide input into your efforts and look forward to working with you to 

provide continuous quality improvement to all patients. 

f 

Statement of Dori Schatell, Medical Education Institute, 

Madison, Wisconsin 

The Medical Education Institute (MEI) is a non-profit foundation dedicated to the 

mission of helping people with chronic diseases learn to manage and improve their 

health. Since 1993, MEI efforts have focused on improving longevity and quality of 

life for people with chronic kidney disease (CKD) through health behavior research 

and evidence-based patient and professional education materials. I appreciate the 

opportunity to provide an additional viewpoint for the Committee. 

To begin, I am dismayed by the implication that the K/DOQI Guidelines were influenced by industry participation. When the MEI administered the first DOQI 

Guidelines in 1996, I was the ‘‘writer’’ for the Anemia Work Group, recording their 

deliberations. Amgen requested and was denied permission to observe the proceedings of this Work Group—they read the final Guidelines at the same time as 

the rest of the renal community and had no role in the outcome. The clinicians who 

spent many months of intensive hours reviewing hundreds of scientific papers and 

developing recommendations were a dedicated, conscientious group who knew they 

were making history. I am very saddened to hear their labors and the subsequent 

results of groups that updated the National Kidney Foundation K/DOQI Guidelines 

denigrated and their ethics called into question. Industry support from Amgen and 

others for the original DOQI Guidelines and subsequent K/DOQI Guidelines has 

moved the practice of nephrology forward by helping to establish key clinical benchmarks in a number of vital areas of practice, including nutrition, bone disease, dialysis adequacy, vascular access, etc. Where would patients be today if those Guidelines had not been written? Who would have supported their development if industry had not stepped up to the plate? 

Second, much of the criticism of current CMS policy regarding anemia treatment 

for people on dialysis is based on the recently-published CHOIR study. Having reviewed the results, which concluded that patients with stages 3–4 CKD had a 34% 

higher risk of adverse outcomes if their hemoglobin levels were 13.5 g/dL, several 

aspects of this paper were of sufficient concern to possibly call the conclusions into 

question: 

• Study power: A power analysis revealed that 1,352 patients would need to be 

enrolled; data were reported for 1,432 patients on the basis of intent to treat. 

But 549 patients withdrew from the study without having had a composite 

event. Did this bias the findings? • Baseline differences between the high and low hemoglobin groups: 

There were significant differences in baseline data for cardiovascular history. 

Those in the high Hgb group had a significantly higher rate of high blood pressure (p=0.03) and coronary artery bypass graft (p=0.05) prior to the study. Did 

this influence the results? 

• Differences in baseline GFR: It is unclear whether the time to renal replacement therapy (RRT) analysis accounted for baseline variations in GFR. Clearly 

individuals with a GFR of 15 at baseline are much closer to needing RRT than 

those whose GFR was 50. 

• No blood pressure changes: Despite worse cardiovascular outcomes in the 

high hemoglobin group, there were no significant changes in blood pressure in 

the high vs. low hemoglobin group. This seems odd. • Lack of statistical significance: The CHOIR authors state that there were, 

‘‘no significant differences between the two groups in the four individual components of the primary composite end point (hospitalization, MI, stroke, or 

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1Perlman RL, Finkelstein FO, Liu L, Roys E, Kiser M, Eisele G, Burrows-Hudson S, Messana 

JM, Levin N, Rajagopalan S, Port FK, Wolfe RA, Saran R. Quality of life in chronic kidney disease (CKD): a cross-sectional analysis in the Renal Research Institute-CKD study. Am J Kidney 

Dis. 45(4):658–66, 2005. 

2Mapes DL, Bragg-Gresham JL, Bommer J, Fukuhara S, McKevitt P, Wikstrom B, Lopes AA. 

Health-related quality of life in the Dialysis Outcomes and Practice Patterns Study (DOPPS). 

Am J Kidney Dis. 2004 Nov;44(5 Suppl 2):54–60 3Lowrie EG, Curtin RB, LePain N, Schatell D. Medical outcomes study short form-36: a consistent and powerful predictor of morbidity and mortality in dialysis patients. Am J Kidney Dis. 2003 Jun;41(6):1286–92. 4Provenzano R, Garcia-Mayol L, Suchinda P, Von Hartitzsch B, Woollen SB, Zabaneh R, Fink 

JC; POWER Study Group. Once-weekly epoetin alfa for treating the anemia of chronic kidney 

disease. Clin Nephrol 61(6):392–405, 2004. 5Lefebvre P, Vekeman F, Sarokhan B, Enny C, Provenzano R, Cremieux PY. Relationship between hemoglobin level and quality of life in anemic patients with chronic kidney disease receiving epoetin alfa. Curr Med Res Opin. 22(10):1929–37, 2006. 

death). . . . However, the hazard ratios for death and hospitalization for CHF 

had strong trends toward a higher risk in the high-hemoglobin group than in 

the low-hemoglobin group.’’ Also, the risk of heart attack (MI) with high hemoglobin was.91 (less than 1.00); thus those with higher hemoglobin actually had 

a lower risk of MI. 

• Non-standard measurement of quality of life: It is unclear why three separate tools were used to assess quality of life (QOL). Given the highly unusual 

finding of no QOL benefit to a higher vs. a lower hemoglobin, one must wonder 

if patients were overwhelmed by the sheer number of survey items (a total of 

83 questions, many with sub-questions). Multiple studies in CKD and dialysis 

patients have shown that those with higher hemoglobin levels score significantly higher in physical and mental functioning on the SF–36 and Kidney Disease Quality of Life (KDQOL).1 2 And, in the dialysis population, higher physical and mental functioning independently predict lower rates of hospitalization 

and death.3 One of the tools used in the CHOIR study (LASA) was developed 

for breast cancer and has been used only twice before in kidney patients. Interestingly, in one of those two studies, 1,557 non-randomized predialysis CKD patients received r-HuEPO, and their hemoglobin levels rose from 9.1 g/dL to 11.6 

g/dL in 16 weeks with significant improvement in all QOL parameters.4 In the 

other analysis by some of the same researchers, there was ‘‘a positive and significant relationship between Hb levels and QOL.’’5

In light of these concerns—and of the exactly contradictory findings of the CREATE study in a similar population published in the same issue of the New England 

Journal of Medicine—the MEI urges the Committee to proceed with caution and 

consider all of the available data. 

Third, previous CMS policies related to use of EPO to correct anemia in people 

on dialysis have had unintended consequences that have harmed patients. Early reimbursement of EPO offered incentives to undertreat patients when dialysis centers 

were paid $40 for up to 10,000 units and $30 additional for more than 10,000 units. 

The Hematocrit Measurement Audit (HMA) policy, which stopped EPO reimbursement to dialysis centers for patients whose hematocrit levels rose above a rolling 

average of 36.5%—without a provision to permit physicians to medically justify 

higher levels—led to lower average hematocrit levels and patients complained of a 

‘‘roller coaster’’ effect that was very debilitating. Please see the attached article the 

MEI published in Nephrology News and Issues with patient interviews that illustrate in these individuals’ own voices how difficult it is to care for children or grandchildren, do simple tasks around the home (like vacuuming, hammering nails, or 

washing windows), hold down a job—or even walk to the mailbox with inadequate 

anemia correction, and how very much better patients feel at a higher vs. a lower 

hematocrit. Anecdotally, patients report they feel every percent of difference in their 

hematocrit or hemoglobin. The MEI is concerned that bundling EPO with other 

drugs may, over time, lead to underutilization as dialysis centers attempt to hold 

down costs to compensate for inflation—unless an appropriate case mix adjuster is 

used and an annual update mechanism is created, as was proposed in the Kidney 

Care Quality and Improvement Act. 

Fourth, each year, according to the United States Renal Data System (USRDS) 

half of the more than 100,000 individuals who reach end-stage and need dialysis 

or transplant to survive are under age 65, or ‘‘working-age.’’ Enabling working-age 

patients to keep their job benefits: 

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6 Hofmann RM, Schatell D, Witten B, Muehrer R, Gagnon R, Becker BN. Factors contributing 

to employment of working-age ESRD patients at initiation of dialysis therapy. Publication pending. 7 Boven K, Knight J, Bader F, Rossert J, Eckardt K, Casadevall N. Epoetin-associated pure 

red cell aplasia in patients with chronic kidney disease: Solving the mystery. Nephrol Dial 

Transplant. 20 Suppl 3:iii33–40, 2005. 

• Patients themselves—through improved social contacts, higher income than 

disability would pay, and access to benefits that may include an employer group 

health plan (EGHP) 

• Dialysis providers—by improving payer mix for dialysis centers 

• Medicare and Social Security—by reducing the number of ESRD patients 

who have Medicare as their primary health coverage and the number collecting 

disability benefits. 

More than 354,000 working age patients started dialysis from 1992–2003. Of 

these, 102,104 were working 6 months prior. More than 71% of these working patients did not receive any EPO to treat their anemia prior to kidney failure, contributing significantly to reduction in employment levels in more than 31,000 patients.6

In 1973, the Medicare ESRD Program was funded based on the belief that people 

who received treatment for kidney failure would be active, productive, tax-paying 

citizens. To the extent that physicians and patients are frightened that appropriate 

anemia treatment will harm them and patients are undertreated as a result, the 

goal of keeping patients working will become even more difficult to achieve. 

Finally, if there is a trade-off to be made between length of life and quality of 

life (with a lower versus a higher hemoglobin level), only one person can legitimately 

make that choice: the person with anemia. I hope the Committee will bear in mind 

that reimbursement policies ultimately and dramatically affect the day-to-day lives 

and futures of people with kidney failure. 

Perhaps the Committee could consider looking at innovative ways to reduce costs 

while improving patient outcomes. For example, why not incentivize patients to receive their EPO doses subcutaneously, which is more effective and less costly—but 

requires more needle sticks. Waiving all or a portion of their Medicare Part B premiums ($93.50 monthly in 2007) for patients who accept subcutaneous dosing would 

likely save considerably more than it would cost. (Incidentally, concerns about pure 

red cell aplasia with subcutaneous dosing of ESR products in Canada and Europe 

have now been attributed to the use of uncoated rubber stoppers in the vials, a practice that has now been stopped).7

f 

Coalition for Dialysis Patient Choice 

December 20, 2006 

The Coalition for Dialysis Patient Choice attended the recent Congressional hearing on Patient Safety and Quality Issues in End Stage Renal Disease Treatment 

and appreciates the opportunity to provide comments to the Committee regarding 

reimbursement policies for anemia management. The Coalition is a non-profit organization formed by companies and organizations dedicated to increasing the availability of innovative, more physiologic dialysis therapies (more frequent and/or 

longer duration) and reducing the barriers to home and self-care dialysis. 

Given the critical role the Federal government has assumed in the care of dialysis 

patients, we commend the Committee’s efforts to seek optimum care in anemia management. As payment methodologies are revised, our Coalition asks that the potential to increase patient access to home and more frequent dialysis modalities also 

be considered. Greater utilization of these modalities will assist in addressing the 

particular anemia management questions raised by this Committee, and also has 

the potential to lower total Medicare costs and improve beneficiary outcomes. 

Hemoglobin levels in the dialysis population and utilization of pharmaceuticals to 

address anemia are without doubt influenced by payment policy. The same ‘‘perverse incentives’’ that influence in-center IV drug utilization also discourage home 

therapies. As stated in the Government Accountability Office’s (GAO) recent report 

titled Bundling Medicare’s Payment for Drugs with Payment for All ESRD Services 

Would Promote Efficiency and Clinical Flexibility, ‘‘Studies have shown that daily 

hemodialysis—which some experts contend is clinically preferable—reduced the 

need for Epogen in some ESRD patients with anemia . . . [h]owever, Medicare coverage is limited to three dialysis treatments a week.’’ Evidence supports that home 

dialysis, whether peritoneal dialysis (PD) or home hemodialysis (HHD), is currently 

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underutilized—despite the continued evidence reported annually, using Medicare 

data, that the home setting leads to the lowest total cost of care. 

We support the GAO’s recommendation for the rapid implementation of the ‘‘expanded bundle’’ as soon as possible. If coupled with appropriate safeguards and 

case-mix considerations to protect patients from EPO underutilization, this method 

represents a very effective way to reverse these perverse incentives and their negative unintended consequences. We further favor the implementation of the ‘‘expanded bundle’’ for all beneficiaries as soon as practicable. 

However, neither patients nor Medicare will realize the greatest potential benefit 

if revision in payment policy results only in more efficient utilization of pharmaceuticals within today’s most prevalent treatment regimen—thrice weekly hemodialysis in the center, or ‘‘conventional’’ hemodialysis. A large, recent randomized 

study of conventional dialysis (the NIH/NIDDK’s HEMO study) showed that modifications within this treatment regimen were unlikely to lead to significant improvement in patient outcomes. To materially improve patient outcomes and reduce Medicare costs, more significant modifications are required to the way dialysis is delivered. Simply put, significantly better dialysis is required for further improvement, 

and more frequent/longer dialysis provides this opportunity. 

The clinical evidence supporting more frequent and longer dialysis modalities is 

compelling and growing. By closer approximation of the 24/7 workings of the naturally functioning kidney, more frequent/longer dialysis leads to a number of potential patient benefits. Relevant to this discussion, these therapies have been shown 

to improve anemia management with lower pharmaceutical needs. In addition, however, these therapies can also: 

• Dramatically improve blood pressure management with fewer antihypertensive 

drug needs 

• Better manage patient bone disease and vascular calcification 

• Improve patient nutrition 

• Improve patient rehabilitation/functional status. 

The most natural setting for these therapies is in the home, where the patient 

retains control of his or her schedule and care. Together, these improvements have 

the potential to dramatically reduce Medicare ESRD drug and hospitalization expenses currently incurred by conventional dialysis patients (these expenses represent over 60% of the current total annual cost of care), and can facilitate patients’ 

continued contributions as productive members of society. 

We believe that the expanded bundle structure, with appropriate performance 

measures and the implementation of ‘‘shared savings’’ concepts that have been discussed, can be instrumental in encouraging therapies beyond today’s conventional, 

thrice weekly in-center dialysis. 

In summary, the Coalition asks that the Committee consider the anemia management questions more broadly, and to take a total cost of care perspective when recommending changes. We ask that you explicitly consider the potential to encourage 

appropriate utilization of home and more frequent/longer dialysis therapies when 

making payment policy modifications. By doing this, not only will Medicare encourage optimal anemia management but, at the same time, optimize patient care costs 

and outcomes. 

Again, we appreciate the opportunity to provide input into this important process. 

We stand ready to provide any additional information that will assist the Committee 

and the community in this valuable work. 

Sincerely, 

Joseph E. Turk, Jr. 

NxStage Medical 

Founding Member 

Rod Kenley 

Aksys Ltd. 

Founding Member 

Jim Sweeney 

Renal Solutions, Inc. 

Founding Member 

Dori Schatell 

Medical Education Institute 

f 

Supporting Partner 

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Statement of Patricia Tate-Harris, Association of Dialysis Advocates, 

Baton Rouge, Louisiana 

The Association of Dialysis Advocates (ADA) is a grassroots patient/family advocacy organization dedicated to ensuring quality, safe care for dialysis patients. ADA 

is self-funded through personal contributions of our members. We do not accept financial or other contributions from the dialysis industry, pharmaceutical industry, 

healthcare industry, or any government entity so that we maintain our integrity 

and objectivity in addressing dialysis-related issues. 

ADA is encouraged by the House of Representatives Ways and Means Committee’s hearing of December 6, 2006 re: the ESRD Program. We are encouraged that 

our congressional representatives are holding Centers for Medicare & Medicaid 

(CMS) accountable for the quality of care provided dialysis patients and for the efficient use of taxpayer dollars that fund care. We are encouraged that our representatives expressed favor towards a ‘‘patients come first’’ policy and pointed to the need 

for CMS policies to reflect such a policy. 

ADA is most grateful for the contributions and support of the Hearing panelists 

for bringing forth data related to the use of Epogen and its detrimental effect on 

patients. When this medication is not administered within established guidelines for 

the benefit of patients, poor patient outcomes can follow. We are also thankful for 

the recent media interest and coverage that brought information to dialysis patients 

and taxpayers regarding the clinical and fiscal issues related to use and overuse of 

Epogen. 

The hearing of December 6, 2006 is but another beginning. ADA patients and 

families are hopeful that the Ways and Means Committee will pursue all issues related to the federal ESRD program so that patients receive quality and safe care 

at a reasonable cost to taxpayers. ADA has longed believed that attention to the use 

of Epogen has been a necessity. 

ADA’s positions regarding specific issues covered during the hearing follow: 

EPOGEN 

ADA strongly believes that an immediate congressional directive should be 

given to CMS to incorporate into the federal ESRD Program the recent FDA 

warning regarding Epogen. 

ADA supports bundling of services and drugs, including Epogen. Additionally, 

ADA supports the clinical individualization of treatment to best meet the needs of 

the patient. It is essential, ADA believes, that the current financial incentive to 

overuse Epogen be removed and replaced with emphasis on patient safety. Lastly, 

ADA believes that the bundling of services and drugs will discourage the overuse 

of Epogen and focus greater attention upon the adequacy of iron stores—and at lesser cost—for what should be a more efficacious use of Epogen. 

ADA supports subcutaneous administration of Epogen. ADA believes that clinical 

and cost perspectives, as demonstrated by the United States Veterans’ Administration Hospitals (as well as in Europe), are supported by subcutaneous administration 

of Epogen. Further, ADA believes that use of multi-dose vials of Epogen will address 

existing provider and patient concerns regarding stinging during subcutaneous administration. 

Lastly, we request that Congress intervene to ensure that (1) policies, payment 

and others, are based upon safe delivery of care to patients by experts having no 

conflict of interest due to their positions, affiliations or relationships within the dialysis industry and/or pharmaceutical companies and that (2) every effort be made 

to ensure that no one pharmaceutical company monopolizes any medication required 

for quality treatment of chronic renal failure and/or ESRD patients. This is a population that is escalating—the protection afforded a monopoly is not in the best interest of patients or taxpayers. 

INCREASED FUNDING FOR PREVENTION AND SPECIAL INVESTIGATIVE STUDIES 

ADA is supportive of the suggestion that NIH be appropriated funding to research 

the factors that c ontribute to over-representation of minorities—particularly African-Americans, Hispanics and Native American Indians—among the kidney failure/ 

dialysis population. We further support a focus upon prevention efforts accompanied 

by funding that ensures attainment of program goals. 

Congress has established 18 ESRD networks to provide quality assurance of the 

ESRD program. African-Americans comprise 12–13% of the general population yet 

represents, according to ESRD Networks 2005 Annual Reports, at least 33% of the 

dialysis population in ten of the eighteen ESRD Network regions. In seven of the 

ten ESRD Network regions the African-American dialysis population is 40% or 

greater. Glaringly, the African-American dialysis population in Network 5 (Marycnoel on PRODPC60 with HEARING

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land, Virginia, Washington, DC, West Virginia) is 59%; in Network 6 (Georgia, 

North Carolina, South Carolina) African-Americans comprise 67% of the dialysis 

population; in Network 8 (Alabama, Mississippi, Tennessee) 62.3%; and Network 13 

(Arkansas, Louisiana and Oklahoma) 52.5%. Such over-representation is an event 

that cannot, and must not, be minimized but rather calls for assertive and aggressive prevention and treatment programs. 

CMS’ RESPONSIBILITY TO BENEFICIARIES 

Among other things, CMS’ responsibility to beneficiaries is three-fold: (1) ensuring 

quality, safe delivery of care (2) ensuring sufficient information is provided in order 

for beneficiaries to make informed decisions, and (3) ensuring an effective 

systematicmechanism through which to address patient concerns related to care. 

Quality, Safe Delivery of Care 

No policy related to quality, safe care is truly meaningful unless it is actually incorporated intothe clinical performance measures and ancillary services required by 

its respective patient population. All stake-holders from patient-families to 

healthcare workers fully recognize that it will be incumbent upon Congress to ensure that CMS, ESRD Networks and the state survey agencies each carry out responsibilities related to the oversight and enforcement of ESRD Conditions for Coverage. 

The recent exposure of a dialysis facility in Birmingham, Alabama (Birmingham 

News, November 19, 2006, ‘‘Patients feel they’re mistreated: Dialysis centers focus on 

profits, advocates say’’) that had not been inspected since 1998 simply demonstrates 

the laxity with which CMS, the ESRD Network and state survey agency carried out 

their statutory, contractual responsibilities. Equally revealing were (1) HHS, Office 

of Inspector General report, Availability of Quality of Care Data in the Medicare 

End Stage Renal Disease Program, November 2006 report (OEI–05–05–0030) that 

reflected the ESRD networks’ lack of necessary data to identify facilities ‘‘with quality improvement needs,’’ and (2) HHS, Office of Inspector General Civil Monetary 

Penalty report (November 2006) that reported a dialysis facility/owner’s agreement 

to pay $150,000 to resolve liability for submission of Medicare claims although 

‘‘inadequate and/or worthless services had been rendered to patients’’— 

worthless services that the HHS OIG alleged ‘‘may have contributed to seven 

deaths . . .’’ 

Patients’ lives are at stake! It is unconscionable that CMS, ESRD networks and 

state survey agencies have permitted such failures in oversight while dialysis 

chains/facilities and pharmaceutical companies nevertheless have experienced raging financial returns. 

Making Informed Decisions 

ADA supports the 2004 ESRD Initiative for Quality Care. However, ADA also 

firmly believes that the initiative’s original intention regarding the Dialysis Facility 

Compare website and chart was to ‘‘empower consumers with quality of care information to make more informed decisions about their healthcare’’ and such has not 

been met. Patients and consumers still need ‘‘to review and compare facilities and 

choose a dialysis facility that best meets their needs.’’ While there is information 

posted regarding anemia, hemodialysis adequacy, and patient survival, ADA believes the information is limited. Dialysis Facility Compare does not provide other 

highly pertinent information for ordinary patients and/or consumers to truly make 

informed decisions. For instance, patients and consumers are greatly interested in 

(a) staffing—including their education, skills knowledge and training, and licensing 

and/or certification (b) inspection reports, and (c) infections and infection rates. And, 

most unfortunately, the information provided is not easily understood by ordinary 

patient-consumers. Both the public disclosure and the simplification of the information found on the Dialysis Facility Compare chart will support informed decisionmaking while furthering patient education and safety. 

CONCLUSION 

We, at the Association of Dialysis Advocates, are encouraged and confident that 

the Ways and Means Committee will be steadfast in its efforts to ensure quality 

care to dialysis patients and the efficient use of public funds. Similarly, we are encouraged and confident that the Ways and Means Committee will work to ensure 

that CMS, ESRD Networks, and State Survey Agencies carry forth their responsibilities in the best interest of dialysis patients, their families, and the public. ADA 

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stands ready to participate and serve in deliberations related to the delivery of care 

in dialysis environments. 

Very truly yours, 

Patricia Tate-Harris 

President 

Æ 

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