MEDICARE PAYMENTS FOR END STAGE RENAL DISEASE DRUGS

HHS: 3/20/14

WHY WE DID THIS STUDY

Prior to 2011, Medicare paid dialysis facilities for the treatment of end stage renal disease (ESRD) using a combination of a fixed rate (known as the “composite rate”) and separate payment amounts based on average sales prices (ASP) for certain drugs. As of January 2011, Federal law required the Centers for Medicare & Medicaid Services (CMS) to bundle Medicare reimbursement for almost all ESRD treatments—including drugs that were previously billed separately—into one payment rate. By implementing the bundled rate, CMS sought to eliminate incentives to overuse separately billable drugs and to promote equitable payment and access to services in ESRD facilities that treat more costly patients. CMS is required to update this rate annually to reflect changes in the price of goods and services used to provide ESRD care. CMS used the PPI for Prescription Drugs, a price proxy published by the Bureau of Labor Statistics, to update the prescription drugs portion of the base rate for the ESRD payment bundle. However, a 2010 OIG study questioned the accuracy of this price proxy when used to estimate changes in prices for ESRD drugs. Read More