Effects of the prospective payment system on anemia management in maintenance dialysis patients: implications for cost and site of care

Controlling health care costs while providing quality care for individual patients and for the population as a whole is a goal of payers such as the Centers for Medicare & Medicaid Services (CMS). The United States employs a variety of billing systems for billing for health care services; two of the main categories are fee-for-service billings, in which costs for services are billed separately as line items in environments such as the emergency department (ED), and bundled payment billings, in which a diagnosis-related group (DRG) is billed as a set amount for a particular type of hospitalization (such as an admission for congestive heart failure). Costs related to end-stage renal disease (ESRD) patients receiving maintenance dialysis have been afforded special scrutiny by CMS, since these costs are vastly disproportionate to ESRD patients’ representation in the Medicare population. In 2011, CMS introduced the Prospective Payment System (PPS, or “the dialysis bundle”), an expanded capitated payment system encompassing a range of dialysis-related products and services [1]. This PPS was designed to create incentives for dialysis providers to control costs, especially for medications such as erythropoiesis-stimulating agents (ESAs) used to treat ESRD-related anemia. In so doing, CMS sought to decrease overall expenditures associated with the ESRD program by approximately 2 %. To help ensure that the PPS did not negatively affect patient care outcomes, CMS contemporaneously established the Quality Improvement Program [2]; this was initially designed to protect against the possibility that hemoglobin levels would drop unduly, although the metric for hemoglobin below 10 g/dL was later eliminated following a 2011 Food and Drug Administration ESA label revision [3].

While the temporal relationship between the introduction of the PPS and patterns of anemia management has been partially explored [4‐7], the extent to which less use of ESAs may be associated with more use of red blood cell (RBC) transfusions or an associated increase in transfusion-related costs is not fully established. Additionally, because the PPS does not include costs incurred outside the outpatient dialysis setting (e.g., those associated with hospitalization or outpatient transfusion centers), it is unclear whether costs and sites of care of anemia management may have partly shifted from one setting to other, more intensive settings (e.g., the ED).

Accordingly, we sought to examine how use of ESAs, intravenous (IV) iron, and RBC transfusions, along with their associated costs to Medicare, changed in the period immediately before and after introduction of the PPS. To do so, we used data from 2009 to 2011. At the same time, we sought to determine whether RBC transfusion rates were increasing in inpatient, outpatient, or ED settings. We hypothesized that while use of ESAs likely declined, as shown by others, use of IV iron and RBC transfusions, along with their associated costs, likely increased; if true, this would likely have the effect of not only increasing the use of blood products, a limited societal resource, but also of shifting some of the anemia management burden from dialysis providers to the institutions that administer most RBC transfusions, such as hospitals [4]. We reasoned that understanding the effects of the PPS could be important when designing future reimbursement policies or payment models, such as ESRD-specific accountable care organizations, aimed at controlling costs.

In this study, we sought to examine how the introduction of the expanded PPS and the ESA label change were associated with temporal changes in the patterns of ESA, IV iron, and RBC transfusion use, and to examine the costs and sites of care associated with anemia management in the period immediately before and after adoption of the PPS and the label change. This is an important issue; costs saved under the capitated PPS system, such as those for transfusions, could be shifted to hospitals because under the DRG system a hospital receives no additional payment, beyond that specified by the DRG, for a blood transfusion.

Overall Medicare payments to outpatient dialysis facilities for dialysis-related services declined on a PPPM basis from 2009 (pre-bundle) through 2011 (post-bundle), a finding consistent with previous work [10]. However, we also found increasing use of transfusions in the inpatient and, especially, observation stay and ED settings. Overall, these changes were modest, increasing by 0.25 per 1000 patient-month or less in the ED or during observation stays. Nevertheless, this phenomenon may represent a shift in the costs and sites of care for anemia management from the dialysis unit to more the expensive hospital-based care environment.

Collectively, it appears that the introduction of the PPS and the ESA label change have been associated with changes in anemia management in important ways. Patients dialyzing at the facilities we studied had lower hemoglobin concentrations on average, and more patients had concentrations below the threshold of 10 g/dL at any given time, findings noted by others [6, 7, 11, 12] that are likely due to changes in patterns of anemia-related medication use. Our study cannot determine whether this represents an improved treatment approach compared with approaches used before the PPS; indeed, results from clinical trials indicate that lower hemoglobin levels are associated with lower risk of cardiovascular events [13, 14].

Collectively, these findings suggest that an ESA-sparing anemia-management strategy resulting in lower mean hemoglobin levels might be the best overall approach for dialysis patients, even if it results in a modest increase in transfusion rates.

The present findings should be considered in the context of transfusion trends occurring in the general population. As of 2011, there was an excess of whole blood and RBC transfusions in the US of about 5.2 % [15], a trend that appears likely to continue [16]. Overall, whole blood and RBC transfusions decreased nationally by 8.2 % in 2011 compared with 2008. Given this trend, the relative increase in transfusions in dialysis patients may be somewhat greater than it initially appears. It is very unlikely, however, that changes in transfusion practices in dialysis patients could seriously tax national blood reserves.

Thus, it is appropriate for society to debate how to optimally use this resource. This is especially true when alternative treatments are available that can partially ameliorate the condition (e.g., ESAs or IV iron) [17]. Additionally, transfusions are not without risk, as they are associated with inflammatory responses (which may in turn exacerbate other conditions) [18], sensitization (which increases the difficulty of obtaining matches for organ transplant) [19], transmission of blood-borne diseases [20], and, likely, other infections [21]. When individualizing therapy, these risks of transfusions should be balanced against the risks of other therapies. IV iron, for example, constitutes an oxidative stress and may contribute to the inflammatory milieu characteristic of dialysis patients, while injudicious use of ESAs has been associated with an increased risk of cardiovascular events.

Additionally, an increase in transfusions has implications for costs and resource use, for which setting is a major determinant. Transfusions can occur in several settings, each of which represents a unique clinical environment, results in different patient experiences, entails specific costs, and uses different reimbursement mechanisms. That transfusion use increased roughly twice as much in the observation environment compared with the ED environment may more generally reflect hospitals increasing use of the observation stay mechanism [22]. Possibly, hospitals are more readily transferring patients from the ED to the observation areas, given that transfusions typically take several hours to prepare and administer and EDs typically focus on rapid patient turnaround. However, we cannot be certain that this is the case.

In the face of increasing overall use of observation stays, the non-trivial 13.9 % increase in ED transfusions over the study period invites particularly close scrutiny. The ED is inherently a suboptimal environment in which to administer transfusions because it is cost-intensive to the facility and time- and space-limited. Transfusions typically require several hours to administer, and even if administered more quickly while the patient undergoes acute hemodialysis, the time and resource investment is substantial in the hyperacute ED setting. As a particularly expensive site at which to render care, the ED may not be the most appropriate place to address what may be, at least in part, a chronic medical issue. Whether EDs are indeed being used more often for transfusions, or whether patients are more likely to receive RBC transfusions when they arrive at an ED with an acute illness with lower mean hemoglobin concentrations is uncertain, and should be investigated.

Transfusions that occur in the inpatient setting also have unique but important cost implications. Inpatient transfusion costs, which are identified under the DRG system, cannot be directly addressed by our study design. However, inpatient transfusions represent a cost currently borne by hospitals. Unless unrecognized cost efficiencies have been realized in the inpatient RBC transfusion process, hospitals may be bearing the costs of changes in outpatient management if there have been no concomitant changes to the Medicare DRG-based reimbursement system, effectively representing cost shifting from dialysis providers and the Medicare ESRD program to hospitals. However, because we cannot directly account for inpatient costs with our present study, we cannot directly demonstrate such cost shifting.

Costs putatively borne by hospitals appear to be more than offset by overall savings to Medicare. As has been demonstrated by a US Government Accountability Office report and in several recent publications, the new PPS, coupled with the 2011 ESA label revision by the US Food and Drug Administration, resulted in an approximately 25 % reduction in ESA use compared with pre-2011 levels, similar to our estimates [23, 24]. Our findings regarding the association of the PPS and ESA label change with patient hemoglobin concentrations and RBC transfusion rates are also broadly concordant with the literature, and with CMS’ own claims-monitoring data and data from the US Renal Data System, namely an increase in the rate of RBC transfusions by 25 to 40 % (despite fluctuations driven by the completeness of the available information), a decline in facility-wide hemoglobin concentrations, and an increase in the percentage of patients with hemoglobin concentrations below 10 g/dL. While prior work has provided important estimates of the payer burden associated with outpatient RBC transfusions, including costs associated with monitoring, laboratory testing, and associated complications, it has not fully considered the effects of the bundle or the ESA label change on outpatient transfusion costs on a PPPM basis. Such costs, although publicly available via Medicare facility cost reports, which include financial data related to provider costs, revenues, and operating margins, are available only in raw format with minimal levels of analytical processing [25]. While ESAs, iron, and transfusions are complementary therapies for anemia management, each has its own unique risks and benefits. A growing tolerance for lower mean hemogloblin levels in dialysis patients likely resulted in non-trivial overall savings for Medicare, when the effects of the PPS, the Quality Improvement Program withholds, and other factors are taken into account.

Of note, we made no attempt to ascertain the specific indication for transfusions. This would be a challenging exercise, since a transfusion may occur in the setting of an acute exacerbation of another disease (such as a cardiac or pulmonary disorder), which may be coded as the principal reason for seeking treatment. As such, we cannot determine precisely why a given patient receives a transfusion. This does not, however, undermine our finding that transfusions have increased in the ED, observation, and inpatient settings. Possibly, patients who present to these settings with, on average, lower hemoglobin levels than in the past receive transfusions from providers who are less tolerant of anemia than nephrologists, for whom management of substantial anemia is a routine clinical occurrence.

Our study is subject to a number of important limitations. Our data are observational, so granular patient detail is lacking. Additionally, in more recent years, transfusion rates appear to have declined from a peak after the PPS. This could be due to providers’ increasing confidence, experience, and familiarity with lower mean hemoglobin levels in dialysis patients, or to providers adapting to hospital-led initiatives to limit blood transfusions. Thus, our work may not be predictive of the future transfusion landscape for dialysis patients. Also, billing claims are an imperfect source from which to determine how medical care (including transfusions) is rendered, since they are designed to capture the payment, rather than strictly clinical, aspects of care. Even so, we followed previously published methodology where possible [5, 8]. While it is possible that additional transfusion-related adverse events may have been recorded in 2011 relative to 2010 because of the increase in the fields available for International Classification of Diseases, Ninth Revision, Clinical Modification diagnosis codes from 10 to 25, the adverse events we examined were of substantial clinical significance, and as such unlikely to occupy positions below the top 10. Additionally, as stated, we cannot directly measure inpatient transfusion costs borne by the hospital, so it is uncertain whether these costs have indeed increased; to fully understand the payer impact of a rise in inpatient transfusions, novel approaches capable of attributing inpatient hospitalizations to the need for RBC transfusions to manage anemia in chronic kidney disease are needed. Likewise, we cannot directly measure savings attributed to less use of ESAs, since ESA costs are now subsumed in the PPS. Also, as stated, the introduction of the PPS coincided with an ESA label change, and we cannot determine how much of the changes we observed were due to introduction of the PPS or to the label change or other factors. Also, as an observational study, this study cannot definitively determine causality. For example, it is uncertain whether RBC transfusions are being administered to acutely ill patients in EDs because of changes in anemia practice patterns or for other reasons. Our study was not designed to address the potential impact of these changes on outcomes such as mortality and cardiovascular events. It may well be the case that recent changes in anemia management have had a beneficial effect on morbidity and mortality in dialysis patients; this issue awaits more definitive study. We also did not undertake specific case-mix adjustment in this analysis. Review of United States Renal Data System data suggests that the distribution of causes of ESRD, the mean age at dialysis initiation, and the spectrum of comorbidity burden did not change materially over this period, making potential changes in case mix unlikely to explain our findings. Finally, our findings are limited to patients who were covered by Medicare Parts and A and B and who were dialyzing in facilities that fully opted in to the PPS at the earliest opportunity.

In conclusion, the introduction of the expanded PPS appears to be associated with less ESA and IV iron use, lower hemoglobin concentrations, and greater use of RBC transfusions. Overall Medicare payments to dialysis facilities appear to have decreased modestly. However, transfusion use has increased in both the outpatient setting (including ED visits and observation stays, which are billed as outpatient visits when patients are not subsequently admitted) and the inpatient setting. While we cannot definitively determine whether inpatient transfusion costs borne by the hospitals have increased, it appears likely that the PPS has been associated with cost shifting from dialysis facilities to hospital-based environments. No conclusions can be drawn from this study as to whether this treatment approach has benefitted or harmed patients receiving maintenance dialysis. Necessary and important future attempts to control costs should proceed with an understanding that a reduction in potentially avoidable interventions and a shift toward use of less-costly and less-acute health care settings are also important goals.