Director, Regulation Management (00REG1)

April 12, 2010

Director, Regulation Management (00REG1)

Department of Veteran Affairs

801 Vermont Avenue, NW – Room 1068

WashingtonDC20420

Dear Sir or Madam:

The National Kidney Foundation (NKF) is the largest kidney patient organization of its kind in the United States. We are responding to the Proposed Rule, “Payment for Inpatient and Outpatient Health Care Professional Services at Non-Department Facilities and Other Medical Charges Associated with Non-VA Outpatient Care,” (Federal RegisterRIN2900-AN37, February 18, 2010), on behalf of our thousands of members with kidney failure who would not survive if they did not have access to regular kidney dialysis treatments.

The rulemaking proposes the adoption of Medicare payment schedules for kidney dialysis services in lieu of the rates that have been negotiated by the VA for the care of veterans with kidney failure when VA facilities are not capable of furnishing such services economically. The ostensible goal is to ensure consistent, predictable medical costs and control expenditures. As stated in the Proposed Rule, approximately 10,500 veterans received dialysis treatment at non-VA facilities at VA expense in 2008 and VA’s outpatient dialysis facility expenditures could decrease by 39% if Medicare pricing were utilized. On the other hand, the Proposed Rule does not take into account the potential negative impact on access to, and quality of, care for veterans who need dialysis treatments three or more times a week, 52 weeks a year.

Many dialysis clinics could be forced to close if the care for all or virtually all of their patients were to be reimbursed at Medicare rates. The Medicare Payment Advisory Commission (MedPAC) reports that, between 2007 and 2008, the cost per treatment for dialysis services reimbursed under the “composite rate” was greater than the Medicare update to the composite rate during that period. MedPAC projects that the Medicare margin for freestanding dialysis facilities will be 2.5 percent in 2010. This projected positive margin, if realized, is unlikely to persist. It does not take into account the 2 percent reduction in total spending that the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) mandated to begin in 2011 under a new dialysis “bundled” payment method. (Please see MedPAC’s March 2010 Report to Congress on Medicare Payment Policy.) The Centers for Medicare and Medicaid Services (CMS) published a Proposed Rule for bundled reimbursement of dialysis services in the Federal Register for September 29, 2009 but the Final Rule has yet to be issued. The

National Kidney Foundation has urged CMS to proceed with caution in implementing this new bundled prospective payment system for dialysis care because of the potential for unintended consequences that might ensue in the care for the vulnerable Medicare beneficiaries who have kidney failure. Changing VA reimbursement policy for dialysis care at the same time that Medicare is implementing a revolutionary End Stage Renal Disease payment system would only exacerbate the potential for negative impact on patient care for the veterans who require dialysis.

Veterans who reside in remote or rural areas of the United States often need access to dialysis at non-VA facilities because there are no VA facilities where they live or the existing VA facilities in their area do not have dialysis units. Non-department dialysis clinics in remote or rural areas are often sole providers in their communities. If these clinics were to close because of change in payer mix, veterans with kidney failure could face limited or no options for life-saving care and the VA might be pressured to initiate direct provision of dialytic care at great expense. In large metropolitan areas, where there are VA facilities with dialysis clinics, transportation barriers often make those VA dialysis clinics inaccessible. If community-based dialysis units in large metropolitan areas have to close because of change in payer mix, veterans would incur significant personal transportation expenses, three or more times a week, 52 weeks a year, to access care at VA dialysis facilities. They might also be more likely to skip dialysis treatments. This could result in hospitalizations and emergency room visits that would mitigate any potential savings from the proposed payment reductions. Finally, if community-based dialysis units in large metropolitan areas have to close because of change in payer mix, urban VA dialysis clinics might have to add shifts and incur overtime payments to dialysis staff to meet the needs of veterans with kidney failure.

The Proposed Rule solicits comments from the community as to how VA may best transition to a new reimbursement model. First, it is the recommendation of the National Kidney Foundation that VA postpone changes in payment policy until the new Medicare bundled prospective payment system is fully operational in 2014, given the concerns mentioned above. Our second recommendation is that the VA continue to honor existing contractual arrangements for the provision of dialysis services at non-departmental facilities until those commitments expire and gradually introduce the new payment system in place of those contractual arrangements.

Sincerely,

Bryan N. Becker, MD

President

National Kidney Foundation, Inc.