Dialysis industry faces bipartisan fire in House

The House Ways and Means Committee, frequently the setting for bitter partisanship under Chairman Bill Thomas (R-Calif.), will hold its final hearing of the 109th Congress today on an issue of bipartisan interest, much to the chagrin of one sector of the healthcare industry.

The House Ways and Means Committee, frequently the setting for bitter partisanship under Chairman Bill Thomas (R-Calif.), will hold its final hearing of the 109th Congress today on an issue of bipartisan interest, much to the chagrin of one sector of the healthcare industry.

The panel is set to grill representatives of the kidney-dialysis-provider industry, drug manufacturers and the Bush administration about the cost and safety of treating kidney-disease patients.

Thomas has an unusual ally on this issue in Rep. Pete Stark (D-Calif.), the incoming chairman of the panel’s health subcommittee, who has been at loggerheads with the chairman for most of their shared years on the committee.


Medicare has provided coverage for end-stage renal disease, or ESRD, for all persons diagnosed with the condition, regardless of age or economic status, since 1972. According to a Ways and Means Committee press release, the federal government pays for dialysis services for 93 percent of all patients who receive them.

The government also has been spending more and more on the program: Spending on ESRD benefits nearly doubled between 1998 and 2003, the committee statement says.

“Medicare has not been a prudent purchaser in this arena, given its rapid growth in spending,” Thomas said in the statement.

One of the factors contributing to the escalating costs is higher spending on prescription drugs to treat anemia, a debilitating side effect of dialysis treatments. Most patients with anemia are given the drug Epogen, which is manufactured by Amgen.

Some lawmakers, including Thomas, have proposed restructuring the payment system for dialysis services in ways that the facilities and their drug suppliers do not support.

Under the current system, providers are paid only  to perform the dialysis services and for related costs but their rates are not adjusted on an annual basis, unlike payments to hospitals and other providers that serve Medicare patients. Drugs such as Epogen are billed separately.


Under the proposed reforms, the payments for services, drugs and other expenses would be “bundled” together into a single payment per treatment session.

In April, the Centers for Medicare and Medicaid Services (CMS) adopted a controversial payment policy for dialysis treatments that generated immediate objections from Capitol Hill. Under the new standard, Medicare pays facilities for administering Epogen and similar drugs beyond the level deemed safe by the Food and Drug Administration (FDA).

The medication is given to patients to increase their red-blood-cell count in order to increase the level of hemoglobin, which carries oxygen in the blood. CMS now pays for the use of the drug until the blood has a higher level of hemoglobin than established by the FDA.

Immediately after CMS announced the new policy, Thomas wrote then-CMS Administrator Mark McClellan demanding an explanation for the agency’s departure from FDA standards.

“I cannot understand why CMS would knowingly contradict FDA findings,” Thomas wrote.

Last month, Stark joined Thomas on another letter on the subject, this time addressed to current acting CMS Administrator Leslie Norwalk, criticizing the policy as “a reimbursement incentive for providers to continue to increase doses” past the FDA-approved level.

The Thomas-Stark letter suggests that CMS’s policy encourages providers to use too much Epogen. “We are deeply concerned that the current CMS policy is not aggressive enough to stem the systemic abuse of Epogen, resulting in costs to taxpayers and potential health dangers to patients,” the lawmakers wrote.

Epogen and Johnson & Johnson’s Procrit have the same active ingredient, epoetin (also known as erythropoietin or EPO). Amgen also makes a similar drug called Aranesp. There are no generic versions of any of the three medications.

An analysis published by the journal Health Affairs in October notes that anemia drugs represent the largest medication expense in the Medicare program; in 2005, CMS spent $1.75 billion on the drugs, the article states, citing federal data.

“Liberalization of the coverage benefit for epoetin therapy over the years has created a financial incentive for its increased use,” the authors conclude.

The Government Accountability Office (GAO) issued a report yesterday on dialysis payments. The report also endorsed bundled payments for all aspects of dialysis treatment, including Epogen. This approach would “have advantages for achieving efficiency and clinical flexibility in treating ESRD patients,” the report states. CMS’s work on developing a new payment mechanism has been delayed, the GAO noted.

The GAO also states that the rise in spending on dialysis drugs has slowed in the last two years but the lack of competition against Epogen limits “the power of market forces to moderate price.”

In a statement released by the committee yesterday, Stark vowed to return to the issue next year and Thomas called for a “permanent solution.”

Research published in the New England Journal of Medicine the same day as the Thomas-Stark letter underscores the risks of higher doses of the medication without making a case for additional benefit, they wrote.

“The study finds no evidence to support the CMS [payment] policy,” Thomas and Stark wrote.

One of the studies concluded that using medication to increase hemoglobin to the CMS-approved level could be harmful and did not appear to have any benefit. The study specifically examined Procrit.

In response to the journal articles, the FDA issued an immediate “public health advisory” cautioning medical providers to heed its previously approved standard for hemoglobin.

The dialysis providers defend their practices and maintain that the researchers’ findings do not apply to their patients. According to their trade association, the Kidney Care Council, the studies examined the use of these drugs on patients who had anemia related to kidney disease but were not undergoing dialysis.

A Stark spokesman said that CMS did not respond to the November letter but the director of CMS’s Office of Clinical Standards and Quality defended the policy in an interview with the trade newsletter Inside CMS.

Echoing the dialysis providers, Barry Straube told the newsletter, “There was a jump to apply the two studies’ findings to the entire dialysis population.” Straube, who is also the agency’s chief clinical officer, downplayed the safety concerns by saying that the average amount of hemoglobin in patients was declining during the first few months of the new policy.