Opportunities To Reduce Medicare Costs Under the End Stage Renal Disease Program for Home Dialysis Patients

HRD-83-28: Published: Jan 21, 1983. Publicly Released: Jan 21, 1983.

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GAO addressed issues related to the reimbursement system proposed by the Health Care Financing Administration (HCFA) for the End Stage Renal Disease (ESRD) Program. GAO focused on methods to reduce Medicare equipment and supply costs for home patients who deal directly with suppliers.

GAO estimated that during calendar year 1980 the total cost of obtaining dialysis supplies and equipment for home patients who dealt directly with suppliers was about $75 million, with Medicare paying about 80 percent. Most of these patients would incur lower costs if they continue to obtain equipment and supplies directly rather than through a facility under the HCFA-proposed ESRD reimbursement system. Since many patients will continue to deal directly with suppliers, GAO stated that it would be advantageous for Medicare to ensure that costs for direct-dealing patients are as low as possible. GAO noted that the main problem in purchasing equipment is the lump-sum coinsurance payment at the time of purchase. GAO learned that the amounts Medicare allowed for equipment rentals vary widely and that rental charges are substantially more costly over the estimated useful lives of the equipment than outright purchase. GAO also found that requiring the purchase of equipment would substantially reduce costs for patients who would be dialyzing for prolonged periods. For those cases where purchase is not reasonable, lease/purchase arrangements with suppliers would reduce Medicare costs.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The agency agreed with the recommendation but intends no action. It is seeking legislation to prohibit home dialysis patients from directly dealing with suppliers to obtain needed equipment. Such legislation would render the recommendation moot but until Congress is convinced to enact such legislation, the recommendation is valid and would save program funds if implemented.

    Recommendation: The Secretary, HHS, should direct the Administrator, HCFA, to require the purchase of dialysis equipment by home patients dealing directly with suppliers except in cases where to do so would place an undue hardship on the patient or where purchase can be shown to be more costly.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Not Implemented

    Comments: The agency is seeking legislation to prohibit home dialysis patients from dealing directly with suppliers to obtain equipment. Such legislation would render the recommendation moot but until and unless the agency convinces Congress to enact it, the recommendation is valid and would save program funds.

    Recommendation: The Secretary, HHS, should direct the Administrator, HCFA, to enter into lease/purchase agreements with equipment suppliers similar to those entered into by State-sponsored kidney programs in those cases where purchase of equipment is not required.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Not Implemented

    Comments: The agency is seeking legislation to prohibit home dialysis patients from dealing directly with suppliers to obtain equipment. Such legislation would render the recommendation moot but until and unless the agency convinces Congress to enact it, the recommendation is valid and would save program funds.

    Recommendation: The Secretary, HHS, should direct the Administrator, HCFA, to negotiate dialysis supply contracts with the major suppliers to obtain prices which are as favorable as those negotiated by other purchasers.

    Agency Affected: Department of Health and Human Services

 

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