Congress urges reform for Epogen reimbursement

January 22, 2007

Last month, the House Ways and Means Committee held a hearing on patient safety and quality issues regarding end-stage renal disease (ESRD) treatment. In his opening remarks, outgoing committee chairman Rep. Bill Thomas (R, Calif.) acknowledged that Medicare payments for the treatment of ESRD increased by almost 50% between 1998 and 2003. In fact, epoetin alfa (Epogen, Amgen) has been identified as the single largest drug expenditure in Medicare Part B each year.

"In addition," Thomas said, "there are long-standing safety concerns about whether patients receiving treatment for ESRD are actually being harmed by the perhaps unnecessarily high doses of anemia drugs they are prescribed." While the Food & Drug Administration has determined that epoetin alfa is necessary only when patients' hematocrit levels are at 30% to 33%, the Centers for Medicare & Medicaid Services allows for reimbursement at values of 39% or higher.

"So the question is one not only of whether taxpayer money is being spent on a monopoly drug, but also what is reasonable and appropriate from a healthcare point of view," Thomas said.

In its report to the committee, released the day before the hearing, the GAO asked Congress to consider establishing a bundled payment for all ESRD services as soon as possible. Walker said it "would encourage facilities to provide services efficiently." In particular, under a fixed, bundled rate for a defined episode of care, facilities would not have the incentive to provide more ESRD drugs than clinically necessary. Thus, with fewer incentives to prescribe a particular drug or treatment, bundled payments would afford clinicians more flexibility in decision-making.

Leslie Norwalk, acting administrator of CMS, given an opportunity to defend CMS' position on this issue, said, "To promote appropriate usage, CMS' monitoring policy considers both hematocrit levels and erythropoietin dosage levels." Current clinical guidelines call for maintaining the hematocrit level of patients on erythropoietin within a narrow target range of 33% to 36%. Factors such as nutritional status, infection, and bleeding may cause the hematocrit to fluctuate, so it is not easy to manage patients to this range."

Norwalk said that if frequent, significant changes in doses of anemia-management drugs are imposed on these existing fluctuations, patient hematocrit fluctuations can become "even more variable and difficult to interpret and manage," especially within the narrow target range of 33% to 36%. "Under CMS' newly revised monitoring policy, Medicare expects a 25% reduction in the dosage of erythropoietin for patients whose hematocrit exceeds 39%," she said. If the dosage is not reduced, she noted, payment is made for the drugs as if the reduction occurred.

"The monitoring policy clearly articulates that providers should adhere to the FDA label instructions on erythropoietin," Norwalk said. "The instruction to carriers to initiate monitoring when the hematocrit reaches 39% ... establishes a marker at which payment must be reduced because the reported hematocrit level was not maintained at levels consistent with FDA labeling."

In terms of bundled payment reimbursement for ESRD care, "many Medicare providers have urged a shift from the current model of paying independently for dialysis treatments and separately billable drugs to a system of bundled payment," Norwalk explained. "CMS is generally supportive of such reforms."

CMS believes a bundled payment system should promote efficiency and clinical flexibility for ESRD facilities, and the system should guard against incentives to undertreat or "cherry-pick" patients to maximize facility profits. Accomplishing these goals, Norwalk said, will require research to support the development of an adequate case mix adjustment for a fully bundled system and mechanisms to ensure beneficiary protections and promote quality care.