Yesterday afternoon the Secretary of HHS, Alex Azar gave a speech at the National Kidney Foundation and articulated a new vision for Medicare’s treatment of kidney disease. This speech is the companion to an interview CMS Administrator Seema Verma gave to Reuters published Monday morning. That little bit of choreography is designed to establish a new policy direction for the treatment of ESRD as Medicare Advantage plans prepare to expand coverage for this condition in 2021.
Kidney care, according to Azar, “has some of the worse incentives in American health care.” To correct those incentives, the Secretary laid out three areas of focus for policy change.
Prevention, detection and management of kidney disease. Awareness of the disease is relatively low. According to Azar, 96 percent of Americans with kidney failure are unaware of it. In 2018, CMMI, in collaboration with the Centers for Disease Control, implemented the National Diabetes Prevention Program. Leveraging Medicare Advantage plans, the program’s goals include weight loss and improved nutrition for beneficiaries at risk for Type 2 diabetes.
Poorly controlled diabetes is the leading cause of kidney failure in the U.S.
The advantage for early detection and better control of kidney disease means beneficiaries make more informed choices about treatment. The lack of awareness about the disease means it is often discovered during an emergency hospitalization. From there the patient is frequently referred to a DVA or FMS clinic. Azar argues for more options, “This extra time [because of greater awareness] allows an optimal start for treatment, whether that’s a pre-emptive transplant without dialysis, starting home dialysis with a functioning catheter or starting peritoneal dialysis with a safe permanent access.”
In short, Azar is planning to disrupt the center-based dialysis system on which FMS and DVA have thrived.
Innovation in treatment of ESRD. The plan to do so includes new payment models that will encourage home dialysis. Azar also hints at changing the payment structure to compensate for new device technologies that are more flexible than other in-home dialysis equipment.
Improved access to transplants and artificial kidneys. The recent falloff in people on the transplant waiting list has raised alarm bells at CMS. In the FY 2019 ESRD final payment rule, the administration noted the decline in the number of people on the waiting list and suggested it would examine practices that might cause it.
The new policy places greater emphasis on transplantation which, Azar acknowledges means lost customers for DVA and FMS. To encourage transplantation, Azar announced that HHS technical experts will be submitting evidence to a federal advisory committee on blood, tissue and organ safety that offers new opportunities to improve organ utilization.
Kidneys are frequently discarded due to the possibility of HIV, Hep B and Hep C. The scientific evidence HHS plans to submit is, presumably, designed to overcome some of these infection concerns.
Living donors are, of course a priority. HHS is moving implementing a program that would compensate living donors for lost wages and travel. Living donors share of the donors has been trending downward in recent years.
Some of the decline in living donors could be a result of an increase in deceased donors resulting from opioid epidemic.
We view this new policy direction in the context of concerns raised by Medicare Advantage plans about expanding Part C coverage to ESRD patients while wrestling with the duopoly of DVA and FMS. Consistent with the “Competition and Choice” policy articulated by the White House in December, we fully expect CMS to provide MA plans with greater network flexibility to better contend with the limited competition among dialysis providers.
This new policy suggests CMS will give plan sponsors incentives to encourage options for treatment beyond the in-clinic hemodialysis three times a week. Those changes clearly include dialysis delivered in settings other than the clinic, like the home or another ambulatory site of service, such as a CVS pharmacy.
As we pointed out in our DVA deck in December, the historically higher reimbursement for dialysis services by MA plans should not be considered a foregone conclusion. The plans have raised concerns about their pricing power and this new effort appears to move the federal government toward a more diverse provider base.
The new policy also appears to include better reimbursement for stages one through four of Chronic Kidney Disease which could lead to slowing the progression to ESRD.
We also view this new policy direction as an indication of the very real concern policy makers have about Medicare’s dependency on the two providers of dialysis services. CMS learned during the rather ill-advised rebasing a few years ago that significant changes to the reimbursement system was presenting access issues for one of the most vulnerable patient populations it serves.
Where does this change leave DVA? While DVA has talked a good deal recently about better treatment and prevention, the primary mechanism they have to execute on such a strategy is DMG, whose sale to UNH is pending. Absent the necessary expertise to provide prevention and management before the onset of ESRD, DVA will have little control over the treatment channels suggested by this new policy.
Certainly, home dialysis has better margins for DVA and FMS, which could even improve if CMS proposes increases to the in-home training add-on payment or to the per treatment reimbursement. In-home dialysis, however, faces other hurdles like state mandates and nephrology practices patterns that are going to be harder to overcome in the short run.
Emily Evans
Managing Director – Health Policy
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