This post responds to Merrill Goozner's comments, which were highly critical of the Epogen payment policy revisions explained below.
In August, the House took an important step to improve our broken health care system. We passed legislation, dubbed the Children's Health and Medicare Protection (CHAMP) Act, to extend the Children's Health Insurance Program (CHIP) and provide health insurance to 11 million children. Five million of these children are currently uninsured; the other six million are at risk of losing their CHIP coverage if the program expires at the end of the month as current law stipulates.
Though the bill's children's health care provisions have received the lion's share of attention, CHAMP also makes significant improvements to Medicare's benefits for seniors and people with disabilities. It eliminates all co-payments and deductibles for preventive services, reduces co-payments for outpatient mental health services, and enables more low-income beneficiaries to take advantage of programs that help them pay for Medicare's drug costs, co-payments, deductibles and premiums.
In addition, and as part of a broader improvement of Medicare's prevention and treatment efforts for chronic kidney disease, the bill modernizes Medicare's payment policies for services and a particular set of drugs administered to dialysis patients with End Stage Renal Disease (ESRD). These patients suffer from anemia because of their inability to produce enough of the hormone erythropoietin, which helps the body produce red blood cells. They are treated with synthetic versions of erythropoietin, collectively referred to as erythropoietin stimulating agents (ESAs) and sold in the United States for dialysis as Epogen.
When administered at appropriate levels, Epogen is tremendously helpful to the health and well being of ESRD patients. However, when over-prescribed in a way that raises red blood cell levels too high, Epogen can increase patients' risk of death, blood clots, strokes, heart failure and heart attacks. That's why the Food and Drug Administration recently slapped a "black box warning" on Epogen that cautions of adverse consequences and advises against using the drug to raise patients' red blood cell counts above certain levels (36 percent of their blood volume).
Unfortunately, Medicare's current reimbursement system encourages excessively high dosing, threatening patients' safety and costing taxpayers hundreds of millions of dollars. As Merrill Goozner correctly noted in his recent post, Medicare pays dialysis facilities more per dose of Epogen administered than it costs the facilities to purchase the drug. According to the Department of Health and Human Services' Office of the Inspector General, Medicare paid $9.48 per 1000 units of Epogen in the third quarter of 2006, but large dialysis organizations were able to buy it for $8.55.
The average Epogen patient receives 18,700 units of Epogen a week. As a result, large dialysis chains make an average of more than $900 per patient per year from administering Epogen - and the higher they dose, the more money they make!
As a result of this perverse incentive to over-prescribe, and according to the National Institutes of Health, more than half of patients have their red blood cell counts elevated at or above the 36 percent of blood volume considered safe. One in five even go above 39 percent.
That's why I'm bird-dogging this issue and am a critic of the current payment system. In late June, I called a hearing on safety concerns related to the over-prescription of epogen. In July, as part of the CHAMP Act, Charlie Rangel and I proposed modernizing Medicare's ESRD payment system to better protect patients' health.
Echoing recommendations from the non-partisan Government Accountability Office and the Medicare Payment Advisory Commission, we proposed a "bundled" payment system that creates incentives for efficient administration of Epogen. Our legislation directs the Centers for Medicare and Medicaid Services (CMS), which administers Medicare, to implement this new system in 2010 consistent with FDA safety recommendations. In the interim, the CHAMP Act reduces Epogen payments for 2008 and 2009. The American Association of Kidney Patients endorsed our proposal.
The new bundled payment system will remove financial incentives to over-dose Epogen, protecting patients' safety and reigning in overspending.
But it will also guard against equally dangerous incentives to under-dose. Though recent FDA actions focus on the health risks patients face when their red blood cell levels are too high, there is also widespread acknowledgement in the medical community that if patients do not receive enough Epogen and their blood cell levels remain low, they will continue to suffer from anemia.
That's why our legislation includes an array of safeguards to ensure that patients get the right amount of Epogen to manage their disease.
One of these measures is a rigorous reporting and quality incentive system. We need to know if patients are being dosed appropriately, and we have to use both a carrot (quality incentive payments) and stick (public reporting) to make sure that happens. We need to get this reporting system up and running prior to the bundled payment system taking effect, so we know it works and are confident that it will properly track patient care under such a system.
However, because new regulations take time to draft and implement, CMS is not be able to craft such a quality reporting system in time for 2008. Given the health risks associated with over- and under-prescription, and the need to give this reporting system a test run prior to 2010, I believe Congress should try to implement a temporary solution for 2008.
Amgen opposes our proposal for a bundled payment system. Corporate lobbyists for the dialysis industry want an inflationary update - an increase equal to inflation in Medicare's payment rate for dialysis and related services - that is not tied to issues of patient safety. I disagree. The sooner we start on a path toward a quality reporting and incentive system and the sooner we implement a bundled system, the better.
Working with the data available to us - which we know is incomplete, but is the best available - we developed a performance standard for 2008 that calls for patients' red blood cell counts to be between 33 and 36 percent of blood volume.
Wherever a target range is set, there will be variability in patients, and some will naturally fall above and below it. That's to be expected. However, according to Goozner, this temporary standard could lead to some patients getting their blood raised above the FDA's recommended limit of 36 percent.
I did not intend for patients to continue to receive too much Epogen.
My goal is to protect patients by eliminating the existing financial incentives for over-prescription. I am currently working with experts in the field to refine these new guidelines so that they improve patient safety, consistent with FDA's recommendations.
If the 33 to 36 percent of blood volume range needs to be revised, we'll do it on Medicare legislation with the Senate later this year. If it turns out it is impossible to develop for 2008, we'll scrap the temporary performance measure and the bonuses in conference and look forward to CMS' more permanent system starting in 2010.
Does our proposed solution include monetary bonuses for dialysis facilities that raise 92 percent of their patients' red blood cell counts above 33 percent of blood volume? Yes. Why? It's not because of, as Goozner implies, industry lobbying.
Rather, such incentives are like the quality reporting system designed to preempt under-prescription. In addition to establishing a ceiling, we must also establish a floor. Otherwise, dialysis facilities that receive "bundled" payments for treating patients would have an incentive to under-prescribe.
We did not pick the 92 percent goal out of thin air. According to information collected by CMS (for its Dialysis Facility Compare website), 92 percent of patients currently have red blood cell levels at or above 33 percent. Setting a measure at the current average seemed a reasonable approach to give this system a test run. Again, however, if this standard turns out to increase the amount of over-prescribing going on, we will work to change or eliminate it.
This quality reporting and incentive system is just one measure we put in the CHAMP Act to ensure that patients will get high-quality care and a safe and appropriate level of Epogen.
We made sure that dialysis facility payments will be adjusted to account for differences in patient needs. For instance, facilities would be eligible for additional payments on behalf of patients who have higher body mass and might therefore need additional Epogen would be eligible for it. Similarly, reimbursement would take into account patients who may need an unusually high amount of Epogen to appropriately manage their anemia (because they are members of certain racial or ethnic groups or otherwise). And facilities that don't get deep price-breaks on the cost of Epogen, such as small or rural dialysis centers, could also receive higher payments.
We also increased support for patient education for individuals with chronic kidney diseases and for screening and prevention services for patients with ESRD.
The Senate passed a much smaller health care bill than the House. That bill extended the Children's Health Insurance Program (CHIP) to 10 million children, one million fewer than the House. It did not address Medicare at all and, as such, did not revise Medicare's payment policies for Epogen.
House and Senate leaders are working toward a compromise bill, which is likely to focus only on children's health. That being said, the Senate has committed to taking up Medicare later this year.
I will keep working to urge the Senate to adopt the House's Medicare improvements, including those that will protect patients from excessively high doses of Epogen.
I look forward to reading - and responding - to your comments.