Final Rule on New Kidney Care Model Seeks Reduced Spending on ESRD

November 1, 2019

Rising rates of obesity and diabetes have raised concerns that more people could be headed for end-stage renal disease (ESRD); thus, Medicare has been seeking ways to reduce the cost of care and to improve the quality of life for people on dialysis. Scientists are focusing on whether more patients with early-stage type 2 diabetes should take sodium glucose co-transporter 2 inhibitors, which have been shown to slow renal decline.

On Thursday, CMS finalized new rules involving payment for end-stage renal disease (ESRD), one of the costliest conditions in all of Medicare and one that has been of intense interest to research in diabetes in recent years.

The new rules involving ESRD cover services starting January 1, 2020. The rule was issued alongside a new home infusion benefit that begins in 2021.

Three rules—those for Durable Medical Equipment Prosthetics, Orthotics and Supplies (DMEPOS), the ESRD Prospective Payment System (PPS), and the ESRD Quality Incentive Program (QIP)—have been updated to support new technology; combat waste, fraud, and abuse; and offer better access to new treatments.

CMS data show there are 430,000 Medicare fee-for-service (FFS) beneficiaries with ESRD, who spend up to 12 hours a week on a dialysis machine. ESRD is so expensive to treat that patients who reach this state of renal failure are automatically eligible for Medicare, at an estimated annual cost of $89,000 per patient. In 2016, Medicare spent $35.4 billion to care for people with this condition, or 7.2% of all Medicare spending, even though these patients account for 1% of those enrolled in the program.

Rising rates of obesity and diabetes have raised concerns that more people could be headed for ESRD; thus, Medicare has been seeking ways to reduce the cost of care and to improve the quality of life for people on dialysis. In the research arena, scientists are focusing on whether more patients with early stage type 2 diabetes should take sodium glucose co-transporter 2 (SGLT2) inhibitors, which have been shown to slow renal decline. The SGLT2 inhibitor empagliflozin (Jardiance), which was the first to show cardiovascular benefits, shared real-world data this spring showing renal benefits.

The new rules do the following:

  • Changes to DMEPOS will modernize pricing of medical equipment, supplies, and services. The rule calls for simplifying the process for ordering items and allows for more rapid response to potential fraud, such as an incident that occurred earlier this year involving shipments of diabetes test strips.
  • The bundled payment outlined in ESRD PPS covers all renal dialysis services for outpatient maintenance, such as drugs and biologics, with the exception of oral-only ESRD drugs until 2025. In a statement, CMS officials stated “we are making refinements to payment for new kidney-related drugs. These changes will better target the payment to innovative new renal dialysis drugs that will encourage ESRD facility uptake of the latest therapies.” Some adjustments were made for low-volume facilities, and add-on payments will address outlier patients.
  • The rule also finalizes several updates under ESRD QIP that will start with payment year 2022, including an updated scoring methodology to the National Healthcare Safety Network. A fact sheet from CMS states that the agency will take additional time to work on other proposed reporting measures after questions have been raised about validity.

According to a fact sheet, in 2020 Medicare projects spending of approximately $10.3 billion to approximately 7000 ESRD facilities for renal dialysis services under the ESRD PPS.