ESRD Fraud 2011 and Beyond
The End-Stage Renal Disease entitlement has been the only condition-specific entitlement in the Medicare program; thus, whether aging into the entitlement or gaining coverage through under-65 SSA disability, no other disease or condition automatically provides Medicare coverage except ESRD. Since its inception to the present, the program has grown to cover more than 400,000 beneficiaries at a cost to Medicare of about $30 billion annually. (Approximately 20% of ESRD patients are covered through commercial plans.) Thus, this 0.7% of Medicare beneficiaries consumes 6% of Medicare’s annual pay-out.
This cost trend has concerned Congress for many years. A significant step toward controlling the trend became effective January, 2011 with the “bundled” payment transition for a costly component of treatments, the drug erythropoietin, or Epo.
The Centers for Medicare and Medicaid Services (CMS) released the Final ESRD Prospective Payment System (PPS) Rule on Monday, July 26, 2010. Under the new “bundled” payment system, effective January 1, 2011, Medicare changed reimbursement to a single payment that covers all renal dialysis services—including drugs and diagnostic laboratory tests—to dialysis facilities for each dialysis treatment.
With this new reimbursement methodology, the opportunity for gaming, or creep in case mix indexing arises. This is analogous to “case mix creep” in billing for Home Health visits, where the illness burden of beneficiaries is significantly over-reported, given the incentive for improved payments. The opportunity for fraud with this new ESRD reimbursement program also includes inappropriate use of erythropoiesis stimulating agents for patient red blood cell counts (a component of billing which enables reimbursement); and billing for erythropoiesis stimulating agents based on false acquisition costs.