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Kidney Failure and the Federal Government

Richard A. Rettig and Norman G. Levinsky, Editors

Committee for the Study of the Medicare End-Stage Renal Disease Program

Division of Health Care Services

INSTITUTE OF MEDICINE

NATIONAL ACADEMY PRESS
Washington, D.C.
1991



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Kidney Failure and the Federal Government Kidney Failure and the Federal Government Richard A. Rettig and Norman G. Levinsky, Editors Committee for the Study of the Medicare End-Stage Renal Disease Program Division of Health Care Services INSTITUTE OF MEDICINE NATIONAL ACADEMY PRESS Washington, D.C. 1991

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Kidney Failure and the Federal Government NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, D.C. 20418 NOTICE: The project that is the subject of this report and its technical appendixes was approved by the Governing Board of the National Research Council, whose member are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for this report were chosen for their special competencies and with regard for appropriate balance. The Institute of Medicine was chartered in 1970 by the National Academy of Sciences to enlist distinguished members of the appropriate professions in the examination of policy matters pertaining to the health of the public. In this, the Institute acts under both the Academy’s 1863 congressional charter responsibility to be an adviser to the federal government and its own initiative in identifying issues of medical care, research, and education. This study was supported by the Health Care Financing Administration, U.S. Department of Health and Human Services, under Cooperative Agreement No. 14-C-99338/3-02. Library of Congress Cataloging-in-Publication Data Institute of Medicine (U.S.). Committee for the Study of the Medicare ESRD Program. Kidney failure and the federal government / Committee for the Study of the Medicare ESRD Program, Division of Health Care Services, Institute of Medicine ; Richard A. Rettig and Norman G. Levinsky, editors. p. cm. Includes bibliographical references and index. ISBN 0-309-04432-4 1. United States. Medicare Bureau. End-Stage Renal Disease Program. 2. Chronic renal failure—Government policy—United States. 3. Medicare. I. Rettig, Richard A. II. Levinsky, Norman G. (Norman George), 1929- . III. Title. [DNLM: 1. Health Policy—United States. 2. Kidney Failure, Chronic—economics—United States. 3. Kidney Failure, Chronic—therapy. 4. Medicare—economics. WJ 342 I593k] RA645.K5157 1991 362.1'9614'00973—dc20 DNLM/DLC 91-15611 for Library of Congress CIP Copyright © 1991 by the National Academy of Sciences No part of this book may be reproduced by any mechanical, photographic, or electronic process, or in the form of a phonographic recording, nor may it be stored in a retrieval system, transmitted, or otherwise copied for public or private use, without written permission from the publisher, except for the purpose of official use by the United States Government. Printed in the United States of America The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and religions since the beginning of recorded history. The image adopted as a logotype by the Institute of Medicine is based on a relief carving from ancient Greece, now held by the Staatlichemussen in Berlin.

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Kidney Failure and the Federal Government COMMITTEE FOR THE STUDY OF THE MEDICARE ESRD PROGRAM NORMAN G. LEVINSKY, M.D., Chair, Department of Medicine, Boston University Medical Center, Boston, Massachusetts CARMELLA A. BOCCHINO, R.N., M.B.A., Nursing Economics, Washington, D.C. CLIVE O. CALLENDER, M.D., Department of Surgery, Howard University Hospital, Washington, D.C. CHRISTINE K. CASSEL, M.D., Department of Medicine, The University of Chicago Medical Center, Chicago, Illinois ROGER W. EVANS, Ph.D., Battelle Human Affairs Research Center, Seattle, Washington RONALD M. FERGUSON, M.D., Ph.D., Department of Surgery, Ohio State University College of Medicine, Columbus, Ohio SHELDON GREENFIELD, M.D., New England Medical Center Hospitals, Boston, Massachusetts PHILIP J. HELD, Ph.D., The Urban Institute, Washington, D.C. SUSAN M. JASKULA, A.C.S.W., Renal Dialysis of St. Louis, Inc., St. Louis, Missouri J. MICHAEL LAZARUS, M.D., Department of Medicine, Brigham and Women's Hospital, Boston, Massachusetts JOHN E. LEWY, M.D., Department of Pediatrics, Tulane University School of Medicine, New Orleans, Louisiana C. RICHARD NEU, Ph.D., The RAND Corporation, Santa Monica, California MARJORIE J. POWERS, Ph.D., R.N., Department of Medical and Surgical Nursing, University of Illinois, Chicago, College of Nursing, Chicago, Illinois JOHN H. SADLER, M.D., Department of Medicine, University of Maryland School of Medicine, Baltimore, Maryland PAUL K. WHELTON, M.D., Johns Hopkins University Schools of Medicine and Public Health, Baltimore, Maryland MARSHA WOLFSON, M.D., Department of Medicine, Portland VA Medical Center, Portland, Oregon

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Kidney Failure and the Federal Government Study Staff Division of Health Care Services KARL D. YORDY, Director RICHARD A. RETTIG, Study Director JOEL H. BROIDA (1989) YEN-PIN CHIANG, Research Associate ANNE PAGE CHIAPELLA, Research Associate DIANE B. MURDOCK, Research Associate GREGORY P. YOUNG, Research Associate DOUGLAS JOHNSON, Research Assistant NAOMI H. HUDSON, Project Secretary BRENDA A. PATTERSON, Project Secretary

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Kidney Failure and the Federal Government Acknowledgments This report results from the deliberations of the Institute of Medicine Committee for the Study of the Medicare End-Stage Renal Disease Program and its recommendations reflect the judgments of the committee. The actual preparation of the report under the direction of the committee has been accomplished by the collective efforts of committee members, staff, and other contributors. The committee wishes to acknowledge its gratitude for these various contributions. The committee thanks the authors of the commissioned papers and contract reports for their invaluable input to the deliberations of the committee and to its report. These experts include: William Amend, Marjorie A. Cahn, Harold I. Feldman, Richard N. Fine, Jose R. Garcia, Daniel S. Gaylin, Frank A. Gotch, Victor M. Hawthorne, Philip J. Held, Prakash Keshaviah, Michael J. Klag, Susan L. Laudecina, Bernard Lo, Nathan W. Levin, Edith T. Oberley, Mark V. Pauly, Anna Pesce, Victor E. Pollack, Drummond Rennie, Ash Seghal, Jonathan Showstack, and Constance S. Thomas. Their specific papers and reports are listed in Appendix C. In particular, it thanks Robert A. Wolfe for his essay, "Survival analysis methods for the End-Stage Renal Disease (ESRD) program of Medicare," published as Appendix D. The committee expresses its appreciation to those individuals and organizations who testified before its two public hearings (Appendixes E and F), to the participants in the three workshops on ESRD staffing, kidney transplantation, and black and nonwhite renal failure patients (Appendixes G, H, and I), and to the participants in the patient focus groups (Appendix J). The committee benefited from the work of the following consultants: Marcia F. Clark, Betty C. Crandall, John G. Eresian, Judith R. Lave, Dale Lupu, Naomi Naierman, and Winfred W. Williams. The committee wishes to acknowledge the specific contributions of the

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Kidney Failure and the Federal Government following individuals to the particular chapters of the report. The study director, Richard A. Rettig, had primary responsibility for preparation of the report. He and the committee chairman, Norman G. Levinsky, edited the entire document and prepared the Summary and Chapter 1. The other contributors to specific chapters were: Chapter 2, Gregory P. Young and Edith T. Oberley; Chapter 3, Christine K. Cassel, Alvin W. Moss, Richard A. Rettig, and Norman G. Levinsky; Chapter 4, Anne P. Chiapella, with the assistance of Paul W. Eggers; Chapter 5, Anne P. Chiapella; Chapter 6, Yen-Pin Chiang and Gregory P. Young; Chapter 7, Gregory P. Young and Yen-Pin Chiang; Chapter 8, Richard A. Rettig, Gregory P. Young, and Douglas Johnson; Chapter 9, Diane B. Murdock and Yen-Pin Chiang; Chapter 10, Richard A. Rettig and Yen-Pin Chiang; Chapter 11, Diane B. Murdock and Yen-Pin Chiang; Chapter 12, Richard A. Rettig, Sheldon Greenfield, John H. Sadler, and Klemens B. Meyer; Chapter 13, Richard A. Rettig; and Chapter 14, Richard A. Rettig and Anne P. Chiapella. Several members of the Institute of Medicine's professional staff contributed to this report. Karl D. Yordy, as Director of the Division of Health Care Services, provided valuable guidance over the duration of the project. Marilyn J. Field made very useful comments on a draft of Chapters 9, 10, and 11. Similarly, Kathleen N. Lohr reviewed a draft of Chapter 12 and, during the time the two projects overlapped, kept us informed of the progress of the Institute of Medicine's study of quality assurance in the Medicare program. The study and the resulting report would not have been possible without the dedicated support of the IOM staff, including Naomi Hudson, project secretary in 1990; Brenda Patterson, project secretary in 1989; H. Donald Tiller, administrative assistant; and Lisa Chimento and Nina Spruill, financial specialists. Wallace Waterfall provided helpful editorial advice. Finally, support for this study was provided by the U.S. Department of Health and Human Services, Health Care Financing Administration, through a cooperative agreement (No. 14-C-99338/3-02). At HCFA, we thank Charles Booth and Bernadette Schumaker, Bureau of Policy Development; Paul Mendelsohn and Suzanne Rohrer, Health Standards and Quality Bureau; Kathy Sagel and Roger Milam, Bureau of Data Management and Strategy; and Paul W. Eggers and Joel Greer, Office of Research. Our special thanks go to Carl Josephson, project officer, Office of Research.

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Kidney Failure and the Federal Government Contents List of Tables and Figures   ix Part I Overview         Summary   3 1   Introduction   23 Part II Patients and Providers     2   Perspectives of ESRD Patients   39 3   Ethical Issues   51 4   The Patient Population   62 5   The ESRD Patient Population: Special Groups   85 6   Structure of the Provider Community   110 Part III Access     7   Access Problems of ESRD Patients   135 8   Access to Kidney Transplantation   167 Part IV Reimbursement and Quality     9   Medicare ESRD Payment Policy   191 10   Reimbursement Effects on Quality   212 11   Outpatient Dialysis Reimbursement Issues   236 12   Quality Assessment and Assurance   274

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Kidney Failure and the Federal Government Part V Data and Research     13   Data Systems   315 14   Research Needs   328 Appendixes     A   Glossary   335 B   Acronyms and Initialisms   347 C   Commissioned Papers and Contractor Reports   351 D   Survival Analysis Methods for the End-Stage Renal Disease (ESRD) Program of Medicare, Robert A. Wolfe   353 E   Institute of Medicine ESRD Study Committee Public Hearing, May 5, 1989, Chicago, Illinois   401 F   Institute of Medicine ESRD Study Committee Public Hearing on "Issues in Dialysis Reimbursement Rate-Setting," February 15, 1990, Washington, D.C.   403 G   Institute of Medicine ESRD Study Committee Workshop on ESRD Staffing, November 3, 1989, Washington, D.C.   405 H   Institute of Medicine ESRD Study Committee Workshop on Kidney Transplantation, December 13, 1989, Washington, D.C.   406 I   Institute of Medicine ESRD Study Committee Workshop on Black and Other Nonwhite ESRD Patients, May 15, 1990, Washington, D.C.   408 J   Institute of Medicine ESRD Study Committee ESRD Patient Focus-Group Participants   409 Index   411

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Kidney Failure and the Federal Government LIST OF TABLES AND FIGURES TABLES 1-1   Incidence and Prevalence of Patients in Medicare End-Stage Renal Disease (ESRD) Program, 1974–89   28 1-2   New Elderly and Diabetic End-Stage Renal Disease (ESRD) Patients as a Percentage of New Medicare ESRD Patients   29 1-3   Projections of Medicare End-Stage Renal Disease (ESRD) Patients to the Year 2000   30 1-4   Cumulative Percentage Change in Medicare End-Stage Renal Disease (ESRD) Benefit Payments, 1974–88 Nominal and Real-Dollar Payments   30 1-5   Growth of End-Stage Renal Disease (ESRD) Program: Patient Growth Versus Real-Dollar Benefit Payment Growth   31 1-6   End-Stage Renal Disease (ESRD) Benefit Payments by Type of Service, 1988,   32 1-7   Medicare End-Stage Renal Disease (ESRD) Benefit Payments, 1974–88,   32 1-8   End-Stage Renal Disease (ESRD) Expenditures in Department of Veterans Affairs, 1984–89 (millions of dollars)   33 4-1   Age of New Dialysis Patients, 1960–67   65 4-2   1967 Projections of New End-Stage Renal Disease (ESRD) Patients, 1968–77   66 4-3   New End-Stage Renal Disease (ESRD) Patients by Age, Gender, Race, and Primary Diagnosis, 1978–89   67 4-4   New End-Stage Renal Disease (ESRD) Patients per Million Population by Age, Gender, and Race, 1987   68 4-5   New End-Stage Renal Disease (ESRD) Patients per Million Population by Primary Diagnosis, Gender, and Race, 1988   69

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Kidney Failure and the Federal Government 4-6   Prevalent End-Stage Renal Disease (ESRD) Patients by Age, Gender, Race, and Primary Diagnosis, 1978–89   70 4-7   Gross and Unadjusted One-Year Mortality for All End-Stage Renal Disease (ESRD) Patients, 1978–88   73 4-8   Mortality for Medicare End-Stage Renal Disease (ESRD) Patients (ever entitled) Adjusted for Age, Race, Gender, and Primary Diagnosis, 1978–88 Patient Cohorts   75 4-9   One-Year Mortality (percent) for All End-Stage Renal Disease (ESRD) Patients, at Year of Incidence, by Age, Gender, Race, and Primary Diagnosis, 1978–88   76 4-10   One-Year Mortality (percent) for Dialysis Patients at Year of Incidence by Age, Gender, Race, and Primary Diagnosis, 1978–88   78 4-11   Five-Year Survival of Dialysis Patients by Country and Diagnosis of Diabetes   81 4-12   Medicare End-Stage Renal Disease (ESRD) Population Projections, Year 2000   82 5-1   Incidence and Prevalence of Pediatric End-Stage Renal Disease (ESRD) Patients, 1978 and 1987   86 5-2   Percentage of Pediatric End-Stage Renal Disease (ESRD) Patients with Functioning Graft, 1978 and 1987   87 5-3   Pediatric End-Stage Renal Diseases (ESRD) Patient Survival (percent) at One Year by Year of Incidence and Age Group, 1978 and 1987   88 5-4   New End-Stage Renal Disease (ESRD) Patients in 1978 and 1988, by Age Group   91 5-5   Patients with Diabetic Kidney Disease as a Percentage of Total End-Stage Renal Disease (ESRD) Patients, by Age Group   93 5-6   Percentage of U.S. Population with Definite Hypertension, 1976–80   96 5-7   Incidence of Treated Hypertensive End-Stage Renal Disease (ESRD) per 10 Million Population by Age Group for Blacks and Whites in 1988   98 5-8   End-Stage Renal Disease (ESRD) Treatment Modalities (percent) for Blacks and Whites on December 31, 1980, 1984, and 1988   104 5-9   Survival of Black Versus Other Dialysis Patients by Year of Incidence   104 6-1   Growth of Outpatient Dialysis Providers, 1980–88   112 6-2   Definitions of Dialysis Unit Size, Demand, Capacity, and Utilization   113 6-3   Outpatient Dialysis Providers, Independent Versus Hospital-Based, 1980–88   117 6-4   Outpatient Dialysis Providers, For-Profit Versus Not-For-Profit, 1980–88   120 6-5   Outpatient Dialysis Providers, by Profit Status and Type of Facility, 1980–88   121

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Kidney Failure and the Federal Government 6-6   Outpatient Dialysis Providers, by Facility Size, 1980–88   125 6-7   Outpatient Dialysis Providers, by Type of Facility, Profit Status, and Size, 1980–88   127 6-8   Hemodialysis Stations, by Type of Facility, Profit Status, and Size, 1980–88   128 7-1   Medicare Eligibility Status of Dialysis Patients, 1980–89   138 7-2   Percentage of Non-Medicare Patients Among Total Dialysis Patients, by State and Year, 1980–89   139 7-3   Percentage of Non-Medicare Patients Among Total Dialysis Patients, by City Versus State, and Year, 1980–87   141 7-4   Services of State Kidney Programs   144 7-5   Trends in State Kidney Program Expenditures   145 7-6   Department of Veterans Affairs (DVA) Expenditures for Dialysis Patients, 1980–89   147 7-7   ESRD Facility Capacity and Utilization, 1984 and 1988   159 7-8   Connecticut ESRD Patient Log   161 7-9   Percentage of Non-Medicare Total Dialysis Patients by State and Year, 1980–89   162     Appendix: Estimated Additional Program Expenditures Required for Universal Entitlement of Medicare ESRD Program, 1990–95   166 8-1   Number and Type of Kidney Transplant Procedures (Medicare and Non-Medicare), by Donor Type, 1980–89   169 8-2   One-Year Survival of Kidney Transplant Patients 1980, 1984, and 1988   170 8-3   Distribution of Kidney Transplants (percent) by Age and Type of Transplant, 1989   175 8-4   Percentage of Responses to Organ Transplantation/Donation Surveys, 1983, 1984, and 1987   181     Appendix: Estimated Additional Medicare ESRD Program Expenditures Required for Removing the 3-Year Eligibility Limit of Transplant Patients and the 1-Year Limit on Payment for Immunosuppressive Drugs, 1990–95   187 9-1   Comparison of the Inpatient Hospital Prospective Payment System (PPS) and ESRD Outpatient Dialysis Payment Policy   194 9-2   Medicare Payment for Facility Outpatient Dialysis Services   196 9-3   Medicare ESRD Benefit Payments, by Type of Service, 1974–87 (in millions of dollars and as percent of total)   206 10-1   Outpatient Dialysis Units: Staff Hours per Patient-Week, 1982 and 1987   219 10-2   Staffing Changes, 1986–1990: North Central Dialysis Centers, Chicago, Illinois   220 11-1   Injections for Per Year Complex Medications, Hemodialysis Outpatients, University of Cincinnati Medical Center and Dialysis Clinic, Inc.-Cincinnati, 1978–1989   240

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Kidney Failure and the Federal Government 11-2   Outpatient Dialysis Facilities, 1985: Distribution of Differences (in dollars) Between Facility-Specific Composite Rates and Audited Costs   246 11-3   Outpatient Dialysis Facilities, 1985: Distribution of Differences (in dollars) Between Facility-Specific Composite Rates and Reported (unaudited) Costs   248 11-4   Outpatient Dialysis Facilities, 1985: Comparison of Differences Between Reported (unaudited) and Audited Costs (in dollars)   250 11-5   Results of Alternative Scenarios for Rebasing and Updating the ESRD Composite Rate for All Dialysis Facilities   254 12-1   Conditions of Coverage for ESRD Providers   289 13-1   Medicare Data Sources and Data Files for ESRD Patients and Providers   317 D-1   Death Rates and Age Among All Black ESRD Patients in 1988   385 D-2   Survival Probabilities for ESRD Patients Incident in 1979   387 FIGURES 1-1   Medicare ESRD Benefit Payments   31 4-1   Number of ESRD Patients by Age Group, 1978–88   64 4-2   Number of ESRD Patients by Primary Diagnosis, 1978–88   64 4-3   Number of ESRD Patients, Actual and Projected, 1974–2000   83 5-1   ESRD Patients: Treatment Modality by Age Group, 1988   92 5-2   Age Distribution of New ESRD Patients, by Race, 1988   100 5-3   Distribution of Primary Diagnosis Leading to ESRD, by Race, 1986–88   101 5-4   ESRD Patients, by Race, 1978–88   103 5-5   Two-Year Survival of Transplanted Cadaver Kidneys, by Race, 1978–88   105 6-1   Outpatient Dialysis Units, 1980–88: Independent Versus Hospital-Based   118 6-2   Outpatient Hemodialysis Stations, 1980–88: Independent Versus Hospital-Based Units   119 6-3   Outpatient Hemodialysis Units, 1980–88: For-Profit Versus Not-For-Profit   123 6-4   Outpatient Hemodialysis Stations, 1980–88: For-Profit Versus Not-For-Profit Units   123 6-5   Outpatient Dialysis Units, by Size, 1980–88   126 8-1   Kidney Transplantation Procedures and ESRD Patients on Waiting Lists, 1980–88   171 9-1   Outpatient Dialysis Reimbursement Rates for Independent Units, 1973–89 (current and constant dollars)   198 12-1   Conceptual Framework of the Medical Outcomes Study   278

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