While Congress is heading toward a major battle on sequestration, a few lines of text in the fiscal cliff deal passed in January are still causing waves, revealing both the extraordinary complexity of the law and the ease with which that complexity can be used for unfounded political hits.
At issue is a small provision in the $600 billion fiscal cliff legislation which would reduce Medicare spending for dialysis services by about $5 billion over 10 years. Medicare spends $10 billion a year on dialysis to care for about 355,000 beneficiaries.
Here’s the back story: The Government Accountability Office recently published a study which found that the amount dialysis centers are being paid to treat patients with kidney failure is likely too high.
The centers receive a “bundled payment” from Medicare for providing dialysis treatment, related services, and some drugs. Utilization of one of the therapies – infusible drugs that are given to patients to boost red blood cells and help alleviate anemia – has declined by almost a third, yet the centers are being paid as though they were using just as much of the drugs.
The result: The dialysis centers get to keep the extra money for a drug even though they are providing less of it to patients.
The GAO study said Congress should ask the government agency that runs Medicare to reprice the bundled rate to account for this reduced use of the blood-boosting drugs. Congress did act on the GAO’s finding in the fiscal cliff deal and required an assessment of both the utilization of therapies and their costs and directed that the payment rate be updated accordingly in 2014.
This change in law was expected to save taxpayers $5 billion over 10 years, according to the Congressional Budget Office (CBO).
One of the other changes contained in this $5 billion saver – which had bi-partisan support from the heads of the Senate Finance Committee – maintains the status quo for two more years by not including in the bundled payment a handful of Part D oral medicines that are used to support dialysis services. These oral medicines are currently dispensed in pharmacies and are covered by Medicare Part D, where prices are determined by competition rather thanWashington price setting.
One of these oral medicines, Sensipar, made by the global biopharmaceutical company Amgen, has been singled out in media reports, even though there are up to five other products affected that account for two thirds of the spending in this group of medicines.
The GAO, in a separate 2011 report, found that many smaller, largely rural dialysis centers might not be ready for the transition to dispensing these oral medicines in the bundle. Many in the dialysis community feared that patient care could be compromised by acting too fast.
For example, many rural centers don’t have the necessary certification as pharmacies that would allow them to dispense the oral drugs. The GAO also questioned whether there was enough data to figure out how much the bundled payment should be adjusted to include these oral medicines. GAO also highlighted the need for quality metrics in the bundle – something that Medicare is working on but has not yet developed and implemented.
So members of the Senate Finance Committee, in a bi-partisan decision, took note of the GAO’s report and delayed including these Part D products in the repricing package until more data can be gathered and better quality metrics could be developed.
And that’s when the firestorm began.
The New York Times published a reckless story in January that said the deal “gave Amgen an additional two years to sell Sensipar without government controls” and that it reaped a windfall. The Times omitted the fact that the provision was designed to protect Medicare’s seniors who live in rural areas, that other companies market oral drugs which treat dialysis patients and are affected by this policy, and it failed to cite the source of the $500 million cost it attributed to this provision.
In fact, a new CBO analysis found that this policy proposal will actually save the Medicare program over time. According to CBO, a three year delay wouldsave $500 million and a four year delay could save more than a billion dollars for taxpayers because of the competitive pricing of the oral drugs in Part D.
Instead of being credited with saving the taxpayer money and addressing the concerns exposed by the GAO, The New York Times chose to spin a story based on politics rather than sound, fact-based reporting. The Times called it “a disheartening example of how intense lobbying and financial contributions can distort the legislative process in Washington.” But in fact, the legislators were trying to protect patients and taxpayers.
Sen. Max Baucus, Democratic chairman of the Senate Finance Committee who represents rural Montana, said there were “too many unanswered questions about how to make sure patients get the medicine they need and how rural dialysis clinics would navigate the new layers of red tape it creates.”
Sen. Orrin Hatch, the ranking Republican on the committee who represents rural Utah, said, “there are good, solid reasons” backed up by government studies to support the two-year delay. “This was always good policy, but this good policy for taxpayers and for Medicare patients was overlooked by sensationalistic reporting,” he said.
So here you have two leading legislators working to protect patients with kidney failure based upon objective GAO reports yet they are being slammed in The New York Times.
It’s easy for the mainstream media to over-simplify the story and paint a picture of ill intent at the hands of corporations (a common refrain in theTimes). It may sell newspapers and inflame critics of both Congress and the pharmaceutical industry. But the story is not based in fact.
Lord help us if this is the direction the budget battles are going where bi-partisan policymaking based upon objective GAO studies gets trumped by sensational claims that can’t be substantiated.
Posted on Forbes: Health Matters, February 25, 2013.