Under MIPPA, Congress directed CMS to implement a new bundled payment system for ESRD services, including injectable drugs such as Epogen®, by January 1, 2011. Prior to implementation of the new bundled payment system, CMS reimbursed ESRD facilities through a combination of a bundled payment for most services, supplies and equipment, and fee-for-service payments for certain separately billable services and drugs. According to the Government Accounting Office, separately billable services accounted for 86% of all Medicare spending on ESRD patients in 2007.
The federal government views the new bundled payment system as a method to reduce costs and encourage providers to use resources more efficiently in the delivery of ESRD care. As in the case of any conversion from fee-for-service to bundled, fixed, or capitated payment systems, the risks (perceived by the government) of patient "cherry picking" and stinting on care will largely supplant the risks of overutilization as economic incentives shift.
Academics and policymakers identified the potential patient care risks associated with a bundled payment system early in the ESRD payment reform process. In order to monitor the impact of the payment bundle on patient care and provide CMS with tools to address unintended negative effects of the new reimbursement system, MIPPA directed CMS to implement a Quality Incentive Program (QIP).
ESRD Quality Incentive Program.
CMS published a final rule on January 5, 2011 that implements the ESRD QIP. The QIP rule, which takes effect on February 4, 2011, will apply to payments for dialysis services provided on or after January 1, 2012. In general, the QIP rule (1) identifies quality measures for ESRD services, (2) establishes performance standards for those quality measures, (3) develops a scoring system to assess the performance of the provider under the quality measures, and (4) applies a payment reduction to providers who do not meet or exceed the established "total performance score."
For the initial year of the QIP (payment year 2012), the three quality measures are the percentages of Medicare patients with: average hemoglobin levels of less than 10.0g/dL, average hemoglobin level of greater than 12.0g/dL, and average urea reduction ratios (URR) greater than 65%. QIP scoring will only apply to facilities with a minimum of eleven ESRD cases in the payment year. In order for a particular patient's measures to be incorporated into a facility's scores, the patient must have received at least four dialysis treatments from the facility within the performance period. Pediatric patients will not be included in calculations for the anemia management measures (hemoglobin), and home hemodialysis patients will be excluded from the hemodialysis adequacy measure (URR). The calculation of anemia measures will also disregard high and low outliers (over 20.0g/dL and under 5.0g/dL).
Each of the three quality measures will translate into 10 points out of a maximum possible total performance score of 30. The performance standard for each of the quality measures in payment 2012 will be the lesser of a national benchmark specified by CMS or the performance of the specific facility in each category in 2007. The national standards for payment year 2012 are: 2% or less for patients with hemoglobin levels of less than 10.0g/dL, 4% or less for patients with hemoglobin levels of greater than 12.0g/dL, and 96% or more patients with URR greater than 65%. For each percentage point below/above the performance standard, two points will be deducted from the provider's total performance score. No total performance score will be assigned to facilities with inadequate numbers of patients for calculating any single component of the score.
As an example, a provider to which the national benchmarks apply (i.e. not facility-specific performance) with 4% hemoglobin levels of less than 10.0g/dL would receive 6 points (10 possible, minus 2 points for each percentage point over 2%); 8 points for 5% of patients with hemoglobin levels greater than 12.0g/dL (10 points minus 2 points for one percentage point above 4%); and 10 points for 99% of patients with URR greater than 65% (maximum score for exceeding benchmark), for a total score of 24.
Payment reductions of up to 2% will be applied to a facility's ESRD reimbursement for the entire payment year as follows: no reduction for a score of 26-30; 0.5% for a score of 21-25; 1.0% for a score of 16-20; 1.5% for a score of 11-15; and 2.0% for a score of 10 or lower. In the example above, the provider's Medicare payments for all of 2012 would be reduced by 0.5%.
In addition to quality scoring and attendant payment adjustments, the QIP rule requires CMS to post the quality data it collects from ESRD providers on its Dialysis Facility Compare website. ESRD providers must also post their total performance score on a certificate displayed for the public in their facilities. CMS must notify ESRD providers of their QIP results in advance and afford the facilities an opportunity to dispute the scores.
Conclusion.
One of the stated goals of the ESRD QIP is to provide reimbursement incentives under the new payment bundle to providers for meeting objective quality of care goals. Critics of the rule have observed that the QIP as applied to payment year 2012 will do nothing to influence provider behavior under the new ESRD payment system because the total performance scores will be based on payment year 2010 data. Thus, providers' past behavior under the prior payment system will be judged against standards not in effect at the time services were delivered. After the initial year of the QIP, this discrepancy will disappear and the reimbursement penalties will be applied to performance under the new payment system. Over time, CMS will refine and most likely add further quality measures to the QIP.
Daniel Murphy is an associate in the Balch & Bingham Healthcare and Corporate & Securities Practice Groups.