In 1972 the US Congress passed legislation authorizing the End Stage Renal Disease (ESRD) program under Medicare

Medicare (United States)

Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...

. Section 299I of Public Law 92-603, passed by Congress on October 30, 1972, extended Medicare coverage to Americans if they had stage five chronic kidney disease (CKD) and were otherwise qualified under Medicare's work history requirements. The program's launch was July 1, 1973. Previously only those over 65 could qualify for Medicare benefits. This entitlement is nearly universal, covering over 90% of all US citizens with severe CKD.

Dialysis Reimbursement

Medicare's unit of payment is one composite rate per dialysis treatment. The ESRD composite rate payment system differs from most other prospective payment systems because there is a single product category to define the service Medicare is buying. Although different equipment, supplies, and labor are needed for hemodialysis and peritoneal dialysis, the current system does not differentiate payment based on dialysis method, location (home or incenter) or equipment used.

The composite rate is intended to cover all operating and capital costs that efficient providers would incur in furnishing dialysis in outpatient facilities or in beneficiaries' homes. The base composite rate as of 2006 is $130 for freestanding dialysis facilities. Medicare caps its payments to facilities at an amount equal to three dialysis sessions per week. Although home dialysis may be given more frequently it is not fully reimbursed by Medicare.

An add-on payment supplements the composite rate. It represents some of the profits previously associated with payments for separately billable drugs. The Social Security Act (Section 1881(b)), as amended by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA, Section 623), directed revisions to the composite rate payment system as well as payment for separately billable drugs furnished by dialysis facilities. There is an annual update to the add-on payment which is determined administratively by CMS

Centers for Medicare and Medicaid Services

The Centers for Medicare & Medicaid Services , previously known as the Health Care Financing Administration , is a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer...

. Congressional Record

Congressional Record

The Congressional Record is the official record of the proceedings and debates of the United States Congress. It is published by the United States Government Printing Office, and is issued daily when the United States Congress is in session. Indexes are issued approximately every two weeks...

5827 updates the drug add-on payment. For 2008 the drug add-on payment to the composite payment rate increased from 14.9 percent to 15.5 percent.

In addition to the add-on payment adjustment, which applies nationally, the composite rate is adjusted up or down by a geographic wage adjustment. (All beneficiaries at a given unit would have the same geographic wage adjustment.) The final adjustment is for case mix; certain beneficiary characteristics trigger composite rate adjustments. These are based on age (<18, 18–44, 45–59, 60–69, 70–79, ≥80 years), body surface area and body mass index.

Medicare Secondary Payer Provision

The Medicare Secondary Payer provision of the ESRD program (also known as the ESRD Coordination Period) was enacted as part of the Omnibus Budget Reconciliation Act of 1981. MSP provides for a coordination of benefits period between Medicare and private health insurance plans for individuals entitled to Medicare solely on the basis of ESRD. If an individual is entitled to Medicare because of ESRD and is covered by an Employer Group Health Plan (EGHP), the EGHP is the first payer (primary) for the first thirty months. The 1981 legislation created an eighteen-month MSP period; the Balanced Budget Act of 1997 extended the eighteen-month period to thirty months. The EGHP is primary regardless of the number of employees and/or the Medicare beneficiary's employment status.

External links

• Examples of ESRD Coordination Periods
• Reimbursement for Hemodialysis,Peter B. DeOreo