End-Stage Renal Disease: Medicare Payment Refinements Could Promote Increased Use of Home Dialysis
Published: 2015-10-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2013, Medicare spent about $11.7 billion on dialysis care for about 376,000 Medicare patients with end-stage renal disease, a condition of permanent kidney failure. Some of these patients performed dialysis at home, and such patients may have increased autonomy and health-related quality of life.
GAO was asked to study Medicare patients' use of home dialysis and key factors affecting its use. This report examines (1) trends in home dialysis use and estimates of the potential for wider use, (2) incentives for home dialysis associated with Medicare payments to dialysis facilities, and (3) incentives for home dialysis associated with Medicare payments to physicians. GAO reviewed CMS policies and relevant laws and regulations, and GAO analyzed data from CMS (2010-2015), the United States Renal Data System (1988-2012), and Medicare cost reports (2012), the most recent years with complete data available. GAO also interviewed CMS officials, selected dialysis facility chains, physician and patient associations, and experts on home dialysis.
section_title: What GAO Found
paragraphs: The percentage of dialysis patients who received home dialysis generally declined between 1988 and 2008 and then slightly increased thereafter through 2012, and stakeholder estimates suggest that future increases in the use of home dialysis are possible. Dialysis patients can receive treatments at home or in a facility. In 1988, 16 percent of 104,200 dialysis patients received home dialysis. Home dialysis use generally decreased over the next 20 years, reaching 9 percent in 2008, and then slightly increased to 11 percent of 450,600 dialysis patients in 2012—the most recent year of data for Medicare and non-Medicare patients. Physicians and other stakeholders estimated that 15 to 25 percent of patients could realistically be on home dialysis, suggesting that future increases in use are possible. In the short term, however, an ongoing shortage of supplies required for peritoneal dialysis—the most common type of home dialysis—reduced home dialysis use among Medicare patients from August 2014 to March 2015. Some stakeholders were also concerned the shortage could have a long-term impact.
Medicare's payment policy likely gives facilities financial incentives to provide home dialysis, but these incentives may have a limited impact in the short term. According to the Centers for Medicare & Medicaid Services (CMS) within the Department of Health and Human Services (HHS), setting the facility payment for dialysis treatment at the same rate regardless of the type of dialysis gives facilities a powerful financial incentive to encourage the use of peritoneal dialysis when appropriate because it is generally less costly than other dialysis types. However, GAO found that facilities also have financial incentives in the short term to increase provision of hemodialysis in facilities, rather than increasing home dialysis. This is consistent with information from CMS and stakeholders GAO interviewed. For example, facilities may be able to add an in-center patient without paying for an additional dialysis machine, because each machine can be used by six to eight in-center patients. In contrast, for each new home patient, facilities may need to pay for an additional machine. The adequacy of Medicare payments for home dialysis training also affects facilities' financial incentives for home dialysis. Although CMS recently increased its payment for home dialysis training, it lacks reliable cost report data needed for effective fiscal management, which involves assessing payment adequacy. In particular, if training payments are inadequate, facilities may be less willing to provide home dialysis.
Medicare payment policies may constrain physicians' prescribing of home dialysis. Specifically, Medicare's monthly payments to physicians for managing the care of home patients are often lower than for managing in-center patients even though physician stakeholders generally said that the time required may be similar. Medicare also pays for predialysis education—the Kidney Disease Education (KDE) benefit—which could help patients learn about home dialysis. However, less than 2 percent of eligible Medicare patients received the benefit in 2010 and 2011, and use has declined since then. According to stakeholders, the low usage was due to statutory limitations in the categories of providers and patients eligible for the benefit. CMS has established a goal of encouraging home dialysis use among patients for whom it is appropriate, but the differing monthly payments and low usage of the KDE benefit could undermine this goal.
section_title: What GAO Recommends
paragraphs: GAO recommends that CMS (1) take steps to improve the reliability of the cost report data, (2) examine and, if necessary, revise policies for paying physicians to manage the care of dialysis patients, and (3) examine and, if appropriate, seek legislation to revise the KDE benefit. HHS concurred with the first two recommendations but did not concur with the third. GAO continues to believe this recommendation is valid as discussed further in this report.

section_title: Letter
paragraphs: In 2013, Medicare spent about $11.7 billion on dialysis care for about  376,000 Medicare patients. Dialysis, a process that removes excess  fluids and toxins from the bloodstream, is the most common treatment for  individuals with end-stage renal disease (ESRD), a condition of  permanent kidney failure. These patients may receive dialysis treatments  in a dialysis facility or may perform dialysis treatments at home, for which  they receive training and support from a facility. Most individuals with  ESRD are eligible for Medicare regardless of their age. Medicare pays  dialysis facilities for treatments—conducted either in a facility or at  home—and for training patients to perform home dialysis. Medicare also  pays physicians to manage patients’ dialysis care and training and to  provide education to certain patients with chronic kidney disease.
The Centers for Medicare & Medicaid Services (CMS) has established a  goal of fostering patient independence through greater use of home  dialysis among patients for whom it is appropriate. In addition, studies  have shown that patients who perform dialysis at home may have  increased autonomy and health-related quality of life. Policymakers and  researchers have raised questions about whether home dialysis, despite  these potential benefits, is underused.
You asked us to study Medicare patients’ use of home dialysis and key  factors that affect home dialysis use. In this report, we examine (1) trends  in the use of home dialysis and estimates of the potential for wider use of  home dialysis, (2) incentives for providing home dialysis associated with  Medicare payments to dialysis facilities, and (3) incentives for prescribing  home dialysis associated with Medicare payments to physicians and the  role of nephrology training in prescribing home dialysis.
To examine trends in the use of home dialysis, we analyzed data for  dialysis patients—including both Medicare and non-Medicare patients— for 1988 to 2012 from the United States Renal Data System (USRDS).
We also reviewed CMS’s analysis of Medicare claims data from 2010 to  2015 for information on more recent trends among Medicare patients. To  gain insight into the factors that contributed to these trends and to identify  estimates of the potential for wider use of home dialysis, we conducted a  literature review and interviewed stakeholders, including two large dialysis  facility chains, an association representing small dialysis facility chains  and independent facilities, patient and physician associations, and  experts on home dialysis identified through a review of published  literature. Information from these interviews cannot be generalized to all  stakeholders.
To examine incentives associated with Medicare payments to dialysis  facilities, we reviewed Medicare policies and relevant federal laws,  regulations, and guidance, and we analyzed facilities’ profit margins  associated with their Medicare-covered dialysis treatments. Specifically,  using Medicare cost reports for freestanding dialysis facilities in the 50  states and the District of Columbia in 2012, we calculated each facility’s  Medicare margin as payments minus costs divided by payments for  Medicare-covered dialysis treatments. We examined each facility’s total  costs, total Medicare payments, and the number of dialysis treatments  provided, and we excluded facilities with (1) internal inconsistencies  among these variables; (2) unusually high or low average costs or  average Medicare payments per treatment, which may be indicative of  data entry errors; or (3) inconsistencies between the numbers of  Medicare-covered treatments reported on the cost reports and the  number reported in Medicare claims. Beyond these exclusions, we did not  independently verify the accuracy or completeness of the cost report data  that dialysis facilities submitted to CMS. We then used regression  analysis to measure the incentive that facilities may have to provide home  dialysis in the short term. Specifically, the regression estimated the extent  to which expanding the provision of home dialysis or dialysis conducted in  facilities was associated with an increase or decrease in facilities’  Medicare margins. (See app. I for additional details about our  methodology for analyzing facilities’ Medicare margins.) We also  interviewed officials from CMS and dialysis facility chains about the costs  for providing dialysis both in a facility and at home and the methods and  requirements for completing the cost reports.
To examine incentives associated with Medicare payments to physicians  and the role of nephrology training, we reviewed Medicare policies and  relevant federal laws, regulations, and guidance. In addition, we analyzed  data from CMS’s Part B National Summary Data File on (1) total  Medicare payments to physicians for the management of patients’ dialysis  care and training in 2013 and (2) the provision of kidney disease  education from 2011—the first full year in which this benefit was  implemented—through 2013. We also conducted interviews on physician  payment policies and training with CMS officials, physician associations,  and experts on home dialysis identified through a review of published  literature.
We assessed the reliability of the CMS and USRDS data we used by  interviewing officials responsible for overseeing these data sources,  reviewing relevant documentation, examining the data for obvious errors,  and—for cost report data—excluding certain facilities as described above.  We determined that the data were sufficiently reliable for the purposes of  this report.
We conducted this performance audit from June 2014 to October 2015 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Types of Dialysis
paragraphs: There are three types of dialysis, which is a process that removes excess  fluids and toxins from the bloodstream: (1) hemodialysis performed   in a facility (referred to as in-center hemodialysis in this report);   (2) hemodialysis performed at home; and (3) peritoneal dialysis, which   is generally performed at home. In-center hemodialysis is the most  common type of dialysis and was used by about 89 percent of dialysis  patients in 2012; the remaining patients received either peritoneal dialysis  (9 percent) or home hemodialysis (2 percent). Similarly, almost all— approximately 96 percent of—dialysis facilities had in-center hemodialysis  patients in 2012; just over two-fifths of facilities had peritoneal dialysis  patients and nearly one-fifth had home hemodialysis patients.
The processes for hemodialysis—performed either in a facility or at  home—and peritoneal dialysis differ. (See fig. 1.) For in-center  hemodialysis treatments, blood flows from the patient’s body through a  surgically created vein or a catheter, known as a vascular access site,  and through tubing to the dialysis machine. The machine pumps the  blood through an artificial kidney, called a dialyzer, to cleanse the excess  fluids and toxins from the bloodstream and then returns the cleansed  blood to the body. Patients typically receive in-center hemodialysis for 3  to 4 hours three times per week. For home hemodialysis treatments, the  process is the same, but the patient performs the treatments and may  perform treatments more frequently and at night. For peritoneal dialysis  treatments, a catheter is used to fill the patient’s abdomen with a dialysis  solution that collects excess fluids and toxins over several hours; those  excess fluids and toxins are removed from the body when the patient  drains the dialysis solution from the abdomen. To conduct the  exchanges—draining and then refilling the abdomen with the dialysis  solution—most peritoneal dialysis patients use a machine that performs  several exchanges during the night while they are asleep, and other  patients do manual exchanges during the day.
The three types of dialysis are also associated with various clinical  advantages and disadvantages. For example, some studies have  suggested that more frequent use of home hemodialysis can achieve  better health outcomes for certain patients such as those with  hypertension. In another example, some studies have suggested that  peritoneal dialysis may have a lower risk for death in the first few years of  dialysis therapy, and peritoneal dialysis can also help patients retain  residual kidney function. However, the causes of some differences in  clinical outcomes between the types of dialysis can be challenging to  determine because of differences in patient characteristics; younger  patients, for example, were more likely to receive peritoneal dialysis than  other types, according to USRDS data. In addition, there may also be  clinical disadvantages. For example, home hemodialysis patients’ more  frequent use of the vascular access site may result in a higher risk for  complications such as damage to the site that requires repair.  Additionally, peritoneal dialysis patients may develop peritonitis, an  infection of the peritoneal membrane, and the peritoneal membrane may  become less effective over time, meaning a patient may eventually have  to switch to either home or in-center hemodialysis.
section_title: Factors Affecting Type of Dialysis
paragraphs: Patients’ preferences may influence whether patients receive home  dialysis (either peritoneal dialysis or home hemodialysis) or in-center  hemodialysis. For example, some patients may prefer home dialysis  because they do not need to travel to the facility three times per week,  giving them greater flexibility to work during the day and undergo dialysis  at night in their home. Some patients also may prefer home dialysis  because there may be fewer diet and fluid restrictions and less recovery  time following each dialysis treatment. On the other hand, successfully  performing home dialysis requires patients to undergo training and  assume other responsibilities that they would not otherwise have if they  dialyzed in a facility. As a result, patients who feel unprepared to accept  such responsibilities or who lack a spouse or caregiver to help them may  be less likely to choose home dialysis. For similar reasons, some experts  and stakeholders have indicated that switching from in-center to home  dialysis can be challenging once patients become accustomed to in- center hemodialysis. Furthermore, the greater complexity of home  hemodialysis training—including learning to place needles in the vascular  access site and how to respond to alarms from the dialysis machine— relative to peritoneal dialysis training could lead some patients to prefer  one type of home dialysis over the other.
In addition to patients’ preferences, clinical factors may affect whether  patients receive home dialysis or in-center hemodialysis. One factor is  whether a patient has received care from a nephrologist prior to beginning  dialysis. Patients who did not receive such care and who have an urgent  need to start dialysis often do so with in-center hemodialysis because  training is not required and because a venous catheter can be placed and  used immediately. More lead time can be required for peritoneal dialysis  to allow the site where the peritoneal dialysis catheter was placed to  heal. As another example, a patient with poor vision or dexterity may  have difficulty performing the tasks associated with home dialysis. In  addition, a patient who has received multiple abdominal surgeries may  not be an appropriate candidate for peritoneal dialysis. Finally, patients  with multiple comorbidities (i.e., multiple chronic diseases or disorders)  may choose in-center hemodialysis because it can allow the nephrologist  to more closely manage those other conditions.
section_title: Medicare Payment for Dialysis Care
paragraphs: Medicare uses different methods to pay (1) dialysis facilities for providing  dialysis treatments to patients and for training them to perform home  dialysis and (2) physicians for managing patients’ dialysis care and  educating them about their condition.
subsections: section_title: Payments to Facilities
paragraphs: For dialysis treatments—including any training that occurs in the first   4 months of treatment—Medicare has paid facilities a single bundled  payment per treatment since 2011. The bundled payment is designed   to cover the average costs incurred by an efficient facility to provide the  dialysis, injectable drugs, laboratory tests, and other ESRD-related items  and services. In 2015, Medicare paid a base rate of $239.43 per  treatment for up to three hemodialysis treatments per week, and  Medicare sets the daily rate for peritoneal dialysis such that payments for  7 days of peritoneal dialysis would equal the sum of payments for three  hemodialysis treatments. Medicare adjusts the base rate to account for  certain factors that affect the cost of a treatment, including costs to  stabilize patients and to provide training during the first 4 months of  dialysis treatments, as well as certain other patient and facility factors.  CMS implemented its Quality Incentive Program beginning in 2012, which  can reduce Medicare payments for dialysis treatments to facilities by up  to 2 percent based on the quality of care they provided.
When training occurs after the first 4 months of the patient’s dialysis  treatments, Medicare pays dialysis facilities the bundled payment plus an  additional fixed amount (often referred to as the training add-on). The  training add-on is for the facilities’ additional staff time to train the patient.  This training, which can happen in an individual or group setting, is  required to be furnished by a registered nurse. The number of  treatments that include home dialysis training—called training  treatments—varies by type of dialysis and by patient. Medicare currently  pays facilities a training add-on amount of $50.16 per treatment for up to  25 home hemodialysis training treatments or a daily equivalent rate for up  to 15 days of peritoneal dialysis training; CMS increased the training add- on payment from $33.44 to $50.16 in 2014.
section_title: Payments to Physicians
paragraphs: Medicare pays physicians (typically nephrologists) a monthly amount per  patient to manage patients’ dialysis care. This monthly amount covers  dialysis-related management services such as establishing the frequency  of and reviewing dialysis sessions, interpretation of tests, and visits with  patients. To receive the payment, Medicare requires the physician to  provide at least one face-to-face visit per month to each patient for  examining the patient’s vascular access site. The monthly amount paid to  the physician for managing in-center patients varies on the basis of the  patient’s age and the number of visits provided to the patient, but the  amount for managing the care of a home patient varies only on the basis  of the patient’s age and not the number of visits. Besides the monthly  payment for patients’ dialysis care, Medicare provides a one-time  payment to physicians of up to $500 for each patient who completes  home dialysis training under the physician’s supervision; this payment is  separate from Medicare’s payments to facilities for training patients.
Medicare also pays physicians to provide kidney disease education to  patients who have not yet started dialysis. Congress established the  Kidney Disease Education (KDE) benefit as part of the Medicare  Improvements for Patients and Providers Act of 2008 to provide  predialysis education to Medicare patients with Stage IV chronic kidney  disease. Topics to be covered include the choice of therapy (such as in- center hemodialysis, home dialysis, or kidney transplant) and the  management of comorbidities, which can help delay the need for dialysis.
section_title: Percentage of Patients on Home Dialysis Generally Declined between 1988 and 2008 and then Slightly Increased; Stakeholder Estimates Suggest Potential for Future Growth
paragraphs: Historical trends in the overall percentage of all dialysis patients on home  dialysis—including both Medicare and non-Medicare patients—show a  general decrease between 1988 and 2008 and a more recent increase  thereafter through 2012. According to USRDS data, 16 percent of  104,200 dialysis patients received home dialysis in 1988. Home dialysis  use generally decreased over the next 20 years, reaching 9 percent in  2008, and then slightly increased to 11 percent of 450,600 dialysis  patients in 2012—the most recent year of data available from USRDS.  (See fig. 2.) More generally, the percentage of all patients on home  dialysis declined from 1988 through 2012 because the number of these  patients increased at a slower rate than the total number of all patients on  dialysis. During the time period from 1988 through 2012, most home  dialysis patients received peritoneal dialysis as opposed to home  hemodialysis. The more recent increase in use of home dialysis is also  reflected in CMS data for adult Medicare dialysis patients, showing an  increase from 8 percent using home dialysis in January 2010 to about 10  percent as of March 2015.
Literature we reviewed and stakeholders we interviewed suggested  several factors that may have contributed to the trends in home dialysis  use from 1988 through 2012. Looking at the initial decline between 1988  and 2008, contributing factors may have included increased capacity to  provide in-center hemodialysis and changes in the dialysis population.
Increased capacity to provide in-center hemodialysis. The growth  in facilities’ capacity to provide in-center hemodialysis from 1988 to  2008 outpaced the growth in the dialysis patient population over the  same time period. Specifically, the number of dialysis stations, which  include the treatment areas and dialysis machines used to provide   in-center hemodialysis, increased at an average annual rate of   7.3 percent during this time period, while the number of patients  increased at an average annual rate of 6.8 percent. As a result,  dialysis facilities may have had a greater financial incentive to treat  patients in facilities in an effort to use this expanded capacity,  according to literature we reviewed.
Changes in the dialysis population. The increased age and  prevalence of comorbidities in the dialysis population may have  reduced the portion considered clinically appropriate for home  dialysis. Dialysis patients who are older and those with comorbid  conditions may be less physically able to dialyze at home. From 1988  to 2008, the mean age of a dialysis patient rose from 52.2 years to  58.6 years. Similarly, the proportion of the dialysis population affected  by various comorbid conditions increased during this time period. For  example, the percentage of dialysis patients with diabetes as the  primary cause of ESRD increased from 24.6 percent in 1988 to   43.1 percent in 2008.
Medicare payment methods and concerns about the effectiveness of  peritoneal dialysis may have played a role in the decline in home dialysis  use between 1988 and 2008, but changes in both factors may have also  contributed to recent increases in use.
Medicare payment methods for injectable drugs. Medicare  payment methods prior to 2011 may have given facilities a financial  incentive to provide in-center rather than home dialysis. Before 2011,  Medicare paid separately for injectable drugs rather than including  them in the bundled payment. As a result, Medicare payments to  facilities for dialysis care—including the payments for injectable  drugs—could have been lower for home patients because of their  lower use, on average, of injectable drugs. However, the payment  changes in 2011 reduced the incentive to provide in-center  hemodialysis relative to home dialysis because the Medicare payment  for dialysis treatments and related services, such as injectable drugs,  no longer differed based on the type of dialysis received by the  patient.
Concerns about effectiveness of peritoneal dialysis. Several  studies published in the mid-1990s indicated poorer outcomes for  peritoneal dialysis compared to hemodialysis, and these studies may  have made some physicians reluctant to prescribe peritoneal dialysis,  according to stakeholders and literature we reviewed. However,  stakeholders identified more recent studies indicating that outcomes  for peritoneal dialysis are comparable to hemodialysis. These newer  studies may have contributed to the recent increases in home dialysis  use by mitigating concerns about the effectiveness of peritoneal  dialysis and by making physicians more comfortable with prescribing  it.
Estimates from dialysis experts and other stakeholders suggest that  further increases in the use of home dialysis are possible over the long  term. The home dialysis experts and stakeholders we interviewed  indicated that home dialysis could be clinically appropriate for at least half  of patients. However, the percentage of patients who could realistically be  expected to dialyze at home is lower because of other factors such as  patient preferences. For example, at a meeting in 2013, the chief medical  officers of 14 dialysis facility chains jointly estimated that a realistic target  for home dialysis would be 25 percent of dialysis patients. To achieve this  target, they said that changes, such as increased patient education and  changes to payment policies, would need to occur. As another example,  physician stakeholders we interviewed estimated that 15 to 25 percent of  dialysis patients could realistically be on home dialysis.
In the short term, however, an ongoing shortage of peritoneal dialysis  solution has reduced the use of home dialysis, and this shortage could  have a long-term impact as well. Medicare claims data analyzed by  CMS show that the percentage of Medicare dialysis patients on home  dialysis had reached 10.7 percent in August 2014, when the shortage  was first announced, but has since declined to 10.3 percent, as of March  2015. CMS officials attributed this decline to the shortage in the supply of  peritoneal dialysis solution because the decline did not occur among  facilities owned by one large dialysis facility chain that manufactures its  own peritoneal dialysis solution and has not experienced a shortage.  Some dialysis facility chains told us that, because of this shortage, they  limited the number of new patients on peritoneal dialysis. In addition, one  physician association stated that the shortage could have long-term  implications. They said that some physicians are reluctant to prescribe  this type of dialysis, even when a facility has the capacity to start a patient  on peritoneal dialysis, because of uncertainties about peritoneal dialysis  supplies.
section_title: Incentives for Facilities to Provide Home Dialysis May Have Limited Impact in Short Term
paragraphs: Medicare payments to dialysis facilities, including those that provided  home dialysis, gave them an overall financial incentive to provide dialysis,  as shown by their generally positive Medicare margins. The average  Medicare margin for all 3,891 freestanding facilities in our analysis was  4.0 percent in 2012—that is, Medicare payments exceeded Medicare  allowable costs for dialysis treatments by 4.0 percent. Similarly, the  average Medicare margin for the 1,569 freestanding facilities that  provided one or both types of home dialysis was 4.20 percent in 2012.  (See table 1.) Focusing on those facilities that provided home dialysis,  nearly all (94 percent) provided both in-center and one or both types of  home dialysis. In addition, although margins were positive, on average,  for these facilities, we found that the Medicare margin for large facilities  (7.21 percent) was considerably higher, on average, than for small  facilities (-3.49 percent). We also found that most of the patient years   (81 percent) were devoted to in-center hemodialysis, followed by  peritoneal dialysis (15 percent) and home hemodialysis (4 percent).  Small and large facilities followed the same pattern.
In addition to giving an incentive to provide dialysis in general, Medicare  payments to facilities likely encourage the use of peritoneal dialysis—the  predominant type of home dialysis—over the long term. The payment rate  for peritoneal dialysis is the same as the rate for hemodialysis provided in  facilities or at home, but the cost of providing peritoneal dialysis is  generally lower, according to CMS and stakeholders we interviewed.  When CMS established the current payment system, it stated that its  decision to have a single payment rate regardless of the type of dialysis  would give facilities a powerful financial incentive to encourage the use of  home dialysis, when appropriate. Another financial incentive that exists  for both peritoneal dialysis and home hemodialysis is that facilities can  receive additional months of payments for patients under 65 who undergo  home dialysis training. Specifically, for patients under age 65, Medicare  coverage typically begins in the fourth month after the patient begins  dialysis, but coverage begins earlier if the patient undergoes home  dialysis training. This incentive is augmented because payments to  facilities are significantly higher during the first 4 months of dialysis.  These incentives to provide home dialysis, compared to in-center  hemodialysis, are consistent with CMS’s goal of fostering patient  independence through greater use of home dialysis among patients for  whom it is appropriate.
Although over the long term facilities may have a financial incentive to  encourage the use of one or both types of home dialysis, the impact of  this incentive could be limited in the short term. This is because, in the  short term, we found that expanding the provision of in-center  hemodialysis at a facility generally tends to increase that facility’s  Medicare margin and that the estimated increase is more than would  result if the facility instead expanded the provision of either type of home  dialysis. In particular, we found that, on average, facilities that provided  home dialysis could improve their financial position in the short term by  increasing their provision of in-center hemodialysis. An additional patient  year of in-center hemodialysis improved the margin by an estimated   0.15 percentage points—for example, from 4.20 to 4.35 percent. (See   fig. 3.) In contrast, increasing home dialysis resulted in a smaller benefit.  Adding a patient year of peritoneal dialysis improved the margin by an  estimated 0.08 percentage points and adding a patient year of home  hemodialysis had no statistically significant effect on the margin; the  estimated 0.04 percentage point reduction on average in the margin was  not statistically different from zero. The pattern of the results in figure 3 for  the three types of dialysis was similar for small and large facilities. (See  results in app. I.)
Our findings on the relative impact of the incentives in the short term are  generally consistent with information on the cost of each type of dialysis  provided to us by CMS and stakeholders we interviewed. First, consistent  with our finding that facilities have a greater short-term incentive for in- center hemodialysis, stakeholders we interviewed said that facilities’ costs  for increasing their provision of in-center hemodialysis may be lower than  for either type of home dialysis. For example, although the average cost  of an in-center hemodialysis treatment is typically higher than the average  cost of a peritoneal dialysis treatment, facilities may be able to add an in- center patient without incurring the cost of an additional dialysis machine  because each machine can be used by six to eight patients. In contrast,  when adding a home patient, facilities generally incur costs for additional  equipment, which is dedicated to a single patient. Second, some  stakeholders said that the cost of providing home hemodialysis, in  particular, can be higher than other types of dialysis in part because  home hemodialysis patients often receive more than three treatments per  week and Medicare’s policy is not to pay for these additional treatments  unless medically justified. Finally, when comparing the two types of  home dialysis, CMS and the stakeholders generally reported that the cost  of home hemodialysis, including training, was higher than for peritoneal  dialysis. They said that home hemodialysis training is more costly  because of the greater complexity such as learning to place needles in  the vascular access site and to respond to alarms. Stakeholders also told  us that Medicare payments cover only a portion of the upfront costs for  training a patient, particularly one on home hemodialysis.
CMS increased the training add-on payment beginning in 2014 in  response to public comments it received on the cost of home  hemodialysis training, but the agency lacks reliable data for determining  whether the revised payment is adequate. Specifically, CMS lacks  reliable data on the cost of home dialysis treatment and training and on  the staff time needed to provide training.
We found that the cost report data on facilities’ costs for each type of  dialysis, including costs for home dialysis training, were not sufficiently  reliable. Although we determined that data on facilities’ total costs  across all types of dialysis were sufficiently reliable for purposes of  our analysis, stakeholders reported that these total costs were not  accurately allocated to each type of dialysis and to training. One  reason for this inaccuracy may be that some facilities allocated certain  types of costs, such as dialysis-related drugs and supplies, based on  the number of treatments for each type of dialysis. Representatives of  these facilities reported that CMS’s Medicare Administrative  Contractors had approved this allocation method. However, the  number of treatments by type of dialysis may not be a reliable basis  for allocating such costs. For example, studies have shown that  utilization of dialysis-related drugs differs by type of dialysis, and  stakeholders reported that supply costs can as well. In addition,  CMS officials told us that they do not regularly review the reliability of  these data.
We also found that CMS lacks consistent data on the staff time  required to provide home dialysis training even though the agency  used the number of hours of nursing time as the basis for its training  add-on payment rate. For example, in 2012, CMS acknowledged that  1 hour did not necessarily correspond to the amount of time needed to  train a patient, even though CMS used 1 hour as the basis. More  recently, despite the fact that CMS increased the training add-on by  basing it on 1.5 hours of nursing time, CMS said that the public  comments it received did not provide consistent information on the  number of hours spent on training; the number of hours reported in  these comments varied from 2 to 6 hours per treatment.
The adequacy of training payments could affect facilities’ incentives for  providing home dialysis, but it is unclear whether these payments are  adequate given CMS’s lack of reliable data on the cost of training and by  type of dialysis. Reliable cost report data are important for CMS to be  able to perform effective fiscal management of the program, which  involves assessing the adequacy of payment rates. In particular, if the  training payments are inadequate, facilities may be less willing to provide  home dialysis, which could undermine CMS’s goal of encouraging the use  of home dialysis when appropriate.
section_title: Medicare Payment Policies and Limited Nephrology Training May Constrain Physicians’ Prescribing of Home Dialysis
paragraphs: Medicare physician payments for dialysis care do not consistently result  in incentives for physicians to prescribe home dialysis. In addition, few  Medicare patients have used Medicare’s KDE benefit, and this low usage  may be due to statutory payment limitations on the types of providers  permitted to furnish the benefit and on the Medicare patients eligible to  receive it. Finally, physicians’ limited exposure to home dialysis during  nephrology training programs is a third factor that may constrain the  extent to which physicians prescribe home dialysis.
subsections: section_title: Medicare Physician Payments May Not Consistently Result in Incentives to Prescribe Home Dialysis
paragraphs: We found that the structure of Medicare’s monthly physician payments— one of several factors that could affect the use of home dialysis—may  give physicians a disincentive for prescribing home dialysis, which could  undermine CMS’s goal of encouraging the use of home dialysis when  appropriate. CMS, when it established the current method of paying  physicians a monthly payment to manage patients’ dialysis, stated that  this method would encourage the use of home dialysis by giving  physicians an incentive to manage home patients. According to CMS,  this incentive would exist because the monthly payment rate for  managing the dialysis care of home patients, which requires a single in- person visit, was approximately equal to the rate for managing and  providing two to three visits to in-center patients. However, we found that,  in 2013, the rate of $237 for managing home patients was lower than the  average payment of $266 and maximum payment of $282 for managing  in-center patients. (See table 2.) This difference in payment rates may  discourage physicians from prescribing home dialysis.
Physician associations and other physicians we interviewed told us that  Medicare payments may give physicians a disincentive for prescribing  home dialysis. They stated that, even though the payment levels for  managing home patients are typically lower, the visits with home patients  are often longer and more comprehensive; this is in part because  physicians may conduct visits with individual home patients in a private  setting, but they may be able to more easily visit multiple in-center  patients on a single day as they receive dialysis. The physician  associations we interviewed also said that they may spend a similar  amount of time outside of visits to manage the care of home patients and  that they are required to provide at least one visit per month to perform a  complete assessment of the patient. In addition, while physicians can  receive a higher payment for providing more than one visit to in-center  patients, these additional visits may be provided by nurse practitioners  and certain other nonphysician practitioners, who may be less costly.  CMS has not revised the overall structure for paying for physicians to  manage dialysis patients’ care since 2004, although it has addressed  some stakeholder concerns such as how it paid physicians when home  patients were in the hospital.
In contrast to the monthly payments, Medicare physician payments  related to patients’ training may provide physicians with financial  incentives for prescribing home dialysis. For certain patients who start  home training—those under 65 who are eligible for Medicare solely due to  ESRD—the monthly payments to physicians can begin in the first month  rather than the fourth month of treatment, which may provide physicians  with an incentive to prescribe home dialysis. In addition, Medicare makes  a one-time payment of up to $500 for each patient who has completed  home dialysis training under the physician’s supervision. One stakeholder  told us that this training payment may provide an incentive for physicians  to prescribe home dialysis.
section_title: Payment Limitations on Categories of Providers and Patients for Kidney Disease Education Benefit May Constrain Its Use
paragraphs: Few Medicare patients have used the KDE benefit, which covers the  choice of therapy (such as in-center hemodialysis, home dialysis, or  kidney transplant) and the management of comorbidities, and  stakeholders generally told us this low usage was related to payment  limitations on the types of providers who are permitted to furnish the  benefit and on the Medicare patients eligible to receive it. According to  USRDS, less than 2 percent of eligible Medicare patients used the KDE  benefit in 2010 and 2011—the first two years it was available—and use of  the benefit has decreased since then.
When CMS implemented the KDE benefit, the agency identified specific  categories of providers—physicians, physician’s assistants, nurse  practitioners, and clinical nurse specialists—as eligible to receive  payment for furnishing the benefit. Stakeholders, including physician  associations, told us that other categories of trained healthcare providers  (such as registered nurses, social workers, and dieticians who may be  part of the nephrology practice) are also qualified to provide predialysis  education. However, when asked if other types of providers could be  eligible to receive payment, CMS officials said that the statute specified  the categories of providers and that the agency was limited to those  providers. Dialysis facilities are also not eligible to receive payment for  the KDE benefit. Although facility representatives said that they were  equipped to provide education to these patients, including education on  the choice of type of dialysis, CMS and some other stakeholders said  that one reason facilities are not eligible to provide the KDE benefit is  their financial interest in treatment decisions. For example, the KDE  benefit is designed to provide objective education to patients on steps  that can be taken to delay the need for dialysis and on the choice of  therapies, which includes kidney transplant, as well as home dialysis and  in-center hemodialysis. Some of these options could be contrary to  dialysis facilities’ financial interest.
Similarly, CMS identified a specific category of patients—those with Stage  IV chronic kidney disease—as eligible to receive the KDE benefit.  Physician stakeholders said that certain other categories of patients, such  as those in Stage III or those in Stage V but who have not started dialysis,  may also benefit from Medicare coverage of timely predialysis education.  However, when asked if other categories of patients could be eligible to  receive the KDE benefit, CMS officials said that the agency was limited by  statute to Stage IV patients.
The low usage of the KDE benefit, which may be a result of these  payment limitations, suggests that it may be difficult for Medicare patients  to receive this education, which is designed to help them make informed  treatment decisions. Literature and stakeholders have underscored the  value of predialysis education to help patients make informed treatment  decisions, and also indicated that patients who receive it may be more  likely to choose home dialysis.
section_title: Limited Exposure to Home Dialysis during Nephrology Training May Constrain Extent to Which Physicians Prescribe Home Dialysis
paragraphs: Literature we reviewed and nearly all of the stakeholders we interviewed  indicated that physicians have limited exposure to home dialysis during  nephrology training programs and thus may not feel comfortable  prescribing it. One study found that 56 percent of physicians who  completed training said they felt well trained and competent in the care of  peritoneal dialysis patients, and 16 percent felt this way in the care of  home hemodialysis patients. Furthermore, another study found that  physicians who felt more prepared to care for peritoneal dialysis patients  were more likely to prescribe it.
Literature we reviewed and stakeholders identified two main factors that  may limit physicians’ exposure to home dialysis while they undergo  nephrology training:
The nephrology board certification examination administered by the  American Board of Internal Medicine does not emphasize home  dialysis, particularly home hemodialysis. The examination blueprint  published by the board shows that approximately 9 percent of the  board certification examination is dedicated to questions regarding  ESRD, which may include hemodialysis and peritoneal dialysis but,  according to one board official, is unlikely to include home  hemodialysis. Literature and stakeholders suggested that greater  emphasis on home dialysis on certification examinations might lead to  a greater emphasis on home dialysis in nephrology training.
According to an Institute of Medicine report, the way Medicare  provides graduate medical education payments may discourage  nephrology training outside of the hospital, and one stakeholder said  this system may impede physician exposure to home patients.  Medicare pays teaching hospitals directly to help cover the costs of  graduate medical education, including the salaries of the physicians in  training. Hospitals have the option to allow physicians to train at a  second, off-site location—for example, a dialysis facility with a robust  home dialysis program—if the hospital continues to pay the  physicians’ salaries. However, the stakeholder said that hospitals may  be reluctant to allow physicians to train at a second, off-site location,  such as a dialysis facility, because patients at such locations may not  be served primarily by the hospital.
The American Society of Nephrology has acknowledged that nephrology  training in home dialysis needs to improve. As a result, the society has  developed and disseminated guidelines identifying training specific to  home dialysis and providing suggestions on curriculum organization to  increase physician exposure to home patients. For example, the  guidelines suggest physicians in training should demonstrate knowledge  of the infectious and noninfectious complications specific to peritoneal  dialysis and home hemodialysis. They also suggest a program’s  curriculum should include observation of and participation in a patient’s  training to conduct home dialysis.
section_title: Conclusions
paragraphs: The number and percentage of patients choosing to dialyze at home have  increased in recent years, and our interviews with home dialysis experts  and stakeholders indicated potential for future growth. To realize this  potential, it is important for the incentives associated with Medicare  payments to facilities and physicians to be consistent with CMS’s goal of  encouraging the use of home dialysis among patients for whom it is  appropriate. One aspect of payment policy—training add-on payments to  facilities—has a direct impact on facilities’ incentives for providing home  dialysis. However, whether these training payments are adequate  continues to be unclear because CMS lacks reliable data on the cost of  home dialysis treatment and training for assessing payment adequacy. If  training payments are inadequate, facilities may be less willing to provide  home dialysis. In addition, the way Medicare pays physicians to manage  the care of dialysis patients may be discouraging physicians from  prescribing home dialysis. Finally, the limited use of the KDE benefit  suggests that it may be difficult for Medicare patients to receive this  education, which is designed to help them make informed decisions  related to their ESRD treatment, including decisions on the choice of the  type of dialysis, as well as options such as kidney transplant and steps to  delay the need for dialysis.
section_title: Recommendations
paragraphs: To determine the extent to which Medicare payments are aligned with  costs for specific types of dialysis treatment and training, the  Administrator of CMS should take steps to improve the reliability of  the cost report data for treatment and training associated with specific  types of dialysis.
The Administrator of CMS should examine Medicare policies for  monthly payments to physicians to manage the care of dialysis  patients and revise them if necessary to ensure that these policies are  consistent with CMS’s goal of encouraging the use of home dialysis  among patients for whom it is appropriate.
To ensure that patients with chronic kidney disease receive objective  and timely education related to this condition, the Administrator of  CMS should examine the Kidney Disease Education benefit and, if  appropriate, seek legislation to revise the categories of providers and  patients eligible for the benefit.
section_title: Agency and Third Party Comments and Our Evaluation
paragraphs: We received written comments on our draft report from the Department of  Health and Human Services (HHS). These comments are reprinted in  appendix II. Because Medicare payments for home dialysis have  implications for patients and the dialysis industry, we also obtained  comments on our draft from groups representing home dialysis patients,  large and small dialysis facility chains and independent facilities, and  nephrologists. Following is our summary of and response to comments  from HHS and these patient and industry groups.
subsections: section_title: Comments from HHS
paragraphs: In written comments on a draft of this report, HHS reiterated its goal of  fostering patient independence through greater use of home dialysis  among patients for whom it is appropriate and pointed out that home  dialysis use has increased since 2011 when the bundled payment system  was implemented. HHS concurred with two of our three  recommendations. In response to our first recommendation that CMS  improve the reliability of cost report data for training and treatment  associated with specific types of dialysis, HHS said that it is willing to  consider reasonable modifications to the cost report that could improve  the reliability of cost report data. HHS also stated that it was conducting  audits of cost reports as required by the Protecting Access to Medicare  Act of 2014. HHS also concurred with our second recommendation to  examine Medicare policies for monthly payments to physicians to manage  patients’ dialysis to ensure that these policies are consistent with CMS’s  goal of encouraging home dialysis use when appropriate. HHS said that it  would review these services through CMS’s misvalued code initiative,  which involves identifying and evaluating physician services that may not  be valued appropriately for Medicare payment purposes and then  adjusting Medicare payment as needed. We believe that this examination  and any resulting revisions to these payment policies have the potential to  address our recommendation.
HHS did not concur with our third recommendation that CMS examine the  KDE benefit and, if appropriate, seek legislation to revise the categories  of providers and patients eligible for the benefit. HHS said that CMS  works continuously to appropriately pay for ESRD services and must  prioritize its activities to improve care for dialysis patients. While we  acknowledge the need for HHS to prioritize its activities to improve  dialysis care, it is important for HHS to help ensure that Medicare patients  with chronic kidney disease understand their condition, how to manage it,  and the implications of the various treatment options available,  particularly given the central role of patient choice in dialysis care. The  limited use of the KDE benefit suggests that it may be difficult for  Medicare patients to receive this education and underscores the need for  CMS to examine and potentially revise the benefit.
section_title: Comments from Groups Representing Patients and the Dialysis Industry
paragraphs: We received comments from five groups: (1) Home Dialyzors United  (HDU), which represents home dialysis patients; (2) the National Renal  Administrators Association (NRAA), which represents small dialysis  facility chains and independent facilities; (3) DaVita, which is one of the  two large dialysis facility chains; (4) Fresenius, which is the other large  dialysis facility chain; and (5) the Renal Physicians Association (RPA),  which represents nephrologists. The groups expressed appreciation for  the opportunity to review the draft, and the three groups that commented  on the quality of the overall report stated that it accurately addressed  issues related to the use of home dialysis.
Three of the groups commented on some or all of our recommendations,  while the remaining two groups did not comment specifically on this  aspect of our report. Specifically, HDU, NRAA, and RPA agreed with our  first recommendation that CMS improve the reliability of cost report data  for treatment and training associated with specific types of dialysis. A  fourth group—Fresenius—expressed concern about the reliability of data  on the costs of home dialysis, which was consistent with our  recommendation that CMS needs to improve the reliability of these data.  RPA, in addition to agreeing with this recommendation, questioned the  reliability of the data on total facility costs that we used for our analysis.  Although it was beyond the scope of our report to verify the accuracy of  each facility’s cost report, we took several steps to assess the cost report  data that we analyzed. These steps included verifying the cost report data  for internal consistency and checking the number of dialysis treatments  reported against Medicare claims. The fact that implementing these steps  caused us to exclude some facilities’ data from our analysis suggests that  the potential exists to improve the accuracy of these data. CMS’s  implementation of our recommendation and auditing of cost reports under  the Protecting Access to Medicare Act of 2014 create the opportunity for  CMS to begin addressing this issue. NRAA, another group that agreed  with our first recommendation, recommended that we or CMS develop  mechanisms in addition to the cost reports to more accurately capture the  resources devoted to providing home dialysis to each patient, but  developing such mechanisms was beyond the scope of this report.
One group (HDU) agreed with our second recommendation that CMS  examine and, if necessary, revise Medicare payment policies for  physicians to manage the care of dialysis patients, but a second group  (RPA) urged us to reconsider the recommendation out of concern that  implementing it could lead to cuts in physician payments for home  dialysis. While RPA agreed that the current payment method gives  physicians a disincentive for prescribing home dialysis, the group  emphasized that it was only one of numerous factors that affect this  treatment decision. RPA also stated that it would support certain payment  changes that would increase physicians’ incentives to prescribe home  dialysis, which could include using performance measures to promote  home dialysis use. However, RPA expressed concern that the process  CMS may use for examining and potentially revising this payment method  could lead to cuts in physician payments for home dialysis, which RPA  asserted would further discourage its use and be contrary to the intent of  our recommendation. We agree that Medicare’s current method of paying  physicians to manage patients’ dialysis care is one of several factors that  could influence physicians’ decisions to prescribe home dialysis and  described these factors in our report. In addition, while we do not know  what changes, if any, CMS will make to physician payments for managing  patients’ dialysis care, we believe the intent of our recommendation—to  ensure that these payments are consistent with CMS’s goal to encourage  the use of home dialysis when appropriate—is clear.
Three groups (HDU, NRAA, and RPA) agreed with our third  recommendation that CMS examine the KDE benefit and if appropriate  seek revisions to the categories of providers and patients eligible for the  benefit. RPA also emphasized its agreement with our findings that the  statutory limitations on the providers and patients eligible for the benefit  have contributed to the limited use of the benefit. These groups also  urged other changes to the KDE benefit such as removing the  requirement for a copayment and making documentation requirements  more flexible. The limitations in the categories of eligible providers and  patients were cited in our interviews with stakeholders as the main  reasons for the limited use of the KDE benefit, but we acknowledge that  other opportunities may exist for improving the benefit’s design. NRAA  also pointed out that facilities currently educate patients with chronic  kidney disease on the choice of type of dialysis but are not reimbursed by  Medicare for doing so. We stated in the report that, according to the large  and small dialysis facility chains we interviewed, they have the capacity to  educate such patients about their condition. However, we also reported  the concern raised by CMS and certain other stakeholders that the  education provided by facilities may not be objective because they have a  financial interest in patients’ treatment decisions.
The patient and industry groups also made several comments in addition  to those described above.
DaVita, NRAA, and RPA stated that the use of telehealth by  physicians to manage the care of dialysis patients could facilitate the  use of home dialysis. We noted in the report that certain visits for  managing in-center patients can be provided via telehealth. CMS has  established a process for identifying other services—such as  managing home patients—that could be provided via telehealth under  Medicare, and examining this process was beyond the scope of this  report.
HDU, NRAA, and RPA stressed the importance of patient-centered  dialysis care and of ensuring that patients have sufficient information  to make informed decisions on the type of dialysis. We agree that  patient preferences and patient education are central to decisions  regarding the type of dialysis and have described these and other  factors that could affect these decisions.
DaVita and RPA stressed the impact of the ongoing shortage of  peritoneal dialysis solution. In particular, DaVita said the shortage is  the biggest barrier to the use of home dialysis. We agree that this  shortage could have a long-term impact on the use of home dialysis  and revised the report to incorporate this perspective.
DaVita and HDU asserted that Medicare’s method of paying for  dialysis care separately from other services, such as inpatient care,  could affect incentives for providing home dialysis. For example,  DaVita suggested that the incentive to provide home hemodialysis  could increase if a single entity were financially responsible for all  Medicare services provided to a Medicare patient. This incentive  could increase because, according to DaVita, the cost of inpatient  care may be lower for home hemodialysis patients than for in-center  hemodialysis patients. We agree that choosing one type of dialysis  over another could affect the use of other types of Medicare services,  but examining such implications was beyond the scope of this report.
NRAA and RPA appreciated that our report addressed the role of  nephrology training programs in the use of home dialysis, and both  groups said that we or CMS should further examine how physicians  can receive greater exposure to home dialysis through these  programs. RPA said that this examination could also address the role  of Medicare payments for graduate medical education. While we  acknowledge the importance of these issues, further examination of  them was beyond the scope of our report.
In addition to the comments described above, the patient and industry  groups provided technical comments on the draft, which we incorporated  as appropriate.
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If you or your staff have any questions about this report, please contact  me at (202) 512-7114, or cosgrovej@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of our report. GAO staff who made key contributions to this  report are listed in appendix III.
section_title: Appendix I: Data and Methods for Analysis of Facilities’ Medicare Margins
paragraphs: This appendix describes the data and methods we used for our analysis  of Medicare margins, which was part of our effort to examine incentives  associated with Medicare payments to dialysis facilities.
subsections: section_title: Medicare Cost Report Data
paragraphs: We analyzed Medicare cost report data for 2012 from freestanding  facilities located in the 50 states and the District of Columbia. We took  steps to restrict our analysis to data from facilities with similar cost and  payment structures. We did not include hospital-based facilities in our  analysis because these facilities’ reported costs may be driven in part by  hospitals’ methods for allocating overhead costs within these hospitals  rather than by the costs of the dialysis facility itself. Because of possible  differences in cost structures, we excluded facilities that (1) provided any  pediatric or intermittent peritoneal dialysis treatments, (2) were  government-owned, or (3) had cost reporting periods not equal to  calendar year 2012, which generally occurred when facilities changed  ownership, opened, closed, or changed Medicare status during the year.  Because of possible differences in payment structures, we also limited  our analysis to facilities that elected to be paid fully under the bundled  payment system. Implementing these steps resulted in the exclusion of  approximately 19 to 20 percent of the 5,380 freestanding facilities  originally in the cost report data set.
We also took several steps to assess the reliability of facilities’ cost report  data on total costs, total Medicare payments, and the number of dialysis  treatments provided. In particular, we checked for and excluded facilities  with internal inconsistencies among variables such as reporting that they  provided more treatments to Medicare patients than to Medicare and non- Medicare patients combined or reporting negative treatment numbers. In  addition, we excluded facilities that reported unusually high or low  average costs or average Medicare payments, which may be indicative of  data entry errors. Finally, we compared the number of Medicare-covered  treatments reported on the cost reports to similar data from Medicare  claims on the number of paid treatments, and we excluded facilities with  inconsistencies. Implementing these steps to assess the reliability of   the data resulted in the exclusion of an additional approximately 8 to   9 percent of the 5,380 freestanding facilities originally in the cost report  data set, leaving 3,891 (72 percent) of these facilities in our analysis. We  focused our analysis primarily on the 1,569 of these 3,891 freestanding  facilities that provided home dialysis (defined as either home  hemodialysis and/or peritoneal dialysis) to Medicare dialysis patients in  2012. We determined that the data on total costs, total Medicare  payments, and number of dialysis treatments provided were sufficiently  reliable for the purposes of our analysis.
section_title: Calculating Average Medicare Margins
paragraphs: (𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 𝑝𝑝𝑀𝑀𝑝𝑝𝑝𝑝𝑀𝑀𝑝𝑝𝑝𝑝𝑝𝑝− 𝐸𝐸𝑝𝑝𝑝𝑝𝑀𝑀𝑝𝑝𝑀𝑀𝑝𝑝𝑀𝑀𝑀𝑀 𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 𝑀𝑀𝑐𝑐𝑝𝑝𝑝𝑝𝑝𝑝)
We calculated the Medicare margin for all facilities that provided home  dialysis. (See table 3.) When calculating the average margin for facilities  in our analysis, we weighted the average by the total number of  Medicare-covered patient years of dialysis. We classified facilities as  small or large based on whether their number of Medicare patient years  was below or above the median number of patient years among the  facilities in our analysis that provided home dialysis.
section_title: Estimating How Facilities’ Medicare Margins Are Associated with Home and In-center Hemodialysis
paragraphs: To examine incentives associated with each type of dialysis, we used  multiple linear regression analysis to estimate the extent to which adding  a patient year of peritoneal dialysis, home hemodialysis, and in-center  hemodialysis was associated with an increase or decrease in facilities’  Medicare margins. The explanatory variables of our regression model  included, for each type of dialysis, a binary variable for whether or not the  facility provided that type of dialysis and a continuous variable with the  number of patient years for that type of dialysis. To control for other  factors that could affect a facility’s Medicare margin, our model also  included binary variables for whether or not the facility was located in an  urban area or whether or not the facility was affiliated with a large dialysis  facility chain. See table 4 for more information about the characteristics  included in the model.
As shown in table 5 and discussed further in the report, the results of our  regression model show the effect on facilities’ Medicare margin from  adding one patient year of a given type of dialysis.
section_title: Appendix II: Comments from the Department of Health and Human Services
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, William Black, Assistant Director;  George Bogart; Andy Johnson; Corissa Kiyan; Hannah Marston Minter;  Richard Lipinski; Elizabeth T. Morrison; Vikki Porter; and Eric Wedum  made key contributions to this report.