NKF Advocacy Update

Fiscal Cliff:  Summary of ESRD Provisions and Outlook for 2013

While much of the focus of the fiscal cliff agreement was on tax rates, it also contains provisions that impact the Medicare ESRD program. In the closing weeks of the 112^th Congress, it became increasingly likely that the ESRD program would be subject to cuts as a revenue source to offset other Medicare provisions (including preventing a scheduled 27% cut to Medicare physician payments).

Key provisions include the following:

• Beginning in January 2014, Medicare payments will be reduced under the dialysis bundle (“rebasing”) to reflect lower usage of erythropoietin stimulating agents (ESA’s) and other physician-administered drugs from 2007 to 2012 (oral drugs are excluded from the calculation).  This provision is consistent with a December 2012 U.S. Government Accountability Office (GAO) report to Congress that found that utilization of these drugs in 2011 was almost one-fourth lower than in 2007, primarily due to less utilization of ESA’s, and that Medicare would have paid $650 million to $880 million less in 2011 if the bundle had been rebased.  As a member of Kidney Care Partners, the National Kidney Foundation  will work closely with the Centers for Medicare and Medicaid Services (CMS) to evaluate the impact of rebasing and ensure the protection of kidney patients.

• A two-year delay to 2016 in moving oral ESRD drugs into the Medicare bundle payment, providing additional time for dialysis providers to prepare for the transition of these medications presently covered under Medicare Part D to the Part B bundle.  In previous legislation, Congress required that oral ESRD drugs be moved to Part B effective January 2014.

• A report by the Government Accountability Office (GAO) on patient access to dialysis, including an analysis of how the Secretary has addressed concerns identified in a previous GAO report on preparations to implement payment for oral drugs in the bundle.  The report is due no later than December 31, 2015.

Perhaps lost in the discussion and media coverage following the congressional consideration of the agreement is the fact that, while the major tax provisions are permanent, the spending side of the equation was resolved only through March 2013.  After that, all eyes will once again be on budget sequestration.  Sequestration refers to the automatic budget cuts that were scheduled to be implemented in January 2013 if Congress did not achieve between $1.2 trillion and $1.5 trillion in deficit reduction measures over a 10 -year period.

If sequestration is implemented, Medicare dialysis payments could be subject to a 2% reduction (the law that created the sequestration trigger limits overall Medicare cuts to 2% and exempts Medicaid, whereas most federal programs would be subject to reductions of approximately 9%).  Although the federal debt limit was reached on December 31, 2012, various stop-gap measures are being taken by the Department of Treasury through February.  After that time, Congress will need to raise the debt limit ceiling.

Furthermore, the Fiscal Year 2013 Appropriations Bills (which include health spending other than Medicare and Medicaid, such as the National Institutes of Health, Centers for Disease Control and Prevention, and Food and Drug Administration) are funded only through March 30, 2013.  Republicans have stated they will not accept further tax increases and that any increase in the debt limit must be matched by an equivalent reduction in spending.

The upcoming year will not start out any clearer than the previous year ended and it remains to be seen whether a bipartisan consensus on a long-term plan can be attained.  In the meantime, NKF is drafting our 2013 public policy priorities and beginning our work on behalf of kidney patients and families once again, with Congress and the Administration.