Government Affairs at Fresenius Medical Care
North America, on the new bundled
reimbursement system for dialysis in the U.S.
and why the mission to offer higher quality
at a lower cost can be a long-term opportunity
for everyone involved in the health system.
Mr. Sepucha, on January 1, 2011 a new law on the reimbursement of dialysis treatment came into force in the U.S., the enactment of which occupied you and the entire dialysis sector for more than two years. The legal text as it stands contains over 900 pages. Rice Powell, the CEO of Fresenius Medical Care North America, had twelve different working groups set up with the view to preparing your company for the introduction of the new reimbursement system; he even goes as far as to talk of a “monumental change” in a letter addressed to the Company’s employees. What is so monumental about the new system?
This is a completely new concept here in the U.S., which for the first time ties reimbursement with satisfaction of quality benchmarks. It is also a dramatic change to a system that had remained practically unchanged for almost two decades. It’s important to note that the reform, which was mandated by Congress in 2008, was called for over many years by ourselves, physicians and patient organizations.
Let me put it in simple terms: Therapy for patients with chronic kidney failure entails several components. In addition to the actual dialysis treatment, there is also, for example, medication for anemia and other associated symptoms, as well as laboratory tests to ensure that the therapy is matched to the needs of the individual patient. Until now, these components have been reimbursed as individual services by CMS (Centers for Medicare and Medicaid Services), the federal health care authorities in the U.S. The new payment system, which came into force at the beginning of January, now bundles several of these elements into a “service bundle”, which is then reimbursed in total as a lump sum. Now, the dialysis treatment itself along with certain drugs and laboratory tests are included in a single bundled payment, and additional drugs will be added in 2014.And what is the aim behind this?
The government hopes to ensure above all that the interests of patients, physicians and providers are aligned to provide the best possible care to dialysis patients as efficiently as possible. This is an expensive population to care for – approximately 6% of all Medicare health expenditures goes to the treatment of dialysis patients and these patients make up only about 1% of the entire Medicare patient population. In addition, the number of people with chronic kidney failure is increasing from year to year. The new payment system was put in place in part to achieve greater efficiency, which is driven in part by an initial reimbursement reduction of 2%. Furthermore, beginning in 2012, Medicare will link the reimbursement system to the quality of the dialysis treatment for the first time. This means that anyone providing dialysis treatment in the future who wishes to receive the full reimbursement level must be able to demonstrate that they have met certain quality targets with their patients. If facilities fail to meet these targets, their reimbursement could be cut by up to 2%. Given that more than 80% of our patients are government-insured, this is a significant change for us.
Yes, because as the operator of the world’s largest network of dialysis clinics, we know from personal experience that a better quality of treatment can contribute considerably to reducing costs. If we take a more holistic approach to therapy – in other words, providing high-quality treatment where the individual components of care are closely coordinated – we can not only improve outcomes, but also reduce the cost of care. This is how risks for patients are kept to a minimum and additional costs are avoided, such as hospitalizations for medical complications. Several years ago, we introduced a patient-centered quality program in our clinics called UltraCare. In addition, we collect clinical data in line with recognized standards for every treatment in order to assess and further improve the quality of treatment. In many ways, the government’s new reimbursement system validates our historical approach.What do you mean by that exactly?
Until this year, the costs for many services related to dialysis were calculated individually. As a result, we weren’t able to take a truly holistic approach as to how patients could be cared for. We now have greater freedom to deal with this question more closely and to put to greater effect the potential of the data we collect in our clinics. From our point of view, the new system is an opportunity for patients as well as dialysis providers.It is a credit to you that you wish to continuously improve the quality of treatment for your patients. But surely there are also tangible economic reasons why you have supported this new legislation?
Of course there are. But the one cannot be viewed separately from the other. If we as a company wish to continue to deliver high-quality treatment to our patients in the long-term, then we have to recognize economic reality. At the same time, it also cannot be in our interest to provide our patients with anything but the highest quality care. In short, they are the reason we exist. If there is an improvement in their quality of life and life expectancy, then that can only be a benefit, both for them and for us. Nevertheless, we also have to be part of the solution in addressing the rising cost of health care both in the U.S. and in countries across the world. In short, we must continue to contribute to improving quality and reducing costs all at the same time. However, and this brings us back to your question, we cannot do this alone. At some point, the public sector must meet us half way.