Dan Liljenquist: Sen. Orrin Hatch made the right choice on this tough issue
During the final hours of the tense budget negotiations in early January, Sen. Orrin Hatch successfully inserted language into the "fiscal cliff" legislation that delays until 2016 the inclusion of oral-only dialysis drugs into the Medicare bundled provider payment for dialysis services.
A few weeks later, The New York Times criticized Hatch, complaining that the delay was a "disheartening example of how intense lobbying and financial contributions can distort the legislative process in Washington." The Times characterized the move as a gift to Amgen, the world's largest biotechnology firm, which would cost taxpayers millions. The majority of the Times' reporting focused on Amgen's political connections with lawmakers and staffers on Capitol Hill. It also detailed the generous campaign contributions Amgen has made to Hatch over the years.
What The New York Times did not do was investigate whether or not the delay was appropriate policy. I believe it was, and that Hatch should be commended for his efforts to protect patient access to oral-only dialysis drugs.
Each year the Medicare program provides dialysis care for more than 365,000 people suffering from "end state renal disease" (ESRD) at a cost of more than $10 billion. Medicare pays health care providers a predetermined amount per treatment (or bundled payment) to provide dialysis care. These bundled payments are a good idea because they encourage dialysis providers to keep costs as low as possible, saving Medicare hundreds of millions of dollars each year.
In March 2011, the Government Accountability Office (GAO) released a report that recommended that the Centers for Medicare & Medicaid Services (CMS) include oral-only dialysis drugs into the Medicare bundled payments for dialysis services. The GAO said, "including these drugs could promote more efficient dialysis care, because organizations that provide this care receive a fixed payment and gain financially to the extent they reduce their costs for the items and services included in the bundle." The GAO's argument for including oral-only dialysis drugs in the payment bundle makes a good deal of sense. Most policymakers agree with this assessment, including Sen. Hatch.
However, when the GAO made this recommendation, it acknowledged (1) that dialysis providers "identified several issues that could affect their ability to provide oral-only ESRD drugs in 2014" and (2) that the available data on which to base the bundled price "may understate the costs that dialysis organizations would incur to provide these drugs." The GAO cautioned CMS against moving too quickly to include oral-only drugs into the dialysis payment bundle, acknowledging that "inadequate payments could lead to access and quality of care issues for beneficiaries on dialysis."
I believe that CMS has not adequately addressed the concerns raised by the GAO. Specifically, applying an across-the-board bundled payment for dialysis services that includes the very expensive oral-only class of drugs could easily lead to rationing of oral-only medications, particularly in rural dialysis clinics. Rural dialysis clinics are typically small operations that survive on very thin profit margins. A handful of patients on oral-only dialysis medications could drive a rural dialysis clinic out of business if they are required to pay for those drugs out of the bundled payment they receive from Medicare. When forced to choose between prescribing oral-only dialysis drugs or keeping their doors open, those clinics will choose not to prescribe the oral-only medications. CMS' proposed dialysis bundled payment does not provide adequate safeguards against rationing of oral-only dialysis medications.
Clearly, these are complex issues that are difficult to understand. I am grateful that Sen. Hatch carefully considered the options and made the right policy decision.
Dan Liljenquist is a former state senator and U.S. Senate candidate.
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