End-Stage Renal Disease: CMS Should Monitor Access to and Quality of Dialysis Care Promptly after Implementation of New Bundled Payment System
Published: 2010-03-31T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Medicare covers dialysis for most individuals with end-stage renal disease (ESRD). Beginning in January 2011, the Centers for Medicare & Medicaid Services (CMS) is required to use a single payment to pay for dialysis and related services, which include injectable ESRD drugs. Questions have been raised about this new payment system's effects on the access to and quality of dialysis care for certain groups of beneficiaries, such as those who receive above average doses of injectable ESRD drugs. GAO examined (1) Medicare expenditures for injectable ESRD drugs, by demographic characteristics; (2) factors likely to result in above average doses of these drugs; (3) CMS's approach for addressing beneficiary differences in the cost of dialysis care under the new payment system; and (4) CMS's plans to monitor the new payment system's effects. GAO analyzed 2007 data--the most recent available--on Medicare ESRD expenditures and input from 73 nephrology clinicians and researchers collected using a Web-based data collection instrument. GAO also reviewed reports and CMS's proposed rule on the payment system's design and interviewed CMS officials.
section_title: What GAO Found
paragraphs: Certain demographic groups had above average Medicare expenditures for injectable ESRD drugs in 2007. For example, Medicare spent $782 per month on injectable ESRD drugs per African American beneficiary, which was about 13 percent more than the average across all beneficiaries on dialysis and was also higher than for other racial groups. Similarly, monthly Medicare spending per beneficiary with additional coverage through Medicaid was about 6 percent higher than the average across all beneficiaries on dialysis. Although GAO did not identify the factors that led to the differences described above, it did obtain information from 73 nephrology clinicians and researchers, selected through referrals from dialysis-related professional organizations and a literature review, on the factors that they consider likely to result in above average doses of injectable ESRD drugs. A majority of these experts identified primarily clinical factors as likely to result in above average doses of these drugs. For example, at least 50 percent of the 73 clinicians and researchers from whom GAO obtained information identified 14 factors (including chronic blood loss and low iron stores) as likely to result in above average doses of erythropoiesis stimulating agents, which accounted for about 75 percent of expenditures on injectable ESRD drugs in 2007. CMS's proposed design for the new payment system for dialysis care includes, as required by law, two payment mechanisms to address differences across beneficiaries in their costs of dialysis care. Under the first payment mechanism--a case-mix adjustment--CMS proposed to adjust payments based on characteristics such as age, sex, and certain clinical conditions that are associated with beneficiaries' costs of dialysis care. The second proposed payment mechanism--an outlier policy--involves making additional payments to providers when they treat patients whose costs of care are substantially higher than would be expected. CMS's preliminary plans for monitoring the effects of the new payment system build on existing initiatives, but it is unclear whether CMS will monitor the effects on the quality of and access to dialysis care for groups of beneficiaries. In prior work, GAO and others have emphasized the importance of monitoring both the quality of and access to care to ensure that Medicare payment system changes do not result in certain groups of beneficiaries experiencing poor care quality or problems accessing services. CMS intends to monitor the quality of dialysis care under the new payment system, but the extent to which CMS will conduct such monitoring for various groups of beneficiaries is currently unclear because CMS's plans are preliminary. Furthermore, CMS's preliminary plans for monitoring access to dialysis care are limited. However, CMS has stated that it will have a comprehensive monitoring strategy in place by January 2011. GAO obtained comments on a draft of this report from CMS and from industry groups representing both large and small dialysis providers and nephrologists.

section_title: Letter
paragraphs: Medicare covers dialysis—a process that removes excess fluids and toxins  from the bloodstream—for most individuals with end-stage renal disease  (ESRD), a condition of permanent kidney failure. Since the  implementation of Medicare’s coverage for dialysis care in 1973, hundreds  of thousands of lives have been extended through Medicare-covered  dialysis treatment. In 2007, Medicare’s dialysis population numbered about  414,000, and program expenditures for dialysis and injectable ESRD drugs  were about $6.8 billion. Beginning in 2011, the Centers for Medicare &  Medicaid Services (CMS), the agency within the Department of Health and  Human Services (HHS) that administers Medicare, will change how  Medicare pays for dialysis and related services to better encourage the  efficient provision of care. Policymakers and others have raised questions  about how this change could affect ESRD beneficiaries.
For payment purposes, CMS currently divides dialysis and related services  into two groups—one group that is paid for under a single payment and a  second group in which services are paid for on a per-service basis. The  first group includes dialysis treatment and associated routine services  such as nursing, supplies, and equipment. Medicare pays for services in  this group under a single payment—referred to as the composite rate— which is a common form of Medicare payment also known as bundling.  Medicare uses bundled payments in order to give providers a financial  incentive to furnish care efficiently, as providers retain the difference if  Medicare’s payment exceeds the costs of providing services. On the other  hand, providers bear financial liability if the cost of beneficiaries’ care  exceeds Medicare’s payment. Under the current payment system for  dialysis care, Medicare uses what is known as a case-mix adjustment to  adjust the composite rate in order to account for basic differences in  beneficiaries’ expected care needs and therefore in the cost of their  dialysis care. These differences can be related to beneficiaries’  demographic and clinical characteristics. Medicare pays for a second  group of dialysis-related services, which were either not routine or not  available in 1983 when Medicare implemented the composite rate, on a  per-service basis. These separately billable services include injectable  ESRD drugs as well as services such as laboratory tests and supplies that  are used during the course of dialysis. Injectable ESRD drugs accounted  for about 86 percent of Medicare expenditures on all separately billable  ESRD services in 2007.
Because providers can receive more Medicare payments for prescribing  more injectable ESRD drugs, we and others have raised concerns that  paying for this care on a per-service basis creates an incentive to use more  of these drugs than necessary. Such use could have adverse effects on  ESRD patients and contribute to unnecessary Medicare spending. In 2006,  we recommended using a single bundled payment for dialysis care  because it would improve efficiency by reducing the incentive to use more  injectable ESRD drugs than necessary.
The Medicare Improvements for Patients and Providers Act of 2008  (MIPPA) requires CMS to implement a new expanded bundled payment  system for dialysis care beginning on January 1, 2011. In September 2009,  CMS issued a proposed rule that described the design of the expanded  bundled payment system in addition to preliminary plans for monitoring  the quality of dialysis care beneficiaries receive once the system is  implemented. Under this new payment system, CMS will use a single  bundled payment to cover all ESRD services that are currently covered  under the composite rate or are paid for separately. MIPPA requires that  CMS use a case-mix adjustment to account for differences across  beneficiaries in the cost of their dialysis care, which could be related to  beneficiaries’ demographic and clinical characteristics. MIPPA also  requires CMS to have an outlier policy, which involves making payments  to providers in addition to the bundled payment for beneficiaries whose  costs of care are substantially higher than would be expected for these  beneficiaries. There are concerns, however, that if the case-mix  adjustment and outlier policy do not adequately account for differences  across beneficiaries in the cost of care, some beneficiaries could have  their access to or quality of dialysis care adversely affected. Specifically,  providers may be discouraged from treating or provide poor quality care to  certain groups of beneficiaries. Beneficiaries who require higher-than- average doses, or amounts, of injectable ESRD drugs may be particularly  vulnerable to the potential of such adverse effects on access and quality  because of their above average costs for these services.
You asked us to report on the characteristics of beneficiaries with above  average doses of injectable ESRD drugs who therefore may be particularly  vulnerable to adverse effects under the new bundled payment system for  dialysis services, and on ways to ensure that such beneficiaries have  adequate access to and quality of dialysis care. This report (1) provides  information on Medicare expenditures for injectable ESRD drugs, by  beneficiaries’ demographic characteristics; (2) identifies the factors that  clinicians and researchers indicate are likely to result in a higher-than- average dose of injectable ESRD drugs for a dialysis patient; (3) describes  CMS’s approach for addressing differences among beneficiaries in the cost  of dialysis care under the new bundled payment system for these services;  and (4) examines CMS’s plans for monitoring the effects of the new  bundled payment system on beneficiaries.
To provide information on Medicare expenditures for injectable ESRD  drugs, by beneficiaries’ demographic characteristics, we analyzed the most  recent available data from a national data system containing information  on beneficiaries with ESRD. Specifically, we obtained 2007 data from the  United States Renal Data System (USRDS) for 326,899 of the 413,540  Medicare beneficiaries on dialysis that year. We calculated monthly  Medicare expenditures per beneficiary on injectable ESRD drugs in  2007. We focused our analysis on three types of injectable ESRD  drugs—erythropoiesis stimulating agents (ESA), intravenous (IV) iron, and  IV vitamin D—because they accounted for about 98 percent of the  approximately $2.2 billion in Medicare expenditures for injectable ESRD  drugs in 2007. We analyzed these expenditures across the following  demographic characteristics available through the USRDS database: age,  sex, race, ethnicity, urban/rural residential location, and whether a  beneficiary was enrolled in Medicaid. We did not examine the extent to  which the associations we report on between demographic characteristics  and Medicare expenditures reflect underlying clinical or other factors. The  USRDS data we analyzed on race and ethnicity are based on subjective  determinations of beneficiaries’ racial and ethnic identity. We assessed the  reliability of the USRDS data we used by interviewing officials responsible  for producing these data, reviewing relevant documentation, comparing  the results to published sources, and examining the data for obvious  errors. We determined that the data were sufficiently reliable for the  purposes of our study. (See app. I for more detail on our scope,  methodology, and data reliability.)
To identify the factors that clinicians and researchers indicate are likely to  result in a higher-than-average dose of injectable ESRD drugs (specifically,  ESAs, IV iron, and IV vitamin D) for a dialysis patient, we developed a  structured data collection approach that included interviews with  representatives of relevant industry groups, clinicians, and researchers  with expertise in ESRD as well as the administration of a Web-based data  collection instrument to selected nephrology clinicians and ESRD  researchers. Specifically, we conducted 20 structured interviews with  representatives of dialysis organizations and dialysis-related professional  organizations, nephrology clinicians, and researchers with expertise in  ESRD to develop the data collection instrument and provide context for  our findings. We also reviewed the clinical literature related to the use of  these three types of injectable drugs. We used information from these  interviews and our analysis of Medicare expenditures on injectable ESRD  drugs to compile a list of factors that may affect the dose of each of the  three types of these drugs in our review. Our Web-based data collection  instrument asked clinicians and researchers to identify which  demographic and clinical factors were more likely to result in a higher- than-average dose for each type of drug. In August and September 2009,  we sent our data collection instrument to 131 clinicians and researchers  based on referrals from dialysis-related professional organizations and a  systematic review of the literature. (See app. I for more information on  the criteria used to select potential clinicians and researchers and app. II  for the data collection instrument.) Our results represent the opinions of  73 of these selected clinicians and researchers and are not generalizable to  a larger population.
To describe CMS’s approach for addressing differences among  beneficiaries in the cost of dialysis care under the new bundled payment  system for these services, we reviewed CMS’s proposed rule on the design  of this new payment system. We also reviewed reports on the design of  this payment system by HHS and the University of Michigan Kidney  Epidemiology and Cost Center (UM-KECC), which has assisted CMS with  the payment system’s design. In addition, we interviewed representatives  of the Department of Veterans Affairs (VA) and two large health plans to  obtain contextual information about other bundled payment systems.   Finally, to examine CMS’s plans for monitoring the effects of the new  bundled payment system on beneficiaries, we interviewed CMS officials  and reviewed prior reports as well as CMS’s proposed rule on the design of  the new bundled payment system.
We conducted this performance audit from November 2008 through March  2010 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
paragraphs: ESRD is a condition of permanent kidney failure. Treatment options  include kidney transplantation and maintenance dialysis. Kidney  transplants are not a practical option on a wide scale, as suitable donated  organs are scarce. In contrast, dialysis is the treatment used by most  beneficiaries with ESRD. Hemodialysis, the most common form of  dialysis, is generally administered three times a week at facilities that  provide dialysis services. During hemodialysis, a machine pumps blood  through an artificial kidney, called a hemodialyzer, and returns the  cleansed blood to the body. In order to receive hemodialysis treatment,  patients must have a vascular access, which is a site on the body where  blood is removed and returned during dialysis.
One of the complications of ESRD is anemia, a condition in which an  insufficient number of red blood cells is available to carry oxygen  throughout the body. A diagnosis of anemia is determined through a  measurement of the level of hemoglobin in the blood. To treat anemia,  providers may administer ESAs intravenously in conjunction with IV  iron.28,,29 30  Another complication of ESRD is hyperparathyroidism, which can result  from a deficiency of vitamin D. Hyperparathyroidism is typically diagnosed  based on the level of parathyroid hormone (PTH) in the blood and can  lead to elevated phosphorus levels and low calcium levels in the blood as  well as softening of the bones. The treatment of hyperparathyroidism  includes the administration of IV vitamin D and oral drugs such as  phosphate binders and calcimimetics.
There are two types of ESAs—epoetin alfa (brand name Epogen®) and darbepoetin alfa  (brand name Aranesp®). In 2007, Epogen accounted for about 92 percent of Medicare  expenditures on ESAs. Of the approximately $2.2 billion in Medicare expenditures on  injectable ESRD drugs in 2007, about 75 percent was spent on ESAs.
Although iron is most commonly administered intravenously, it can also be given orally.
Over the last several years, researchers and clinicians have debated how to best manage  anemia in chronic kidney disease patients, including those with ESRD. Some studies have  concluded that using ESAs to achieve higher-than-recommended hemoglobin targets does  not reduce, and may sometimes result in, adverse cardiovascular events. See Tilman B.  Drueke et al., “Normalization of Hemoglobin Level in Patients with Chronic Kidney Disease  and Anemia,” The New England Journal of Medicine, vol. 355, no. 20 (2006), and Ajay K.  Singh et al., “Correction of Anemia with Epoetin Alfa in Chronic Kidney Disease,” The New  England Journal of Medicine, vol. 355, no. 20 (2006). Based on the results of these studies  and other safety concerns, the Food and Drug Administration (FDA) issued a “black box”  warning and required labeling changes for ESAs in 2007. FDA recently announced that all  patients receiving ESAs must be provided a medication guide that explains the potential for  adverse events while using these products. In the case of ESAs, the medication guides warn  of “potential death or other serious side effects.”  Other researchers have suggested that  variability in dosing of ESAs across dialysis facilities treating similar patients may be  evidence that some utilization of these drugs is not clinically appropriate. See Mae Thamer  et al., “Dialysis Facility Ownership and Epoetin Dosing in Patients Receiving  Hemodialysis,” The Journal of the American Medical Association, vol. 297, no. 15 (2007).
subsections: section_title: New Bundled Payment System for Dialysis Care
paragraphs: In September 2009, CMS issued its proposed rule for the design of the new  bundled payment system for dialysis care, which is required by law for  services furnished on or after January 1, 2011. CMS proposed that under  the new bundled payment system, Medicare would continue paying  dialysis facilities a bundled payment per dialysis treatment for up to three  treatments per week as it does under the current system.  However,  unlike the current payment system, the new bundled payment would cover  ESRD drugs and other separately billable services (for example,  laboratory tests related to ESRD treatment) in addition to dialysis services  currently covered under the composite rate. Under CMS’s proposed rule,  the ESRD drugs covered under the new bundled payment would include  injectable ESRD drugs as well as oral ESRD drugs, such as calcimimetics,  that are currently covered under Medicare Part D.
section_title: Accounting for Beneficiary Cost Differences under Medicare Bundled Payment Systems
paragraphs: Bundled payment systems in Medicare typically include a case-mix  adjustment and may also use an outlier policy to account for differences in  the cost of beneficiaries’ care. In general, a case-mix adjustment varies  payments based on factors associated with beneficiaries’ expected costs  of care. As a result, a case-mix adjustment typically increases bundled  payments for providers who treat high-cost beneficiaries. In addition,  some bundled payment systems under Medicare use an outlier policy to  partially offset providers’ financial losses for treating beneficiaries whose  costs of care substantially exceed what would be expected. To reduce  these financial losses, an outlier policy involves making provider payments  in addition to the case-mix adjusted bundled rate for these high-cost  beneficiaries.
The accuracy with which bundled payments are adjusted to account for  differences in beneficiaries’ expected costs of care may affect  beneficiaries’ access to and quality of care. In prior work, we and others  have stated that if a bundled payment system’s case-mix adjustment is not  designed adequately, then payments may be too low for certain groups of  beneficiaries. Further, providers could respond to these inadequate  payments by choosing not to treat or inappropriately limiting care for  these groups, which could adversely affect these beneficiaries’ access to  and quality of care. We and others have noted that underpaying for  care, which could result from an inadequate case-mix adjustment, may  result in care of poor quality. In particular, poor quality of care could  occur under bundled payment systems if, for example, providers furnish  inadequate doses of drugs in an effort to minimize cost. Beneficiaries w above average costs of care may be particularly vulnerable because  providers who treat these beneficiaries face the potential of financial  losses on these patients if the bundled payments are not adjusted  appropriately to take these above average costs into account.
The potential unintended effects of bundled payment systems on  beneficiaries have led us and others to note that access to and quality  under various Medicare bundled payment systems should be monitored.  For example, in 1999, we noted that monitoring access to care would be  necessary under Medicare’s bundled payment system for skilled nursing  care to ensure that Medicare beneficiaries continued to have access to  medically necessary services. Similarly, in its 2006 report, the HHS Office  of Inspector General stressed the importance of monitoring quality under  the bundled payment system for home health care. Our work and work  by others has also noted the importance of monitoring the effect of  Medicare bundled payment systems on various groups of beneficiaries.  Specifically, in 2000 we and the Medicare Payment Advisory Commission  (MedPAC) reported on the bundled payment system for home health care  and recommended that the delivery of these services be monitored across  groups of beneficiaries, such as those whose care is more costly than  average. Furthermore, a study on the bundled payment system for  inpatient rehabilitation services affirmed the importance of monitoring  access to care for various groups of beneficiaries.
section_title: Certain Groups of Beneficiaries, Including African Americans and Those with Medicaid Coverage, Had Above Average Expenditures for Injectable ESRD Drugs in 2007
paragraphs: Monthly Medicare expenditures per beneficiary for injectable ESRD drugs  in 2007 were above average for certain demographic groups, and African  Americans and persons with Medicaid coverage were among the groups  for which this difference was largest. In particular, Medicare expenditures  on injectable ESRD drugs in 2007 were $782 per African American  beneficiary per month—about 13 percent more than the $693 spent for all  Medicare beneficiaries on dialysis (see fig. 1). The above average  spending per African American beneficiary was due primarily to higher  spending on ESAs and IV vitamin D. Monthly Medicare spending per  African American beneficiary on ESAs was about 10 percent higher than  the average across all beneficiaries on dialysis, and spending on IV vitamin  D was about 38 percent higher than average. Average monthly Medicare  expenditures per beneficiary for other racial groups were below the  average for all beneficiaries on dialysis in 2007. As a result, average  monthly expenditures for African Americans were about 41 to 42 percent  higher than spending for beneficiaries who classified themselves as  American Indian/Alaskan Native or Asian or Pacific Islander and about   21 percent higher than for expenditures for White beneficiaries.
Average monthly expenditures per beneficiary for injectable ESRD drugs  were also above average for beneficiaries enrolled in both Medicare and  Medicaid. Specifically, average monthly expenditures per beneficiary  enrolled in Medicare and Medicaid were $735 in 2007, which was about   6 percent higher than the $693 spent across all beneficiaries on dialysis  and about 12 percent higher than the $659 for Medicare beneficiaries who  were not in Medicaid. This difference was mainly due to above average  expenditures on ESAs and IV vitamin D for beneficiaries enrolled in both  Medicare and Medicaid. For beneficiaries with both Medicare and  Medicaid coverage, expenditures on ESAs were about 6 percent higher  than the average for all beneficiaries in 2007, while expenditures on IV  vitamin D were about 11 percent higher than average.
Monthly Medicare expenditures per beneficiary for adults age 20 to   64 were generally higher than the average for all Medicare beneficiaries on  dialysis. Most notably, Medicare spending per beneficiary age 20 to 44 was  about 9 percent more than the monthly average for all Medicare  beneficiaries on dialysis (see fig. 2). Monthly Medicare expenditures per  beneficiary age 20 to 44 were also higher when compared to those of other  age groups, in particular beneficiaries age 19 and under or age 75 and  older. The higher-than-average spending for beneficiaries age 20 to 44 was  driven primarily by above average expenditures on ESAs and IV vitamin D.  Specifically, Medicare spending on ESAs per beneficiary age 20 to 44 was  about 9 percent higher than the average across all beneficiaries on dialysis  in 2007. Similarly, Medicare spending on IV vitamin D per beneficiary age  20 to 44 was about 12 percent higher than the average for all beneficiaries.
Monthly expenditures per beneficiary in 2007 for females, non-Hispanic  beneficiaries, and urban residents also exceeded the average for all  beneficiaries on dialysis, but to a lesser extent than for African Americans  and beneficiaries in both Medicare and Medicaid. For example, female  beneficiaries had average monthly expenditures of $715, which was about  3 percent higher than the monthly average across all Medicare  beneficiaries on dialysis and about 6 percent higher than monthly  expenditures per male beneficiary. Similarly, the $708 that Medicare spent  per month on non-Hispanic beneficiaries was about 2 percent higher than  the average across all beneficiaries on dialysis and about 19 percent higher  than the average for Hispanic beneficiaries.
For more detailed information on Medicare expenditures for injectable  ESRD drugs, by demographic characteristics, see appendix III.
section_title: A Majority of Selected Clinicians and Researchers Identified Primarily Clinical Factors as Likely to Result in Above Average Doses of Injectable ESRD Drugs
paragraphs: While we report that certain demographic groups were associated with  above average Medicare expenditures for injectable ESRD drugs in 2007,  we did not identify the factors that led to these differences in expenditures  across groups of beneficiaries. However, we collected information from  nephrology clinicians and ESRD researchers on the factors they consider  likely to result in above average doses of injectable drugs—ESAs, IV iron,  and IV vitamin D.
A majority of the 73 clinicians and researchers who completed our Web- based data collection instrument identified clinical factors, rather than  demographic characteristics, as likely to result in above average doses of  injectable ESRD drugs. Specifically, at least 50 percent of these experts  identified 14 such factors, including chronic blood loss, low iron stores,  and recent hospitalization, as likely to result in above average doses of  ESAs (see table 1). Further, a majority of the clinicians and researchers  who completed our data collection instrument indicated that demographic  factors were not likely to result in above average doses of ESAs.  Specifically, at least 50 percent of these experts identified 16 of the 17  demographic factors, such as age, race, and socioeconomic status, as not  likely to result in above average doses of ESAs (see app. IV for detailed  results). These results are consistent with information from our structured  interviews with nephrology clinicians, who indicated that they consider  clinical factors, rather than demographic characteristics, when making  dosing decisions for ESAs and other injectable ESRD drugs.
The literature we reviewed on the use of ESAs provides some explanation  for how clinical factors impact the dose of this drug. For example, chronic  blood loss is a common occurrence among hemodialysis patients. Blood  loss can increase a person’s ESA requirements by reducing the level of  iron in the blood. Sources of blood loss include blood lost during the  hemodialysis process, regular blood draws for laboratory testing, and  gastrointestinal bleeding. As another example, the clinical literature  describes how recent hospitalizations relate to ESA use. Studies  demonstrate that hospitalized ESRD patients usually experience a decline  in hemoglobin levels, which worsens anemia and increases  posthospitalization ESA requirements. The literature offers multiple  explanations for this decline in hemoglobin levels. For example,  hospitalized ESRD patients commonly experience infection, inflammation,  and iron deficiency. All of these conditions can contribute to increased  ESA requirements. Additionally, the literature explains the effect of  dialysis catheters on the use of ESAs. According to published research, the  use of dialysis catheters compared to other forms of vascular access  makes ESRD patients more prone to infection and inflammation, which  increase ESA requirements.
As with ESAs, a majority of clinicians and researchers who completed our  data collection instrument identified clinical factors, such as chronic  blood loss and low iron stores, as likely to result in above average doses of  IV iron (see table 2). These individuals identified six clinical factors as  likely to result in above average doses of IV iron. Five of these six clinical  factors overlap with the clinical factors identified for ESAs. Moreover, at  least 50 percent of clinicians and researchers who completed our data  collection instrument identified demographic factors, such as age, race  and residential location, as not likely to result in an above average dose of  IV iron (see app. IV for detailed results).
Also similar to ESAs, the literature on the use of IV iron provides some  context for the clinical factors that are likely to result in above average  doses of IV iron. For example, chronic blood loss can result in iron  deficiency and increase a person’s IV iron requirement. Sources of blood  loss leading to increased IV iron requirements include blood retention in  the dialyzer tubing, blood testing, and gastrointestinal bleeding. Also, the  literature explains that the state of having low iron stores is more common  in patients on dialysis for less than 6 months than those on dialysis for  longer amounts of time.
As table 3 shows, a majority of the clinicians and researchers who  completed our data collection instrument identified two clinical factors— hyperparathyroidism and a lack of predialysis care—and one demographic  factor—low socioeconomic status—as likely to result in higher-than- average doses of IV vitamin D (see app. IV for detailed results).  Hyperparathyroidism is present in almost all ESRD patients and develops  early in the course of chronic kidney disease. In fact, research shows that  PTH levels start to increase early in the course of chronic kidney disease  and can lead to the development of hyperparathyroidism. In addition,  new ESRD patients who have not received predialysis care from a  nephrologist may be at greater risk of health complications. According to  the clinical literature, new ESRD patients may begin dialysis treatment  without receiving predialysis care from a nephrologist because they face   barriers to receiving care. One such barrier is low socioeconomic  status. Specifically, the literature shows that low socioeconomic status  may be associated with limited access to health care services.
section_title: CMS Proposed Several Case-Mix Adjustment Factors and an Outlier Policy to Address Cost Differences among Beneficiaries
paragraphs: Issued in September 2009, CMS’s proposed rule for the new bundled  payment system for dialysis care identified several clinical and  demographic factors that the agency proposed to use in the case-mix  adjustment model required by MIPPA. The case-mix adjustment factors  that CMS proposed include age, sex, body surface area, body mass index,  length of time on dialysis, and comorbid conditions. CMS and UM- KECC studied the relationship between these proposed factors and the  cost of dialysis care and used the results to determine how to adjust  payments under the new bundled payment system. For example, based  CMS’s proposed case-mix adjustment, the bundled payment for a  beneficiary who has been on dialysis for fewer than 4 months would be 47 percent higher than the payment for the same beneficiary on dialysis for  more than   4 months.
CMS used the criteria listed be factors. Specifically, a factor  low to select potential case-mix adjustment    had to have a statistically significant relationship with beneficiaries of dialysis care that was large enough to result in meaningful difference in payments to providers,    could not introduc poor quality care,  e incentives for providers to furnish inappropriate or  must be measured based on objective guidelin es, and  must be based on reliable data.
CMS considered some factors as potential case-mix adjusters but did not  propose them because they did not meet CMS’s criteria. One example of  a factor that CMS considered but did not propose as a potential case-mix  adjuster is congestive heart failure. CMS officials stated that they did  not  propose this factor in part because of the lack of clear and objective  guidelines for diagnosing this condition. As another example, a  beneficiary’s prior ESA use was not proposed as a case-mix adjuster  because, according to CMS officials, this factor would introduce  inappropriate incentives for providers. Specifically, they concluded that if  the extent of prior ESA use were a case-mix adjustment factor, a provide r  would have the incentive to increase a beneficiary’s ESA dose to obta higher Medicare payments under the new bundled payment system.
CMS also considered including race and ethnicity in the proposed case- mix adjustment model, but chose not to include these factors. CMS invited  public comment on this decision, noting that an adjustment based on race and ethnicity may be warranted. One of the reasons CMS cited in its  proposed rule for not including race and ethnicity in the proposed model  was the lack of objective guidelines for classifying beneficiaries’ race or  ethnicity. This absence of objective guidelines implies that there is likely  to be an inconsistency across individuals in how they classify themselves  into racial or ethnic categories. CMS also noted that its concerns with th e  quality of data on race and ethnicity made it difficult to propose these  variables as case-mix adjusters. One quality issue that CMS cited is the  inconsistency over time in how Medicare data on race and ethnicity  collected for one of its two sources of this information—the Renal   were  Management Information System (REMIS) database. Additionally, CMS  cited studies indicating that information on race and ethnicity from  Medicare’s second source of these data—the Medicare Enrollment  Database (EDB)—may be inaccurate. These studies found that the EDB  may not accurately identify beneficiaries’ race and ethnicity, particularly  for beneficiaries in smaller minority groups, such as Asians and  Hispanics.
In addition to a case-mix adjustment model, CMS proposed using an  outlier policy, as required by MIPPA, to increase payments to providers  when they treat beneficiaries whose costs of dialysis care substantially  exceed what would be expected. CMS proposed identifying these high- cost beneficiaries based on their cost of outlier services, which CMS  defines as ESRD services that are separately billable under the current  payment system for dialysis care, such as injectable ESRD drugs. The  agency has noted that it is primarily the variation in the cost of outlier  services that poses a financial risk to providers and that could therefore  adversely affect beneficiaries’ access to and quality of dialysis care.  Furthermore, according to CMS officials, the agency collects beneficiary- level data on the use of outlier services but not on those covered under the  composite rate, such as the dialysis procedure. Such data would be  necessary to identify beneficiaries with higher-than-expected costs for  dialysis care overall. Based on CMS’s proposed outlier policy, providers  could receive outlier payments when they treat beneficiaries whose costs  for injectable ESRD drugs and other outlier services exceed a certain  threshold.
The case-mix adjustment and outlier policy may need to be recalibrated  periodically. The specific parameters of these payment mechanisms  initially will be based on patterns of utilization, and therefore spending,  that existed before the new bundled payment system was implemented.  The bundling of payments changes financial incentives for providers and is  intended to encourage the efficient provision of care. To the extent that  providers change how they practice after the new payment system is  implemented, in response to the financial incentives of the new bundled  payment system to provide dialysis care more efficiently or other factors,  the parameters of the case-mix adjustment and outlier policy could  become less accurate over time. As a result, CMS officials stated that they  may recalibrate these payment mechanisms using data collected after  implementation of the new bundled payment system. However, CMS  officials noted that they had not established a time frame for this  recalibration.
section_title: CMS’s Preliminary Monitoring Plans Build on Existing Initiatives, but Whether CMS Will Monitor Quality of and Access to Care for Groups of Beneficiaries Is Unclear
paragraphs: CMS officials told us that their preliminary plans for monitoring the effects  of the new bundled payment system on beneficiaries include three current  CMS initiatives that focus on monitoring the quality of dialysis care (see  table 4). In comments on a draft of this report, CMS reported that it plans  to have a comprehensive monitoring strategy in place when the new  bundled payment system is implemented on January 1, 2011. One of the  three key initiatives in CMS’s preliminary monitoring plans is its network  of 18 private organizations—called ESRD networks. Each network is  charged with monitoring and promoting the quality of dialysis care in a  geographic area, which generally covers one or more states. The networks’  monitoring responsibilities include analyzing facility-level data on quality  measures to identify facilities that need assistance with quality  improvement. The networks are also responsible for evaluating and  addressing patient complaints. The second quality monitoring initiative  that CMS plans to rely on is the Clinical Performance Measures (CPM)  project. Under this project, CMS has monitored quality by collecting and  analyzing data on dialysis quality measures for a nationally representative  sample of beneficiaries on dialysis. CMS has used these data to report  annually on comparisons of the quality of dialysis care across the country  and across groups of beneficiaries. The third initiative involves monitoring  the quality of individual dialysis facilities by ensuring that they comply  with Medicare’s conditions for coverage that a facility must fulfill in order  to receive Medicare payment for dialysis care. One of these conditions  requires that a dialysis facility develop and implement a program to  monitor and improve the quality of services it provides. CMS requires  that this plan include the collection and monitoring of data on patient  satisfaction with care and the adequacy of dialysis, among other measures.
In addition to the monitoring initiatives described above, CMS has or is  developing two other quality initiatives focused primarily on promoting  the quality of dialysis care rather than monitoring. The first of these  initiatives that CMS plans to continue under the new bundled payment  system is Dialysis Facility Compare, which is a tool on the Medicare  program’s Web site that allows users to compare dialysis facilities based  on measures of the quality of dialysis care. By making public each facility’s  quality information, Dialysis Facility Compare gives facilities the incentive  to improve the quality of care they furnish. CMS is developing the second  of these initiatives—a quality incentive program (QIP)—which is required  by MIPPA to be implemented beginning January 1, 2012. Under the QIP,  Medicare is required to reduce payments to dialysis providers by up to   2 percent if the dialysis care they furnish does not meet a total  performance score based on quality standards established by CMS. CMS  proposed using indicators of dialysis adequacy and anemia management to  measure quality under the QIP. By linking a portion of provider payments  to measures of dialysis adequacy and anemia management, the QIP would  give providers a financial incentive to improve these aspects of dialysis  care. However, the QIP would not address other aspects of dialysis care,  such as mineral metabolism, which is related to the use of IV vitamin D,  unless CMS incorporated additional measures into the program.
We and others have noted the importance of monitoring quality of and  access to care under bundled payment systems to help ensure that  beneficiaries receive appropriate care. Although CMS intends to monitor  quality under the new bundled payment system, the extent to which CMS  will conduct such monitoring for various groups of beneficiaries is  uncertain. CMS officials told us that it was too early in the process of  developing a monitoring plan to address how they might monitor various  groups of beneficiaries. CMS is developing the capacity to monitor the  quality of dialysis care for groups of beneficiaries, such as those with  above average costs of care. Specifically, CMS is implementing a new  database called the Consolidated Renal Operations in a Web-Enabled  Network (CROWNWeb), which is designed to collect CPM data as well as  other clinical and demographic information for all beneficiaries with  ESRD. However, because CMS is still developing its monitoring plans, it  is uncertain to what extent CMS will use these data to monitor the quality  of dialysis care for various groups of beneficiaries under the new bundled  payment system.
While CMS has initiatives it plans to use to monitor the quality of dialysis  care beneficiaries receive under the new bundled payment system, these  initiatives involve systematic monitoring of only one measure of  beneficiaries’ access to such care. Specifically, CMS systematically  monitors the extent to which beneficiaries are discharged involuntarily  from facilities by requiring the networks to track these beneficiaries. To  improve the networks’ ability to track these beneficiaries, CMS is  developing a database designed to allow the networks to track the number  of involuntary discharges based on beneficiary characteristics, such as  age, race, and ethnicity. However, according to CMS officials, the agency  does not systematically monitor other measures of access to dialysis care,  such as the use of dialysis services.
Although CMS’s monitoring initiatives do not generally focus on  beneficiaries’ access to dialysis care, CMS has the data sources necessary  to conduct more comprehensive monitoring of access for various groups  of beneficiaries, including those with above average costs of care. In  particular, one data source that CMS has available to monitor access to  dialysis care is the information it generates on the characteristics of  beneficiaries receiving care in dialysis facilities. This facility-level  information—the Dialysis Facility Report—is compiled by UM-KECC in  part from Medicare claims and the REMIS database. CMS could use these  data, in addition to information it has on which facilities open or close  during a given year, to compare the characteristics of beneficiaries in  these facilities. This information could indicate whether facility openings  and closures affect the availability of dialysis facilities for certain groups  of beneficiaries more than others.
CMS also has the data necessary to monitor other measures of access to  care, such as changes in the use of dialysis services and shifts in the site of  dialysis care. CMS collects data on the use of Medicare-covered services,  such as ESRD drugs, through the process of paying claims for these  services. In addition, the CROWNWeb database will contain beneficiary- level data on demographic and clinical characteristics. CMS could use  these data sources to identify groups of beneficiaries whose service use is  higher than average and who therefore may have above average costs of  dialysis care. CMS could then use these data to monitor the use of dialysis  services for groups of beneficiaries with above average costs of care.  Changes in the use of dialysis services could indicate how the new  bundled payment system may have affected beneficiaries’ access to these  services. For example, if the use of a given dialysis-related drug declined  over time for certain groups of beneficiaries but not for others, then this  could prompt an assessment of whether this reduction was appropriate  and whether the payment system may have caused this difference. CMS  could also monitor the extent to which beneficiaries receive emergency  dialysis in hospitals rather than outpatient dialysis facilities as an indicator  of access to dialysis care. An increase in hospital admissions for  emergency dialysis services for certain groups of beneficiaries could  indicate that these groups are having difficulty gaining admission to  outpatient dialysis facilities.
section_title: Conclusions
paragraphs: The new bundled payment system for dialysis care—required to be  implemented for services furnished on or after January 1, 2011—has the  potential to improve the efficiency of care delivery, in part by reducing the  financial incentive to use more injectable ESRD drugs than are necessary.  However, if this new payment system causes providers to consistently  experience financial losses when treating beneficiaries with above average  costs, then some beneficiaries could face problems accessing dialysis care  or with the quality of that care. Groups of beneficiaries with above average  costs of dialysis care, whether related to clinical or demographic factors,  may be more vulnerable to these types of problems. Therefore it will be  important for CMS to monitor the effect of the new bundled payment  system on the access to and quality of dialysis care for these  beneficiaries—which is consistent with previous work on the need for  such monitoring under other bundled payment systems in Medicare.  Furthermore, early identification of any adverse effects of the payment  system on beneficiaries will be crucial because their need for life- sustaining dialysis makes them particularly sensitive to disruptions in  dialysis care.
CMS recognizes the importance of monitoring the effect of its new  bundled payment system on beneficiaries and is developing plans for these  efforts. In commenting on a draft of this report, CMS stated that it plans to  have a comprehensive monitoring strategy in place when the new bundled  payment system is implemented on January 1, 2011. However, because  CMS’s monitoring plans are preliminary, the extent to which CMS intends  to monitor quality for various groups of beneficiaries, such as those with  above average costs of care, is unclear. Furthermore, while CMS’s  preliminary plans for monitoring under the new bundled payment system  contain initiatives designed to monitor the quality of dialysis care, these  plans involve very limited monitoring of access to these services. CMS has  or is developing the tools it could use to monitor access to and quality of  dialysis care for various groups of beneficiaries, including those with  above average costs of dialysis care. Specifically, CMS currently collects  data on the use of injectable ESRD drugs and other Medicare services that  could be used to monitor access to these services. CMS is also developing  a data system that will contain quality measures for each beneficiary with  ESRD. CMS could draw on this capacity as it plans and conducts its  monitoring efforts. Moreover, CMS could use information from these  efforts to help refine the payment system over time.
section_title: Recommendation for Executive Action
paragraphs: To help ensure that changes in Medicare payment methods for dialysis  care do not adversely affect beneficiaries, we recommend that the  Administrator of CMS monitor the access to and quality of dialysis care for  groups of beneficiaries, particularly those with above average costs of  dialysis care, under the new bundled payment system. Such monitoring  should begin as soon as possible once the new bundled payment system is  implemented and be used to inform potential refinements to the payment  system.
section_title: Agency and Industry Comments and Our Evaluation
paragraphs: We received written comments on a draft version of this report from CMS  and oral comments on the draft report from representatives from dialysis  facility organizations and from a nephrologist specialty association.
subsections: section_title: Comments from CMS
paragraphs: In written comments on a draft of this report, CMS agreed with our  recommendation and noted that it is planning to actively monitor the  effects of the new bundled payment system on all ESRD beneficiaries,  including those with above average costs. CMS noted that it plans to have  a comprehensive monitoring strategy in place when the payment system is  implemented on January 1, 2011. In particular, CMS plans to use its  existing data sources to examine overall trends in care delivery and quality  to help the agency ensure that beneficiaries continue to receive quality  care under the new payment system. CMS stated that it would use its  existing infrastructure, including the ESRD networks, for quality oversight  in the ESRD facilities. Furthermore, CMS indicated that it plans to use  information from these monitoring activities for potential refinements to  the new bundled payment system and the QIP.
CMS noted that our statement that the agency’s preliminary plans involve  limited monitoring of access to dialysis care did not reflect the agency’s  current planning efforts because our assessment was based on interviews  conducted prior to the publication of the ESRD proposed rule, which  occurred on September 29, 2009. However, we spoke with CMS officials in  December 2009 to review our evidence and findings regarding the agency’s  preliminary monitoring plans, and at that time, agency officials told us that  our information was accurate.
CMS commented that our report suggests that clinical factors, rather than  demographic characteristics, are more likely to relate to higher doses of  injectable ESRD drugs, resulting in above average expenditures for certain  groups of beneficiaries. CMS also noted that the case-mix adjustment  model is designed to predict dialysis facility costs and be used in making  payments to such facilities based on information they are able to provide  on claims. CMS further noted that demographic and other factors had  been determined to be statistically significant in predicting facility costs.  The results of our study indicate that while Medicare expenditures on  injectable ESRD drugs were related to beneficiaries’ demographic  characteristics, a majority of clinicians and researchers from whom we  obtained input noted that these characteristics by themselves generally  were not likely to result in higher doses of injectable ESRD drugs.  However, we do not draw any conclusions regarding the relative  importance of demographic or clinical characteristics in predicting  dialysis facility costs for the purposes of a case-mix adjustment model and  payment system. Evaluating the appropriateness of CMS’s proposed case- mix adjustment factors was beyond the scope of this study. CMS provided  technical comments, which we incorporated as appropriate. We have  reprinted CMS’s letter in appendix V.
section_title: Comments from Industry Representatives
paragraphs: We invited representatives of both large and small dialysis facility  organizations and a nephrologist specialty association to review and  provide oral comments on the draft report. The groups represented were  the Kidney Care Council (KCC), the National Renal Administrators  Association (NRAA), and the Renal Physicians Association (RPA). The  three groups generally agreed with our message and recommendation to  CMS. Their comments focused on three areas: the data and populations  analyzed in the report, our findings related to beneficiaries’ demographic  characteristics and clinical conditions, and the nature and timeliness of  CMS’s monitoring plans. Industry representatives also provided technical  comments, which we incorporated as appropriate.
First, representatives from each of the organizations commented on the  scope of the report by raising potential issues with the data and  populations we analyzed. RPA representatives noted that our data on  Medicare expenditures for injectable ESRD drugs, which were based on  USRDS data for 2007, may not represent current trends in utilization and  expenditures. They asserted that prescribing patterns for injectable ESRD  drugs may have changed since 2007 and that this may have been due in  part to safety concerns associated with ESA use. In addition,  representatives from both KCC and NRAA stated that the report did not  sufficiently examine the socioeconomic status of ESRD beneficiaries,  including how beneficiaries with both Medicare and Medicaid coverage  would fare under the new bundled payment system. An NRAA  representative also noted that our report did not examine data on the  poorest ESRD beneficiaries who have Medicaid coverage but do not  qualify for Medicare coverage. In addition, KCC representatives noted that  the report did not provide enough information on Part D drugs, which  CMS proposed to cover under the new bundled payment system.  Moreover, RPA representatives noted that there is a great deal of anxiety  in the provider community about whether the bundled payment will be  sufficient to cover the cost of these drugs.
In our report, we analyzed USRDS data on Medicare expenditures for  injectable ESRD drugs and demographic characteristics such as age, sex,  race, and Medicaid status for 2007 because these were the most recent  data available. Moreover, our analysis of data from 2003 through 2006  indicated that the results based on 2007 data were consistent with data  from the previous 4 years. We acknowledge, however, that the safety  concerns about ESAs could have influenced prescribing practices and that  such changes could affect the relationship between expenditures on  injectable ESRD drugs and demographic characteristics and have added  some detail to the report on these issues. We examined beneficiaries  covered by both Medicare and Medicaid because detailed information on  beneficiaries’ socioeconomic status is not available. We did not examine  data on beneficiaries without Medicare coverage because they are not  included in the data CMS used to develop the new bundled payment  system. We agree that Part D drugs will be important under the new  bundled payment system. However, data on the use of these drugs, which  according to CMS constituted about 14 percent of Medicare expenditures  on all ESRD drugs in 2007, were not available.
Second, industry representatives commented on our findings related to  beneficiaries’ demographic characteristics and clinical conditions.  Representatives from KCC pointed out that our findings on the  relationship between Medicare expenditures on injectable ESRD drugs  and beneficiaries’ demographic characteristics were consistent with  published research on this topic and noted that these relationships are  driven by underlying clinical factors. However, RPA representatives noted  that the report did not address the reason for these observed relationships.  In addition, representatives from KCC and RPA agreed with our finding  that clinicians do not take beneficiaries’ demographic characteristics into  account when making dosing decisions. However, KCC representatives  noted that there was an apparent disconnect between the results of our  first and second findings. In order to facilitate interpretation of these  results, KCC representatives suggested that we include in the report a  copy of the instrument used to collect information from clinicians and  researchers on the factors that are likely or not likely to result in above  average doses of injectable ESRD drugs.
We did not address the extent to which the relationships between  Medicare expenditures on injectable ESRD drugs and beneficiaries’  demographic characteristics were driven by underlying clinical factors  because doing so was beyond the scope of our study. We did, however,  obtain input from clinicians and ESRD researchers to gain insight into the  factors that may affect the dose of these drugs for dialysis patients. We  agree with KCC’s suggestion and have included the structured data  collection instrument in appendix II.
Finally, representatives from all three organizations agreed that it will be  important to monitor the effects of the new bundled payment system on  beneficiaries but expressed concern about how CMS would conduct such  monitoring. Representatives from NRAA stressed the need to identify  vulnerable populations, such as those with high costs of dialysis care, as  part of the monitoring process. However, NRAA and RPA representatives  questioned how CMS would identify these populations through its  monitoring activities. In addition, KCC representatives expressed concern  about the timeliness of CMS’s monitoring activities, noting that data from  CMS on the provision of dialysis care can have a long lag time, which  makes the information less relevant. Representatives from all three  organizations expressed concerns related to CROWNWeb implementation.  Specifically, both NRAA and RPA representatives noted that they view  CROWNWeb as a potentially useful tool for CMS monitoring activities, but  are concerned about when it would be fully implemented. NRAA  representatives noted that challenges remain to making the database  operational. Furthermore, representatives from KCC cautioned that if data  in CROWNWeb are not collected in a consistent way across dialysis  facilities, the information from this database could be unreliable.
Our report recommends that CMS monitor the effect of the new payment  system on beneficiaries, such as those who are vulnerable to adverse  effects of the payment system because of their above average costs of  dialysis care. We also point out in the report that it will be important for  CMS to draw on data sources it has or is developing to identify and  monitor access to and quality of dialysis care for such groups of  beneficiaries. We agree with KCC representatives that CMS’s monitoring  activities should be timely so that any problems resulting from the new  payment system can be addressed as soon as possible after  implementation. Our recommendation to CMS emphasizes the need for  timely monitoring, particularly given the sensitivity of the dialysis  population to potential disruptions in access to and quality of care. We  also reported that CROWNWeb is a key element in CMS’s preliminary  plans for its monitoring approach, and agree that it is important for CMS  to develop reliable data and ensure that such data are available to use as  soon as possible after the bundled payment system is implemented.
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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 this report. GAO staff who made major contributions to this report are  listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) provide information on Medicare expenditures  for injectable end-stage renal disease (ESRD) drugs, by beneficiaries’  demographic characteristics; (2) identify the factors that clinicians and  researchers indicate are likely to result in a higher-than-average dose of  injectable drugs for a dialysis patient; (3) describe the Centers for  Medicare & Medicaid Services’ (CMS) approach for addressing differences  among beneficiaries in the cost of dialysis care under the new bundled  payment system for these services; and (4) examine CMS’s plans for  monitoring the effects of the new bundled payment system on  beneficiaries.
To provide information on Medicare expenditures for injectable ESRD  drugs, by beneficiaries’ demographic characteristics, we analyzed the most  recent available data from a national data system containing information  on beneficiaries with ESRD. Specifically, we obtained data from the  United States Renal Data System (USRDS) on monthly Medicare  expenditures per beneficiary on dialysis in 2007 for injectable ESRD  drugs. We focused our analysis on erythropoiesis stimulating agents  (ESA), intravenous (IV) iron, and IV vitamin D because these three types  of drugs accounted for about 98 percent of the approximately $2.2 billion  in Medicare expenditures on injectable ESRD drugs in 2007. We analyzed  data for 326,899 Medicare beneficiaries on dialysis in 2007. The data we  analyzed did not contain all of the 413,540 beneficiaries on dialysis in 2007  because we excluded beneficiaries (1) who were in Medicare managed  care plans, (2) for whom Medicare was not the primary payer, or (3) for  whom no claims for Medicare services provided in 2007 were submitted.
We analyzed monthly Medicare expenditures per beneficiary in 2007 on  ESAs, IV iron, and IV vitamin D across the following demographic  characteristics available through the USRDS database: age, sex, race,  ethnicity, urban/rural residential location, and whether a beneficiary was  enrolled in Medicaid. Additionally, we analyzed USRDS data for 2003  through 2006 to determine whether the results for 2007 were consistent in  prior years. We did not address in our expenditure analysis the extent to  which the relationships we presented between demographic  characteristics and Medicare expenditures reflected underlying clinical or  other factors. Data on monthly Medicare expenditures per beneficiary  were based on Medicare claims. The expenditure amounts that we  presented did not include beneficiary cost sharing. Monthly Medicare  expenditures per beneficiary were calculated by dividing Medicare  expenditures for a given drug by the number of months beneficiaries were  on dialysis in 2007.
USRDS data on demographic characteristics—with the exception of  Medicaid enrollment status—were drawn primarily from CMS’s Renal  Management Information System (REMIS) database. Dialysis providers  collected these data using a standardized form called the Medical  Evidence Form. We used these data to present results on monthly  Medicare expenditures on injectable ESRD drugs across the following age  categories: 0-19, 20-44, 45-54, 55-64, 65-74, and 75 and older. We selected  these age categories to capture the pediatric population (i.e., age 19 and  under) and to make the number of beneficiaries within each of the  remaining categories similar. The USRDS data we analyzed on race and  ethnicity are based on subjective determinations of beneficiaries’ racial  and ethnic identity. In addition, these data were collected using different  racial and ethnic categories depending on which version of the Medical  Evidence Form was used. Figure 3 demonstrates how the racial and ethnic  categories on the different versions of the Medical Evidence Form link to  the categories we used in this report. A beneficiary’s residence was  classified as urban if it was in an area with at least 500 people per square  mile, and all other areas were considered rural. Finally, USRDS data on  Medicaid enrollment status were drawn from the Medicare Enrollment  Database. We used beneficiaries’ Medicaid enrollment status as an  indicator of their socioeconomic status because beneficiaries’ income and  asset levels determine their eligibility for Medicaid, which provides  financial assistance with the cost of medical care.
We assessed the reliability of data from the USRDS by interviewing  officials responsible for producing these data, reviewing relevant  documentation, comparing the results to published sources, and  examining the data for obvious errors. Although we report that CMS has  concerns about using data on race and ethnicity for the purposes of  adjusting bundled payments, we determined that data on these  characteristics as well as other USRDS data that we used were sufficiently  reliable for the descriptive analytical purposes of our study.
To identify the factors that clinicians and researchers indicate are likely to  result in a higher-than-average dose of injectable ESRD drugs (specifically,  ESAs, IV iron, and IV vitamin D) for a dialysis patient, we developed a  structured data collection approach that included interviews with relevant  industry groups, clinicians, and researchers with expertise in ESRD as  well as the administration of a Web-based data collection instrument to  selected nephrology clinicians and ESRD researchers (see app. II for the  data collection instrument). To develop this instrument and provide  context for our findings, we conducted 20 structured interviews with  representatives of large and small dialysis organizations and dialysis- related professional organizations, nephrology clinicians, and researchers  with expertise in ESRD and also reviewed the clinical literature related to  the use of the three types of drugs. We asked each interviewee about  the beneficiary characteristics associated with high or low use of these  drugs. We summarized the information obtained from these interviews and  used it to develop the lists of clinical factors used for our data collection  instrument. The demographic factors listed on the data collection  instrument were those we examined in our analysis of Medicare  expenditures on injectable ESRD drugs. We pretested the data collection  instrument with nephrologists and revised it based on comments we  received.
Through the data collection instrument, clinicians and researchers were  asked to identify the clinical and demographic factors that are likely to  result in a higher-than-average dose of ESAs, IV iron, or IV vitamin D for a  dialysis patient. In addition, individuals who completed the data collection  instrument had the option of writing in factors not already listed in the  instrument. We analyzed results by calculating the percentage of the   73 clinicians and researchers who completed our data collection  instrument who identified a given factor as being likely or not likely to  result in a higher-than-average dose of each of the three types of ESRD  drugs we examined. These results represent the views of the 73 clinicians  and researchers and are not generalizable to a broader population.
We administered the Web-based data collection instrument to a select  number of clinicians and researchers with expertise related to the factors  that could impact the dose of injectable ESRD drugs. We selected these  individuals in two ways. First, we obtained referrals from national, U.S.- based professional organizations that represent nephrology clinicians   (i.e., nephrologists, nephrology nurses, nephrology physician assistants,  and advanced practitioners specializing in nephrology) who evaluate and  treat dialysis patients. We compiled an initial list of nephrology-related  professional societies and associations based on our background research  on ESRD. To identify additional organizations, we visited the Web site of  each of these organizations and obtained a list of related organizations, if  available. We selected eight organizations from these lists that met the  above criteria. We asked each organization that we identified for referrals  to up to 20 nephrology clinicians who have expertise related to factors  that could impact the dose of ESAs, IV iron, or IV vitamin D for dialysis  patients. We specified in our request that these individuals must (1) be  nephrologists, nephrology nurses, physician assistants or advanced  practitioners specializing in nephrology, or nephrology  technicians/technologists; (2) evaluate and treat dialysis patients; and   (3) reside in the United States. We also asked for referrals to major  national societies or associations, other than the ones we already planned  to contact, that are based in the United States and represent nephrology  clinicians. If referrals to additional organizations were provided, we  contacted these groups as described above and asked them for referrals to  clinicians. We received referrals from the following seven organizations:    American Academy of Nephrology Physicians Assistants    American Nephrology Nurses’ Association    American Society of Pediatric Nephrology  The second way we identified clinicians and researchers was through the  ESRD literature. Using multiple databases, including BIOSIS Previews®,  Elsevier BIOBASE, MEDLINE, SciSearch®, EMBASE®, EMCare, and  EMBASE AlertTM, we conducted a review of the literature published from  2004 through 2009 related to the use of ESAs, IV iron, and IV vitamin D to  treat ESRD patients. We searched these databases for articles related to  the dose of these drugs.
We administered the Web-based data collection instrument in August and  September 2009. We sent the instrument to 131 clinicians and  researchers—the 100 referrals we received from professional  organizations and an additional 31 primary authors that we identified  through the literature. We received 73 completed instruments.
To describe CMS’s approach for addressing differences among  beneficiaries in the cost of dialysis care under the new bundled payment  system for these services, we reviewed CMS’s proposed rule on the design  of the new payment system. We also reviewed the Department of Health  and Human Services’ report to Congress on the design of the new payment  system as well as reports on this topic by the University of Michigan,  Kidney Epidemiology and Cost Center (UM-KECC), which has assisted  CMS with the payment system’s design. In addition, we interviewed CMS  officials and representatives from UM-KECC. We also interviewed  representatives of three non-Medicare payers of dialysis care—the  Department of Veterans Affairs (VA) and two large health plans—to obtain  contextual information about other bundled payment systems. Finally,  to examine CMS’s plans for monitoring the effects of the new bundled  payment system on beneficiaries’ access to and quality of dialysis care, we  interviewed CMS officials and reviewed prior reports as well as CMS’s  proposed rule on the design of the new bundled payment system.
section_title: Appendix II: GAO Data Collection Instrument on Dose of Dialysis-Related Drugs
section_title: Appendix III: Medicare Expenditures for Injectable ESRD Drugs by Demographic Characteristics
paragraphs: Table 5 presents detailed information on average monthly Medicare  expenditures per beneficiary for injectable ESRD drugs in 2007, by  beneficiaries’ demographic characteristics. These results are based on  data for 326,899 Medicare beneficiaries on dialysis in 2007 from USRDS.  See appendix I for additional detail on the methodology used to generate  these results.
section_title: Appendix IV: Detailed Results from Data Collection Instrument on Dose of Dialysis- Related Drugs
paragraphs: This appendix contains additional information on the results of the data  collection instrument we used to systematically collect information on the  factors likely to result in a higher-than-average dose of three types of  injectable dialysis-related drugs—ESAs, IV iron, and IV vitamin D (see   app. II for the data collection instrument). Table 6 presents data on the  factors identified by the 73 clinicians and researchers that are either likely  or unlikely to result in higher-than-average doses of ESAs. Tables 7 and   8 present data on IV iron and IV vitamin D, respectively. Following these  tables is a brief summary of the open-ended responses to the data  collection instrument.
subsections: section_title: Summary of Open- Ended Responses
paragraphs: In addition to selecting from among the list of factors in the data collection  instrument, individuals completing the instrument had the option of  writing in factors not already listed that they considered as likely to result  in above average doses of ESAs, IV iron, or IV vitamin D. Of the 73  clinicians and researchers who completed the data collection instrument,  about 23 percent wrote in additional factors for ESAs, 19 percent wrote in  such information for IV iron, and about 37 percent did so for IV vitamin D.  Examples of additional factors provided by clinicians and researchers for  ESAs and IV iron include nonadherence to diet, hyperparathyroidism, lack  of predialysis care, and smoking. Examples of factors supplied for IV  vitamin D include nonadherence to phosphate binders, nonadherence to  diet, and recent hospitalization.
section_title: Appendix V: Comments from the Centers for Medicare & Medicaid Services
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Jessica Farb, Assistant Director;  Amyre Barker; William Black; Manuel Buentello; Krister Friday; Rich  Lipinski; and Jennifer Whitworth made key contributions to this report.