American Kidney Fund 6110 Executive Boulevard Suite 1010 Rockville, Maryland 20852

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1 American Kidney Fund 6110 Executive Boulevard Suite 1010 Rockville, Maryland voice fax toll-free Español Member: CFC December 14, 2009 Ms. Charlene Frizzera Acting Administrator Centers for Medicare and Medicaid Services Department of Health and Human Services Hubert H. Humphrey Building Room 445-G 200 Independence Avenue, SW Washington, DC Re: CMS-1418-P: Medicare Programs; End-Stage Renal Disease Prospective Payment System; Proposed Rule Dear Acting Administrator Frizzera, The American Kidney Fund is our nation s leading charitable health organization serving people with and at risk for kidney disease through direct financial assistance, comprehensive education, and community service programs. We appreciate the opportunity to provide comments on the proposed rule (CMS P), published in the September 15, 2009 Federal Register, regarding changes to the ESRD Prospective Payment System (PPS). The mission of the American Kidney Fund is to fight kidney disease through direct financial support to patients in need; health education; and prevention efforts. We provide treatment-related financial assistance to nearly 1 out of every 5 dialysis patients in the U.S. We help low-income patients maintain their health insurance coverage, pay out of pocket costs for medications covered under Part D, as well as help patients pay other treatment-related expenses not covered by their insurance. The Medicare benefit has provided access to care that has extended and improved the lives of ESRD patients. We applaud CMS for its commitment to promoting efficiency in the quality of care for individuals living with ESRD.

2 The American Kidney Fund is a member of Kidney Care Partners (KCP). KCP will also submit comments on the Proposed Rule. AKF has actively participated in the development of and strongly supports the KCP comments. In addition, there are a number of provisions in the rule that directly affect our ability to carry out the AKF mission of providing direct financial assistance to help kidney patients obtain the care that they need. This AKF letter provides additional views and comments on concerns directly related to our mission. Below are our comments on the Proposed Rule: I. Bundling of Drugs without an Intravenous Equivalent CMS proposes to include two classes of oral drugs with no injectable equivalents calcimimetics and phosphate binders in the statutory definition of renal dialysis services such that payment for these products would be included in the single payment amount made under the new prospective payment system 1. The American Kidney Fund questions whether CMS has authority to implement this proposal under the applicable statute. Further, we believe that the current proposal could have a serious, adverse impact on beneficiaries and may constrain appropriate access to medically necessary products. In accordance with Section 1881(b) (14) (B) of MIPPA, CMS considers all items and services currently in the composite rate to be renal dialysis services and included in the ESRD PPS. It refers to ESRD drugs for which payment was made separately under Title XVIII of the Social Security Act and any oral equivalent form of such drug or biological. 2 It is logical to assume that drugs that are administered as part of the dialysis treatment process would be included in the composite rate, and therefore, should be included in the proposed payment bundle; however, the rationale for inclusion of separately billable outpatient oral medications in the bundle - as these drugs are not currently included in the composite rate - is unclear. CMS has not provided sufficient justification for expanding the definition of renal dialysis services to include oral drugs without an intravenous equivalent for purposes of the bundle. The American Kidney Fund remains committed to ensuring that patients have access to quality care and services. We are concerned that bundling as proposed by CMS may tend to adversely affect achievement of these goals of access and quality for the following key reasons: Limited Patient Access We are concerned that including oral drugs without an IV equivalent in the payment bundle may limit patient access to the most clinically appropriate drugs and threaten optimal outcomes. Dialysis patients take numerous oral medications that do not have intravenous equivalents, including phosphate binders and calcimimetics. Each patient is unique, having a different health condition, often including numerous co-morbidities, which require multiple medications to treat Fed. Reg. at Fed. Reg. at

3 Monitoring Outcomes In 2003, a Health and Human Services (HHS) Report to Congress on the bundling of ESRD payments indicated that changes in practice patterns resulting from a bundled prospective payment system would require monitoring to determine whether clinical outcomes improve or decline as a result of the system's financial incentives. AKF is concerned there are currently few appropriate clinical metrics in place to monitor impacts of changes in drug regimen on patients. Because of the complexity of the proposed changes, we believe that it could pose a threat of unintended consequences which could be detrimental to patient outcomes. CMS must ensure that patients have access to the medications that best treat their medical condition instead of those that are simply the least costly. Tracking and Coordination The proposed rule also creates potential challenges with tracking and coordinating the disbursement of oral medications. AKF is concerned that drug monitoring for adverse interactions could be greatly undermined. Additionally, CMS has not addressed the administrative mechanisms for distributing a patient s renal medications through one source and non-renal medications through a different source. Dialysis patients often have several co-morbidities, see a number of different doctors and take a variety of drugs. Moreover, requiring dialysis facilities to provide oral drugs is a major change and would create a financial and staffing burden, especially on rural and smaller facilities. Dialysis facilities cannot legally dispense outpatient drugs and state laws typically require pharmacists on staff when such drugs are dispensed, as well as other costly requirements. The costs for either becoming a licensed retail pharmacy or contracting for this new service are not addressed in the rule and would add further burdens on providers, with no patient benefit. Limited Incentives for Research and Development AKF is also concerned that bundling may limit incentives for pharmaceutical manufacturers to develop new, innovative drugs to combat renal disease. If limiting costs becomes the primary driver of prescription decision-making, there may be little incentive for research and development of new drugs. There are approximately 100,000 new kidney failure patients in the United States each year. Does CMS assume that health outcomes for kidney disease patients will remain static? Eliminate Access to Financial Programs We believe that including Part D drugs in the bundle could eliminate access to financial programs that assist patients with co-pays, such as the Medicare Low Income Assistance program as well as programs such as the American Kidney Fund s Medicare Part D Program for Prescription Bone Medication. Access to such assistance is vital. Let me share with you one example. A retired industrial firefighter in Louisville, Kentucky, recently wrote to us to let us know that he had been prescribed medication for treatment of secondary hyperparathyroidism at an out-of-pocket cost of $600 a month. I couldn t afford it, he said. I did what I could but occasionally I had to take half doses or share with friends on the same prescription. Because he was not taking clinically appropriate doses of his medication, he was scheduled for a parathyroidectomy to treat his condition. Fortunately, he was able to enroll in the American Kidney Fund s program that helps 3

4 with costs under Part D and as a result, he avoided surgery. He is now taking his medication, as prescribed, because our assistance program helps him to afford it. This Louisville firefighter is represented many times over in the ESRD population. If such patients do not have access to the medications that they need, health outcomes may be adversely affected and Medicare costs may increase unnecessarily as hospitalizations and surgeries increase. The American Kidney Fund remains opposed to including Part D oral drugs that do not have intravenous equivalents in the payment bundle until CMS addresses issues of access, quality measures and outcomes, and disbursement. If CMS moves forward with this proposal, however, it must establish a tracking system and relevant metrics to ensure patients receive their drugs in the correct frequency and duration. II. Patient Cost Sharing and Co-Insurance For almost 40 years, the American Kidney Fund has been the primary source of financial assistance to help kidney patients access the care that they need. Accordingly, we have major concerns regarding increases in patient cost sharing in the new payment system. The proposed payment structure will be burdensome for patients, as the proposed rule imposes a patient co-insurance of 20 percent on the entire bundled ESRD payment. In addition to the inclusion of oral meds in the payment bundle, CMS proposes to include in the bundle all laboratory tests ordered by the MCP receiving the ESRD capitated payment. We agree that the bundle should include tests directly related to provision of ESRD services. However, separately billable services related to other co-morbidities should not be included in the bundle. Including such separately billable lab services will impose an unnecessary hardship on patients because CMS will fund the costs of laboratory services at 80 percent, leaving the remaining 20 percent to be covered by coinsurance paid by beneficiaries or their secondary insurance where available. Financial Burden on Patients Medicare patients currently have no co-insurance obligations for laboratory services; Medicare currently reimburses 100% for these services. Dialysis patients have numerous lab tests ordered on a regular and as-needed basis. AKF believes that costs for labs and other currently covered services should not shift to patients in the new payment system. Similarly, adding oral drugs to the ESRD payment bundle would impose an additional financial burden on patients. Whether they are using the drugs or not, they would be subject to a 20 percent co-insurance obligation which is guaranteed to be more than the copayment for Part D drugs. AKF believes that patients should not be subject to excessive co-payments for oral drugs. When drug, laboratory, and other costs are added to the bundle, the out of pocket costs that patients must pay have the potential to be far greater than their current monthly co-pays and expenditures. Such cost sharing increases imposed on renal patients are inequitable as they are not imposed on other Medicare beneficiaries. The proposal may significantly increase patient out 4

5 of pocket payments which is very troubling for a patient population that is already economically vulnerable and often unemployed because of their disease and the time required for its treatment. AKF remains opposed to including separately billable lab services ordered by the MCP and oral drugs in the payment bundle and calls on CMS to consider the financial burden that increased copays and co-insurance costs will have on patients ability to pay. III. Case Mix Adjustors for Race CMS is aware of the direct correlation between race and costs and has acknowledged that African American patients, in particular, require higher doses of erythropoiesis-stimulating agents (ESAs) in order to control anemia. As another example, African Americans have been shown to be more likely to take cinacalcet hydrochloride for the treatment of secondary hyperparathyroidism. 3 However, there is no accounting for race as a case mix adjustor in the proposed payment structure. Racial and ethnic disparities in ESRD persist, with 2007 incident rates in the African American and Native American populations 3.7 and 1.8 times greater, respectively, than the rate among whites. African Americans represent 12 percent of the U.S. population, but make up 30 percent of those on dialysis. Among those individuals of Hispanic background, the ESRD rate is 1.5 times higher than among non- Hispanics. 4 Disparities among Minority Patients CMS has noted that required utilization and spending levels are higher on some separately billable drugs for minority patients. Nonetheless, the proposed payment system will include these drugs in the bundle without adequately accounting for the higher cost of minority patients. If CMS reimbursement to cover the cost of high-cost racial minorities is inadequate, it could have devastating financial effects on facilities that treat a large number of such patients and may negatively impact their access to care. Race Adjustor Required by MIPPA According to MIPPA, there is a requirement that the ESRD payment system include an adjustor that may include the race of a patient. CMS has a great deal of data regarding race provided by the Medicare Enrollment Database (EDB) and the Renal Management Information System (REMIS); however, CMS has repeatedly cited challenges in evaluating data needed to establish race as an adjustor. The American Kidney Fund believes that these two data sources provide a significant amount of data to inform decisions regarding race and that CMS currently has the means to implement a case-mix adjustor based on race. AKF also believes that the Medicare data 3 St. Peter, W.L., Li, Q., Liu, J., Persky, M., Nieman, K. Arko, C., Block, G.A., Cinacalcet Use Patterns and Effect on Laboratory Values and Other Medications in a Large Dialysis Organization, 2004 through Clin J Am Soc Nephrol 4: , U.S. Renal Data System 2008 Annual Data Report 5

6 surrounding race is no less reliable than the data used to implement other case mix adjustors that CMS has incorporated in the proposed rule. Therefore, while we recognize that there are challenges in the data used to evaluate race as an adjustor, the American Kidney Fund recommends that CMS refine its data sources and that a race/ethnicity adjustor be factored into the reimbursement policy. Thank you for your consideration of our comments. We look forward to continuing to work with the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services (HHS) to ensure that Medicare beneficiaries with ESRD continue to have access to necessary health services. Sincerely, LaVarne A. Burton President and Chief Executive Officer 6