11costs of CKD & ESRD

And how can you not forgive?You make a feast in honor of whatwas lost, and take from its place the finestgarment, which you saved for an occasionyou could not imagine, and you weep

night and dayto know that you were not abandoned,that happiness saved its most extreme

formfor you.

jane kenyon“happiness”

ICOSTS OF CKD & ESRD11

200

Introduction

In this year’s ADR we continue to report on the overall expenditures of the ESRD program rela-tive to those of the Medicare system, and pres-ent data on the employed population as well. We also look at costs during the transition to ESRD therapy, and at costs for CKD patients who die before reaching ESRD.

Data contrasting per person per year (PPPY) costs in the Medicare and employed popula-tions show considerably higher expenditures in the latter group, suggesting that employed pa-tients, even though they are on average 20 years younger, are paying more for their ESRD care, and may be supplementing provider income streams and potential margins. From this stand-point, employer group health plans (EGHPs) may want to assess the source of this difference to determine the quality and value for these ex-penditures. Although Medicare has the abil-ity to set payment rates, this is not the case for EGHPs, which may find few options when ne-gotiating with dialysis and other providers for components of care.

Medicare PPPY expenditures for dialysis, for example, approach 63,000, while dialysis costs for EGHPs—which cover younger patients—now exceed 26,000. For transplant events, costs in the two populations are nearly 90,000 and 50,000, respectively. In future Annu-al Data Reports we will further explore these

marked differences in expenditures associated with the different payor systems.

Data on components of care show consider-able differences in provider revenue streams on a per person per month (PPPM) basis. Units owned by for-profit chains, for instance, have greater expenditures for erythropoietin, intra-venous iron, and IV vitamin D, while hospital-based units tend to use other injectables to a greater degree. Preventive care costs vary con-siderably by provider. Costs for influenza vac-cinations, for example, are nearly 50 percent greater in units owned by DCI than in other units, while costs for pneumonia vaccinations are highest in Renal Care Group units, and lipid testing costs are greatest in units owned by Na-tional Nephrology Associates. It is unclear how these differences may relate to overall morbidity and mortality in the ESRD population. In the fu-ture, the USRDS will analyze the relationship be-tween degrees of expenditures for components of care and potential morbidity and mortality.

New data on vascular access and associ-ated expenditures show that total vascular ac-cess procedures for hemodialysis have climbed considerably over the last 2 years, while peri-toneal dialysis procedures and costs have been relatively constant. Data on Medicare Part B services show a shift from inpatient to outpa-tient treatment, a pattern also true in “pure” vascular access claims. Hospitals receive simi-

202 · overall costs of

CKD & ESRD

204 · components of costs

206 · ESRD program

expenditures

costs in the transition to ESRD · costs prior to CKD patient death · Medicare expenditures & PPPY costs

actuarial tables of Parts A & B costs for CKD & ESRD

total ESRD spending · trends in costs & patient populations, by age, race, diagnosis, & vintage

208 · per person per year expenditures,

by modality

210 · components of care

212 · vascular access

expenditures

214 · summary

expenditures by age, gender, race, diagnosis, vintage, & modality

spending for clinical services, injectables, preventive care, & inpatient & outpatient services

costs by modality, setting, billing source, & physician speciality · annualized & PPPY expenditures

Figures 11.1 PPPY costs for EGHP patients averaged $72,450 in 2003, compared to $54,904

for Medicare patients, and appear to be increasing at a faster rate than Medicare costs.

Figures 11.5–6 Inpatient and outpatient expenditures account for the largest portion of

yearly Medicare and per person per year costs for dialysis. Inpatient costs grew only 1.3

percent between 2002 and 2003. Outpatient costs, in contrast, rose 9 percent, and are

17 percent higher than those incurred for inpatient services. Figure 11.25 Overall PPPY

dialysis costs were nearly $63,000 in 2003 for patients covered by Medicare, while costs

for those with EGHP coverage grew to $126,000—double the Medicare costs, and more

than 21 percent higher than in the previous year.

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2005 Annual Data Report 11ECONOMIC COSTS OF ESRD

Chapter highlights

lar compensation for inpatient vascular access procedures, whether these procedures are asso-ciated with insertions, insertions and complica-tions, or the treatment of complications alone. Facilities, however, receive significantly lower payments for outpatient services. Differences in these vascular access expenditures, particularly in the hemodialysis population, need to be con-sidered when looking at overall vascular access trends.

Patients using simple fistulas continue to have lower overall expenditures in the next year, while expenditures are greatest for those using dialysis catheters. These associated costs do not imply causality, since patients with catheters may have multiple medical conditions and be unable to have an internal access placed, there-

. · Costs of Medicare, ESRD, & EGHP programsESRD dollars are calculated directly from claims (Table K.) & estimated costs for HMOs & organ acquisition. ESRD costs in 2003 are inflated by 2 percent to account for costs incurred but not reported. Medicare dollars are obtained from the CMS Office of Financial Management. EGHP data are derived from the Medstat claims database. Medicare per person per year costs are limited to period prevalent ESRD patients with Medicare as primary payor; as-treated model. See Appendix A for further details.

.2 · Median age of the Medicare & ESRD populationsincludes all patients with claims.

by biasing the data. Regardless of this, howev-er, fistula use is clearly rising, and is associated with overall lower expenditures consistent with reduced complication rates.

In summary, ESRD program costs con-tinue to rise and, as shown in the Précis, have exceeded 8. billion—6.6 percent of the to-tal Medicare budget. EGHP expenditures for ESRD account for 2.3–2.5 percent of health plan expenditures, and that percentage is growing. PPPY costs for EGHP patients average 72,450, compared to 54,904 for Medicare patients, and appear to be increasing at a faster rate than the Medicare costs—in spite of a median age of 52 for EGHP patients, compared to that of 62 for Medicare ESRD patients.

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COSTS OF CKD & ESRD11

202

11.3 incident ESRD patients age 67+

Per person per month expenditures for the transition to ESRD, by diagnosis

n the six months leading up to a diagnosis of ESRD and the six immediately following, the highest per person per month (PPPM) costs are, not surprisingly, incurred by

patients with the greatest disease burden—those with congestive heart failure alone or in conjunction with diabetes (Figure .3). In 995, for example, PPPM costs for patients age 67 or older and with both diagnoses rose 206 percent in the month of initiation, to 3,529. In 2002, this one-month increase was 287 percent, and costs reached 8,26. This spike at the start of therapy is followed, for all groups, by a sharp fall during the next month. At month six, however, PPPM costs for patients with both CHF and diabetes re-main 59 percent higher than for those with neither diagnosis, and 39 percent higher than for those with diabetes alone.

Trends are similar for patients who die with a diagnosis of chronic kidney disease (Figure .4). PPPM costs tend to be high-est for those with both CHF and diabetes, and spike in the month before death. In 2003, for example, costs for all patients nearly dou-bled during this month, reaching ,946. During this month, how-ever, PPPM costs for patients with diabetes alone rise at a higher rate than those for patients with diabetes accompanied by CHF—in 2003, 20 and 86 percent, respectively.

Inpatient and outpatient expenditures account for the largest portion of yearly Medicare and per person per year costs for dial-ysis (Figures .5–6). It appears that inpatient costs have stabilized, increasing by only .3 percent between 2002 and 2003. Outpatient costs, in contrast, show an increase of 9 percent, and are 7 percent higher than those incurred for inpatient services.

For transplant events, overall inpatient costs are more than four times higher than those for outpatient services. Part B costs for transplant grew by nearly 0 percent between 2002 and 2003, and are close to equaling outpatient expenditures. Per person per

Overall costs of CKD & ESRD

month expenditures parallel total costs. Spending for inpatient services, for example, are more than four times those found on the outpatient side, illustrating the high initial hospitalization costs at-tached to each transplant event. As is the case with overall outpa-tient and part B costs, per person per year costs for these servic-es are nearly equal.

The highest costs for a functioning graft are associcated with inpatient and part B services. Overall part B expenditures have increased the most over time—by more than five-fold since 993 and 2 percent in 2003—while per person per year costs have more than tripled. Inpatient costs for graft failure seem to be leveling off, and actually declined in 2003. Outpatient costs, however, rose nearly 4 percent overall in 2003, while per person per year costs rose 0 percent. Costs for graft failures are highest for inpatient services but, similar to costs for functioning grafts, appear to be declining; costs incurred for outpatient services are moving up-ward and increased nearly 4 percent overall in 2003.

The greatest portion of total Medicare ESRD dollars is spent on the provision of hemodialysis (Figures .7–8). Total Medicare ex-penditures for dialysis totaled 4.8 billion in 2003, far above the 0.8 billion expended for transplant events. Per person per year costs are noticeably different, in that expenditures are highest for transplant events and graft failure, exceeding those for dialysis by nearly 33,000 and 8,000, respectively.

{Figure .3} incident ESRD patients age 67 & older, with Medicare as primary payor for the six months before & the six months following the first ESRD service date. {Figure .4} Medicare-entitled patients diagnosed with CKD in the year pri-or to death; data from the 5 percent Medicare sample. {Figures .5 & .7} peri-od prevalent ESRD patients; modalities determined using Model 2 methodology as described in Appendix A; patients with Medicare as secondary payor are included. Totals are paid claims for all ESRD patients starting at first ESRD service date & continuing until death or the end of the study period. {Figures .6 & .8} period prevalent ESRD patients; modalities determined using Model 2 methodology as de-scribed in Appendix A; patients with Medicare as secondary payor are excluded.

11.4 Medicare-entitled patients with CKD in the year prior to death

CKD patients who die: costs in the year prior to death, by diagnosis

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203

2005 Annual Data Report 11Economic costs of Esrd

11.5 period prevalentESRD patients

Growth in annual Medicare expenditures, by modality & type of service

11.6 period prevalentESRD patients

Growth in Medicare expenditures per patient year, by modality & type of service

11.7 period prevalentESRD patients

Total Medicare expenditures, by modality 11.8 period prevalent

ESRD patientsTotal Medicare expenditures

per patient year, by modality

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COSTS OF CKD & ESRD11

204

Components of costs

11.a Medicare patients with CKD diagnosed in 2002, & period prevalent ESRD patients, 2003

Per person per month Part A costs (dollars) for CKD & ESRD: actuarial, as-treated model

11.10 period prevalent ESRD patients, 2003

Per person per month total Part A outpatient costs for the ESRD population, by diagnosis

11.9 Medicare patients with CKD diagnosed in 2002, & period prevalent ESRD patients, 2003

Per person per month total Part A costs for the CKD & ESRD populations, by diagnosis

art A per person per month (PPPM) costs for chronic kid-ney disease (CKD) and ESRD

are shown in Table .a and Figures .9–0. Overall ESRD costs are six times high-er than those incurred for CKD. A large portion of this difference is attributable to much higher inpatient medical and surgi-cal costs for ESRD patients. ESRD medi-cal costs, for instance, are more than three times higher than those found in CKD pa-tients, while surgical costs are more than five times greater. Large differences also oc-cur on the outpatient side. ESRD expendi-tures for dialysis and EPO, for example, are 96 and 42 per month, while CKD costs for similar services are negligible.

Patient comorbidity has a major impact on expenditures. In CKD patients, higher costs are sustained for those with multiple conditions. Medical costs for patients with a combination of congestive heart failure (CHF) and diabetes, for instance, are near-ly triple those incurred for patients with di-abetes only, while surgical costs are nearly double. And ESRD costs for patients with diabetes are noticeably greater than those found in non-diabetic patients—26–29 per-cent higher for medical and surgical costs, and 5 percent higher for dialysis and EPO.

Dialysis and EPO account for nearly 80 percent of total outpatient ESRD monthly expenditures, while nearly 2 percent of to-tal cost is related to the use of injectables such as IV vitamin D and IV iron.

Part B costs for CKD and ESRD patients generally follow the same patterns found in Part A costs (Table .b and Figures .–2). Inpatient surgery costs for physician and anesthesia services, for instance, are more than three times higher for ESRD pa-tients compared to CKD patients, while out-patient costs for the same services are more than double. Nephrologist hospital costs for ESRD patients are dramatically higher than those incurred for CKD patients, and ESRD costs in this category are 36 percent greater for diabetics than for non-diabetics. Non-nephrologist hospital costs for ESRD are higher as well, with monthly costs for

CKD ESRD All DM CHF DM+CHF Neither All DM NDM

Inpatient Medical DRG 243.8 145.4 336.6 405.6 129.5 771.3 884.4 699.6 Surgical DRG 153.1 111.2 186.7 213.0 115.1 783.5 907.1 705.3 Other DRG 36.6 22.8 47.9 61.6 19.9 78.2 107.7 59.6 Inpatient pass-through 9.4 6.3 12.9 14.8 5.1 44.8 49.7 41.6Outpatient OP dialysis 0.6 0.6 0.6 0.8 0.2 915.8 995.7 865.1 OP EPO 0.8 0.8 0.7 1.0 0.5 412.2 446.9 390.2 IV vitamin D 0.0 0.0 0.0 0.0 0.0 108.6 110.4 107.5 IV iron 0.1 0.1 0.1 0.1 0.0 76.0 87.3 68.9 Other injectables 2.1 2.0 1.9 1.7 2.7 15.2 16.0 14.7 OP surgery 5.7 5.5 4.8 5.5 6.4 92.5 107.5 83.0 Emergency hospital 3.0 2.5 3.3 4.0 2.3 19.4 22.0 17.7 Clinic 2.6 2.9 2.4 3.2 2.0 7.6 9.4 6.5 PT/OT 5.7 4.9 6.5 7.5 4.2 9.3 12.5 7.3 Pharmacy 3.7 3.4 4.0 3.9 3.6 8.3 8.8 8.0 Supplies 4.3 3.3 5.0 5.3 3.9 7.5 9.0 6.6 Other outpatient 6.0 5.4 6.5 7.5 4.9 23.8 27.9 21.2Skilled nursing facility 68.3 42.0 98.5 106.7 38.3 122.8 164.5 96.4Home health agency 38.3 25.8 48.3 65.8 19.3 79.8 118.4 55.3Hospice 13.8 7.8 21.6 16.8 11.1 10.3 11.4 9.6Total 598 393 788 925 369 3,587 4,096 3,264

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2005 Annual Data Report 11ECONOMIC COSTS OF ESRD

11.b Medicare patients with CKD diagnosed in 2002, & period prevalent ESRD patients, 2003

Per person per month Part B costs for CKD & ESRD: actuarial, as-treated model

11.12 Medicare pts with CKD diagnosed in 2002, & period prevalent ESRD pts, 2003

Per person per month total Part B nephrologist & non-nephrologist costs for the CKD & ESRD populations, by diagnosis

11.11 Medicare patients with CKD diagnosed in 2002, & period prevalent ESRD patients, 2003

Per person per month total Part B costs for the CKD & ESRD populations, by diagnosis

ESRD exceeding those for CKD by more than 50 percent.

Not surprisingly, the cost for immuno-suppressive drugs is much higher in ESRD patients, undoubtably due to the use of these drugs in transplant recipients. Pre-scription drug costs, however, are nearly 27 percent lower in the ESRD population.

Expenditures for CKD patients with both CHF and diabetes are 2 and 56 per-cent higher, respectively, than costs in pa-tients with CHF or diabetes only, while monthly costs for ESRD patients with dia-betes exceed those for non-diabetics by 33 percent. Total per person per month part B costs for non-nephrologist services far exceed those for services provided by ne-phrologists, and are higher for CKD pa-tients with multiple cormorbidities and ESRD patients who are diabetic.

{Tables .a–b & Figures .9 & .–2} Medicare patients diagnosed with CKD in 2002 & with Medi-care as primary payor (5 percent Medicare sample), & period prevalent ESRD patients, 2003, with Medicare as primary payor. Costs are per person per month for calendar year 2003. {Figure .0} period prev-alent ESRD patients, 2003, with Medicare as prima-ry payor. Costs are per person per month for calen-dar year 2003.

CKD ESRD All DM CHF DM+CHF Neither All DM NDMInpatient surgery Physician 11.6 8.9 14.0 14.6 9.8 35.5 40.4 32.4 Anesthesia 2.6 2.0 2.9 3.2 2.2 8.7 10.0 7.9Outpatient surgery Physician 13.4 14.5 11.3 14.0 13.5 27.6 35.0 22.8 Anesthesia 2.3 2.4 2.0 2.3 2.4 5.3 6.9 4.2Nephrologist Hospital 1.9 1.1 2.5 3.6 0.9 26.6 31.5 23.4 Critical care 0.1 0.0 0.1 0.2 0.0 0.9 1.1 0.8 IP consult 0.8 0.5 1.0 1.4 0.4 5.3 6.4 4.6 SNF 0.0 0.0 0.0 0.1 0.0 0.2 0.3 0.2 ER 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 OP consult 0.3 0.4 0.2 0.3 0.3 0.3 0.3 0.3 Office 1.2 1.4 0.9 1.4 1.0 4.8 3.9 5.4 Therapeutic 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Home visit 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Non-nephrologist Hospital 25.4 14.7 34.4 44.2 12.5 65.6 81.6 55.5 Critical care 2.7 1.3 3.9 4.8 1.2 9.2 10.9 8.1 IP consult 6.7 4.1 8.9 11.3 3.5 22.1 27.2 18.9 SNF 3.2 2.1 4.4 4.9 1.8 4.4 6.1 3.4 ER 4.5 3.1 5.7 6.9 2.8 15.1 17.6 13.6 OP consult 2.9 3.0 2.7 3.1 2.9 6.5 7.1 6.1 Office 18.0 18.1 18.0 20.8 15.6 23.6 26.6 21.7 Therapeutic 0.4 0.3 0.4 0.3 0.4 0.3 0.2 0.3 Home visit 0.5 0.4 0.8 0.9 0.3 0.5 0.7 0.4

CKD ESRD All DM CHF DM+CHF Neither All DM NDM

Dialysis 0.4 0.3 0.4 0.6 0.1 186.8 201.9 177.2Vascular access 1.6 1.3 1.8 2.4 1.1 71.9 84.8 63.7Peritoneal access 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0Laboratory 13.5 13.8 13.0 17.4 10.5 107.2 116.4 101.4Pathology 2.9 2.7 2.9 2.7 3.3 7.3 6.1 8.0Radiology 23.0 21.6 21.9 21.9 25.6 64.9 71.2 60.9Ambulance 10.4 6.8 14.0 17.2 5.6 101.4 150.6 70.3Durable medical equipment 15.5 10.7 19.6 26.3 7.8 36.5 49.2 28.5Prosthetics 2.5 3.0 1.3 4.8 1.0 15.0 30.2 5.3Diagnostic testing 2.8 2.8 2.7 3.7 2.2 6.3 7.2 5.7Cardiovascular 7.5 5.0 10.4 11.5 4.4 16.4 19.1 14.7Physical medicine 1.4 1.6 1.1 1.5 1.4 1.9 2.1 1.8Opthalmology 2.5 3.3 2.0 2.9 2.1 4.4 6.6 3.0Immunosuppressive drugs 0.2 0.2 0.3 0.2 0.1 53.5 40.9 61.5Prescription drugs 20.6 17.4 20.7 18.1 24.8 15.1 9.7 18.6Other Part B 17.8 19.3 15.1 23.8 13.8 35.9 55.3 23.6 Total 221 188 241 293 175 988 1,166 876

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COSTS OF CKD & ESRD11

206

ESRD program expenditures

11.16 period prevalent ESRD patients

Prevalent ESRD populations & program costs, by age

11.17

11.13 ESRD spending

11.14 Annual percent change in ESRD spending

11.15 December 31 point prevalent patients

Estimated point prev-alent ESRD patients

period prevalent ESRD patients

Prevalent ESRD populations & program costs, by race (Medicare only)

xpenditures for both Medicare paid claims and Medicare patient obli-gations increased by 7–8 percent in

2003, 2–3 percent less than growth in the prior year (Figure .3). Spending for non-Medicare claims rose 5 percent, slightly less than the nearly 6 percent rise in 2002. Medi-care HMO spending increased by less than percent in 2003 after falling and 5 percent in the previous two years.

Total Medicare spending grew 5.6 per-cent in 2003, down nearly 6 percent from the . percent rise in 2002 (Figure .4). This decrease translates directly into re-duced costs per patient year, which showed a 2.2 percent increase in 2003 compared to

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2

4

6

8

10

12

14

16

Patient populations

Program costs

92 94 96 98 00 02

raey su

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mo rf e

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-5

0

5

10

15

20

Percent growth in population

Percent growth in program costs

5+ years

<2 years

raey suoi ve r

p m

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nah c t

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-5

0

5

10

15

<2 years 2-<5 years 5+ years5+ years

<2 years

207

2005 Annual Data Report 11ECONOMIC COSTS OF ESRD

11.18

11.19 period prevalent ESRD patients

Prevalent ESRD populations & program costs, by vintage (in years; Medicare only)

period prevalent ESRD patients

Prevalent ESRD populations & program costs, by primary diagnosis (Medicare only)

5.8 percent in the previous year. Growth in Medicare costs over recent years appears quite modest when compared to the recent dramatic increases in costs for EGHP pa-tients. Total spending for these patients in-creased substantially in 2002 (6 percent) and while growth in 2003 was significant-ly lower it still reached 28 percent. Per per-son per year costs rose 5.3 percent in 2003, more than double the growth in 2002.

The Medicare ESRD population grew by only 2.8 percent in 2003, compared to a 3. percent increase in the estimated num-ber of non-Medicare patients with ESRD (Figure .5).

Since 2000, growth in the Medicare pop-ulation has been highest in patients age 45–64 and those age 75 and older; in the EGHP population, the greatest growth has been in the number of patients age 45–64. (Figure .6). Per person per year costs for children rose 7.3 percent in 2003, compared to less than 2 percent in all other age categories.

The Asian population continues to show the highest yearly percent growth, reach-ing nearly 4 percent in 2003 compared to 2–2.5 percent in other racial groups (Figure .7). Increases in program costs in 2003 were similar for all races, ranging between 4.6–6.3 percent.

Diabetes continues to be the most com-mon primary cause of renal failure in Medicare ESRD patients, affecting near-ly 40 percent of the total ESRD population (Figure .8). Total yearly expenditures for patients with diabetes are 64 percent high-er than those for patients with glomerulo-nephritis, and 300 percent higher than for patients whose ESRD is caused by hyper-tension.

For all vintage groups, both the size of the Medicare population and the costs in-curred rose less in 2003 than in 2002 (Fig-ure .9).

{Figure .3} Medicare ESRD costs are obtained from claims files, & include all Medicare as prima-ry payor claims as well as amounts paid by Medicare as secondary payor. Medicare patient obligations are estimated deductibles & copays, HMO costs are es-timated as the number of HMO months times the Medicare AAPCC, & organ acquisition costs are es-timated as $25,000 per transplant. The non-Medi-care estimate includes all non-Medicare patients (us-ing the AAPCC primary payor estimate for Medicare as secondary payor patients), & estimated patient ob-ligations. {Figure .4} total Medicare ESRD costs obtained from claims data, & include all Medicare as primary payor claims as well as amounts paid by Medicare as secondary payor. PPPY costs include only patients with Medicare as primary payor. {Fig-ure .5} December 3 point prevalent patients; non-Medicare status determined from payor sequence. {Figures .6–9} period prevalent ESRD patients; non-Medicare & MSP patients excluded. As-treated economic model (see Appendix A for details). EGHP data are not available for ages 65 & over or by race, primary diagnosis, or vintage. EGHP data are derived from the Medstat claims database. See Ap-pendix A for further details.

)sral lo

d fo s

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uo

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P

30

40

50

60

70

0-1920-4445-6465-7475+

91 93 95 97 99 01 03 70

80

90

100

110

6

8

10

12

14

16

18

20

91 93 95 97 99 01 03 40

50

60

70

80

90

100

Transplant event w/i year

Functioning graft only

Graft failure within year (Medicare only)

0

50

100

150

200

00 02 80

120

160

200

240

Dialysis only: Medicare EGHP

) sr allod fo s

dna s

uo

ht ni( s ts

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35

40

45

50

55

60

65

70Male Female

91 93 95 97 99 01 03 80

85

90

95

100

8

10

12

14

16

18

91 93 95 97 99 01 03 40

50

60

70

80

Transplant event w/i year

Functioning graft only

Graft failure within year

90

100

110

120

130

140

00 02 80

100

120

140

160

180

Dialysis only: Medicare EGHP

)sral lod fo s

dn as

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30

40

50

60

70White Black Other

70

80

90

100

110

6

8

10

12

14

16

18

91 93 95 97 99 01 03 40

45

50

55

60

65

70

75

Transplant event within year

Functioning graft only

Graft failure within year

Dialysis only

COSTS OF CKD & ESRD11

208

Per person per year expenditures, by modality

11.20 period prevalent ESRD patients

PPPY expenditures, by age 11.21 period prevalent

ESRD patientsPPPY expenditures,

by gender 11.22 period prevalent ESRD patients

PPPY expenditures, by race (Medicare)

ith few exceptions, yearly Medi-care expenditures for ESRD pa-tients increase steadily along with

patient age (Figure .20). In dialysis pa-tients, for example, costs for patients age 65 and older are 47 percent higher than those for pediatric patients; expenses for these older patients reached 68,000 in 2003. Transplant costs for patients age 65–74 are 4 percent higher than those incurred for children, and post-event costs for these

patients exceed those for children by more than 5,000 per annum. In sharp contrast to dialysis and transplant costs for Medi-care patients, costs for patients insured by Employer Group Health Plans (EGHPs) in 2003 were 52–68 and 36–6 percent higher, respectively; children had the highest costs in both modalities.

In Medicare patients, dialysis and graft failure costs are nearly 0 percent higher for women compared to men, while transplant

W

)sra llo

d fo s

dna s

uo

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P

30

40

50

60

70

Diabetes Hypertension Glomerulonephritis Other

70

80

90

100

110

5

10

15

20

25

91 93 95 97 99 01 03 40

50

60

70

80

90

100

Transplant event within year

Functioning graft only

Graft failure within year

Dialysis only

)sra llo

d fo s

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uo

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30

40

50

60

70

<2 years2-<5 years 5+ years

Dialysis only

70

80

90

100

110

6

8

10

12

14

16

91 93 95 97 99 01 03 40

50

60

70

80

Transplant event within year

Functioning graft only

Graft failure within year

91 93 95 97 99 01 03

)srallo

d fo s

dna s

uo

h t ni( s ts oc YPP

P 0

50

100

150

200

Dialysis Transplant event Functioning graft Graft failure

Dialysis only: Medicare EGHP

00 02

209

2005 Annual Data Report 11ECONOMIC COSTS OF ESRD

11.23 period prevalent ESRD patients

PPPY expenditures, by diagnosis (Medicare) 11.24 period prevalent

ESRD patientsPPPY expenditures,

by vintage (Medicare)

11.25 period prevalent ESRD patients

PPPY expenditures, by modality

costs are similar between the two genders (Figure .2). Dialysis and transplant costs for women enrolled in EGHPs, in contrast, are 8.3 and .9 percent lower that those in-curred by their male counterparts.

Dialysis costs for whites and blacks show only slight differences, while those for transplant events are 5 percent high-er for black patients (Figure .22). A more striking difference is evident in costs for pa-tients with a functioning graft; since 99,

spending has been consistently higher for blacks when compared to whites, reaching a difference of nearly 2 percent in 2003.

By primary diagnosis, per person per year (PPPY) expenditures are highest for patients whose ESRD is caused by diabe-tes (Figure .23). In dialysis patients with diabetes, for instance, spending exceeded 68,000 in 2003—nearly 3 percent high-er than for patients with hypertension, and almost 30 percent higher than for patients

with glomerulonephritis. The greatest dif-ferences are seen in patients with a func-tioning graft; expenditures for diabetics ex-ceed those for patients with hypertension, glomerulonephritis, and other primary di-agnoses by 49, 95, and 76 percent, respec-tively. Differences in patients with graft failure are 30, 45, and 32 percent.

In the dialysis population, PPPY expen-ditures are highest in patients who have been on dialysis for less than two years (Figure .24). In the transplant population, in contrast, costs are 7.4 percent lower in newer transplant patients compared to pa-tients who have had their transplant for 2–5 years, and percent lower than those for patients of the longest vintage.

Overall PPPY dialysis costs were near-ly 63,000 in 2003 for patients covered by Medicare, while costs for those with EGHP coverage grew to 26,000—double the Medicare costs, and more than 20 per-cent higher than in the previous year (Fig-ure .25). Expenditures continue to rise for patients on dialysis and for those with graft failure, while they are falling for new-ly transplanted patients and those with a functioning graft.

{Figures .20–25} period prevalent ESRD patients; patients with Medicare as secondary payor are ex-cluded. As-treated model, modalities determined us-ing Model 2 methodology as described in Appendix A.

In Figures .20–2 & .25, EGHP data are de-rived from the Medstat claims database. See Appen-dix A for further details.

91 93 95 97 99 01 03

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1.0

1.5

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2.5Other injectables

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IV Vitamin D hormone

EPO

91 93 95 97 99 01 03

)sd

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PPP 0.0

0.5

1.0

1.5

2.0

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400

450

500

550

600

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40

60

80

100

120

800

900

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All 1 2 3 4 5 6 NC HB U50

100

150

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Unit affiliation (see table at right for codes)

All 1 2 3 4 5 6 NC HB U0

10

20

30

All 1 2 3 4 5 6 NC HB U50

75

100

125

150

Dialysis EPO IV iron

IV vitamin D Other injectables Laboratory

622 + (647)599 to <622556 to <599495 to <556below 495 (451)

180 + (260)140 to <180113 to <140

87 to <113below 87 (62)

1,783 + (2,058)1,591 to <1,7831,460 to <1,5911,284 to <1,460below 1,284 (1,107)

2,213 + (2,275)2,144 to <2,2132,092 to <2,1442,024 to <2,092below 2,024 (1,963)

IV iron EPO Dialysis

Laboratory Other injectables IV vit. D hormone

COSTS OF CKD & ESRD11

210

Components of care

11.29 period prevalent dialysis patients

PPPM costs ($) for injectables, 2003, by HSA

11.30 period prevalent dialysis patients

PPPM costs ($) for inpt & outpt services, 2003, by HSA

11.26 period prevalent dialysis patients

PPPM costs for clinical services

costs for clinical services

11.28 period prevalent dialysis patients

PPPM costs for clinical services, by unit affiliation, 2003

11.27 period prevalent dialysis patients

Total Medicare spending on injectables

hile PPPM costs for dialysis rose 2.2 percent between 2002 and 2003, costs for EPO and IV iron rose 5.2

and 9.8 percent, respectively (Figure .26). Medicare spent nearly .6 billion on EPO in 2003— percent more than in the pre-vious year (Figure .27). PPPM costs for dialysis, EPO, and IV iron are greatest in units owned by DaVita (Figure .28).

PPPM costs for injectables are highest in the eastern portions of the country, especial-ly in the Gulf Coast states and those along the Atlantic Seaboard (Figure .29). Nation-wide PPPM costs for EPO and IV iron are 609, while those for IV vitamin D and oth-er injectables are 54.

On a national level, PPPM inpatient and outpatient costs are very similar, at ,839 and 2,67, respectively; outpatient non-dialysis, dialysis, and Part B costs are ,025, ,42, and 988 (Figure .3).

Preventive care costs are greatest for eye examinations, followed by hepatitis B vac-cinations (Figures .32–33). Medicare costs for eye examinations reached 25.4 million in 2003; only 3 million, in contrast, was spent on cancer screening. PPPM costs for lipid testing are greatest in NNA units, and

Outpatient

IV vitamin D & other injectables

Erythropoietin & IV iron

Inpatient

lowest in units owned by RCG or DCI (Fig-ure .34).

Sixty percent of patients now use Zem-plar and only 6.3 percent use Calcijex; the use of Hectoral grew from 6.6 to 9. percent between 2002 and 2003 (Figure .35). For IV iron therapy, 45 percent of patients are now using Ferrlecit, and 36 percent are on Venofer (Figure .36). PPPY costs for Zem-plar exceeded 2,500 in 2003 (Figure .37).

{Figures .26–27} period prevalent dialysis patients. Same methods as those used in Table K.; see Appen-dix A for details. {Figure .28} period prevalent dial-ysis patients, 2003. {Figures .29–3} period preva-lent dialysis patients with Medicare as primary payor, 2003, by HSA, unadjusted. {Figures .32–34} peri-od prevalent dialysis patients, 2003. Same methods as those used in Table K.; see Appendix A for details. {Figures .35–36} period prevalent dialysis patients. Population further restricted to those who survive on dialysis for the entire calendar year, so as to have an equal opportunity to receive IV vitamin D or IV iron preparations. Unit-affiliated data are for 2003. {Fig-ure .37} period prevalent dialysis patients. Popula-tion further restricted to those who survive on dialy-sis for the entire calendar year, so as to have an equal opportunity to receive IV vitamin D or IV iron prepa-rations. PPPY calculated for patients who receive one type of vitamin D or iron preparation exclusively dur-ing calendar year 2003. Non-Medicare, Medi-care HMO, & Medicare as secondary payor patients excluded; as-treated economic model.

W

91 93 95 97 99 01 03

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20

30

40

50

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91 93 95 97 99 01 03

)srallo

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0

5

10

15

20

25 Cancer screening

Hep. B vaccine

Pneumonia vacc.

Flu vaccine

Eye exams

Lipid test

HbA1c

Cancer screening

Hep. B vaccine

Pneumonia vacc.

Flu vaccine

Eye exams

Lipid test

HbA1c

All 1 2 3 4 5 6 NC HB U

1 2 3 4 5 6 NC HB UAll

1 2 3 4 5 6 NC HB UAll

1 2 3 4 5 6 NC HB UAll

1 2 3 4 5 6 NC HB UAll 1 2 3 4 5 6 NC HB UAll 1 2 3 4 5 6 NC HB UAll

0

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0.5

1.0

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2.0

2.5

0.0

0.2

0.4

0.6

0.8

1.0

Unit affiliation (see table above for codes)

0.00

0.05

0.10

0.15

0.20

0

2

4

6

HbA1c Lipid testing Eye examinations

Influenza vacc. Pneumonia vacc. Hepatitis B vacc.

0.0

0.2

0.4

0.6

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1.0 Cancer screening

Venofer Ferrlecit INFeD0

500

1,000

1,500I.V. Iron

)sr allo

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1,000

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92 94 96 98 00 02

stneita

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20

40

60

80

100Hectoral

Zemplar

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(see table for codes)

% using IV vitamin D

92 94 96 98 00 02

stneita

p fo tnecre

P

0

20

40

60

80

100Venofer

Ferrlecit

INFeD

(see table for codes)

% using IV iron

1,783 + (2,058)1,591 to <1,7831,460 to <1,5911,284 to <1,460below 1,284 (1,107)

1,092 + (1,170)1,025 to <1,092

969 to <1,025907 to <969

below 907 (841)

1,158 + (1,198)1,122 to <1,1581,100 to <1,1221,063 to <1,100below 1,063 (1,012)

1,007 + (1,151)913 to <1,007848 to <913758 to <848

below 758 (682)

211

2005 Annual Data Report 11ECONOMIC COSTS OF ESRD

11.31 period prevalent dialysis patients, 2003

Unadjusted Part A & B costs ($), 2003, by HSA

11.32 period prevalent dialysis patients

PPPM costs for preventive care

costs for preventive care

11.34 period prevalent dialysis patients

PPPM costs for preventive care, by unit affiliation, 2003

11.33 period prevalent dialysis patients

Total Medicare spending on preventive care

Chain · Fresenius Chain 2 · GambroChain 3 · DaVitaChain 4 · Renal Care

GroupChain 5 · Dialysis

Clinics, Inc.

Chain 6 · Nat’l Nephrology Assoc.

NC · Non-chain unitsHB · Hospital-based

units U · Unknown affiliation

11.35 period prevalent dialysis patients

I.V vitamin D use 11.37 period prevalent

dialysis patientsPPPY costs for

injectables, 2003

Dialysis

Part B

Outpatient (non-dialysis)

Inpatient

11.36 period prevalent dialysis patients

I.V iron use

91 93 95 97 99 01 03 )s

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0.6

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Hemodialysis

Peritoneal dialysis

91 93 95 97 99 01 03

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40

80

120

160

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Hemodialysis

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91 93 95 97 99 01 03

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0

20

40

60

80

100

91 93 95 97 99 01 03

serudecor

p fo t

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10

20

30

40

50

60

70

Fistulas Grafts HD caths PD caths

eru

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Fistulas Grafts HD caths PD caths

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Inpatient Outpatient

“Pure” inpatient

“Pure” outpatient

COSTS OF CKD & ESRD11

212

Vascular access expenditures

11.38 Medicare ESRD Part B vascular access claims

Trends in total access procedures

access procedures

11.40 Medicare ESRD Part B VA claims

Trends in access procedures, by setting

11.39 Medicare ESRD Part B vascular access claims

Trends in access costs

11.42 pure inpatient & outpatient claims

Dollars, by intervention type & billing source, 2003

vasCular access spending

11.43 pure inpatient & outpatient

Dollars, by access type & intervention, 2003

11.41 Medicare ESRD Part B VA claims

Percent of procedures that are access only

11.44 all inpt. & outpt. claims

Dollars, by access type & physician specialty, 2003

ince 99, the number of vascular access procedures for hemodialy-sis and peritoneal dialysis patients

has grown 392 and 27 percent, respectively (Figure .38). Costs during that same peri-od rose at a slower pace—34 and 0 percent (Figure .39). Between 2002 and 2003, how-ever, total costs increased at a higher rate than did the number of procedures. Costs rose 0.8 and 3.3 percent for hemodialysis and peritoneal dialysis, compared to an 8.7 and 2.5 percent growth in procedures.

In 99, more than three-quarters of all access procedures were performed in inpa-tient setttings; as of 2003, however, two out of every three procedures are done on an outpatient basis (Figure .40). This trend is shown as well by data on access-only pro-cedures (Figure .4).

Total inpatient vascular access costs per procedure in 2003 reached ,75 for inser-tions only, 3,045 for insertions and com-plications, and 2,070 for complications only; outpatient costs were ,494, 2,245, and 2,53, respectively (Figure .42). For inpatient procedures, facility costs ac-counted for 93–96 percent of total costs. For procedures done on an outpatient ba-sis, in contrast, facility costs were 73 per-cent of total costs for insertions only, 77 percent for insertions and complications, and 84 percent for complications only.

By access type, costs per procedure for hemodialysis accesses are highest for cath-eters, at ,700 for an insertion only and 4,25 for a combined insertion and com-plication; costs are lowest for fistulas (Fig-ure .43). For peritoneal dialysis catheters, costs for a combined insertion and compli-cation reach 6,76, almost three times the cost for an insertion-only procedure.

As reflected by total physician dollars, most fistulas and grafts are placed by sur-geons; hemodialysis catheters, in contrast, are placed almost equally by surgeons and radiologists (Figure .44). Most peritoneal dialysis catheters are now placed by sur-geons as well, a change from earlier years when most such accesses were placed by nephrologists.

The use of hemodialysis fistulas and catheters has been growing since 999, as graft use has declined (Figure .45). Dur-ing this time, total annualized Medicare expenditures for vascular access have in-creased 9.5 percent; costs for fistulas and

S

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ni ,$( stsoc YP

PP

0

1

2

3

4

5

6

7

Fistulas Grafts Catheters1999 2003 1999 2003 1999 2003

Physician

Inpatient facility

Outpatient facility

Fistulas Grafts Catheters

stneita

p f o tne cre

P

0

10

20

30

40

50

601999

2003

)sd

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ht ni ,$( s ts

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0

10

20

30

40

50

60

70Other

Physician

Inpatient

Outpatient

1999

Total Fistulas Grafts Catheters0

10

20

30

40

50

60

702003

213

2005 Annual Data Report 11ECONOMIC COSTS OF ESRD

11.45 hemodialysis patients; CPM data

Vascular access use, by access type

11.47 hemodialysis patients; CPM data

Per person per year Medicare expenditures for vascular access procedures, by vascular access type

11.46 hemodialysis patients; CPM data

Total per person per year Medicare expenditures, by vascular access type

grafts have grown 20.8 percent, while those for catheters have risen at a lower rate of 3.9 percent (Figure .46). Outpatient costs have grown between 4 percent for fistulas to 8.5 percent for catheters, while physician costs have increased at higher rates—3 percent overall, and 34 percent for inpatient and physician costs.

Per person per year costs for outpatient vascular access servic-es have, since 993, grown at rates greater than those of the annu-alized Medicare expenditures: 45, 6, and 67 percent for fistulas, grafts, and catheters, respectively (Figure .47). Inpatient PPPY costs for fistulas and grafts, however, have increased less than 2 percent, while costs for catheters have risen nearly 4 percent. Overall, PPPY costs have increased 30–33 percent.

Figures .38–40 Medicare ESRD Part B vascular access claims, identified by CPT codes & ICD-9-CM diagnosis codes; location derived from the CMS “Place of Ser-vice” variable. Figure .4 Medicare ESRD Part B vascular access claims, where Part B claim can be matched with corresponding Part A claim. Figures .42–43 “pure” inpatient & outpatient claims, 2003. Figure .44 all inpatient & outpa-tient claims, 2003. Figures .45–47 hemodialysis patients from the 999 & 2003 CPM data with Medicare as primary payor & vascular access data. Intent-to-treat model. Vascular access type in use in December 998 & 2002. In Figure .47, facil-ity costs for vascular access include only “pure” vascular access inpatient & outpa-tient claims; physician costs include all vascular access claims.

Figure number 11.29 11.29 11.30 11.30 11.31 11.31 11.31 11.31 EPO/Fe Vit D/oth. Inpt Outpt Inpt Outpt Dialysis Part B Overall value for all pts 608 153 1,823 2,163 1,823 1,021 1,142 993 Total patients 309,514 309,514 309,514 309,514 309,514 309,514 309,514 309,514 Overall value for pts mapped 609 154 1,839 2,167 1,839 1,025 1,142 988 Missing HSA/state: pts dropped 5,285 5,285 5,285 5,285 5,285 5,285 5,285 5,285

maps: national means & patient popUlations

COSTS OF CKD & ESRD11

214

Chapter summary

Figures .–2 PPPY costs for EGHP patients averaged 72,450 in 2003, com-pared to 54,904 for Medicare patients, and appear to be increasing at a faster rate than Medicare costs.

Figures .5–6 Inpatient and outpatient expenditures account for the largest portion of yearly Medicare and per per-son per year costs for dialysis. Inpatient costs grew only .3 percent between 2002 and 2003. Outpatient costs, in contrast, rose 9 percent, and are 7 percent higher than those incurred for inpatient ser-vices. Figures .7–8 The greatest por-tion of total Medicare ESRD dollars is spent on hemodialysis. Total Medicare expenditures for dialysis totaled 4.8 billion in 2003, far above the 0.8 bil-lion expended for transplant events.

Table .a ESRD medical costs are more than three times higher than those for CKD patients, while surgical costs are more than five times greater. Table .b Inpatient surgery costs for physician and anesthesia services are more than three times higher for ESRD patients com-pared to CKD patients, while outpatient costs for the same services are more than double. Figure . Expenditures for CKD patients with both CHF and diabe-tes are 2 and 56 percent higher, respec-tively, than costs in patients with CHF or diabetes only, while monthly costs for ESRD patients with diabetes exceed those for non-diabetics by 33 percent.

Figure .3 Expenditures for both Medi-care paid claims and Medicare patient obligations increased by 7–8 percent in 2003, 2–3 percent less than growth in the prior year. Figure .4 Total Medi-care spending grew 5.6 percent in 2003,

introduction

overall costs of CKD & ESRD

components of costs

ESRD program expenditures

down nearly 6 percent from the . per-cent rise in 2002. Figure .5 The Medi-care ESRD population grew by only 2.8 percent in 2003, compared to a 3. per-cent increase in the estimated number of non-Medicare patients with ESRD.

Figure .20 In sharp contrast to dialy-sis and transplant costs for Medicare patients, costs for patients insured by Employer Group Health Plans in 2003 were 52–68 and 36–6 percent higher, respectively. Figure .25 Overall PPPY dialysis costs were nearly 63,000 in 2003 for patients covered by Medicare, while costs for those with EGHP cover-age grew to 26,000—double the Medi-care costs, and more than 2 percent higher than in the previous year.

Figure .27 Medicare spent nearly .6 billion on EPO in 2003— percent more than in the previous year. Figure .33 Medicare costs for eye examinations reached 25.4 million in 2003; only 3 million, in contrast, was spent on cancer screening.

Figure .42 Total inpatient vascu-lar access costs per procedure in 2003 reached ,75 for insertions only, 3,045 for insertions and complications, and 2,070 for complications only; out-patient costs were ,494, 2,245, and 2,53, respectively. Figure .46 Total annualized Medicare expenditures for vascular access have increased 9.5 per-cent since 999; costs for fistulas and grafts have grown 20.8 percent, while those for catheters have risen at a lower rate of 3.9 percent. Figure .47 Per per-son per year costs for outpatient vascular access services have, since 993, grown at rates greater than those of the annual-ized Medicare expenditures.

per person per year expenditures, by modality

components of care

prescription drug costs