GAO Tracks Decline In ESA Use Following Regulatory Changes

A Government Accountability Office report finds that use of erthryopoiesis-stimulating agents in dialysis decreased 31% from 2007 to the end of 2011 after Medicare’s bundled dialysis payment was changed to include drugs and FDA revised dosing recommendations.

Use of erythropoiesis-stimulating agents (ESAs) dropped 31% in Medicare from 2007 to the end of 2011 as a result of changes in reimbursement and more conservative dosing recommendations from FDA, a Government Accountability Office report says.

GAO was directed by the Medicare Improvements for Patients and Providers Act of 2008 to report on trends in the utilization of ESAs. MIPPA also required Medicare’s bundled payment for dialysis to encompass related items and services, including drugs, which had been billed separately. The inclusion of drugs such as ESAs and I.V. iron, used to treat anemia associated with dialysis, and I.V. vitamin D, used to counteract mineral loss, in the bundled payment began Jan. 1, 2011. Bundling of oral ESRD drugs without injectable equivalents is set to begin Jan. 1, 2014 (Also see "Delaying Inclusion Of Oral-Only ESRD Drugs In Bundled Payment Gives Short-Term Reprieve To Genzyme, Amgen" - Pink Sheet, 2 Aug, 2010.).

In 2010, ESAs accounted for about 73% ($2.2 billion) of Medicare expenditures on ESRD drugs, with Amgen Inc.’s Epogen (epoetin alfa) accounting for 93% of that amount and Amgen’s Aranesp (darbepoetin alfa) accounting for the remaining 7%, GAO says. ESAs along with iron and vitamin D accounted for 96% of all dialysis-related drugs.

In a Dec. 7 report, GAO describes the drop-off in ESA utilization as linked to the regulatory implementation timeline: utilization “trends generally were stable from 2007 through the middle of 2009, when CMS issued the proposed rule for the design and implementation of the new bundled payment system, and declined gradually until the third quarter of 2010. Following the third quarter of 2010, when CMS issued the final rule for the payment system, the decline accelerated sharply and continued after the FDA recommended more conservative dosing of ESAs in June 2011.”

FDA changed ESA labeling, which had recommended targeting dosing to achieve and maintain a hemoglobin range of 10 g/dL to 12 g/dL. Labeling no longer includes a target hemoglobin range because clinical evidence suggests there is an increased risk of heart attack and stroke with hemoglobin targets over 11 g/dL (Also see "Epogen Facing Sales Hit With Reduced Dosing Instructions In ESA Labeling For Renal Disease" - Pink Sheet, 24 Jun, 2011.). CMS responded to the updated labeling by altering its Quality Incentive Program guidelines for dialysis, removing the measure that encouraged facilities to keep patients’ hemoglobin over 10 g/dL. The QIP change will go into effect in 2013.

GAO notes that the downward trend in ESA use was driven primarily by lower utilization per beneficiary rather than a decrease in the share of ESRD beneficiaries who received the drugs. “Specifically, ESA utilization per beneficiary among those who received this type of drug declined by about 30% from the third quarter of 2010 through the end of 2011, but the share of beneficiaries on dialysis receiving ESAs fell just 5 percentage points, from 95% to 90%,” the report says. The drop is reflected in product sales, with Amgen reporting Epogen sales 19% lower in 2011 than 2010.

The report also found that utilization per beneficiary receiving I.V. iron declined by 16%, while the share of ESRD beneficiaries receiving it increased from 70% to 75%, and, for those receiving I.V. vitamin D, utilization declined by about 14%, and the share of ESRD beneficiaries receiving it fell from about 74% to 70%.

GAO states that the ESA trend is consistent with the financial incentive for facilities to provide dialysis care more efficiently under the new bundling system.

As for the impact on patients, GAO was unable to find much information. “Our review of the limited information available and interviews with ESRD clinicians indicated that the effect on beneficiaries of recent changes in ESRD drug utilization is unclear,” the report says. U.S. Renal Data System (USRDS) and CMS data “showed an increase from 2010 to 2011 in the rate of blood transfusions. However, CMS data also indicate that the incidence of stroke and heart failure, which have been linked to the use of ESAs, continued to improve during this time period. The ESRD clinicians we interviewed stated that the limited clinical evidence available was insufficient to determine the impact on beneficiaries of recent changes in ESRD drug utilization.”

One argument Amgen and patient groups made against removing the floor on target hemoglobin levels was the possibility for an increase in blood transfusions. Using Medicare claims data, a study by USRDS found that transfusions among dialysis patients were up nearly 21% in September 2011 compared to September 2010 (Also see "ESAs And Transfusions In Dialysis Patients: Watching For The Tipping Point" - Pink Sheet, 15 May, 2012.).

Potential Savings From Rebasing The Bundle

GAO believes that the bundled ESRD payment rate could be reduced given the decline in use of ESRD drugs. On average, utilization of ESRD drugs in 2011 was about 23% lower than in 2007, GAO said, so it believes Medicare paid more than necessary for dialysis care in 2011 because the rate was based on 2007 utilization levels. GAO estimated Medicare spending on dialysis would have been $650 million to $880 million lower in 2011 if the bundled rate had been rebased to reflect 2011 use of drugs. “Furthermore, this estimate of potential savings could be larger in future years if the level of ESRD drug utilization at the end of 2011 declines further, as preliminary data suggest,” the report says.

However, the report says CMS has no plans to rebase the bundled rate and believes it lacks authority to rebase the rates based on utilization shifts, although the Medicare law does allow it to increase payment to account for price increases.

So GAO’s recommendation in the report, which was sent to the committees with jurisdiction over Medicare – Senate Finance, House Ways and Means and House Energy and Commerce – is that “Congress should consider requiring the Secretary of HHS to rebase the ESRD bundled payment rate as soon as possible and on a periodic basis thereafter, using the most current available data.”