impact of the bundle pps on home dialysis economics

APMXXX, Rev. X

Impact of the Bundle PPS on

Home Dialysis Economics

APMXXX, Rev. X

PPS Bundle

The new Bundled Payment System is the first

major change to dialysis reimbursement in

thirty years

Puts more risk on providers by increasing

scope of services while lowering payment

Puts more risk on dialyzors by increasing co-

pay responsibility

Payment not tied to Quality Measures, yet

APMXXX, Rev. X

Unbundled vs Bundled

2010Composite Rate

Separately Billable IV Drugs

Non Composite CKD5 Labs

Non-renal Labs

Oral Medications

2011 PPSComposite Rate, IV

Medications or substitutes, ~53 renal-related labs, Vit D

Oral Medications (will be in bundle in 2014)

Non-renal Labs

~$251 $229.62

+/-case mix

= ~$242.50

+other adj

- 3.1%

transition

adjustor

APMXXX, Rev. X

The Bundle Supports Home Therapies

CMS reiterates their goal of increasing the use of home

therapy (p.155 and p154 Final Rule)

Payment is PER TREATMENT, in full bundle increments.

(p164 Final Rule) – PD remains at HD equiv daily rate

Medicare retains the ability for providers to be paid for

additional medically justified HD treatments (p790 Final

Rule).This continues CMS’s current policy.

Training is maintained outside the bundle as an add-on

to the full bundled rate. The add-on payment for patient

training rate is increased from $20 per treatment to

approximately $33 per treatment. (p148 Final Rule)

APMXXX, Rev. X

2008 Drug Payments By Modality

• Home patients may receive additional iron and vitamin D under Part D, so

costs may be understated for these items as they shift to the bundle

• The use of ESAs and other medications may decrease under bundled

payment system

• Still, the differential has been substantial to date

Confidential5

Sessions (Raw)ESA Payments Per

Session

Vitamin D Payments Per

Session

Iron Payments Per Session

Other Drug Payments Per

Session

TOTAL Drug Payments Per

Session

In-Center Hemo 34,943,584 $42.93 $10.34 $5.54 $0.91 $59.71

Home Hemo 442,793 $27.02 $0.48 $1.15 $0.33 $28.98

Source: Moran Company Analysis, 2010.

APMXXX, Rev. X

“Changes in anemia management and hemoglobin levels following revision of a bundling policy to

incorporate recombinant human erythropoietin”

Hasegawa et al; Kidney International advance online publication 20 October 2010; doi: 10.1038/ki.2010.382

Impact of Bundled Payment on

ESA/Iron Use in Japan No significant differences were found in pre- or post-policy cross-

sections for hemoglobin distributions or the percentage of patients

prescribed rHuEPO.

Among patients receiving rHuEPO, the mean dose significantly

decreased by 11.8 percent.

The percentage of patients prescribed intravenous iron over 4

months significantly increased; however, the mean dose of iron did

not significantly change.

Thus, this bundling policy was associated with reduced rHuEPO

doses, increased intravenous iron use, and stable hemoglobin levels

in Japanese patients receiving hemodialysis.

APMXXX, Rev. X

FREEDOM* Study UpdateInterim results from the largest ongoing study of DHHD

Confidential7

TIME TO RECOVER**Reduction in post-treatment recovery from 532

to 74 minutes at 12 months

(p<0.0001)

DEPRESSIVE SYMPTOMS**29% improvement in BDI score (p<0.01), 48%

improvement for those with scores >15 at 12

months (p<0.005)

QUALITY-OF LIFE (SF-36)Physical (PCS) increased from 35.6 to 38.4

(p=0.04), Mental (MCS) increased from 46.6 to

50.7 (p=0.03)

ANTIHYPERTENSIVE MEDSAt 12 mo., # prescribed decreased by 35%

(p<0.0001), % requiring no meds increased

from 12% to 47% (p<0.002)

SLEEPSignificant improvements in General Indices,

Sleep Adequacy, Respiratory Disturbances,

and Daytime Somnolence

RESTLESS LEG (IRLS INDEX)23% reduction in global severity (p=0.03), and

26% improvement in restless leg symptoms

(p=0.006)

STANDARDIZED MORTALITY RATIO (SMR)SMR=0.53 after adjusting for age, gender, race, and primary

cause of renal failure, representing a 47% reduction in mortality

events vs. expected

* Jaber BL, et al; Am J Kid Dis: 53:310-320, 2009. The above are a priori defined interim results

** Jaber BL, et al; Am J Kid Dis: In Press 2010

APMXXX, Rev. X

Intermittency of HD and risk of deathBleyer, Kidney Int, Vol. 55 (1999), pp. 1553-9

The intermittent nature of center hemodialysis may

contribute to an increased sudden and cardiac death

rate on Monday and Tuesday for patients

enrolled in the USRDS.

Study design: USRDS data from 1977 to 1997, comprising 326,728 deaths,Note: Monday represents the 3-day interval for MWF schedules, Tuesday for TTS. No 3-day interval exists for daily therapies.

p=0.002p=0.0005

p=0.1 p=0.03

APMXXX, Rev. X

Standard mortality ratios (SMR*) for HHDDeath rates half or less of what are expected after adjustment

Therapy

Patients

# of Centers

Locations

Timing

HHD

70

NR

US

1986-92

Daily

117

2

US

2003-4

Nocturnal

72

2

Australia

2004-5

Daily

415

5

US, Europe

1982-2005

Daily

2,553

>300

US

2006-7

p<0.0001p=0.03

p<0.005p<0.05

p<0.001

*Actual/expected mortality, although methods of calculation differ slightly. NxStage mortality is adjusted for age and gender.

APMXXX, Rev. X

Cumulative Survival PD/ICHD 2000-2005

Vonesh, EF. Kidney International 2008; 70 Supplement

PD and Incenter HD Survival virtually identical in 389,000 patients

APMXXX, Rev. X

Home Economics Can be Favorable for

all Stakeholders

Patients

Ability to work

Lower Transportation $

May Reduce Meds

Waiver of 90 day wait

Payers/System

Less hospital days

Less medication expense

Lower total cost

Facilities

Higher private pay mix

Appropriate to bill for

additional needed HHD

treatments

Less brick & mortar $

Waiver of 90 day wait

APMXXX, Rev. X

Economics patient working IU Greenfield USRDS

The health and flexibility benefits of more frequent HHD allow more

patients to continue or return to work.

Percentage of Working-Age Patients Working

The ability to continue working:

Improves patients‟ personal

economic situation.

Helps patients remain

contributing members of society.

The Economics of HHD

Patient Perspective (continued)

©2009 NxStage Medical, Inc. NxStage® is a registered trademark of NxStage Medical, Inc. System One™ is a trademark of NxStage Medical, Inc. Patents and patents pending.

Detailed reference list available upon request. CAUTION: Federal law restricts this device to sale by or on the order of a physician. APM410 Rev. A

17. Borg, D et al. Home dialysis: The future is now. Hemodialysis International. 2008; 1: 132. Presented as an abstract at the 2008 Annual Dialysis Conference.

19. The Renal Network, Inc. 2005 annual statistical report. http://www.therenalnetwork.org/data/2005stat.php, retrieved June 5, 2009.

20. U.S. Renal Data System, USRDS 2007 Annual Data Report, Patient Characteristics Reference Table C.15, Percent distribution of patients, by employment status, p. 92.

21. Kraus M A, et al. Work and travel in a large short daily hemodialysis (SDHD) program. J Am Soc Nephrol. 2007; 18: 512A. Presented as a poster at American Society of Nephrology 2007 Annual

Congress.

The Economics of Home Dialysis

Patient Perspective

APMXXX, Rev. X

Economics patient perspective reduced transportation medication

NxStage IDE study cost savings out-of-pocket expensesPatients on more frequent HHD may significantly reduce or

eliminate key out-of-pocket costs.*

13

* Patients should consult with their center and/or physician to see how more frequent HHD is covered by their insurance.





Reduced Medications Reduced Transportation

14. Assumptions: 20-mile round-trip distance to center; $.55/mile federal mileage rate; 142 annual trips to center (less than full 156 due to average of 14 hospitalization days).28,29

15. SDHD = Short Daily Hemodialysis. Assumptions: 20-mile round-trip distance to center; $.55/mile federal mileage rate; 12 annual trips to center (for monthly clinic visits).

16. Kraus M A, et al. A comparison of center-based vs. home-based daily hemodialysis for patients with end-stage renal disease. Hemodialysis International. 2007; 11: 468-477.


18. Assumes $15 per month patient co-payment for anti-hypertensive medications.



APMXXX, Rev. X

Economics healthcare system savings Peter

Crooks Kumar Borg

Leading institutions have demonstrated significant savings in annual total

costs of care for dialysis patients with more frequent HHD, compared to in-

center treatment.

“At Kaiser Permanente, [Medical

Director] Dr. Peter Crooks tells AP

that their mantra is: „When you

start dialysis, you do it at home.‟

…Crooks says Kaiser statistics

suggest a reduced need for

hospitalization in home dialysis

patients, “potentially saving

$10,000 to $20,000 in annual

healthcare costs per patient29…”

— Peter Crooks, MD Medical

Director, Kaiser Permanente as

cited in MedScape Medical

News

“Our internal data here at Kaiser found that total patient

care costs were lowest for home hemodialysis patients,

followed by peritoneal dialysis patients and lastly in-

center hemodialysis patients.”30,31

— Victoria Kumar, MD Southern California

Permanente Medical Group

“Costs per patient are $10,000 to $12,000 per year

less for the HHD patients as compared to In-center HD

patients.”17

— Diane Borg, BSN, RN, CNN Greenfield Health

Systems


Healthcare System Perspective (continued)




29. Jeffery S. Media report looks at developments in trend to home hemodialysis. MedScape Medical News (WebMD), based on original reporting by the Associated Press. 2005; July 12;

http://www.medscape.com/viewarticle/538730, retrieved April 17, 2009.

30. Boggs W. Home hemodialysis cuts hospital days. Reuters Health. 2008; October 10.

31. Kumar, V A et al. Hospitalization in daily home hemodialysis versus peritoneal dialysis patients in the United States. Am J Kid Dis. 2008; 52: 4 (October): 737-744.


Healthcare System Perspective

APMXXX, Rev. X

Healthcare system costs of care ESRD patients

dialysis reduce hospitalizations medications

Dialysis services are only a

portion of total annual costs of

care for ESRD patients.

Dialysis services only account for 24% of

total annual costs of care.24

• Hospitalization and drug costs account

for over 45% of total annual costs of

care.24

• More frequent HHD has been shown to

reduce hospitalizations and the need

for drugs.16,17,27,28,29,30





16. Kraus M A, et al. A comparison of center-based vs. home-based daily hemodialysis for patients with end-stage renal disease. Hemodialysis International. 2007; 11: 468-477.


24. U.S. Renal Data System, USRDS 2008 Annual Data Report, Reference Table K.e (supplement), Medicare payments ($) per person per year: 2006, by claim type (model 1).

27. Bohan S. Home dialysis offers new lease on life. San Mateo Daily News. 2008; February 24.

28. Schiller B. Daily home hemodialysis clinical experience. Satellite WellBound Healthcare; presentation at 2008 Annual Dialysis Conference.

29. Jeffery S. Media report looks at developments in trend to home hemodialysis. MedScape Medical News (WebMD), based on original reporting by the Associated Press. 2005; July 12;

http://www.medscape.com/viewarticle/538730, retrieved April 17, 2009.

30. Boggs W. Home hemodialysis cuts hospital days. Reuters Health. 2008; October 10.



APMXXX, Rev. X

Economics healthcare system perspective

patient hospitalizations reductions Kaiser

Wellbound

Leading institutions that are experienced with more frequent HHD have

demonstrated 40% to 50% reduction in patient hospitalizations for HHD

patients.*

*Compared to their in-center counterparts.





27. Bohan S. Home dialysis offers new lease on life. San Mateo Daily News. 2008; February 24.

28. Schiller B. Daily home hemodialysis clinical experience. Satellite WellBound Healthcare; presentation at 2008 Annual Dialysis Conference.



APMXXX, Rev. X

Top 10 reasons for hospitalizationTable G.12.1 (supplement)

Total hospital discharges, by detailed Diagnostic Related Group2005, period prevalent patients

DIAGNOSTIC RELATED GROUPS Type Discharges

127 Heart failure & shock Medical 46,913

144 Other circulatory system diagnoses w

complication/comorbidity

Medical 42,056

316 Renal failure Medical 40,833

416 Septicemia age >17 Medical 26,569

478 Other vascular procedures w complication/comorbidity Procedure 23,166

089 Simple pneumonia & pleurisy age >17 w


Medical 21,985

182 Esophagitis, gastroenteritis & miscellaneous digestive

disorders age >17 w complication/comorbidity

Medical 19,632

120 Other circulatory system operating room procedures Procedure 19,530

296 Nutritional & miscellaneous metabolic disorders age

>17 w complication/comorbidity

Medical 18,888

331 Other kidney & urinary tract diagnoses age >17 w


Medical 16,409

Source: 2007 USRDS ADR (2005 data)

6 of top 10 reasons for hospitalization directly addressed by daily dialysis

APMXXX, Rev. X

Anticipated Revenue Change by

Modality Under the Bundle

Confidential18 Rev A

12/14/2007

-20

-10

0

10

20

30

40

50

60

Incenter Home Hemo PD

Revenues based on: ESRD Bundled Rate of $230/treatment - (ave composite rate of $142/tx +

medication add-on + historic avg $ medications and supplies billed per treatment by modality).

Per

treatm

ent

And, centers will be responsible for more services under bundle

than they are now covering in the baseline revenues shown.

APMXXX, Rev. X

Why Home Will Increase Under Bundle

More patients will choose to go home

– KDE Benefit

– Conditions for coverage

Home Therapy can be more cost effective for

center and for patients (PD and HHD)

Potential for less medication use

More likely to remain working and insured

APMXXX, Rev. X

Conclusions

CMS stresses repeatedly a goal to encourage more

home therapy and the clinical benefits of home dialysis

CMS states a desire for innovation

HHD per treatment revenue is up ~$40, whereas

incenter revenues decline

PD revenue is increased for adult patients

Training and retraining add-on is increased by 60% ($20-

$33)

Important provisions, such as medical justification for

additional HD treatments remain

APMXXX, Rev. X

Questions

439 South Union Street, Lawrence, MA 01843

www.nxstage.com tel: 978-687-4700

Back-up Material

APMXXX, Rev. X

Comparison of current LCD’sICD-9 Code Code Description TrailBlazer PGBA FCSO

275.3 HyperphoshatemiaX

276.61 and 276.69 Fluid overload; fluid retention X X X

276.7 Hyperkalemia X X X

420.0 Acute pericarditis X X X

428.0 Congestive Heart Failure, Unspecified X X X

428.1 Left Heart Failure X X

458.8 Hypotensive cardiomyopathy without overt CHFX

518.4 Acute edema of lung X X X

588.9 Other specified disorders resulting from impaired renal functionX

649.9 Complications of pregnancy, unspecified X X X

782.3 Edema X X

V23.89 Supervision of other high-risk pregnancy X X X

Other non-ICD-9 Mechanical failure (ie. Access impairment, electrical/equipment failure or

inadequacy would justify an additional treatment)X

*NxStage SAB members were surveyed and weighed in on the % of their current HHD population were described by each of the

codes in the various LCDs.

Members of the NxStage Scientific Advisory Board indicated that at least one of

the diagnoses included the three current LCD’s would be present in 80% of the

patients historically determined to be candidates for the daily home therapy .

APMXXX, Rev. X

Volume Overload definitions

TrailBlazer/PGBA Volume Overload: Extra dialysis

sessions may be necessary if the patient has evidence of volume

overload such as marked daily weight gain in excess of five pounds

per day, congestive heart failure, marked edema, pulmonary edema

as evidenced by blood gases (hypoxemia), chest x-ray or physical

examination, which responds to fluid removal (improves with

dialysis), or evidence that volume loads cannot be reduced by other

means such as ultrafiltration, and must be removed by dialysis.

FCSO: Volume overload-daily weight gain greater than five

pounds per day Or an elevated hemoglobin and hemotocrit Or

physical examination with findings indicative of volume overload

Source: LCD L30566 (FCSO), LCD L28224 (PGBA), LCD L26781 (TrailBlazer)

APMXXX, Rev. X

Comments from MAC Medical directors

In the case of Highmark, LCDs are not

contemplated unless we see that a service or

item is being used in medically inappropriate

ways. The LCD would then set limits/

boundaries for payment, as needed. Highmark

does not have an LCD on frequency of dialysis.– Dr. Larry Clarke, Medical Director for Highmark MAC

The MAC has the flexibility to pay for >3/week

and to determine medical necessity.– Dr. Elaine Jeter, Medical Director, PGBA J11 MAC

impact of the bundle pps on home dialysis economics

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