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PART III
Access

Access to health care arises as a policy question because some individuals lack appropriate health care services. Access deals with limits to care, primarily financial barriers to care, especially the resources that enable individuals to purchase care. Medicare and Medicaid were enacted in 1965 to remove financial barriers to health care for the elderly and the poor. In 1972, Medicare was expanded to include those disabled, eligible for cash Social Security benefits, after a two-year period.

The Social Security Amendments of 1972 also established an entitlement to Medicare for most Americans individuals with permanent kidney failure. Medicare coverage meant that dialysis and kidney transplantation services would be covered as well as other medical services covered under the Medicare program. Despite this virtually universal coverage, a variety of access issues have arisen over the history of the program.

Congress, in the Omnibus Budget Reconciliation Act of 1987, asked the IOM to examine access for two groups of individuals with kidney failure—those eligible for Medicare benefits and those not eligible for such benefits. Chapter 7 addresses the problems of both groups. Chapter 8 deals with limits of access to kidney transplantation that may stem from the limited period of Medicare eligibility after transplantation and from restrictions on payment for immunosuppressive drugs. This chapter also considers the issue of equitable allocation of donated organs but places greatest emphasis on the problems created by the shortage of kidneys suitable for transplantation.



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Kidney Failure and the Federal Government PART III Access Access to health care arises as a policy question because some individuals lack appropriate health care services. Access deals with limits to care, primarily financial barriers to care, especially the resources that enable individuals to purchase care. Medicare and Medicaid were enacted in 1965 to remove financial barriers to health care for the elderly and the poor. In 1972, Medicare was expanded to include those disabled, eligible for cash Social Security benefits, after a two-year period. The Social Security Amendments of 1972 also established an entitlement to Medicare for most Americans individuals with permanent kidney failure. Medicare coverage meant that dialysis and kidney transplantation services would be covered as well as other medical services covered under the Medicare program. Despite this virtually universal coverage, a variety of access issues have arisen over the history of the program. Congress, in the Omnibus Budget Reconciliation Act of 1987, asked the IOM to examine access for two groups of individuals with kidney failure—those eligible for Medicare benefits and those not eligible for such benefits. Chapter 7 addresses the problems of both groups. Chapter 8 deals with limits of access to kidney transplantation that may stem from the limited period of Medicare eligibility after transplantation and from restrictions on payment for immunosuppressive drugs. This chapter also considers the issue of equitable allocation of donated organs but places greatest emphasis on the problems created by the shortage of kidneys suitable for transplantation.

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Kidney Failure and the Federal Government 7 Access Problems of ESRD Patients The high costs of dialysis and transplantation severely limited the access of most Americans to care for ESRD before 1973. Section 2991 of the Social Security Amendments of 1972 effectively resolved access problems stemming from financial considerations. That statute defined eligibility for ESRD beneficiaries in the following language: (e) Notwithstanding the foregoing provisions of this section, every individual who— has not attained the age of 65; (A) is fully or currently insured (as terms are defined in section 214 of this Act), or (B) is entitled to monthly insurance benefits under title II of this Act, or (C) is the spouse or dependent child (as defined in regulations) of an individual who is fully or currently insured, or (D) is the spouse or dependent child (as defined in regulations) of an individual entitled to monthly insurance benefits under title II of this Act; and is medically determined to have chronic renal disease and who requires hemodialysis or renal transplantation for such disease; shall be deemed to be disabled for purposes of coverage under parts A and B of Medicare subject to the deductible, premium, and co-payment provisions of title XVIII.1 The 1972 amendment created a ''near-universal'' entitlement to Medicare coverage of ESRD treatment for most Americans. It did not, however, create an entitlement for all.2 Consequently, one question that Congress asked in its OBRA 1987 charge dealt with access problems of ESRD patients who are not eligible for Medicare coverage. The congressional charge also asked that the study consider access problems of Medicare-covered ESRD beneficiaries. Both are considered below, with a focus on dialysis patients. (Chapter 8 deals with access problems of kidney transplant pa-

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Kidney Failure and the Federal Government tients.) This chapter also deals with access limitations that flow from state laws and regulations, especially certificate-of-need (CON). ESRD PATIENTS NOT ELIGIBLE FOR MEDICARE Congress, in 1978, directed the Secretary of Health, Education, and Welfare to conduct a study of the number of patients with ESRD who are not eligible for benefits with respect to such disease under this title, and of the economic impact of such non-eligibility of such individuals. Such study shall include consideration of mechanisms whereby governmental and other health plans might be instituted or modified to permit the purchase of actuarially sound coverage for the costs of ESRD. [Public Law No. 95-292, § 181(f)(6).] HCFA responded belatedly in 1984 (HCFA, 1984). The report, using 1981 data, estimated that of the 55,000 ESRD patients in the United States who received dialysis treatments from Medicare-certified dialysis facilities, about 8,500 were not then entitled to Medicare benefits. Half of these unentitled patients were awaiting entitlement to the Medicare program and approval was expected: For these individuals, Blue Cross and other private insurers were the major sources of support for 50 percent, whereas Medicaid was the primary payment source for another 27 percent. However, more than 4,000 of the 8,500 patients were reported as not eligible for Medicare benefits. The reasons are not entirely clear. Either they had not established fully or currently insured status under Social Security, or they had not filed an application for benefits. For 70 percent of these ESRD patients, public programs—the Veterans Administration, state Medicaid, and state kidney programs—constituted the major sources of support. The ESRD facilities surveyed for this study identified bad debts and delays in payment from non-Medicare sources as the two financial problems associated with unentitled patients. This was particularly true among self-pay patients—citizens as well as noncitizens—who lacked any public or private health insurance. HCFA estimated that the cost of covering these unentitled ESRD patients who were not eligible for Medicare benefits would be $170 million for FY 1984 and $290 million for FY 1988. Since many unentitled ESRD patients were being supported wholly or partly by other federal programs, HCFA concluded that extending Medicare coverage to them would simply transfer responsibility from one federal source to another and recommended against legislation to do so. The prevailing view, expressed by HCFA's 1984 report and accepted by many others, is that access limitations to ESRD treatment have been relatively minor. In addition to stability in the percentage of reported noneligibles

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Kidney Failure and the Federal Government and the existence of other government programs to finance ESRD treatment, other factors supporting this view include the continuing growth of the patient population and the existence of an aggressive medical specialty that is dedicated to treating patients. Who Are the Reported Noneligibles? Although aliens not legally residing in the United States may present themselves for treatment as ESRD patients, and may represent a significant proportion of the noneligibles, as a practical matter they are seldom eligible for either Medicare or state Medicaid coverage. Citizenship or resident alien status is effectively a requirement for Medicare and Medicaid eligibility for ESRD treatment.3 Eligibility for Medicare coverage for ESRD is a function of Social Security insured status, which results from active labor force participation. Workers are eligible for Social Security benefits if they have established fully or currently insured status, measured by quarters of coverage, and meet other criteria (age 62 for some, age 65 for others, disabled, blind) that entitle them to receive benefit payments. Workers are fully insured for themselves and their families if they have a minimum of 6 quarters of covered employment; after 40 quarters of coverage, a person is fully insured for life. They are currently insured if they have 6 quarters of covered employment in the past 3 years. In 1989, covered earnings of $470 were required to earn one quarter of coverage. Since 1981, there have been two major expansions of Medicare coverage. The Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248) extended Medicare coverage to federal government employees. The Social Security Amendments of 1983 (Public Law 98-21) made coverage mandatory for all new state and local government employees; voluntary participation had been available to such individuals since 1950. Individuals with a diagnosis of ESRD who are not eligible for Medicare ESRD coverage either do not qualify for fully or currently insured status under Social Security or have not filed an application for Social Security coverage. This includes those with no work experience, or employed in jobs not covered by Social Security, or employed in covered occupations but who have not applied, and who are neither the spouse nor dependent child of an eligible person. What individuals or groups of individuals are at risk of lacking Medicare ESRD coverage because they are not covered under Social Security? Data to answer this question are not collected currently by HCFA. Practically speaking, the ineligibles include some federal, state, and local government employees; domestic, farm, and all other workers in covered occupations who have not applied for coverage; and those who have never worked, such as young, unmarried, nonworking mothers and their children. People in

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Kidney Failure and the Federal Government most of these categories are disproportionately concentrated among the poor and minorities. Magnitude of the Problem The total number of dialysis patients increased from 52,364 in 1980 to 90,886 in 1986; during this time, the reported non-eligible patients accounted for 6 to 7 percent (Table 7-1). In the 3 years from 1987 to 1989, however, that percentage increased to 7.2, 7.3, and 7.5 percent. Although the percentages were stable until recently, the absolute numbers of noneligible ESRD patients more than doubled from 3,697 in 1980 to 8,722 in 1989. The implications of this growth are examined below. Geographic Variations Although the national percentage of reported noneligibles has been stable, HCFA ESRD data show marked variation by state. In Table 7-2, these data are summarized for selected states, and several different patterns emerge. In the first pattern, some states have been consistently high over time and more recently have abruptly dropped to a very low percentage of non-Medicare patients. In Arkansas, for example, the reported non-eligibles declined from 20.1 percent in 1980 to 12.5 percent in 1986 and then fell TABLE 7-1 Medicare Eligibility Status of Dialysis Patients, 1980–89     Medicare-Eligible Patients Non-Medicare Patients Year Total Dialysis Patientsa Number of Enrollees Applications Pending Number % of Total Patients 1980 52,364 44,827 3,840 3,697 7.1 1981 58,924 51,359 3,768 3,797 6.4 1982 65,765 57,784 3,998 3,983 6.1 1983 71,987 63,624 3,945 4,418 6.1 1984 78,483 69,258 4,227 4,998 6.4 1985 84,797 74,169 4,965 5,663 6.7 1986 90,886 79,739 5,076 6,071 6.7 1987 98,432 85,774 5,587 7,071 7.2 1988 105,958 91,820 6,371 7,767 7.3 1989 116,169 100,857 6,590 8,722 7.5 a As of December 31 of the calendar year. SOURCE: HCFA, 1980–89.

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Kidney Failure and the Federal Government TABLE 7-2 Percentage of Non-Medicare Patients Among Total Dialysis Patients, by State and Year, 1980–89 State 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 Arizona 16.2 16.1 16.2 14.8 12.3 13.7 12.2 12.8 15.2 15.1 Arkansas 20.1 15.0 14.1 13.1 12.2 12.4 12.5 3.5 4.8 4.6 California 7.8 7.2 7.6 7.6 8.0 8.4 8.5 10.1 10.9 11.0 Illinois 5.5 5.6 5.5 5.3 6.3 8.0 9.2 7.0 8.5 9.7 Iowa 12.6 11.9 12.2 11.2 2.4 10.2 0.9 3.1 4.2 2.6 Maryland 6.0 6.1 7.4 7.3 9.2 6.5 6.7 11.3 9.3 8.7 New Mexico 24.9 21.7 17.9 13.9 12.2 12.0 10.1 8.9 14.6 12.3 New York 7.9 7.5 6.6 6.8 7.5 7.8 8.4 9.0 10.2 9.8 Puerto Rico 12.8 7.7 8.7 7.0 7.4 8.3 6.3 10.0 9.2 7.7 Virginia 11.8 9.8 8.2 7.9 7.4 8.0 9.0 7.8 8.3 8.0 Washington, D.C. 29.1 27.5 15.9 17.4 16.3 20.6 15.5 26.4 17.4 17.6 All states 7.1 6.4 6.1 6.1 6.4 6.7 6.7 7.2 7.3 7.5 NOTE: As of December 31 of the calendar year. SOURCE: HCFA, 1980–89. precipitously to 4.6 percent in 1989. The recent drop may be due to the fact that patients treated at the Little Rock Veterans Hospital were counted as Medicare-eligible after the hospital obtained Medicare certification in 1986-87, although this does not explain the entire historical pattern (C.W. Roach, ESRD Network 13, personal communication, December 13, 1989). A second pattern involves a stable rate suddenly increasing. For example, from 1980 through 1984, Illinois hovered around 6 percent for reported noneligibles, but from 1985 onward, it fluctuated between 7 and 10 percent. The reported noneligibles for Maryland were stable in the 6 to 7 percent range until 1983, increased briefly to 9.2 percent in 1984, returned to the lower level, then increased again to 11.3 percent in 1987, and have remained above 8 percent since then. A third pattern involves percentages consistently higher than the national level over time. This is dramatically shown in the cases of Arizona and New Mexico. In 1988, Arizona had 222 noneligible ESRD patients (15 percent). Of these, 42 percent were whites, 29 percent Native Americans, and 22 percent Hispanics; one-quarter were covered under the Department of Veterans Affairs (DVA); three-quarters had "other" coverage. In New Mexico, for the same year, 71 patients (13 percent) were reported not eligible. Of these, 43 percent were Native Americans, 32 percent Hispanics, and 20 percent whites; more than one-quarter had no insurance; two-thirds had "other" insurance (S.K. Stiles, Intermountain End-Stage Renal Disease Network, Inc., personal communication, December 21, 1989). Furthermore,

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Kidney Failure and the Federal Government the data strongly suggest that the reported noneligibles are concentrated among ethnic minorities. What is not known is the adequacy of coverage from non-Medicare sources or the financial effects of ESRD on other insurers such as state Medicaid, the DVA, and the Indian Health Service (IHS). An examination of the percentage of reported noneligibles in 20 major U.S. cities relative to their states' percentages showed that some, but not all, had markedly greater concentrations of reported noneligibles than did their home states (Table 7-3). This was true for Boston, Chicago, Detroit, Los Angeles, Miami, New York City, Newark, and Philadelphia. In addition, Washington, D.C., fluctuated between a high of 29.1 percent and a low of 15.5 percent of reported noneligibles, a significant proportion of whom had Medicaid coverage only. These data suggest that proportionately more noneligible patients are found among urban residents, as well as among ethnic minorities. Existing data on reported noneligibles do not include the extent and adequacy of other sources of support. Thus, they do not permit direct examination of the effects of noneligible status on access to or denial of treatment, nor do they allow comparison of the Medicare benefit package to non-Medicare coverage. Most important, they do not permit examination of the effect of eligibility status on patient outcomes. Payment Sources Potential sources of financial support available to noneligible ESRD patients are personal resources, private health insurance, or public programs. Personal wealth and private insurance may cover a few, but public programs must provide the support for most patients. The latter include state Medicaid programs, state kidney disease programs, the IHS, and the DVA. State Medicaid Programs A survey of ESRD-related expenditures by state Medicaid programs, state general assistance (welfare-medical) programs, and state kidney programs performed by the Intergovernmental Health Policy Project generated responses from 47 states and the District of Columbia (IHPP, 1989a).4 It showed that state Medicaid programs have very inadequate data on ESRD patients and expenditures. Only 23 states could provide Medicaid expenditure data for FY 1988, the most recent fiscal year; for fiscal years 1983 through 1987, the numbers reporting such data were 6, 8, 9, 14, and 18, respectively. Those 23 states reported $68 million in expenditures in 1988 but indicated that this underestimated true expenditures.5 State Medicaid programs serve two ESRD patient groups. Copayments are made for those Medicare-entitled patients who are also eligible for Medicaid (dual eligibles). In addition, treatment for individuals who lack any

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Kidney Failure and the Federal Government TABLE 7-3 Percentage of Non-Medicare Patients Among Total Dialysis Patients, by City Versus State, and Year, 1980–87 City and State 1980 1981 1982 1983 1984 1985 1986 1987 Boston Massachusetts 8.7 5.7 8.2 5.8 8.2 5.8 7.6 6.3 7.3 6.7 7.3 5.7 12.9 8.7 10.1 8.0 Chicago Illinois 10.6 6.5 9.8 5.6 8.9 5.5 8.4 5.3 9.4 6.3 11.8 8.0 15.8 9.2 10.6 7.0 Cleveland Ohio 5.7 4.8 4.6 5.1 3.8 5.1 4.1 5.2 3.0 5.4 9.5 7.1 9.5 5.6 8.6 5.6 Dallas Texas 7.5 7.0 5.0 6.0 5.4 5.2 7.2 5.8 8.0 5.6 9.6 6.4 10.0 5.9 9.0 5.9 Detroit Michigan 8.5 6.2 8.2 6.4 11.2 6.5 8.3 7.0 11.2 8.2 8.2 7.5 8.0 7.7 7.9 6.7 Indianapolis Indiana 13.2 7.1 12.6 6.2 10.8 5.7 3.1 1.9 4.7 2.7 0.8 1.1 4.1 2.4 2.4 3.1 Los Angeles California 11.8 7.8 11.9 7.2 10.5 7.6 9.5 7.6 13.6 8.0 13.5 8.4 15.9 8.5 14.3 10.1 Miami Florida 9.0 4.5 12.0 4.8 12.6 5.2 12.1 5.4 11.8 5.4 9.8 5.3 9.9 5.9 10.0 4.9 New York City New York 11.5 7.9 10.9 7.5 8.2 6.6 9.2 6.8 10.8 7.5 12.5 7.8 11.5 8.4 11.8 9.0 Newark New Jersey 6.1 4.8 5.7 3.9 7.0 4.0 10.5 4.8 7.8 5.6 8.4 5.2 17.4 6.0 7.1 8.5 Philadelphia Pennsylvania 8.2 6.6 6.5 5.1 6.6 5.4 7.1 5.4 7.8 5.7 8.2 6.2 8.1 4.8 9.1 5.8 Phoenix Arizona 13.8 16.2 8.6 16.1 12.9 16.2 8.9 14.8 7.9 12.3 10.2 13.7 10.1 12.2 10.6 12.8 Washington, D.C. 29.1 27.5 15.9 17.4 16.3 20.6 15.5 26.4 NOTE: As of December 31 of the calendar year. SOURCE: HCFA, 1980–87.

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Kidney Failure and the Federal Government Medicare coverage is paid for. Although state Medicaid ESRD expenditures for dual eligibles and reported noneligibles are undoubtedly substantial, neither a direct count nor a good estimate exists. A follow-up survey of 10 states—California, Florida, Illinois, Louisiana, Maryland, Massachusetts, Michigan, New York, Pennsylvania, and Texas—addressed the extent of Medicaid coverage of ESRD services and related medications for those with Medicaid coverage only (not eligible for Medicare) and for the dual eligibles (Laudicina, 1990). The services examined included outpatient hemodialysis; in-center peritoneal dialysis; inpatient hemodialysis; kidney transplant surgery; blood transfusions; transportation; home hemodialysis; intermittent peritoneal dialysis; continuous cycling peritoneal dialysis; continuous ambulatory peritoneal dialysis; dialysis equipment, supplies, and dialysis support services; self-dialysis training; and paid aides to assist at home. Seven of the 10 states examined provide Medicaid coverage for nearly all of the 15 benefits surveyed. Eight of the 10 surveyed state Medicaid programs reimburse for outpatient dialysis treatment at payment levels ranging from $110 to $150 per session. Illinois, Maryland, and Massachusetts pay the equivalent of the Medicare composite rate under their Medicaid programs. In contrast, Florida pays only for dialysis in a hospital-based center and sets an annual payment cap of $1,000 per Medicaid ESRD patient! Louisiana reimburses hospital-based centers up to 72 percent of billed charges. Texas Medicaid does not pay for home and routine hemodialysis. State Medicaid agencies generally pay the same for center-based and home dialysis, except New York, which pays lower rates for home dialysis, and Pennsylvania, which sets a lower rate for home dialysis but makes an additional payment for dialysis equipment rental. With regard to Medicaid reimbursement policy for dual eligibles (Medicare and Medicaid), six states pay providers for the Medicare Part B deductibles and 20 percent coinsurance. Four other state's—California, Michigan, New York, and Pennsylvania—reimburse Medicare Part B coinsurance and deductibles for dual eligibles for facility and home dialysis, not to exceed the Medicare-approved amount. Texas indicated that coverage of ESRD services constituted a financial burden, a result of the growth in recent years of the overall Medicaid case load and an assessment that all chronic care expenditures are expensive. The survey also investigated reimbursement for medications in the following categories: antihypertensives, anemia treatment, calcium/phosphorus metabolism control, multivitamin compounds, and kidney transplant immunosuppressives. Although state Medicaid programs routinely reimburse the drug costs for Medicaid-eligible patients, various restrictions exist. Florida does not yet provide erythropoietin (EPO) for its Medicaid recipients; California will not honor more than three prescriptions for antihypertensive

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Kidney Failure and the Federal Government drugs within a 75-day period. Maryland limits payment for EPO to no more than $400 per prescription and attempts to get Medicare to cover the cost of Imuran and cyclosporine for Medicaid recipients who have received transplants within the year; Texas limits coverage of EPO to no more than three injections per week and will not pay for more than three prescriptions per month for drugs intended for home use (e.g., antihypertensives, calcium/ phosphorus metabolism controllers, multivitamin compounds, and cyclosporine). Medicaid agencies in most states do not reimburse separately for all ESRD-related drugs, although some drugs are included in the dialysis facility's rate (e.g., heparin, protamine, saline, pressor drugs, glucose, and antihypertensives). Since the inception of the Medicaid program in 1965, states have been allowed to "buy into" a private health insurance program for Medicaid recipients, provided this option is exercised on a statewide basis. California, New York, Minnesota, and Washington have chosen this option. The option is not based on patient diagnosis, so there is no way of knowing how many ESRD patients benefit from it. New York Medicaid officials believe that it is sometimes cost-effective for the state to pay for private insurance premiums in lieu of caring for a Medicaid-eligible individual under the Medicaid rate structure. However, it is estimated that only a minority of Medicaid-eligibles have their health costs reimbursed in this manner. State Kidney Programs Twenty states administer kidney programs independent of their state Medicaid programs. Nineteen of these programs support a variety of ESRD-related services, from direct patient financial support to public education for organ donation; Michigan's program is basically a data registry (IHPP, 1989a). In Table 7-4, state kidney programs and their services are listed. Patterns of state kidney disease program expenditures, shown in Table 7-5 are mixed. The Texas Kidney Health Care Program (which is different from the Texas Medicaid program) is unique in offering comprehensive financial assistance in all areas of patient care: transportation, medication, transplant workup procedures, dental care, and transplant follow-up care. It expanded in the early 1980s, experienced a major cut during FY 1986, and has been stable at just under $10 million. Given the budget pressures that many state governments face at the present time, it is probably not realistic to expect that these state kidney programs will increase their financial support for noneligible ESRD patients or that more states will add such programs.6 Other ESRD Programs The IHS is responsible for providing comprehensive medical care to Native Americans living on reservations. IHS health care benefits vary

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Kidney Failure and the Federal Government diabetics; and college graduates are nearly twice as likely to be working as those with less education. Rehabilitation services for ESRD patients deserve sustained attention, especially in light of the report that EPO reduces the fatigue of dialysis patients and equips them to engage in more active pursuits, and because transplant patients should be encouraged to take advantage of their better functional status. The issue of rehabilitation also should be examined in the context of all chronic disease patients as the challenges of ESRD are apt to be encountered elsewhere. Preventive Services The human and economic burden of kidney failure makes it necessary to consider the access of individuals to services that may prevent ESRD. Reduced access to preventive health care has been postulated as a partial explanation for the enormous burden of ESRD among black Americans (Feldman, 1990). Implicit in this hypothesis is the notion that there exist medical regimens that may be effective in the prevention of ESRD, such as the control of hypertension and the control of hyperglycemia in diabetics. There is also some evidence for the beneficial effects of reducing dietary protein and phosphorus, and the administration of certain medications may be of some value (Feldman, 1990). Preventive care for blacks, long documented as deficient, has steadily improved over the past decade. DHHS reported that the proportion of blacks seeing a physician annually was 18 percent less than that of whites in 1963 and that this disparity had been virtually eliminated by 1983. The differences between blacks and whites in utilization of many specific types of health care also diminished over this period. Despite these gains and their accompanying improved health outcomes, morbidity among the black population remains, on average, higher than for whites (HCFA, 1984; NCHS, 1987). Blendon and co-workers (1989) reported on disparities in the use of health services and in health status between blacks and whites. A significantly higher proportion of blacks had not seen a physician within a one-year period. Additionally, despite evidence that serious illness is more common among blacks, their average number of physician visits was lower (3.4 per year) than that of whites (4.4 per year). Blacks with a chronic or serious illness were also more likely to have had no ambulatory physician visits during the previous year (25.1 percent versus 16.6 percent). The figures for blacks and whites with hypertension were 30 percent and 19 percent, respectively. Blacks were also less likely than whites to have any health insurance; for those blacks with coverage, it was less likely to be

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Kidney Failure and the Federal Government private insurance. These differences were reduced but still significant when adjusted for self-reported health status and income. Shulman and co-workers, (1986) investigated the economic barriers to medical care for 4,688 ambulatory patients in Georgia. Nearly one-quarter were hypertensive. Sixteen percent reported occasions on which they could not afford their medications. Blacks were substantially more likely to report this than whites, a phenomenon partially accounted for by the lower mean per-capita income of blacks and their greater prevalence of moderate-to-severe hypertension. Although barriers to preventive health care are easy to demonstrate, their relationship to the high incidence of ESRD among minority groups is not established. Several investigators have explored socioeconomic status indicators—proxies of access to preventive medical care—and related them to the development of renal insufficiency and hypertensive ESRD. Rostand and co-workers (1989) explored the effects of income and level of education on blood pressure control in an ambulatory-care practice in which hypertensive blacks had a twofold risk of developing renal insufficiency. Neither income nor education predicted the occurrence of renal disease. These data suggest that some of the differences in risk of renal failure among blacks may be due to factors other than differences in access to antihypertensive therapy. Another study (Whittle et al., 1991) of hypertensive ESRD patients also showed that low socioeconomic status was an independent predictor for the development of ESRD; controlling for it did not eradicate the significant influence that black race had on the occurrence of kidney failure. Little research has been performed in the Hispanic community regarding access to preventive health care. The San Antonio Heart Study, a community-based study of 1,288 Mexican Americans and 929 whites in Texas, evaluated the prevalence and severity of hypertension among these populations. The prevalence of hypertension adjusted for body weight and socioeconomic status tended to be lower among Mexican Americans. Nonetheless, Mexican Americans had somewhat lower awareness, received treatment less frequently, and had worse control of hypertension than did whites. These findings suggest that socioeconomic barriers to preventive health care services exist in the Mexican American community. In summary, significant barriers to the acquisition of preventive care have been identified for minority groups, especially for blacks. More research is needed, however, to elucidate the importance of control of hypertension on the development and progression of renal disease. Although barriers to preventive care are accompanied by a significantly impaired health status of the black population, a specific causal relationship between impaired access to care and the predisposition to ESRD has not been established.

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Kidney Failure and the Federal Government STATE REGULATIONS Some states have stringent CON regulations, and the committee has examined the implications of CON laws on ESRD patients' access to care. A major concern with the CON regulations is their effect on the treatment capacity, both at the program level and at the unit level. As defined in Chapter 6, the number of dialysis stations is the measure of capacity. Unit capacity then can be further defined as the number of hemodialysis stations in a dialysis facility that operates two patient treatment shifts a day for 6 days a week. A survey conducted by the Intergovernmental Health Policy Project of the George Washington University (IHHP, 1989a) identified 15 states (Alabama, Connecticut, Hawaii, Illinois, Kentucky, Maine, Massachusetts, Nebraska, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, and Washington) and the District of Columbia as having CON regulations affecting hospital-based as well as independent dialysis providers as of June 1989.10 The results of this survey were reviewed and confirmed by Dialysis Management, Inc., Denver, Colorado. Information on state CON programs was then combined with the 1984 and 1988 HCFA facility survey data to generate the following summary statistics. Nationally, treatment capacity grew at an average annual rate of 8.1 percent between 1980 and 1988 whereas the number of total treatments increased 9.7 percent.11 Station utilization increased slightly from an average of 484 treatments per station in 1984 to 517 in 1988, as Table 7-7 indicates. Utilization of the median facility shifted upward from 465 treatments per station in 1984 to 494 in 1988, a 6 percent increase. Large variations in utilization were noted among states, especially between CON states and non-CON states. In states with CON regulations, utilization increased 16 percent from an average 491 treatments per station in 1984 to 568 in 1988, whereas in states without CON programs the ratios increased only 12 percent. Using our definition of full capacity as 624 treatments per station per year, the national average utilization rate in 1988 was 83 percent (517/624). States with CON had a utilization rate of 91 percent; states without CON had a 77 percent utilization rate. This CON-related difference in utilization appears to be widening over time: the average difference was 63 treatments per station in 1984, and 89 in 1988. The substantial increase of the utilization rate over time in the CON states does not appear to be due solely to the growth of the patient population in those states. If anything, the patient population in CON states grew more slowly than in non-CON states between 1984 and 1988. Limited facility capacity (due to CON or other regulations) is more likely to be causing higher utilization rates in the CON states. Experience in California,

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Kidney Failure and the Federal Government TABLE 7-7 ESRD Facility Capacity and Utilization, 1984 and 1988   Total No. of Stations/Unit Total No. of Patients/Unit per Year No. of Hemodialysis Treatments/Unit per Year Hemodialysis Treatment/Station Ratio In-Center Patient/Station Ratio   1984 1988 1984 1988 1984 1988 1984 1988 1984 1988 National average 13.2 13.2 60.8 61.2 6,641 6,936 484 517 3.6 3.8 Hospital-based 10.9 11.2 55.2 60.0 5,409 6,151 490 535 3.6 3.9 Independent 15.3 14.4 65.6 62.0 7,716 7,406 478 507 3.6 3.8 National distribution                     10th percentile 5.0 5.0 12.0 13.0 1,268 1,219 204 177 1.8 1.5 25th percentile 7.0 8.0 25.0 25.0 2,894 2,860 345 319 2.6 2.5 Median 11.0 11.0 47.0 48.0 5,224 5,504 465 494 3.4 3.6 75th percentile 18.0 17.0 81.0 83.0 8,996 9,415 601 665 4.5 4.8 90th percentile 25.0 24.0 122.0 126.0 13,658 14,407 776 861 5.6 6.2 States with CON 13.6 13.2 62.4 69.5 6,860 7,771 491 568 3.7 4.2 Hospital-based 11.0 10.9 56.8 64.3 5,583 6,530 502 580 3.7 4.3 Independent 15.7 15.2 67.0 73.9 7,919 8,836 482 558 3.6 4.2 States without CON 10.8 13.3 42.0 54.6 4,782 6,335 428 479 3.2 3.5 Hospital-based 9.5 11.5 40.4 55.0 4,215 5,805 446 491 3.5 3.5 Independent 12.0 14.0 43.5 54.5 5,293 6,552 411 475 2.9 3.5 Example—CON                     Connecticut 12.1 11.5 62.9 76.3 7,278 9,224 619 885 4.6 6.2 Hospital-based 10.6 10.6 57.4 71.0 6,387 8,526 619 840 4.6 5.9 Independent 32.0 17.5 140.0 113.5 19,752 14,111 617 1203 4.4 8.5 Example—No CON                     Texas 16.9 16.1 72.8 57.8 8,527 6,979 461 417 3.3 3.1 Hospital-based 13.4 13.9 56.5 44.3 5,862 5,347 415 366 3.0 2.5 Independent 18.5 16.6 80.4 61.4 9,780 7,420 482 430 3.4 3.2 NOTES: Excluded from these data are transplant-only, backup-only, and inpatient-only facilities, as well as those reporting no treatment. The number of patients includes both home patients and in-center dialysis patients, unless otherwise noted. The number of treatments refers only to outpatient hemodialysis; peritoneal dialysis treatments and various treatments are excluded from the statistics here. SOURCE: HCFA Annual ESRD Facility Survey, 1984 and 1988.

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Kidney Failure and the Federal Government Florida, Georgia, Tennessee, and Texas in the mid-1980s also supports such a hypothesis. In those states, as soon as the CON regulations for ESRD facilities were eliminated, the number of renal treatment facilities grew substantially. Specific Limits to Access and Geographic Variations In New England, state health code and CON requirements have tended to be stringent (IHPP, 1989b). For example, Maine requires CON review and approval before a dialysis service is established in an existing health care facility or a freestanding center, regardless of cost. Vermont requires CON review for the establishment of independent dialysis centers, but not the hospital-based dialysis facilities. The strongest regulation of dialysis services occurs in Rhode Island, Massachusetts,12 and Connecticut. In these states, the establishment of either a freestanding or a hospital-based dialysis service requires CON review and approval regardless of cost. Any additions to existing services are also subject to review, even if only one station is added. The exception in New England is New Hampshire, in which all outpatient services are exempt from CON review. Variations in utilization, and thus their effects on access, among geographic areas are even more evident when Connecticut or New York City is compared to Texas. In Connecticut, a state with CON and other stringent regulations on the provision of health care, there was essentially no growth in either the number of facilities or the number of dialysis stations between 1984 and 1988, whereas the number of patients and dialysis treatments increased significantly. Utilization increased almost 43 percent, from 619 to 885 treatments per station per year, during the 4-year period. The calculated statewide utilization rate was 99 percent in 1984 and 142 percent in 1988. In New York City, the utilization rate was 706 treatments per station in 1984, or 113 percent of defined ''full utilization.'' This increased to 782 treatments per station per year in 1988, or 125 percent of "full capacity." Texas, whose health care sector has not been highly regulated, eliminated CON in August 1985. A significant increase in dialysis facilities and stations occurred: From 1984 to 1988, facilities increased by almost 70 percent, and stations increased over 60 percent, whereas the patient population increased by only 34 percent. This led to a 10 percent decrease in utilization from 461 treatments per station in 1984 to 417 in 1988. Hypothetically, differences in facility growth between Connecticut or New York City and Texas might be due partly to geographic differences in the cost of providing dialysis rather than to CON regulations. The experience in Texas alone, however, argues otherwise. Before Texas removed its CON regulation in August 1985, growth in dialysis facilities was very slow, from 78 units in 1983 to 81 units in 1985. After the CON regulation was

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Kidney Failure and the Federal Government TABLE 7-8 Connecticut ESRD Patient Log June 1989: A California dialysis patient was promoted and transferred to Connecticut by his company. He eventually turned down the promotion/transfer because he could find nowhere to dialyze in southwestern Connecticut. June 1989: A patient from Florida wished to visit his son and grandchildren in Stamford for 2 weeks. He was unable to do so since there was no place within driving distance where he could be dialyzed. July 1989: A 27-year-old Florida woman wished to attend a conference in New Haven but needed one transient treatment. She did not make the trip because she could not be treated. October 1989: The parents of two automobile accident victims (one in critical condition) wanted to visit their children; the dialysis patient father needed temporary treatment; his request was eventually denied and referred to the network. November 1989: A social worker called to state that she had a woman from Long Island, New York, who was the possible victim of domestic violence. The woman had family in Darien, Connecticut, and wanted to transfer. She was referred to the network and as of January 1990 was still looking for space. November 1989: A 73-year-old patient in Texas with a life expectancy of about one year wanted to be near her daughter and grandchildren in Darien, Connecticut. A bed had been secured at a local nursing home pending dialysis availability. She was referred to Norwalk and a file was created in case an opening originated. removed, the number of dialysis facilities increased substantially: 25 new dialysis facilities began to operate in 1986, representing a 31 percent increase from the previous year. This suggests that CON regulations also play a major role in explaining differences in facility growth across states. Connecticut, in addition to CON, has several other requirements that may limit capacity:13 a required nurse supervisor with no patient load for every dialysis shift; a required nurse-to-patient ratio for dialysis units; and limits on the use of technicians in freestanding dialysis units. Taken together, these requirements impose an economic cost on facilities and limit incentives to expand. The data regarding utilization suggest that access problems can arise as federal reimbursement policies intersect with the cost of state regulations. What are the consequences of capacity limits in Connecticut? First, dialysis units are unable to accept transients or new patients because of their "full-capacity" status. This is illustrated by Table 7-8, which contains entries from a log of transfers, transients, and requests, prepared by a nurse at one dialysis facility. Second, the percentage of patients treated in Medicare-certified facilities who are not eligible for Medicare coverage, is shown in Table 7-9. Compared to the national average, Connecticut's acceptance of noneligible patients over time has consistently been one-third to one-half the national acceptance rate. This implies either that the state has fewer reported noneligibles presenting for treatment or that the absence of Medi-

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Kidney Failure and the Federal Government TABLE 7-9 Percentage of Non-Medicare Total Dialysis Patients by State and Year, 1980–89   1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 United States 7.1 6.4 6.1 6.1 6.4 6.7 6.7 7.2 7.3 7.5 Connecticut 4.3 3.4 2.7 4.1 3.9 3.9 3.7 6.2 4.6 4.9 Difference 2.8 3.0 3.4 2.0 2.5 2.8 3.0 1.0 2.7 2.6 Connecticut/U.S. 61.0 53.0 44.0 67.0 61.0 58.0 55.0 86.0 63.0 65.0   SOURCE: HCFA, 1980–89. care coverage discourages their acceptance under circumstances of full capacity. Third, since Connecticut is technically at capacity for in-center hemodialysis, anecdotal reports indicate that continuous ambulatory peritoneal dialysis is the only modality being offered by certain providers. Thus, for other than clinical reasons, capacity limits apparently restrict patient choice to modalities prescribed. Implications of Regulations for Access and Quality The data show that capacity growth is constrained and utilization increased in CON states relative to non-CON states. Who benefits from state CON regulation of dialysis units? What are the effects of higher utilization (or productivity) of dialysis units? Existing data permit only a limited response. First, CON results in no direct economic benefit to the federal government: higher utilization does not reduce Medicare expenditures nor does lower utilization increase them. Second, CON confers local monopoly benefits on approved providers, reducing competition among providers and raising barriers to entry. Moreover, the costs of legally defending local monopoly are more easily absorbed by provider chains than by single-owner units. Third, by sanctioning local provider monopoly, CON decreases patient choice of providers and eliminates competition among facilities for patients on the basis of amenities. Held and Pauly (1983) have shown that competition in ESRD program increases the amenities that dialysis patients receive. Fourth, CON regulation provides no assurance of quality and actually shields facilities from the need to compete on the basis of quality. Finally, in some states, CON has contributed to serious access problems. The committee finds no persuasive reason for the application of state certificate-of-need regulations on dialysis treatment capacity

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Kidney Failure and the Federal Government that is regulated mainly by the Medicare payment level. The committee strongly favors the elimination of CON as applied to dialysis facilities, but recognizes that this requires state government rather than federal government action. It recommends that HCFA review with each of the relevant states the effect of CON regulations on ESRD patient access to care in light of national data on utilization. NOTES 1.   Public Law 95-292 (June 13, 1978) amended Section 226A of the Social Security Act in the following ways: It removed reference to age 65 as a criterion of eligibility for ESRD coverage; it extended eligibility to those who would be eligible if employment, as defined by the Railroad Retirement Act of 1974, were included as employment under the Social Security Act; it substituted "is medically determined to have end stage renal disease" for "chronic renal disease and ... requires hemodialysis or renal transplantation"; and it added a provision that an individual meeting the foregoing requirements have filed an application for benefits. The Tax Equity and Fiscal Responsibility Act of 1982 (Public Law No. 97–248), Sections 121 and 278, extended Medicare coverage, including coverage for ESRD, to federal government employees. 2.   Legislation proposed in December 1971 (H.R. 12043, 92d Cong., 1st Sess.) by Representative Wilbur Mills (D-Ark.), then chairman of the House Committee on Ways and Means, called for a renal entitlement that included all citizens and resident aliens. This language was not used in Section 299(I) of the Social Security Amendments of 1972. 3.   The relationship between United States citizenship and resident alien status and eligibility for Medicare and Medicaid benefits is complicated. An individual may be eligible for Medicare Part A (Hospital Insurance) benefits if he or she has established eligibility for Social Security benefits under Title II of the Social Security Act [Section 1818(a)(3) of the Social Security Act, 42 USC § 1395i-2(a)(3)]. Eligibility for Medicare Part A benefits, for those not eligible under Title II of the Social Security Act, and eligibility for Medicare Part B benefits [Section 1836(2)(B) of the Social Security Act] requires that an individual be a resident of the United States and either a citizen or an alien lawfully admitted for permanent residence who has resided in the U.S. continuously during the five years immediately before applying for benefits. Ordinarily, to qualify for state Medicaid benefits under federal law, an individual must be a citizen or national of the United States or in a satisfactory immigration status [Section 1137(d) of the Social Security Act, 42 USC § 1320b-7(d)], except for emergency care [Section 1903(v) of the Social Security Act, 42 USC § 13966b(v)]. 4.   The medical component of state general assistance programs provided no support for ESRD patients. 5.   The Medicare-Medicaid tape-to-tape project, which has been administered variously by HCFA's Office of Research, the Office of the Actuary, and the Bureau of Data Management and Strategy (BDMS), was discussed with the HCFA Office of Research project officer as a data source. Under the Office of Research, this project included Medicaid records for 3, 4, or 5 state programs, depending on the year; under the Actuary and BDMS, it included more states. However, merging these data with Medicare data to link the records of dual-eligible and noneligible ESRD patients was judged to be a large and difficult research effort that was beyond the scope of this study. 6.   In late 1990, the Maryland state kidney program became a target for elimination in that state's budget retrenchment.

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Kidney Failure and the Federal Government 7.   Satellite dialysis units are typically located in small DVA hospitals that do not have a full nephrology service. 8.   In December 1990, the New York State Health Department released a report of an advisory committee on ESRD in New York State. That committee recommended that "all U.S. citizens and resident aliens with ESRD should be eligible for Medicare benefits, not just those who meet the [Social Security] work history requirements" (New York State Department of Health, 1990, p. 11). 9.   The percentage of patients over age 65 who currently have transplants includes those who received transplants before age 65, and thus is larger than the percentage who were over 65 when they received transplants. 10. Since the mid-1980s, several states either have eliminated their CON programs entirely or have exempted certain services from them. The analysis in the text reflects the changes that have taken place through mid-1990. 11.   The IOM study used the number of stations to measure capacity and the number of hemodialysis treatments (rather than the number of patients) to measure demand. 12.   Massachusetts, in late 1989 or early 1990, eliminated its Determination of Need program. 13.   See State of Connecticut, Regulation of the Department of Health Services, § 19-13-D55a, for the licensure of an outpatient dialysis unit and standards for in-hospital dialysis units. REFERENCES Alexander SR, Arbus GS, Butt K, et al. 1990. 1989 Report of the North American Pediatric Renal Transplant Cooperative Study. Pediatr Nephrol 4:542–553. Blendon RJ, Aiken LH, Freeman HE, Corey CR. 1989. Access to medical care for black and white Americans: A matter of continuing concern. JAMA 261:278–281. Eggers, PW. 1989. Projections of the ESRD population to the year 2000. Proceedings of the Annual Public Health Conference on Records and Statistics . DHHS (PHS) 90–1214, Public Health Service, Washington, D.C., 121–126. Evans RW, Manninen DL, Dugan MK, et al. 1990. The Kidney Transplant Health Insurance Study. Seattle, Wash.: Battelle Memorial Institute. Feldman HI. 1990. End-stage renal disease in U.S. minority groups. Paper prepared for the Institute of Medicine ESRD Study Committee. Philadelphia, Pa. GAO (General Accounting Office). 1990. Health Insurance: Cost Increases Lead to Coverage Limitations and Cost Shifting. GAO/HRD-90-68. Washington, D.C. Hawthorne VM, Julius M, Kneisley J, Port FK, Dennisot L, Wolfe RA. 1991. Access to medical care in ESRD. Michigan Academician 23:87–97. HCFA (Health Care Financing Administration). 1980–89. Annual ESRD Facility Surveys. Baltimore, Md. HCFA. 1984. Report to Congress: Study of Unentitled End-Stage Renal Disease Patients. Baltimore, Md. Held JH, Pauly MV. 1993. Competition and efficiency in the end stage renal disease program. J Health Econ 2:95–118. IHPP (Intergovernmental Health Policy Project). 1989a. The Medicaid experience with end-stage renal disease: Findings of a national survey. Report prepared for the Institute of Medicine ESRD Study Committee. George Washington University, Washington, D.C. IHPP. 1989b. Certificate of Need (CON) Regulation of ESRD Services: Findings of a 50-State Survey. Report prepared for the Institute of Medicine ESRD Study Committee. George Washington University, Washington, D.C. IOM (Institute of Medicine). 1990. ESRD Staff Analysis of HCFA PIMMIS data. Washington, D.C.

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Kidney Failure and the Federal Government Laudicina S. 1990. Medicaid coverage and payment of ESRD services. Report prepared for the Institute of Medicine ESRD Study Committee. Washington, D.C. NCHS (National Center for Health Statistics). 1987. Health. DHHS Publ. No. (PHS)88–1232. Public Health Service, U.S. Department of Health and Human Services. Washington, D.C. Newmann JM, Held PJ, Hutchinson T. 1989. Access to Renal Transplantation: Patients' Knowledge and Perceptions. Washington, D.C.: The Urban Institute. Washington, D.C. New York State Department of Health. 1990. End-Stage Renal Disease in New York State: A Report of an Advisory Committee. Albany, N.Y. OIG (Office of Inspector General, U.S. Department of Health and Human Services). 1987. Amending the Medicare Secondary Payer Provision for ESRD Beneficiaries Could Save the Medicare Program $3 Billion over the Next 5 Years. Draft report. Washington, D.C. Pollack VE, Pesce A. 1990. Analysis of Data Related to the 1976–1989 Patient Population: Treatment Characteristics and Patient Outcomes. Report prepared for the Institute of Medicine ESRD Study Committee. Cincinnati: Dialysis Clinic, Inc.-Cincinnati. Rettig RA, Marks EL. 1980. Implementing the End-Stage Renal Disease Program of Medicare. Rept. R-2505-HCFA/HEW, The RAND Corporation, Santa Monica, Calif. Rizzoni G. 1989. Combined report on regular dialysis and transplantation in Europe, XIX, 1988: Renal replacement therapy in children. Presented at the XXVth Congress of the EDTA-ERA, Goteborg, Sweden, June 11–15. Rostand SG, Brown G, Kirk KA, Rutsky FA, Dustian HP. 1989. Renal insufficiency in treated essential hypertension. N Engl J Med 320:684–688. Shulman NB, Martinez B, Brogran D, Carr AA, Miles CG. 1986. Financial cost as an obstacle to hypertension therapy. Am J Public Health 76:1105–1108. UNOS (United Network for Organ Sharing). 1990. Annual Report on the U.S. Scientific Registry for Organ Transplantation and the Organ Procurement and Transplantation Network, 1988 and 1989. Washington, D.C.: U.S. Department of Health and Human Services. Whittle J, Whelton PK, Seidler AJ, Klag MJ, et al. 1991. Does racial variation in risk factors explain black-white differences in the incidence of hypertensive end-stage renal disease? Arch Intern Med (in press).

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Kidney Failure and the Federal Government APPENDIX Estimated Additional Program Expenditures Required for Universal Entitlement of Medicare ESRD Program, 1990–95 Year Projected No. of Total Patientsa Non-eligible Patients (7.5%) Annual Program Expenditures per Enrolleeb Annual Average EPO Expenditure per Treated Patientc Midline Estimate of Additional Program Expendituresd (million of dollars) Estimated Range of Additional Program Expenditurese (million of dollars) 1990 159,800 12,000 26,370 5,500 370 240–480 1991 170,100 12,800 27,161 5,665 400 270–530 1992 181,000 13,600 27,976 5,835 440 290–590 1993 192,100 14,400 28,815 6,010 480 320–640 1994 203,400 15,300 29,680 6,190 530 350–700 1995 214,600 16,100 30,570 6,376 570 380–760 NOTE: All current provisions, such as 12 months of Medicare as a second payer and a 3-year limit on eligibility of transplant patients, are assumed remain unchanged. a based on midline projections of Eggers (1989). b Estimate is based on 1987 figure with a projected 3% annual growth. Expenditures on EPO are not included. c Estimate is based on 1989 HCFA interim reimbursement rate with a projected 3% annual growth. Market penetration of EPO is assumed to be 75% throughout the projection years. d An estimated 45 to 50% of this estimate will actually be a transfer of funds from other federal programs, such as VA program and federal grants to rate Medicaid programs. e Based on a low estimate of 5% and a high estimate of 10% noneligible ESRD patients.