Challenges Looming for 2010
The dialysis community faces significant changes during 2010, specifically bundling and CROWNWeb. Many providers have been soul searching and asking questions about how these changes will alter their business environment. In anticipation of these challenges, there is anxiety regarding survival of multiple parts of the industry. Small providers will need to adapt to the radical changes in reimbursement and optimize patient care to thrive under the new rules. Specialty labs will be examining their business models due to the changes from receiving reimbursement directly from Medicare to having to rely on the dialysis clinic for payment. Dialysis providers will need to change their overall business approach to match supply cost and expenses due to possible reduced reimbursement and additional expense obligations such as oral drugs and labs. They will also have greater clinical challenges to optimize the delivery of care and improve outcomes.
Bundling and CROWNWeb: the Focus of 2010
As the new decade starts, the dialysis industry is bracing for some major changes particularly in the mechanisms for getting reimbursed for dialysis care, increased reporting requirements, as well as the goal of increasing the quality of patient care and improving overall patient outcomes.
The publication of the proposed rules for a bundled payment system, proposed rules for a bundled payment system, scheduled to start in less than 12 monthsscheduled to start in less than 12 months, January 1, 2011, has generated so much anxiety in the field that the CROWNWeb project, the mandated CMS reporting initiative, has been pushed off “center stage”. CROWNWeb is still on the horizon and, even though CMS has changed contractors, the project is anticipated to be rolled out sometime in 2010.
However, it is bundling that has riveted the attention of End Stage Renal Disease (ESRD) providers. The 547 page proposed rules released in September have generated more than this number of pages of comments from the industry itself. The comment period was even extended an additional 30 days to allow for complete reaction from the industry. The entire U.S. dialysis field is now waiting with considerable anxiety for the publication of the final rules that will govern reimbursement starting January 2011.
This change in reimbursement has resulted in considerable soul searching and questions about how the business and clinical environment will have to change going forward and the ever-present concern about survival of disparate parts of the overall industry. Some of what is proposed in the bundling rules follows.
Change for Laboratory Analyses
(currently done by specialty lab companies):
If the proposed rules hold, starting next January, ESRD lab companies will no longer directly bill Medicare for analyses of blood values for dialysis patients for which they are currently reimbursed 100% of the Medicare fee schedule. Lab companies will need to receive payment for these analyses directly from the provider because the cost of analyses for patients is to be included in the bundled payment. This new methodology, of shifting payment to the dialysis provider, is not merely one of Medicare paying for the same analyses via the clinic. First, the proposed rules have the potential of including more analyses for no additional payment. Also clinics may have problems collecting the cost of labs from diverse payors.
The potential for more labs to be included results from the proposal that any lab ordered by the patient’s nephrologist (MCP physician) will be included in this bundled payment. this “payment” methodology would reduce the amount that Medicare reimburses That is, if the nephrologist orders a general lab test such as a PSA or hemoglobin A1c, these will be considered part of the bundled payment even though it is not a test that is directly relevant to ESRD.
Furthermore, this “payment” methodology (including heretofore items that were paid directly by Medicare at 100%) would reduce the amount that Medicare reimburses for laboratory analyses because the bundled payment is the Medicare allowed amount of which Medicare pays only 80%. The remaining 20% of the allowed reimbursement, that is not paid by Medicare, would then have to be paid by a co-insurer or the patient, a liability that didn't exist under the old payment mechanisms. It is a real concern that many current secondary payors may not feel that these payments are their obligation because, until now, they have not been.
Back to the TopAdded Burden on Clinics in Providing Oral Medications:
There is considerable concern with the proposed inclusion of oral medications in the bundle. First, it is troubling that there are scant data to support the proposed $14 per treatment for oral drugs in the bundle. From CMS’s own admission, this amount was not derived through any solid analysis of historic data because a large number of these medications are currently purchased individually by patients or are included in Medicare Part D coverage, and are part of the “doughnut hole”. It is still not clear whether non-ESRD medications will be included in the bundled payment such as antihypertensives, statins, and diabetes medications. The second concern of many providers is that they currently are not licensed, nor have the capacity, to dispense these medications, which normally, by statute, must be done by a licensed pharmacist.
Back to the TopIncentives to Optimize Treatment Under Bundling and to Meet Performance Expectations:
One of CMS’s objectives with bundling is to encourage clinicians to pay more attention to managing key aspects of treatment and to remove any incentive to over use (in CMS’s judgment) medications, such as erythropoiesis-stimulating agents (ESAs). In some ways, this is a positive aspect of bundling and one would hope that this approach was already in place. On a facility level, clinicians may need to have better analytical tools to measure the impact of specific treatment options on outcomes and in general mount more sophisticated CQI programs. There is also the initial element of “pay for performance” in the proposed rules. This would seem at this point to be a misnomer as the rule amounts to a withhold with very little incentive other than to “earn” back the withhold.
Back to the TopBundled Reimbursement is More Complicated and Errors Result in Losses for the Provider:
Fundamental elements of payment under bundling:
The payment bundle is intended to be determined by patient characteristics and co-morbidities. There are over a dozen specific patient elements proposed to determine the level of payment. Each of these elements represents added payment for a dialysis treatment. The proposed base rate is approximately $200 per treatment, which is then adjusted by other factors. The base rate is increased based on patient characteristics. For example, for a patient between the ages of 18 and 44 a coefficient of 1.158 would apply to the base value resulting in a per treatment amount of $230. If this patient also has a recognized cancer it will result in an additional coefficient of 1.128 and a per treatment value of $260. It is clear that if both of these items are not on a claim the dialysis provider will receive the base value and could lose $60 per treatment for this patient – or $9,360 annually.Integrated clinical and financial information is critical:
What is clear from both the increasing demands on renal providers as well as the determinants of payment is that comprehensive Good, real time, clinical information and well-integrated information will be critical for their survival. Good, real time, clinical information, such as that in the QCS system, will be needed to optimize treatment, mount effective CQI programs, track morbidity and mortality as well as pass on key co-morbidities to the claim generation system to assure no loss in revenue for earned amounts. It is abundantly clear that the omission of even one co-morbidity for example, an incident of GI bleeding – with a factor of 1.316 for three months, can lead to underpayment of nearly $63 per treatment - $2,500 for the three months for one patient!Assuring correct reimbursement:
Once claims are generated, the dialysis facility needs to know what reimbursement is expected for a month’s worth of treatments. In our clients’ case, algorithms for computing expected revenue for “case mix” are currently incorporated in QMS Focus. In the near future, a more complex calculation scheme will be required with the new payment adjustors. This information is essential to project a month’s revenue soon after claims are generated for effective business analyses. It is also needed to adjust accounts receivable (A/R) values to assure that actual payment corresponds to projected revenue. Differences can then be analyzed regarding errors in the Medicare Administrative Contractor’s (MAC’s) calculations, rejected items on claims (e.g., an unrecognized co-morbidity), or errors on the claim submitted.Phase-in Period for Bundling:
The proposed rules allow providers to implement bundling via one of two routes. They can choose to be governed 100% by bundling rules from the start – on January 1, 2011 – or they can opt for a three year phase-in. This latter is considered the default option by CMS and results in one quarter payment for ESRD services to be computed using the bundling rules with three quarters based on the old rules for 2011. In 2012 the computation would be 50% and 50%; in 2013 it would move to 25% and 75%; and all payments would be based on the bundling rules starting January 1, 2014.
From the discussion above – particularly regarding expected monthly revenue and evaluating A/R – this phase-in period would add considerable complexity to the claim generation and revenue process, as well as business analyses.
Finally, if a provider opts for 100% bundling starting next January 2011, this election (based on the proposed rules) must be made by November 1, 2010. The final rules and their interpretation by MACs may not be final until well into 2010, therefore making this election intelligently could be difficult on providers.
Quantitative Medical Systems Industry Wrap-Up:
The above discussion covers mainly the aspects of the rules that have been under the most intense discussion. An exhaustive analysis would probably require a document as long as the proposed rules! As this is being written we assume that CMS is digesting the comments that were provoked by the proposed rules, with final rules being promulgated once this work is complete (we expect in the second quarter of 2010). At this point it is virtually impossible to predict what the rules will be, as many of the concepts in the rules resulted in very strong criticism. What seems clear is that when the rules are known, the provider community will have a disturbingly short time to put this payment scheme in place. The process, as in the past, is for CMS to establish their rules, then MACs will determine the details of how they require providers to implement them and format claims. It is only at this point that systems such as those that QMS has had in place for over half of the renal community can be modified. We are taking proactive steps to do just that.
Back to the TopWhatever happened to CROWNWeb?
CROWNWeb – a major concern during the first 9 months of 2009 – was seemingly pushed aside with the publication of the proposed bundling rules in mid-September. As of this writing, Phase II of the CROWNWeb implementation is continuing with the date of final full roll out still undetermined. QMS has had extensive communication with CMS, in an effort to get a “go ahead” to create batched data files from QCS for electronic submission of CROWNWeb data – much in the same way that all QMS clients currently electronically submit their claims for dialysis services. Until this is possible, we have produced reports consistent with the CROWNWeb entry screens for several QCS clients that are participants in the Phase II project, to better facilitate the manual entry of data. We continue to be engaged in the effort to convince CMS to accept electronic data.
Back to the TopThank you
QMS hopes that the above information is useful as you address the future. We would like to remind you not to hesitate to contact us if you have any questions or concerns about the dialysis industry. We can be reached at 1-800-752-4600 or you can e-mail us at qms@qms-us.com.
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