Nonbank Financial Companies

Floor Speech

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Mr. GRASSLEY. Mr. President, I have long worked for the continued viability of rural low-volume hospitals so that Medicare beneficiaries living in rural areas in Iowa and elsewhere in the country will continue to have needed access to care.

Today, I want to discuss another concern, one regarding low-volume dialysis clinics in rural areas and the kidney dialysis patients they serve.

Congress enacted a new end-stage renal dialysis, ESRD, bundled payment system in the Medicare Improvements for Patients and Providers Act of 2008 that takes effect next year.

I support the establishment of a fully bundled payment system for renal dialysis services.

It is intended to improve payments for ESRD services and to ensure access
to critical renal dialysis services, including those in rural areas.

It will also improve the quality of care for dialysis patients by requiring ESRD providers to meet certain standards through a new quality incentive program that is established for ESRD providers.

It establishes a permanent annual update for ESRD providers.

It also provides for payment adjustments in certain circumstances, such as payments for low-volume facilities and for dialysis facilities and providers in rural areas that need additional resources.

Last fall, the Centers for Medicare and Medicaid Services, CMS, issued a proposed rule to implement the new ESRD bundled payment system. That rule will be finalized later this year.

I am concerned that overall some of the proposed adjustments that reduce payments for dialysis treatment may be unduly low.

But today I want to focus on one issue in particular--the adjustment that CMS has proposed for low-volume facilities.

The legislation that established this new bundled payment system specifically requires CMS to adopt a payment adjustment of not less than 10 percent for low-volume facilities to ensure their continued viability with other facilities.

The Secretary was given the discretion to define low-volume facilities.

Unfortunately, CMS has proposed a very restrictive definition and set of criteria to qualify as a low-volume facility so the payment adjustment would only apply to facilities that furnish fewer than 3,000 treatments a year.

According to CMS, ``the low-volume adjustment should encourage small ESRD facilities to continue to provide access to care to an ESRD patient population where providing that care would otherwise be problematic.''

CMS also notes that low-volume facilities have substantially higher treatment costs.

Previously, CMS considered an ESRD facility with less than 5,000 treatments a year to be small.

But now CMS is proposing to limit eligible ESRD facilities to those with less than 3,000 treatments a year and requiring this limit to be met for 3 years preceding the payment year, along with certain ownership restrictions.

CMS has not proposed any geographic restriction that would limit the low-volume payment adjustment to dialysis facilities in rural areas.

Medicare reimbursement is already problematic for small dialysis organizations because they operate on very low Medicare margins.

According to the March 2010 report of the Medicare Payment Advisory Commission, MedPAC, large dialysis organizations have Medicare margins of 4.0 percent compared to other dialysis facilities with Medicare margins of only 1.6 percent.

MedPAC also found that rural dialysis providers have Medicare margins that average -0.3 percent compared to urban providers with positive margins of 3.9 percent, and they expressed concern that the gap in rural and urban margins has widened.

They project that Medicare margins will fall from an aggregate 3.2 percent margin in 2008 to an aggregate 2.5 percent in 2010.

If corresponding declines are seen in rural areas, negative margins for rural facilities will increase, and low-volume rural facilities will be hit even harder.

And this projection does not take into account any of the additional reductions that CMS has proposed as part of the new bundled payment system even though these reductions would have a significant adverse impact on small dialysis facilities.

Should the proposed restrictions on low-volume facilities be finalized, the continued viability of these small dialysis facilities will be questionable.

This will be especially true in rural areas, and beneficiary access to these critical dialysis services will be severely jeopardized.

Small rural dialysis clinics provide beneficiaries with end-stage-renal disease access to critically-needed dialysis services in medically underserved areas.

In some rural areas, a single clinic may be the only facility that furnishes this life-sustaining care.

Should the unduly restrictive treatment limit for low-volume facilities be finalized as proposed, small rural facilities with slightly higher treatment volumes will lose these essential low-volume payments.

Since rural dialysis facilities already face negative Medicare margins, many are likely to close, further limiting access to crucial dialysis services that these kidney patients depend upon to survive.

New facilities would not be eligible for low-volume payments until their fourth year of operation under the proposed rule, making it unlikely that other facilities would take the place of those that had closed.

The prospect of Medicare beneficiaries' losing access to these life-sustaining services is simply unacceptable.

I, therefore, urge CMS to modify the proposed restrictions for low-volume adjustments by raising the treatment limit to the existing 5,000 treatment definition for small rural dialysis facilities.

One of my constituents, Laura Beyer, RN, BSN, is the manager of dialysis at Pella Regional Health Center, a critical access hospital in rural Iowa. She has written an editorial about this problem and the financial crises that small outpatient dialysis facilities, such as Pella Regional Health Center, are facing. Her editorial will be appearing in Nephrology News in July.

I ask unanimous consent to have printed in the Record this editorial.

There being no objection, the material was ordered to be printed in the Record

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