Bundling has worked. The perverse incentive that stimulated providers to over-use epoetin-alfa in treating anemia in dialysis (and non-dialysis) patients went away and less epoetin-alfa was used. The savings for providers generated a healthy profit. Naturally now dialysis providers such as DaVita and Fresenius want to keep the money saved from using less epoetin. They are aggressively lobbying Congress to stop the cut-back. The NY Times Article from Aug 28 elaborates:
"At issue is how the government reimburses dialysis clinics. Until 2011, the government paid clinics for each dosage of an anti-anemia drug administered, a practice that led to concern that clinics were overusing the drug. But after adopting a flat fee for dialysis, the use of the drug plunged, while the dialysis companies’ earnings margins rose. That prompted Congress to order a cut in the drug fee.
Some outside experts say the industry is now effectively enlisting patients and members of Congress as a lobbying tool to protect their payments. The real problem, they say, is that the industry continues to open or acquire new clinics even as growth in the number of patients on dialysis nationwide has slowed.
“Patients should not be used as pawns in a series of scare tactics to protest a change in a payment,” said Richard Berkowitz of Skokie, Ill., who said he was repeatedly pressured when he recently visited his dialysis clinic to sign a petition protesting the cuts, even though he routinely does dialysis on his own at home."
"But sometimes sound policy goals collide with short-term fiscal decisions. In the recent law averting the last fiscal cliff standoff, Congress required Medicare to reduce reimbursement to dialysis providers to account for the decline in the use of certain dialysis drugs. Pursuant to that change, dialysis providers are now facing a proposed twelve percent reduction in Medicare payment when the program currently pays only 3-4 percent above providers’ costs. Implementation of this proposal would mean that for the first time in the forty years that the federal government has covered Americans on dialysis, Medicare will no longer cover the cost of delivering that care."
Bottom-line - I hope the lobbying doesn't work. Dialysis providers are already making a healthy profit (see Table below) and they have done very well under the bundle. As costs in certain areas like medications go down, the bundled payment should go down. Besides, the government should not be paying for investments in other areas like new clinics or line the pockets of executives or investors. Arguing that patients will be denied care is a scare tactic that providers wheel out each time anyone tries to cut into profitability.
DaVita's Financial Snapshot (Source: Yahoo Finance)
| Profitability |
| Profit Margin (ttm): | 5.78% |
| Operating Margin (ttm): | 16.35% |
|
| Fiscal Year |
| Fiscal Year Ends: | Dec 31 |
| Most Recent Quarter (mrq): | Jun 30, 2013 |
|
