Fiscal Cliff Healthcare Policy Fix: Good for Rural Patients and Taxpayers
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By Grace Boatright
Rarely do federal lawmakers come upon a policy that can expand access to critical health care services and simultaneously save taxpayers money.
But according to a new report from the Congressional Budget Office, a tweak in the way Medicare pays for certain kidney disease drugs could do just that - preserving the availability of crucial treatments to rural patients and saving the program billions.
At issue is Medicare's handling of a few "oral-only" dialysis medications designed for end-stage renal disease, the most severe version of chronic kidney disease.
In 2011, Medicare switched to a payment system that reimbursed for all dialysis-related treatments in one "bundled" rate. Instead of paying prevailing market prices, the government opted to compensate health care providers according to a formula.
But the Centers for Medicare and Medicaid Services - the government agency that oversees the program - decided to exempt certain oral dialysis medications from the bundle through 2014. January's fiscal cliff deal extended the exemption through 2016.
Instead, those drugs will continue to be dispensed by local pharmacies through Medicare Part D, the prescription drug benefit.
That's the right call. Setting appropriate compensation is a particularly time-consuming and complicated task. It requires a remarkable volume of medical data. If officials had simply thrown the oral dialysis treatment into the price-control bundle, they almost certainly would have set compensation too low.
Indeed, the Government Accountability Office explicitly warned of "a potential underestimate of the total cost" and said that there were still "questions about payment adequacy beginning in 2014."
If policymakers had proceeded with bundling the oral dialysis medications, patients could have lost access to them. Health care providers serving the Medicare population would have started losing money when dispensing these drugs. Many would have been forced to stop offering them - leaving patients in the lurch.
Patients suffering from end-stage renal failure are some of the most vulnerable in the entire Medicare population. They typically require at least three rounds of treatment every week. Even minor disruptions to their health care regimens can lead to serious deterioration of their already fragile condition.
Those in rural areas would have been hit particularly hard. Many communities outside urban centers depend on just one or two health clinics to meet their medical needs. A single clinic may serve patients coming from 50 miles away or more. These clinics typically run on very thin profit margins and depend heavily on Medicare payments to stay afloat.
Aware of the potential adverse consequences in rural communities, legislators responded by maintaining these oral medicines under the Part D prescription drug benefit. This move helped to maintain the viability of small clinics servicing rural communities.
This was good for patient access but, according to the government budget accountants, also good for the Medicare program and taxpayers because it saves money. The CBO projects that extending the exemption through 2018 would save taxpayers approximately $1.3 billion.
Sens. Max Baucus, D-Mont., and Orrin G. Hatch, R-Utah, played particularly important roles in marshalling support for the extension of the exemption through 2016, as part of the fiscal cliff deal earlier this year. They should be commended for championing the interests of rural Americans.
Because Congress acted in the best interests of rural patients, Medicare enrollees suffering from renal disease can now rest assured that they will retain access to treatments they need.
Grace Boatright is the legislative director for the National Grange, an organization that advocates for rural America.
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