Statement of Leslie V. Norwalk, Acting Administrator, Centers for Medicare and Medicaid Services

Testimony Before the House Committee on Ways and Means

December 06, 2006

The Centers for Medicare and Medicaid Services (CMS) believes that in general, treatment decisions for ESRD patients are best left to the clinical judgment of treating physicians.  The CMS is charged with determining appropriate coverage and payment for services to Medicare beneficiaries.  In recent years, CMS has worked hard to ensure its coverage and payment policies promote high quality care, which is in the best interests of the beneficiaries we serve as well as the long-term financial health of the Medicare program.

Quality and safety initiatives have been at the center of the Administration’s health care agenda for more than five years.  We have made significant strides in promoting greater transparency in the health care industry, giving Medicare beneficiaries and all consumers unprecedented access to information that supports meaningful choices.  Whether considering dialysis facilities, hospital services, skilled nursing providers or prescription drug benefits, people with Medicare can find the information they need to identify the best quality and value among available options.  The CMS has devoted significant resources to ESRD quality and patient safety issues, with a comprehensive Quality Roadmap, the ESRD Quality Initiative, and ongoing research to explore  ESRD payment reforms, among other efforts.   

The Congress also has been an important partner in these achievements.  Efforts such as the Care Management for High Cost Beneficiaries Demonstration create a platform for research to improve quality care and reduce the costs of caring for fee-for-service beneficiaries with one or more chronic diseases, who generally incur high Medicare costs.  CMS has selected six sites under the demonstration, including one in New York state that focuses on beneficiaries with chronic kidney disease.  Programs under the demonstration are testing ways to increase adherence to evidence-based care, reduce unnecessary hospital stays and emergency room visits, and help participants avoid costly and debilitating complications.      

The CMS Quality Roadmap & Medicare’s ESRD Quality Agenda

In 2005, CMS issued the “CMS Quality Roadmap,” to promote the right care for every person, every time. The Quality Roadmap builds on the Institute of Medicine’s six aims for healthcare: Patient-centered; Safe; Accessible; Effective; Efficient; and Equitable. 

The CMS Quality Roadmap presents five strategies to achieve its vision:

• Partnering and collaborating with other healthcare stakeholders;
• Collecting and publicly reporting data that measures the quality, efficiency and cost of healthcare;
• Striving to reform healthcare reimbursement systems to promote quality and efficiency, while avoiding  unnecessary costs and complications;
• Promoting the use and availability of clinical information for providers and Medicare beneficiaries, particularly through the adoption of health information technology, to assist them in providing and receiving high-quality and efficient care ; and,
• Promoting the use of evidence-based healthcare information, in clinical, coverage, and payment systems, ensuring that the latest treatments, medical devices and services are available to clinicians and their patients, while avoiding inappropriate or wasteful use of those treatments.

Significant work and leadership in clinical quality initiatives also preceded the adoption of the CMS Quality Roadmap.  In 2001, the Administration launched the Medicare Quality Initiative in pursuit of quality health care through accountability and public disclosure not just for Medicare patients, but for all Americans.  Following the implementation of specific initiatives focused on nursing homes, home health, and hospitals, CMS announced the ESRD Quality Initiative in 2004. 

Specific objectives of the ESRD Quality Initiative, which focuses on dialysis facilities, reflect an array of goals to stimulate and support improvement in the quality of dialysis care:

• Refining and standardizing dialysis care measures, ESRD data definitions, and data transmission to support the needs of Medicare’s ESRD program;
• Empowering patients and consumers by providing access to facility service and quality information;
• Providing quality improvement support to dialysis providers;
• Assuring compliance with conditions of coverage; and,
• Building strategic partnerships with patients, providers, professionals, and other stakeholders. 

While all efforts under the ESRD Quality Initiative are significant, the Fistula First Breakthrough Initiative is particularly noteworthy.  Under the initiative, facilities submit data to Medicare contractors charged with quality review of dialysis facilities (“ESRD Network Organizations”) to facilitate a more coordinated approach to care.  The initiative has led to a significant increase in the use of AV Fistulas in treating dialysis patients – a measure associated with considerable reductions in avoidable hospitalization and death for ESRD beneficiaries. 

The ESRD Quality Initiative also supports the annual collection of Clinical Performance Measures (CPMs) for a random sample of dialysis patients nationwide.  With these measures, CMS can identify and track opportunities for improvement in areas such as the adequacy of hemodialysis and peritoneal dialysis, anemia management, and vascular access management.  The Quality Initiative also includes the Dialysis Facility Compare resource on www.medicare.gov, which contains quality information for all Medicare approved dialysis facilities in the United States.  Patients and consumers are able to search and compare facilities on this site and choose a dialysis facility that best meets their needs.

In addition to various efforts under the ESRD Quality Initiative, CMS partners with states to conduct regulation and enforcement activities to ensure that dialysis facilities comply with federal safety and quality standards.  Under this survey and certification program, CMS establishes standards for safe and effective operation of dialysis facilities; develops guidelines and procedures; provides training for surveyors; and coordinates state activities.  Currently, dialysis facilities are surveyed roughly every 36 months.  State survey agencies also will investigate specific complaints on an as needed basis, outside of the regular survey cycle.

Finally, nearly all patients with ESRD suffer from debilitating anemia.  Much of this anemia can be managed through drug therapy.  CMS has had a quality initiative for years to encourage appropriate management of anemia in ESRD patients, including an active monitoring policy for patients being treated with erythropoietin.

All of these examples demonstrate a commitment by the Administration and CMS to ensuring and improving high quality care for the ESRD population.  We have made significant strides over the last 5 years, and will continue to work to increase the availability of consistent, standardized core data elements that promote greater transparency and better care outcomes for ESRD patients. 

Anti-Anemia Agents Used in ESRD Patients

Two prescription drugs commonly are used for anemia management in patients with ESRD who are dialyzed in renal facilities: epoetin alfa (Epogen®) and darbepoetin alfa (Aranesp®).  These products rely on erythropoietin to help control anemia.  To promote appropriate usage, CMS has in place a monitoring policy that considers both hematocrit levels and erythropoietin dosage levels.[1] 

Current kidney disease clinical guidelines, determined through national consensus processes by multiple ESRD experts and stakeholders, call for maintaining the hematocrit level of patients receiving erythropoietin within a narrow target range of 33-36 percent.  Because many factors such as nutritional status, infection, and bleeding may cause the hematocrit to fluctuate, it is not easy to manage patients to this narrow range.  Some patients might be above (or below) the target in one month, for example, but below (or above) it in others. If one superimposes frequent and significant changes in doses of anemia management drugs on these existing fluctuations, patient hematocrit fluctuations can become even more variable and difficult to interpret and manage, particularly within the narrow target range of 33-36 percent.

Promoting Appropriate Payment through Hematocrit Monitoring

ESRD treatment facilities submit claims to CMS monthly for erythropoietin, which is billed separately from other dialysis services.  The claim form includes fields where the facility must report the beneficiary’s hematocrit test result.  Commonly, a dialysis patient’s hematocrit level is tested many times during a month. 

CMS is committed to establishing and maintaining policies in all areas of the Medicare program that protect beneficiaries, promote efficient and appropriate use of medical interventions, and enable providers to render excellent care.  The newly revised CMS monitoring policy for erythropoietin used in ESRD patients instructs providers on how to submit claims, and instructs CMS contractors on how to adjudicate the claim.  Under the policy, Medicare expects a 25 percent reduction in the dosage of erythropoietin for patients whose hematocrit exceeds 39.0.  If the dosage is not reduced, payment is made for the drugs as if the reduction occurred.

The new monitoring policy is not a national coverage determination, and thus it is not a determination of the reasonableness and necessity of using an anti-anemia agent to maintain hematocrit levels above 36 percent.  The monitoring policy clearly articulates that providers should adhere to the FDA label instructions for erythropoietin, i.e, seeking to achieve a hematocrit of 30-36 percent. The instruction to carriers to initiate monitoring when the hematocrit reaches 39 percent is not a new hematocrit range policy, but instead establishes a marker of the point at which payment must be reduced because the reported hematocrit was not maintained at levels consistent with FDA labeling. 

The value 39 percent is not a therapeutic hematocrit target, which CMS believes is appropriately left to a treating physicians’ clinical judgment.  Rather, it is the target to initiate reduction in payment, a function appropriate to the mission of CMS.  To be clear, it recognizes the difficulty in the clinical setting of maintaining the hematocrit in the narrow clinical guideline range of 33-36 percent, and therefore does not immediately cut off payment for a single hematocrit value that fluctuates above this narrow range. However, it does set in motion a policy that will reduce reimbursement if the hematocrit level remains above 39 and the provider does not reduce erythropoietin dosage as FDA labeling and national clinical guidelines indicate.[2]

A provider submitting a claim for erythropoietin in an ESRD patient with a hematocrit above 39 may inform CMS that a dose reduction has occurred, despite the continued high hematocrit, using a modifier on the claim form.  If the provider has not reduced the dose or informed CMS that a dose reduction has occurred, however, Medicare’s payment systems will apply a 25 percent reduction in payment.  The provider is given appropriate notice of the payment reduction and may appeal the determination.

Promoting Patient Safety through Hematocrit Monitoring

Consistent with the approach taken to advance all of its quality and transparency initiatives, CMS worked closely with the ESRD community and other stakeholders in developing the revised hematocrit monitoring policy.  CMS announced its intent to develop the new policy in fall 2003, along with a solicitation of scientific literature from the industry.  In the interest of promoting quality and efficiency in the care of ESRD patients, CMS was determined to develop a permanent, evidence-based policy for erythropoietin payment and hematocrit monitoring. 

Scientific literature submitted to CMS demonstrated that patients with hematocrit levels within the target range had better health outcomes than those with hematocrits below the target level.  The data also demonstrated that there is considerable natural variability in individual patient hematocrit levels, making it difficult to consistently maintain a hematocrit within the narrow range of 33-36 percent. 

After analyzing the literature CMS developed a proposed policy, published in July 2004.  The CMS reviewed available scientific evidence along with a large volume of public comments from the stakeholder community in developing the final policy.  The final policy issued in November 2005 reflected a careful balance to ensure proper patient care while allowing appropriate payment for services rendered by treating physicians.  In attempting to implement this policy, CMS became aware that there were process issues in collecting the claims-based information necessary to adjudicate these claims and, after working with stakeholders and CMS contractors, a revised erythropoietin monitoring policy was issued in April, 2006.

Appropriate interpretation of the evidence for erythropoietin treatment of anemia in the ESRD population is disputed within the stakeholder community.  Several reasons for this dispute are not readily amenable to correction by CMS.  In addition, many clinical trials have methodological restrictions that limit the degree to which their findings can be generalized among the Medicare population. Other published reports of clinical trials do not necessarily present all of the available data due to limitations of space and other factors.  It is possible that some of the outstanding questions could be addressed in part by analyzing collected but unpublished data. 

CMS believes that, in general, medical decisions are best made by the treating physician.  The human physiologic response to erythropoietin is not immediate, and the effect of a given dosage on the hematocrit or hemoglobin of a given individual can vary widely.  This variation also is reflected in the wide and unpredictable variation in the dosage needed to achieve and maintain hematocrit within the target range, although other factors also contribute to variation in dosage.  Current accepted medical practice may also include the use of drugs for indications that are not covered by an FDA label, but that are supported by clinical evidence in peer reviewed medical literature.  Medicare may provide coverage for off-label uses of drugs and biologics when those items are considered reasonable and necessary. 

Mainstream press has recently focused on two trials published in the New England Journal of Medicine (NEJM) regarding erythropoietin use in chronic kidney disease (CKD) patients.  However, the study populations for these trials do not necessarily reflect the Medicare ESRD patient population.  Both studies addressthe optimal target level for hemoglobin in CKD patients who do not yet need dialysis.  It is possible, if not probable, that many of the study subjects were not Medicare beneficiaries because they were too young to qualify for Medicare and were not disabled.  Only patients with ESRD, who require dialysis or transplant, are eligible for Medicare regardless of age or disability; other patients with CKD are not Medicare beneficiaries (unless their age or a disability qualifies them).  This distinction is important. 

Anemia management for patients with ESRD cannot be assumed to be the same for patients, often younger, with CKD (who do not yet require dialysis).  The NEJM study authors did not generalize their findings to the ESRD population.  Patients receiving dialysis are exposed to clinical situations that patients with CKD not requiring dialysis are not exposed to, including: artificial kidney membrane exposure; large fluid shifts during dialysis; anti-coagulation received while on dialysis; different medications or other treatments. Finally, the NEJM studies looked at patients who were intentionally maintained at high hematocrit levels (the clinical study, research goal), as opposed to the typical ESRD patient who may fluctuate periodically above a hematocrit of 39 percent, but is not maintained at that level (the clinical practice situation).

In spite of the NEJM studies’ focus on patients with CKD, not ESRD, CMS considers the findings significant.  Any scientific study published in a peer-reviewed journal such as the NEJM will be subject to international scrutiny and examination. Experts review the study design, methodology, results and conclusions. CMS will be participating in that scrutiny, which may include the need to design and implement further randomized clinical trials.

CMS is committed to establishing and maintaining policies in all areas of the Medicare program that protect beneficiaries, promote efficient and appropriate use of medical interventions, and enable providers to render excellent care.  In the case of ESRD, and specifically the monitoring policy for anti-anemia therapies, CMS is exploring a number of approaches to collecting additional data.  The current policy was developed after carefully analyzing and weighing a significant body of data and clinical evidence from a variety of sources; additionally, the policy was reviewed and reassessed 6 months after its initial publication.  CMS is just now beginning to obtain sufficient claims data to attempt to assess whether the monitoring policy is achieving its stated goals: encouraging providers to try to maintain hematocrits in the range consistent with FDA labeling and national clinical guidelines, while not paying for unjustified dosages that maintain patients outside that range. Additional data sources will allow CMS to continue this pattern of vigilant, ongoing assessment of the monitoring policy.  Further data also could support the possibility of an alternative CMS policy for anemia management and treatment.

The current monitoring policy relies on data submitted on the claims form.  This effort could be expanded; in fact, CMS already is pursuing a number of enhancements.  Currently, claims data do not provide either the route of administration for erythropoietin or the size of individual doses.  CMS is implementing changes that will introduce a 100 unit code to capture dosing information with greater precision and, in conjunction with line item billing, will permit tracking of individually prescribed doses versus an aggregate monthly total for facilities.

In addition, CMS is implementing requirements to include the route of administration on claims for erythropoietin administered to ESRD beneficiaries (not chronic kidney disease patients).  Existing CMS survey data suggest that subcutaneous administration is employed in only 7 percent of hemodialysis patients, differs by geographic location (more likely in the Midwest and West), and differs by dialysis facility ownership.  Inasmuch as studies have suggested that subcutaneous may be a preferred route of administration, potentially requiring lower levels of erythropoietin to achieve the desired therapeutic effect, data of this nature is critical to continuous evaluation of the hematocrit monitoring policy.

Using the information currently collected, CMS also is able to quantify monthly utilization of erythropoietin, though the accuracy of these data is limited to what providers report on the claims – typically including quantities of the drug that have been opened but not necessarily provided to any patient (referred to as wastage).  These and other limitations result in current claims data providing only a limited picture of erythropoietin utilization and anemia management.  Additional data would be helpful.

One possible approach is to collect data – such as the dosage of erythropoietin actually administered or additional hemoglobin / hematocrit measurements – through clinical trials.  Such an approach is a challenge to implement, however.  The CMS’ authority to condition Medicare coverage on participation in clinical trials and collection of data is could be constrained by the Health Insurance Portability and Accountability Act, the Privacy Act, and other concerns.

Another approach might be to create registries of data submitted by hospitals and other facilities.  Such registries could be a robust data collection mechanism, pursuing elements beyond what can be collected on the claim form.  Before such an approach could be adopted, however, CMS must assess potential restrictions to requiring hospitals and facilities to report information to a registry.  Provider burden also would be an important consideration.

CMS could consider requiring additional Clinical Performance Measures through the existing Quality Initiative.  The CPM project collects clinical information on dialysis patients in order to measure and track quality of care received by patients in dialysis facilities.  However, CPMs currently are collected on just a 5-percent sample of dialysis patients nationwide.  It will take a number of years before CPMs can be collected more broadly – ideally for all dialysis patients – due to limitations in facilities’ and with CMS’ own data collection systems.

Bundled Payment

In addition to significant quality efforts, CMS is committed to efficient and appropriate payment for all Medicare providers.  In the context of ESRD care, many have urged a shift from the current model of paying independently for dialysis treatments and separately billable drugs, to a system of bundled payment.  CMS is generally supportive of such reforms, and has devoted resources to research and development of a system that encourages high quality and efficient care through mechanisms such as value-based purchasing.

The CMS believes that a bundled payment system should promote efficiency and clinical flexibility for ESRD facilities.  The system should guard against incentives to under-treat patients or to “cherry-pick” patients in order to maximize facility profits.  Accomplishing these goals will require (1) research to support the development of an adequate case mix adjustment for a fully bundled system, and (2) mechanisms to ensure beneficiary protections and promote quality care.

The CMS has made significant accomplishments towards implementing a basic case mix adjusted composite rate system, as required by the Medicare Modernization Act of 2003 (MMA).  Following the MMA’s enactment, CMS funded research activities to develop new case-mix adjustments, which were implemented in April 2005.  Since then, CMS has pursued several research approaches that could be used in a demonstration of a bundled PPS for ESRD facilities.

At this point, CMS is continuing its research on approaches that achieve our goals related to quality and payment accuracy.  Development of a payment model that addresses the substantial variation in the dosage of erythropoietin has been a key area of this research. We continue to devote a considerable amount of time and resources to developing an appropriate ESRD payment system, including further research on targeted case-mix adjusters and quality incentives.  We expect to detail the results of this work in the report to Congress required by section 623 of the MMA and move forward with a demonstration to further test these approaches, as the law requires.  We expect these efforts, coupled with prior research, will provide a well-informed basis for comprehensive ESRD payment reform in the future.

Conclusion

This Administration has made significant strides in promoting and ensuring quality care for ESRD patients.  From the CMS Quality Roadmap and efforts under the ESRD Quality Initiative like Fistula First, to selecting a Chronic Kidney Disease–focused site under the Care Management for High Cost Beneficiaries Demonstration, to ongoing research in support of comprehensive ESRD payment reform, CMS is helping to improve quality and efficiency in the care of ESRD patients.  The significant strides made over the last 5 years have laid important groundwork for further improvement.  The CMS will continue to build on these efforts, and looks forward to further work with the Congress and the ESRD community to achieve our common goals.    

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[1] Anemia severity is monitored by measuring the hematocrit with a simple blood test that reveals the proportion of red blood cells in whole blood.  The hematocrit result is expressed as a percentage.  Alternatively, the hemoglobin concentration in whole blood may be used to monitor anemia.  The numeric value of the hematocrit is generally three times the value of the hemoglobin measured simultaneously, though they are expressed using different units.  Thus, for example, a hematocrit of 30 percent corresponds to a hemoglobin concentration of 10 g/dl.

[2] The FDA labeling for Epogen® and Aranesp® notes that as the hematocrit approaches a reading of 36, the dose of the drug should be reduced by 25 percent.