The Most Costly Earmark in S-CHIP

[unhappycamper]

The Most Costly Earmark in S-CHIP
Merrill Goozner
Posted August 29, 2007 | 10:26 PM (EST)


Two weeks ago, a front page story in the New York Times revealed that House version of the children's health insurance bill had secretly funneled hundreds of millions of dollars to favored hospitals -- a violation of the Democrats' pledge to remove the shroud of secrecy surrounding earmarks. The story was alarming because it provided additional ammunition to a Bush administration that was already ideologically opposed to expanding the program that provides government-run health insurance to millions of uninsured kids.

Last week, I learned that the bill contains another unheralded earmark, also unrelated to children's health. This one, too, funnels hundreds of millions of dollars to special interests. And unlike the hospital earmarks, which were a mere raid on the treasury, this earmark, given the Orwellian name "Quality Incentive Payments in the End Stage Renal Disease Program," will subject hundreds of thousands of Americans on dialysis to unnecessary risk, and will in all likelihood lead to premature deaths.

The legislation earmarks up to $300 million over the next three years for clinics that achieve certain quality benchmarks while treating the more than 300,000 Americans with failed or failing kidneys who receive dialysis through Medicare's End Stage Renal Disease (ESRD) program. Chief among those benchmarks is correction of the anemia associated with failing kidneys. The payments will go to clinics that raise 92 percent of their patients to a red blood cell count that's at least 33 percent of blood volume (or a hemoglobin count of 11 grams per deciliter).

The measure gives clinics a powerful incentive to continue using large quantities of one company's drug -- Amgen's Epogen, which stimulates red blood cell production. The House passed the bill even though the Food and Drug Administration recently issued a black box warning cautioning against overuse and the Center for Medicare and Medicaid Services rewrote its reimbursement guidelines to limit payments for overuse of the drug.


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uhc comment: I wonder who put that earmark in the bill?

[REP]

1. Yikes

...and it would simpler to prevent the anemia in the first place by easing back on low-protein diets pre-dialysis, which numerous studies (which I am too tired to go hunt down this minute) have shown do not delay progression of ESRD but do cause patients to present in much worse shape (malnourished, weak, anemic, etc) than those who followed a diet with a normal protein portion.

Off to take my pills and cross my fingers that I stay at Stage 2 failure! (ESRD is Stage 5)

[leftchick]

2. an article from last year....

Looks like the bundle payment system was scrapped. This is horrible. :(

http://www.forbes.com/markets/2006/12/06/amgen-epogen-congress-biz-bizhealth-cz_kd_1206amgen.html

<snip>

A report issued by the U.S. Government Accountability Office on Tuesday provides a glimpse into the congressional committee's thinking. The report suggests changing the way Medicare pays for Epogen, Amgen's (nasdaq: AMGN - news - people ) multibillion-dollar anti-anemia drug. The changes, if implemented, would likely cut into Amgen's prodigious profits.

Epogen's main use is to treat anemia in patients with kidney failure, also known as end-stage renal disease. Such patients receive Epogen during dialysis treatments, which are usually covered by Medicare. In 2005, Medicare and Medicaid spent $2 billion on Epogen, more money than on any other drug. This year, Epogen sales to Medicare and Medicaid should total about $2.5 billion, accounting for 18% of Amgen's sales and 23% of its profit, according to Sanford C. Bernstein analyst Geoffrey Porges.

One reason Rep. Bill Thomas, the California Republican who is chairman of the revenue-raising Ways & Means Committee, called for the hearing was the publication last month of a study on dialysis, the blood-cleansing treatment used for kidney patients. The New England Journal of Medicine report found 20% of patients being treated for dialysis have red blood cell counts associated with increased risk of heart problems and death.

The GAO report notes that Medicare pays for certain dialysis services under a type of bundled rate, called a composite rate. For some dialysis-related drugs, including Epogen, Medicare also pays each time the drug is administered. The current system provides a financial incentive to use drugs, according to a report earlier this year by the Medicare Payment Advisory Commission, an independent federal body that advises Congress on issues affecting the Medicare program. Indeed, dialysis centers get 25% of their profits from the Medicare reimbursements they receive on Epogen, according to a Morgan Stanley report. Perhaps unsurprisingly, the average dose of Epogen quadrupled between 1991 and 2003.

The GAO recommended that Congress consider establishing a bundled payment system for all kidney-failure services, "including drugs, as soon as possible." In such a bundled payment system, a dialysis center is given a fixed sum of money and then chooses how to spend that sum on dialysis treatment and related drugs. Such a system gives dialysis providers an incentive to minimize expenditures, because it gets to keep what it doesn't spend.

Of course, that pits the treatment providers' profits against the best interests of patients. In a statement issued in response to the GAO report, Amgen said it is concerned that implementing a bundled payment system "without appropriate case-mix adjusters and quality safeguards could introduce financial incentives to underutilize services and could decrease the quality of care."