August 20, 2010

End Stage Renal Disease Prospective Payment System

Proposed Rule
Summary

Score: 32 / 60

Additional details
Agency
Department of Health and Human Services
Regulatory Identification Number
0938-AP57
Agency Name
Department of Health and Human Services
Rule Publication Date
09/17/2009
Comment Closing Date
12/16/2009

RULE SUMMARY

This proposed rule would implement a case-mix adjusted bundled prospective payment system (PPS) for Medicare outpatient end-stage renal disease (ESRD) dialysis facilities beginning January 1, 2011, in compliance with the statutory requirement of the Medicare Improvements for Patients and Providers Act (MIPPA), enacted July 15, 2008. The proposed ESRD PPS would replace the current basic casemix adjusted composite payment system and the methodologies for the reimbursement of separately billable outpatient ESRD services.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
As of November 2009, the regulation was not available on the HHS web page. The quarterly provider update on regulations for June-August was not yet posted. A search using keywords "end stage renal" returned no obvious links to the regulation, and a search sing the RIN returned nothing. Keyword and RIN searches on regulations.gov bring up the proposed regulation.
3/5
2. How verifiable are the data used in the analysis?
Data are drawn from several HHS databases, including CMS claims files, the Online Survey and Certification and Reporting file, the Healthcare Cost Report Information System, the National Claims History file, and the Social Security System Death Master File. Tables reproduce summary data. Perhaps insiders know where to locate these databases, but the analysis does not usually explain how. Links provided for some data.
3/5
3. How verifiable are the models and assumptions used in the analysis?
Inputs used to calculate case mix adjustment factors come from University of Michigan studies that are fully cited, and the most recent one is linked. Other studies are also cited. Assumes that individual facilities will choose whichever payment option—the new one or a transitional one—provides a higher payment. No research is cited in support but this seems reasonable.
4/5
4. Was the analysis comprehensible to an informed layperson?
The preamble explains, in a logical order, how the calculations were done. Regression analysis is explained in words. Some terminology may make this hard for the layman to follow, but this is much better than simply reporting equations. There is a moderate amount of unnecessary summarization and "as was stated earlier" type references. The regulatory analysis section is an easy read but does not provide enough information to show how the analysis reached the conclusions it did; for that, one must read the entire preamble, which is quite turgid in spots. In places it is heavy on accroynms and jargon that would confuse most people.
3/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
2/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The clear concern in the legislation and regulation is cost containment. There are two references to outcomes for patients: (1) more closely matching payment with cost should help ensure access to treatment for more expensive patients, and (2) HHS believes increased provider flexibility from a single packaged payment could allow providers to improve clinical outcomes. The latter is somewhat vague.
4/5
Does the analysis identify how these outcomes are to be measured?
Only costs/cost reductions are measured. The hoped-for improvement in outcomes is not analyzed. Process-oriented quality of care measures are discussed, but these are not used in the regulatory analysis.
2/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
The RIA section does not provide much support of this, but it does reference parts of the preamble that provide support for the proposed payment system. It references UM-KECC's research on case-mix bundles on pages 25–31, 81–83, and at multiple other points in the preamble. It is not clear precisely what type of theory underlies the UM-KECC research.
2/5
Does the analysis present credible empirical support for the theory?
The UM-KECC research provides some empirical support for one aspect of the calculations.
3/5
Does the analysis adequately assess uncertainty about the outcomes?
No relevant discussion.
0/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
2/5
Does the analysis identify a market failure or other systemic problem?
The systemic problem is bad incentives created by current payment method, which may encourage providers to increase high-profit add-ons.
5/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The analysis contanis a very short explanation of the incentives. More detail would have been helpful.
2/5
Does the analysis present credible empirical support for the theory?
No discussion of empirics that tell us whether this problem really exists or how big it is.
0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
See above.
0/5
7. How well does the analysis assess the effectiveness of alternative approaches?
3/5
Does the analysis enumerate other alternatives to address the problem?
Several very different types of adjustments to rates are considered. They all focus on changes in how to calculate rates. For example, statistical analysis examined the effects of various co-morbidities on costs, and HHS then considered which co-morbidities to take into account in setting rates.
4/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
All are tweaks on the basic proposal, which established a bundled price for dialysis treatment. "In developing this proposed rule, we considered a number of alternatives. We considered other adjustments, including race, modality, and site of service. We considered alternative adjustments to explain variation in cost and resource usage among patients and ESRD facilities. For example, we considered alternatives in the outlier policy, such as outlier percentages of 1.5, 2, 2.5, to 3 percent, rather than the proposed 1 percentage policy. We also considered a monthly payment, but instead proposed a per treatment payment."
2/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
The analysis considers qualitatively how some of the alternatives could affect costs or, in a few cases, providers' incentives to treat various kinds of patients. To some extent this addresses the costs issue, but not the clinical outcomes issue.
2/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
For costs, the analysis calculates a baseline that reflects what the federal government would have paid in the absence of the proposed rule. No baseline for clinical outcomes.
3/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Only federal expenditures are considered. For outlier modeling, presents five different percentages and calculates cost of those alternatives (page 287).
3/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
The analysis identifies only federal expenditures.
3/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
The analysis identifies only the prices the government will pay for services. There is no consideration of price changes that may be driven by changes in behavior.
2/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
The analysis and preamble argue that establishing a single, bundled reimbursement rate will remove providers' incentives to over-use profitable inputs that were previously billed separately, such as drugs. A detailed discussion considers whether to offer additional payments based on race (since race seems to affect treatment costs), noting both data difficulties and incentvies for providers to manipulate data or discriminate in favor of patients who qualify for an additional payment based on race. The discussion of these incentive issues is qualitative. The analysis does not analyze how the change of payment system will affect the decision of pharmacies and "other providers" to cover the services. Also mentions possible changes in behavior depending on the implementation of the regulation (page 114).
3/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
No relevant discussion.
0/5
Does the analysis identify the alternative that maximizes net benefits?
Since outcomes are not estimated/calculated, it is not possible to calculate net benefits.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
While the cost-effectiveness is not reported for each item, the analysis and preamble reference the comparison of cost of the options.
1/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
The analysis calculates change in costs to the federal government and also change in costs to Medicare beneficiaries that reflects their 20 percent copay. A table breaks down the impact showing percentage changes for different types of facilities.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
No calculation of the outcomes or discussion of incidence is given.
0/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
The RIA and the preamble are heavily integrated, so while one cannot see if the RIA itself affected decision making, analyses that are referenced in the RIA seemed to have a large impact on the decision. In some cases, alternative tweaks are accepted or rejected based on the logic in the anlaysis, but not as a result of any quantitative analysis. The proposed rule uses the analysis in the sense that the calculations determine what prices the federal government will pay.
3/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
Net benefits are not calculated. Some of the decisions (eg, no race-based fees) seem to reflect sensitivity to incentive issues that would affect net benefits.
2/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
HHS may reconsider whether to use a montlhy payment rather than a per treatment payment: "Some of the factors that we may evaluate at that time are whether the ESRD PPS has resulted in improved clinical outcomes, the degree to which facilities have increased the utilization of other modes of dialysis such as home PD, and whether interested stakeholders at that time would favor a monthly or other per unit of time payment methodology." The proposed rule outlines a quality incentive program HHS plans to propose in a future rule, which will vary providers' reimbursements based on their reporting of quality data and their performance as measured by those data. So, some articulation of measures and goals may be coming in the future, though these appear to be measures and goals to qualify for payments rather than measures and goals used to evaluate the regulation.
2/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
For some time, providers have been required to report 26 clinical performance measures. HHS indicates that performance based on these measures may affect providers' payments in the future. But this does not seem to be a commitment to reassessing the results of this regulation. The preamble mentions on page 22 that current quality review initiatives are enough to monitor outcome on care quality: "Current quality review initiatives provide a basis for monitoring the impact of a bundled ESRD PPS after implementation, to ensure quality of care does not deteriorate in response to the system’s efficiency incentives."
3/5
 
Total 32 / 60