Medicare Program; Coverage of Epoetin (EPO) Used by Competent Home Dialysis Patients

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405, 410, 413, and 414

[BPD-737-F]

RIN 0938-AF54

Medicare Program; Coverage of Epoetin (EPO) Used by Competent

Home Dialysis Patients

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule.

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SUMMARY: This final rule adopts as final the interim final rule that

provided for Medicare coverage of EPO used by ESRD beneficiaries who

dialyze at home and are competent to use the drug without medical or

other supervision and established criteria for selection of patients

that can be considered ``competent'' and for monitoring of the patients

who are selected. It also makes minor changes in response to public

comments on the interim rule.

The interim rule was necessary to implement section 4201(d)(1) of

the Omnibus Budget Reconciliation Act of 1990 (OBRA '90). The purpose

of the amendments is to facilitate use of EPO at home, while ensuring

that such use of the drug is safe.

EFFECTIVE DATE: These rules are effective on February 9, 1994.

FOR FURTHER INFORMATION CONTACT: Jackie Sheridan, (410) 966-4635.

SUPPLEMENTARY INFORMATION:

I. Background

Chronic renal failure (CRF) is a progressive and usually

irreversible decline in kidney function that does not always require

regular dialysis. However, CRF patients who have end-stage renal

disease (ESRD) do require a regular course of dialysis or kidney

transplantation in order to sustain life.

Section 299I of the Social Security Amendments of 1972 (Pub. L. 92-

603) established the Medicare ESRD benefit by extending coverage to any

individual who requires either dialysis or transplantation and meets

the following requirements:

Is fully or currently insured or entitled to monthly

benefits under title II of the Social Security Act; or

Is the spouse or dependent child of the insured or

entitled individual.

The methods and amounts of payment for services to ESRD patients

have changed over the years and are currently set forth in

Secs. 410.50, 410.52, and 413.170-413.179 of the HCFA rules. Law and

program policy have moved over the years towards encouraging greater

use of self-dialysis and home dialysis.

On June 1, 1989, the Food and Drug Administration (FDA) approved

the generic drug epoetin which we commonly refer to as ``EPO''. EPO is

a sterile, colorless, preservative-free, liquid, biologically

engineered protein that stimulates the bone marrow to make new red

blood cells. EPO may be covered under the Medicare program when used to

treat anemia associated with chronic renal failure. Most chronic renal

failure patients are anemic because their kidneys are unable to produce

sufficient amounts of a substance called erythropoietin.

Patients with chronic renal failure include those who require renal

dialysis and are eligible for Medicare under the end-stage renal

disease (ESRD) provisions of the law. In accordance with the labeling

approved by the FDA, EPO may be administered either intravenously or

subcutaneously for the treatment of anemia associated with chronic

renal failure or anemia induced by the drug AZT used by patients with

the HIV virus. Individuals with chronic renal failure use the drug to

elevate or maintain the red blood cell level (as measured by the

hematocrit or hemoglobin level) and to decrease the need for blood

transfusions. Chronic renal patients considered for initiation of EPO

therapy should generally have a hematocrit of less than 30%.

In July, 1989, we issued instructions in the Provider Reimbursement

Manual--Part 1 (Chapter 27, Transmittal 11) authorizing Medicare

contractors to start paying for the drug EPO, as of June 1, 1989.

Coverage instructions were issued in November 1989 in the Intermediary

Manual--Part 3 (Transmittal 1449), Carriers Manual--Part 3 (Transmittal

1329), Hospital Manual (Transmittal 576) and the Renal Dialysis

Facility Manual (Transmittal 42). The effective date of the coverage

instructions was also June 1, 1989. The Medicare regulations were not

amended at that time.

Before enactment of Public Law 101-508 (OBRA '90), home use of EPO

was not covered. For patients who dialyzed at home to receive Medicare

payment for EPO, the drug had to be administered either in an ESRD

facility or as a service ``incident to'' a physician's professional

services.

II. Statutory Provisions

Section 4201(d)(1) of OBRA '90 amended section 1861(s)(2) of the

Act by adding a new subparagraph (Q) that--

Provides for coverage, effective July 1, 1991, of EPO that

is used by home dialysis patients who are competent to use the drug

without medical or other supervision and for coverage of items related

to administration of the drug; and

Requires the Secretary to establish by regulation methods

and standards for the safe and effective use of the drug at home.

Section 4201(c) of that same law provided for payment for EPO

furnished to ESRD patients by Medicare approved dialysis facilities to

be made at the rate of $11 per 1,000 units, rounded to the nearest 100

units, effective January 1, 1991. Section 13566 of the Omnibus Budget

Reconciliation Act of 1993 (OBRA '93, Pub. L. 103-66) sets the rate at

$10 per 1,000 units effective January 1, 1994.

Typically, EPO is administered at the end of the dialysis

treatment. Therefore, unless medical documentation shows that it is

necessary to administer EPO at a time other than during dialysis,

payment for patients who dialyze at a facility is made only to the

facility.

The change made by section 13555(b) of OBRA '93, which provides for

coverage of EPO self-administered by any dialysis patient (not limited

to those who dialyze at home) will be implemented by separate

regulations.

For home use of EPO supplied to a home dialysis patient competent

to administer the drug without medical supervision, HCFA pays only a

Medicare approved dialysis facility or a supplier of home dialysis

equipment and supplies, if the patient obtains the drug directly from

the supplier. In either case, payment for home use of EPO is made at

the rate described above.

If a home patient is competent to use EPO without supervision and

the drug has been prescribed, generally the patient's dialysis facility

would furnish it. If a physician administers EPO to the patient, it

should be the physician who receives the Monthly Capitation Payment

(MCP) for furnishing the beneficiary's renal-related services. If a

physician other than the MCP physician furnishes EPO, this physician

must look to the MCP physician for payment for EPO administration. In

this latter case, HCFA pays on a reasonable charge basis for the drug,

but makes no additional payment to the physician for administration.

HCFA will announce annually, for public comment, whether an update

in the EPO allowance is appropriate. By statute, any increase will not

exceed the percentage increase (if any) in the implicit price deflator

for the gross national product for the second quarter of the preceding

year over the implicit price deflator for the second quarter of the

second preceding year.

III. Provisions of the Interim Final Rule

In the interim final rule with comment period, published on

September 4, 1991, we made the changes discussed below:

A. Major changes.

We amended subpart U of part 405 of the HCFA rules, which sets

forth the conditions for coverage of services furnished to ESRD

beneficiaries, as follows:

1. Patient selection.

To ensure the safe and effective use of EPO by home dialysis

patients, we amended Sec. 405.2163 to require that the patient's

dialysis facility or the physician responsible for all dialysis-related

services make a comprehensive assessment of the patient and the

patient's needs at the time of selection for EPO therapy.

We emphasized that proper patient selection is necessary for a

safe, effective program of EPO therapy at home. It is necessary for the

dialysis facility or the physician responsible for all dialysis-related

services to assess--

Whether the patient will actually be able to administer

the drug or have available the necessary assistance from a care-giver;

and

Whether the patient complies with certain elements

necessary for successful EPO therapy.

Accordingly, we required that, in order to be selected for home use

of EPO, a patient must--

Be a home dialysis patient (either peritoneal or

hemodialysis method).

Have a hematocrit (or comparable hemoglobin) of less than

30 percent unless medical documentation justifies a patient's need for

EPO with a hematocrit higher than 30 percent. For example, a patient

with severe angina, severe pulmonary disease, or severe hypotension may

require EPO to prevent adverse symptoms even though the patient has a

higher hematocrit.

Be under the care of the physician who is responsible for

the dialysis-related services and who prescribes EPO, and under the

care of the renal dialysis facility that establishes the plan of care

for the services and monitors the progress of the home EPO therapy.

Be trained by the facility to inject EPO or have an

appropriate caregiver who is trained to inject EPO.

In addition, as part of the assessment, we required the following:

a. The patient's hematocrit (or hemoglobin), serum iron,

transferrin saturation, serum ferritin, and blood pressure must be

measured.

b. An appropriate protocol, developed by the patient's physician or

facility and including monitoring of blood pressure, must be given to

the patient for the safe and effective use of the drug.

c. The patient must be capable of performing self-administration of

EPO, be able to learn aseptic technique, and be able to read the drug

labeling, or must have a primary care-giver who can perform these

tasks.

d. The patient must be able to adhere to a disciplined medical

regimen.

2. Patient care plan.

To ensure adequate monitoring of home EPO therapy, we amended

Sec. 405.2137(b) to add a new paragraph (b)(7) which requires that the

patient plan for a home dialysis patient who uses EPO in the home

include the following:

Review of diet and fluid modifications to monitor iron

stores and hyperkalemia related to dietary indiscretion or elevated

blood pressure.

Reevaluation of the patient's dialysis prescription taking

into account the patient's increased appetite and red blood cell

volume.

A method of teaching the patient to identify the signs and

symptoms of hypotension and hypertension.

The decrease or discontinuance of EPO if hypertension is

uncontrolled.

A method of followup on blood work and a means to keep the

physician informed of the results.

3. Other concerns.

In order to minimize possible abuse of EPO, we revised

Sec. 405.2163(g)(4) to require that the physician or facility ensure

that ``on hand'' EPO is limited to a two-month supply.

We also requested the public's views and suggestions regarding this

policy, and any other issues, including whether it is necessary to

impose special storage requirements for safe-keeping of EPO,

considering that the drug contains no preservatives and that its

presence might entail possible risks to children in the household.

B. Other minor changes.

We also made minor changes to codify in the rules the coverage of

EPO in general and to reflect the expansion of that coverage to include

EPO used at home by home dialysis patients. (As explained in the

``Background'' section of the preamble to the interim rule, previous

coverage of EPO was implemented through general instructions issued by

HCFA, but not reflected in the rules.)

Section 410.10 We amended this section to show that EPO used at

home by home-dialysis patients is now covered as one of the services

included in ``Medical and other health services'', as defined in

section 1861(s) of the Social Security Act.

Section 410.29 We amended this section to show that EPO may be

covered as an exception to the general exclusion of drugs that may be

self-administered.

Section 410.50 We amended this section to show that medically

necessary drugs and biologicals are covered as part of institutional

dialysis services furnished in a dialysis facility. (EPO covered as a

dialysis facility service is paid as an add-on to the facility payment

rate.)

Section 410.52 We amended this section to show that EPO for use by

competent patients in the home is now included in the scope of ESRD

services furnished in the patient's home.

Section 413.170(a)(1) We amended this section to update the cross

references to the ESRD program coverage provisions in the regulations.

Section 413.170(c) We added a new paragraph (c)(6) to describe

reimbursement for EPO when it is furnished by a Medicare-approved

dialysis facility or a supplier of home dialysis equipment and

supplies.

Sections 414.300 and 414.335 We added a new paragraph (d) to

Sec. 414.300 and a new Sec. 414.335 to specify method of payment for

EPO that the beneficiary obtains directly from a supplier of home

dialysis equipment and supplies.

IV. Discussion of Comments

We received fifteen letters of comment from two nephrologists,

three renal dietitians, three nephrology nurses, two dialysis centers,

two professional associations, one home health agency, one medicare

carrier, and one law firm.

A. Patient Selection

Comment: Two commenters, both nephrologists, recommended that EPO

be given for patients with hematocrits greater than 30 percent, even up

to 35 percent. One of the commenters stated that a hematocrit of 30

percent is not normal and that in a male, for whom normal hematocrit

would be closer to 40 percent, a 30 percent reading means that the

individual is functioning at three-quarters of his or her ability to do

exercises as well as other things. That, combined with the chronic

uremic state, which all dialysis patients have, makes it much more

difficult for these patients to function in a useful manner. The

commenter believes hematocrits closer to 35 percent would make much

more sense for keeping these patients in a normal state and making them

generally much more functional. The other commenter stated that his

dialysis center is not required to justify continuation of EPO to

patients with hematocrits of up to 35 percent. Commenters asked whether

justification would be required each month or a single letter of

justification would suffice.

Response: The drug labeling for EPO recommends dosage to maintain a

patient's hematocrit in the range of 30-33 percent (target range) with

a maximum of 36 percent. It also states that the dose of EPO should be

reduced when the hematocrit reaches the target range of 30-33 percent

or increases by more than 4 points in any two-week period. Therapy with

EPO can result in an abnormal increase in red blood cells if the

hematocrit is not carefully monitored and the dose appropriately

adjusted.

We believe we are justified in requiring a hematocrit of less than

30 percent for initiation of EPO therapy at home. Thirty percent is the

low end of the target range. Medical review guidelines in the manuals

used by Medicare intermediaries and carriers provide for payment of

subsequent claims for EPO without documentation of medical necessity as

long as the hematocrit is below 36 percent. We have revised

Sec. 405.2163(g)(2) to clarify that the 30 percent hematocrit threshold

applies only to initiation of EPO therapy.

Comment: One commenter, operating a renal dialysis program in a

university hospital, pointed out that, due to the close working

relationship that exists between the renal physicians, dialysis staff

and outpatient department, a physician may order EPO for an ESRD

patient, note that order in the patient's chart, and verbally inform

the pharmacist of the order without providing a written prescription.

The commenter believes this procedure to be the norm. However, the

fiscal intermediary processing those claims will not pay for any claims

for which a written prescription is not provided. The commenter

believes this process to be burdensome, especially since the order is

documented in the patient's medical chart. The commenter also asked

whether there will be any policy affecting refillable prescriptions.

Response: We are sympathetic to the concerns expressed by the

commenter and remain sensitive to requirements that may appear to be

overly burdensome. However, we believe the intermediary is justified in

requiring a written prescription. While in the case the commenter

presented it might seem to create additional paperwork, a written

prescription protects the pharmacist as well as providing a basis for

payment by the intermediary. The intermediary or carrier has discretion

to determine whether to require documentation on refillable

prescriptions on the basis of reasonableness and necessity.

Comment: The same commenter suggested that we establish more

specific guidelines for ``regular monitoring'' of patients who self-

administer EPO, especially with regard to maximum hematocrit readings.

Two commenters recommended including guidelines similar to those in the

manufacturer's labeling. Two other commenters suggested that we include

a mechanism for monitoring patient compliance such as the completion of

a patient log.

Response: The drug labeling for EPO provides general therapeutic

guidelines with regard to the starting dose and maintenance dose, as

well as when the dose should be reduced or increased. We believe the

labeling provides adequate guidelines and that physicians should have

the flexibility to interpret those guidelines with regard to their

patients. Since drug regimens will vary depending on the individual

patient's prescribed plan of treatment, we do not wish to be overly

prescriptive with respect to specific monitoring protocols. We have,

however, revised language at Sec. 405.2163(g)(2)(iii) to require that

the physician follow the drug labeling instructions when monitoring the

EPO home therapy as well as in developing appropriate protocols. We

also agree that a patient log is a valid means to monitor compliance.

To encourage use of that mechanism or similar effective mechanisms, we

have added ``(such as a patient log)'' in Sec. 405.2137(b)(7).

Comment: One commenter asked what type of medical documentation

will be required to support payment for occasional use of EPO prior to

dialysis, required because of temporary patient weakness or a low

hematocrit reading.

Response: Medicare eligibility based on ESRD is not established

until the patient has been undergoing routine dialysis for three months

or has a kidney transplant. Thus it is unlikely that a patient

undergoing EPO therapy before dialysis would be a Medicare beneficiary.

However, if a beneficiary whose Medicare eligibility is based on age or

disability receives EPO for either of the types of anemia listed on the

drug labeling, the drug may be covered if furnished ``incident to a

physician's service''. Routine documentation requirements for this

treatment include appropriate diagnostic coding on the HCFA-1500 claim

form filed by the physician.

Comment: One commenter stated that the rule implies that home

dialysis patients have not been receiving EPO and that the need for EPO

must be evaluated for each patient. The commenter points out that many

patients have met the criteria for EPO, have been monitored monthly by

appropriate laboratory tests and frequent blood pressure checks, and

may already have been determined to have hematocrits within the target

range. The commenter recommended that we not require full evaluation of

patients who are already on EPO.

Response: We realize that a patient who is receiving EPO may have a

hematocrit within the target range of 30-33 percent. We also realize

that any patient considered for home use of EPO would be under the care

of a physician who furnishes all dialysis-related services. We assume

that, in determining whether the patient is an appropriate candidate

for home use, the physician would take into account any previous

evaluations and whether the patient is currently receiving EPO.

Nevertheless, we continue to believe that every patient must be

evaluated before being approved for home use of EPO. The physician may

base the evaluation in part on information previously obtained in the

course of monitoring dialysis, but must also evaluate other factors,

such as competence to inject the drug and capacity for proper storage

of the drug, that are not pertinent to receiving EPO in a facility or a

physician's office.

Comment: One commenter believes that home health agencies (HHAs)

should not have to adhere to the standard of ensuring that the two-

month supply limitation is met, especially in a patient's own

household. The commenter believes that such a standard could impose on

the HHA inappropriate and unwarranted liability, especially since EPO

is a drug that allegedly ``may be abused.'' The same commenter also

requested that the phrase, ``in the judgment of the home health

agency,'' be inserted after the word ``patient'' in Sec. 405.2163(g)(2)

to prevent reviewing agencies from alleging that the patient did not

have the abilities necessary to self-administer EPO.

Response: Under Sec. 405.2163 (g)(2) and (h)(3), the patient's

physician or dialysis facility (and not the supplier) is responsible

for ensuring that the patient is capable of self-administering the drug

and, through the drug prescriptions, that the amount ``on hand'' does

not exceed a 2-month supply. Accordingly, if an HHA qualifies to be a

supplier of home dialysis equipment and supplies, that HHA would not be

subject to the responsibilities that aroused the commenter's concern.

Ordinarily, HHAs would not be involved in monitoring self-

administration of EPO.

Comment: One professional association commented that the wording in

Sec. 405.2163(g)(2)(iii), that is, ``being able to adhere to a

disciplined medical regimen'', is a broad subjective statement that

lacks meaning without some measurement of nonadherence. It recommended

replacing the language with the words ``be able to meet the

requirements of an established home dialysis training program and

periodic reassessment by qualified training staff.''

Response: We agree that the cited current language lacks

specificity and have removed it. However, we did not add the suggested

language because, in this context, it is training in the self-

administration of EPO (rather than in self-dialysis as such) that is

pertinent, and that is already dealt with in paragraph (g)(3).

B. Patient Care Plan

Comment: Three commenters, all renal dietitians, questioned the

wording of the requirement to review a patient's diet and fluid

modifications to monitor adequate iron stores and hyperkalemia. All

commented that the amount of iron required during EPO therapy can

rarely be met with dietary iron, since such diets are typically iron

deficient. They noted that oral or even intravenous supplemental iron

is required and recommended that we revise the language to include the

following:

Review of diet and fluid intake for indiscretions as

reflected by hyperkalemia and elevated blood pressure secondary to

volume overload.

Review of medications for adequate provision of

supplemental iron.

Evaluation of hematocrit and measures of iron stores.

Response: We agree with these comments and have revised

Sec. 405.2137(b)(7) (i)-(iii) to include the suggested content.

C. Other Concerns

Comment: One commenter asked for clarification of the effective

date.

Response: The law (section 4201(c) of the Omnibus Budget

Reconciliation Act of 1990) that set the payment rate at $11 per 1,000

units was effective January 1, 1991. However, under section 4201(d) of

that Act, coverage of EPO self-administered at home by home dialysis

patients is effective July 1, 1991. Thus, Medicare payment is available

for services that are furnished on or after that date and that also

meet the requirements of the interim final rule published on September

4, 1991.

Comment: Two commenters felt that an initial 2-month EPO supply

might be too much since (1) patients who receive the drug from a renal

facility must be seen by their physician monthly and (2) a 2-month

supply might discourage patients from maintaining blood pressure and

hematocrit monitoring. The commenters were also concerned that the

supplier or renal facility may be requested to take back unused

portions of EPO, if the home dialysis patient received a kidney

transplant or died soon after receiving the supply. They suggested that

a smaller quantity would alleviate the beneficiary's coinsurance

responsibility.

Response: First, we note that the provision sets the 2-month

initial supply as a maximum limit, to be used when circumstances make a

2-month supply appropriate. We recognize that patients who obtain their

supplies directly must be monitored monthly, and we would expect a

physician to prescribe a lesser amount for some patients. In

Sec. 405.2163, we have added a paragraph (h) to highlight the

responsibilities of the physician and the dialysis facility. Paragraph

(h)(3) makes clear that the 2-month supply is a maximum.

Comment: One commenter stated that billing procedures instructing

an initial billing of up to a 2-month supply followed by subsequent

billings limited to a 1-month supply are inconsistent with our proposed

regulations which appear to intend that the beneficiary maintain a 2-

month supply at all times.

Response: The commenter has misinterpreted the intent of the

policy. The intent is not to require a ``minimum'' 2-month supply, but

rather to ensure that the patient has at least a 1-month supply. As

stated above, the physician may initially prescribe ``up to'' a 2-month

supply. When half of the initial 2-month supply is used, the next 1-

month supply may be ordered, and so on.

Comment: In response to our specific request for comments on

whether it is necessary to impose special storage requirements for

safe-keeping of EPO, two commenters stated that storage and home safety

issues need to be more specifically addressed and documented. They

recommended that we require, as part of the assessment, assurance that

the patient has the ability to store EPO under refrigeration, secure

from tampering and out of the reach of children.

Response: We agree with the commenters and have revised

Sec. 405.2163(g) to add the suggested language.

Comment: One commenter questioned whether HCFA will establish

regional intermediaries to process home EPO claims.

Response: EPO claims from home dialysis patients who obtain their

dialysis supplies directly from suppliers will be processed by four

regional carriers that were designated under a final rule published on

June 18, 1992 (at 57 FR 27290), and that also process claims for

durable medical equipment, prosthetics, orthotics and other items

covered under Medicare Part B.

However, claims for items furnished incident to a physician's

service as defined in 42 CFR 410.10(b) will continue to be processed

under the current carrier configuration, and regional intermediaries

will continue to process claims from facilities.

Comment: One commenter stated that at least one 8-hour day should

be allocated to train a patient in proper techniques of self-

administration. The commenter also asked whether a training fee can be

charged for this training time or whether any additional reimbursement

can be obtained since this added monitoring activity expands physician

activities under the monthly capitation plan.

Response: We agree that patients need to be properly trained in the

self-administration of EPO; however, we do not believe that we should

set a specific minimum time limit for training as suggested by the

commenter. We believe there should be sufficient flexibility to allow

for differences in individual patients' learning ability.

There is no separate payment for training or retraining in, and

monitoring of, home use of EPO. A patient should be trained to self-

administer EPO as part of the home dialysis training program that is

paid for at the home dialysis training composite rate in accordance

with Sec. 413.170 of the HCFA rules. With respect to monitoring self-

administration of EPO, we believe the additional physician's time and

effort are minimal and should be subsumed within the physician's

monthly capitation payment under Sec. 414.314 of those rules.

Comment: Two commenters asked whether reimbursement can be expected

for home supplies needed to self-administer EPO, e.g., syringe, needle,

alcohol wipes.

Response: Payment for the medical supplies needed for

administration of EPO, whether in the home or in a facility, is

included in the Medicare payment rate for EPO. Both before OBRA '90 and

since the implementation of those provisions, HCFA has always included

the cost of supplies as part of the Medicare payment for EPO. We see no

basis for different treatment of supplies for self-administration of

EPO in the home.

The payment rate for EPO is $11.00 per 1,000 units and, we believe,

is more than adequate to cover the minimal cost of supplies (less than

20 cents per administration). The manufacturer of EPO is protected from

competition for seven years by the Orphan Drug Act. The company reports

substantial profits and gives rebates to facilities depending upon

usage. It appears that facilities pay considerably less for EPO than

the Medicare rate, providing sufficient payment for supplies needed for

administration.

The source of this information is the Department's Office of the

Inspector General (OIG) study, ``Draft Report--Review of Epogen

Reimbursement'' (Audit No. A-01-92-00506). The OIG reviewed invoices

paid by dialysis facilities and financial reports filed by the

manufacturer and found that facilities generally pay nine to ten

percent less for EPO than the Medicare payment rate. In addition, the

manufacturer gave surveyed facilities end-of-year rebates ranging from

two percent to eight percent depending upon the volume of EPO used.

Comment: Two commenters expressed the hope that local physicians

will be able to continue to administer EPO incident to a physician's

service.

Response: This regulation is in no way intended to preclude

provision of EPO furnished incident to a physician's service.

Comment: One commenter was of the opinion that there is no

statutory authority for the provision in Sec. 413.170(c)(6)) requiring

suppliers to accept assignment of benefits for EPO.

Response: The statutory provisions for payment of benefits for EPO

are in section 1881(b)(1). Section 1881(b)(1)(B) of the Act provides

for payments ``to or in behalf of'' beneficiaries for home dialysis

supplies and equipment. However, with respect to payment for self-

administered EPO, section 1881(b)(1)(C) permits payment only to a

supplier of home dialysis supplies and equipment that is not a provider

of services, a renal dialysis facility, or a physician. There is no

authority in the law to pay this benefit to a beneficiary. Therefore,

the law implicitly requires payment to a supplier under assignment.

Furthermore, any other reading of the statute would have anomalous

results. For example, if the statute did not require suppliers to

accept assignment, the beneficiary would be protected for charges for

home dialysis supplies and equipment, but not for EPO furnished

directly by the supplier. Nothing in the legislative history suggests

the Congress intended such a result.

V. Specific Changes to the Interim Final Rule.

In response to the comments discussed above, we have made the

following changes in the text of the interim final rule published on

September 4, 1991.

1. Patient care plan.

We have revised Sec. 405.2137(b)(7) to establish separate

requirements for review of medication and evaluation of hematocrit for

iron stores and to suggest use of a patient log for keeping the

physician informed of the results of blood tests.

2. Patient selection.

We have revised Sec. 405.2163 to--

Require that the physician follow the drug labeling when

he or she establishes the protocol and monitors home use of EPO;

Include as an assessment requirement obtaining assurance

that EPO can be stored under refrigeration, secure from tampering and

out of reach of children in the patient's residence.

Add a paragraph (h) to highlight the responsibilities of

the physician and the dialysis facility and to make clear that the

``two-month'' supply of EPO is a maximum and that control of the amount

``on hand'' is maintained through the physician's prescriptions.

B. Technical amendments.

1. Throughout the text ``Erythropoietin'' is changed to

``Epoetin'', which is the generic name of the drug.

2. In Sec. 413.170(c)(6), the cross-reference is corrected.

VI. Regulatory Impact Statement

A. Executive Order 12866

Executive Order 12866 (E.O. 12866) requires us to prepare an

analysis for any document that meets one of the E.O. 12866 criteria for

a ``significant regulatory action''; that is, that may--

Have an annual effect on the economy of $100 million or

more or adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities;

Create a serious inconsistency or otherwise interfere with

an action taken or planned by another agency;

Materially alter the budgetary impact of entitlements,

grants, user fees, or loan programs or the rights and obligations of

recipients thereof; or

Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

E.O. 12866.

In the proposed rule, we determined that a regulatory impact

analysis was not required for these rules because they would not have

an annual impact of $100 million or more or meet any of the other

threshold criteria. However, we indicated our intention to include in

the final rule a cost and benefit analysis that considers the social

benefits to Medicare beneficiaries who use EPO at home. We asked for

specific comments concerning benefits from home administration of EPO.

We listed, as examples of these benefits, savings in travel and

transportation costs previously required to obtain EPO or the ability

of the beneficiary to resume employment. We also requested public

comment on any benefits and costs that may be anticipated as a result

of this regulation.

No comments were received concerning the benefits of self-

administration of EPO or on any portion of the impact analysis. Thus,

we have prepared an analysis based on our review of data available to

us and of pertinent literature.

The following chart summarizes home dialysis beneficiary records

for the period February 28, 1991 through February 29, 1992. It reflects

the most current data on file and also encompasses the time immediately

before and after July 1, 1991, the effective data of coverage of home

administration of EPO. We identified, as ESRD beneficiaries who are

potentially eligible for home use of EPO, beneficiaries who have

completed the necessary home dialysis training or were home dialysis

patients during this period. The chart indicates the number of

beneficiaries on home dialysis and the number receiving EPO therapy as

of June 30, 1991. The same information is shown for the billing period

November 1, 1991 through January 31, 1992, the most current billing

information for home dialysis beneficiaries.

Home Dialysis Beneficiaries

[February 28, 1991-February 29, 1992]

--------------------------------------------------------------------------------------------------------------------------------------------------------

Home Dialysis

Beneficiaries Self-Adm.* Fac/Phy.** Not Receiv'g EPO

--------------------------------------------------------------------------------------------------------------------------------------------------------

As of 6/30/91....................................... 38,515 12,733 25,782

Billing Period 11/1/91-1/31/92...................... 38,515 1,656 11,890 24,969

--------------------------------------------------------------------------------------------------------------------------------------------------------

*Self-Adm. stands for self-administered.

**Fac/Phy. stands for facility or physician administered.

Our records indicate that as of June 30, 1991 there were 38,515

beneficiaries that dialyzed at home. Before coverage of home

administration of EPO, 12,733 of these beneficiaries received EPO in

the ESRD facility or in a physician's office. As a result of coverage

of home administration of EPO, 1,656 beneficiaries or 4.3 percent of

home dialysis beneficiaries self-administer EPO. We estimate that this

number will increase as more beneficiaries become qualified to self-

administer EPO and realize the benefits of home administration.

In attempting to perform a cost-benefit analysis, we reviewed three

published reports and one unpublished report. We also relied upon

billing information submitted by intermediaries. Average expenditure

for ESRD beneficiaries receiving EPO therapy approximate $6,900

exclusive of dialysis treatment. This amount includes the cost of the

drug and other services such as iron treatment and hypertension

therapy. The average annual cost for patients not using EPO

approximates $450, exclusive of dialysis treatments, and includes the

cost of other services such as blood transfusions and hepatitis

therapy. The annual expenditures for EPO users represent very gross

estimates. More definitive cost data and experience with the

administration of EPO is needed in order to permit analysis of actual

costs and EPO's relative effects.

As mentioned earlier in this preamble, use of EPO by chronic renal

failure patients reduces or eliminates the need for blood transfusions.

EPO also reduces the recipients' risk of transfusion-related illnesses.

The transmission of non-A, non-B hepatitis is of greatest concern (see

``Recombinant Human Erythropoietin: Factors to Consider in Cost-Benefit

Analysis'', American Journal of Kidney Diseases, Vol. XVII, No. 1,

January 1991). Although rare, the threat of acquired immunodeficiency

syndrome (AIDS) and hepatitis B should also be considered. For ESRD

patients receiving EPO, the risk of hepatitis infection related to

transfusions has been reduced from 13.8 to 4.5 percent because the

patient's need for blood transfusions has been reduced and in some

cases eliminated.

Reducing the need for transfusions also increases kidney transplant

success in chronic renal failure patients by reducing sensitization.

According to the above cited article, some individuals receiving

frequent transfusions may develop cytotoxic antibodies. Excessive

cytotoxity levels may result in increased waiting time for suitable

organs. Also, when high cytotoxity levels are present, graft survival

rates are reduced. When EPO is used, thus reducing or eliminating the

need for transfusions, patients are more likely to retain transplanted

organs successfully.

There are other potential benefits associated with the use of EPO.

Since EPO stimulates the production of red blood cells thereby reducing

or eliminating anemia, the need for hospitalization due to anemia or

anemia-related illnesses could be expected to decline.

Another very important though not quantifiable benefit of receiving

EPO is improved quality of life. An article appearing in The Journal of

the American Medical Association (JAMA) (The Quality of Life of

Hemodialysis Recipients Treated with Recombinant Human Erythropoietin,

Vol. 263, No. 6, February 9, 1990) reported on the results of a study

of over 300 hemodialysis patients in nine dialysis centers. The study

showed that hemodialysis patients receiving EPO are happier--their

energy levels are higher, physical functioning is improved, physical

activity levels are increased, etc. Similar results were also reported

in the American Journal of Kidney Diseases article mentioned earlier in

this impact statement. Although these studies did not specifically

study home dialysis patients, we believe that results would be equally

true for this group.

In reviewing the literature on EPO, we also found that most EPO

recipients require additional medications or therapies to counteract

possible adverse effects. Some of the possible side effects of EPO

therapy are iron depletion, hypertension, and arteriovenous graft

clotting.

Iron Depletion--EPO recipients may not get the full benefit of

increased hematocrits from EPO if they lack sufficient iron reserves.

EPO increases the body's production of red blood cells. This requires

sufficient iron reserves. Consequently, patients on EPO may become iron

deficient. Their iron reserves must be monitored and iron supplements

administered to ensure that the patient's iron reserves are not

depleted.

Hypertension--Use of EPO may elevate a patient's blood pressure, a

reaction that may be related to the rate of increase in hematocrit.

Therefore, an EPO patient's blood pressure must be carefully monitored.

Thirty percent of all EPO patients receive hypertension therapy.

Arteriovenous (AV) Graft Clotting--Fourteen percent of all EPO

patients experience clotting of AV graft as compared to 6 percent of

chronic renal patients not receiving EPO. The cause of the AV clotting

is believed due to increased hematocrit.

The foregoing benefits and adverse effects of using EPO are the

same for patients who receive the drug in a physician's office or ESRD

facility as for patients who self-administer the drug. Those

beneficiaries who received EPO in a physician's office or ESRD facility

and, as a result of this regulation, shift to self-administration will

realize further benefits, such as savings of time and in transportation

costs. In order to receive the full benefit of EPO therapy, most

patients receive it at least three times a week. Therefore, we estimate

that the savings in transportation costs will average approximately

$300 per beneficiary for calendar year 1992. Of course, this estimate

is only an average; the actual saving will vary depending on distance

traveled to and from the ESRD facility or physician's office by a

particular beneficiary.

Since EPO is a relatively new drug, definitive information on its

large scale effectiveness, direct costs, savings, etc., is not

available. Literature supports the view that ESRD beneficiaries

receiving EPO experience an improved quality of life, resulting in

higher energy levels and improved physical functioning. For those

beneficiaries who did receive EPO in a physician's office or ESRD

facility and meet the criteria for self-administration, the change to

self-administration will save time and eliminate travel expenses

associated with office and facility visits. We expect that over time

more home dialysis beneficiaries who did not receive EPO or received a

reduced dosage because they were unable to travel to the physician's

office or ESRD facility as often as needed will become candidates for

self-administration of EPO. We do not have data on which to base a

prediction of the number who will choose this form of administration.

Obviously, each beneficiary's physician will need to consider potential

adverse as well as beneficial effects.

B. Regulatory Flexibility Act

We generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 602

through 612) unless the Secretary certifies that a final rule will not

have a significant economic impact on a substantial number of small

entities. For purposes of the RFA, individuals are not considered to be

small entities.

Also, section 1102(b) of the Act requires the Secretary to prepare

a regulatory impact analysis if a final rule may have a significant

impact on the operations of a substantial number of small rural

hospitals. This analysis must conform to the provisions of section 604

of the RFA. For purposes of section 1102(b) of the Act, we define a

small rural hospital as a hospital that is located outside of a

Metropolitan Statistical Area and has fewer than 50 beds.

We are not preparing analyses for either the RFA or section 1102(b)

of the Act since we have determined, and the Secretary certifies, that

this rule will not have a significant economic impact on a substantial

number of small entities and will not have a significant impact on the

operations of a substantial number of small rural hospitals.

Paperwork Reduction Act

Section 405.2137 of this rule contains information collection

requirements that are subject to review by the Office of Management and

Budget (OMB) under the Paperwork Reduction Act of 1980. When OMB

approves these provisions, we will publish a Federal Register notice to

that effect. If you comment on the information collection requirements,

please send a copy of those comments directly to: Office of Information

and Regulatory Affairs, Office of Management and Budget, room 3002, New

Executive Office Building, Washington, DC 20503, Attention: Allison

Herron Eydt, Desk Officer for HCFA.

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Health facilities, Health

professions, Kidney disease, Laboratories, Medicare, Reporting and

recordkeeping requirements, Rural areas, X-rays.

42 CFR Part 410

Health facilities, Health professions, Kidney diseases,

Laboratories, Medicare, Rural areas, X-rays.

42 CFR Part 413

Health facilities, Kidney diseases, Medicare, Puerto Rico,

Reporting and recordkeeping requirements.

42 CFR Part 414

End-stage renal (ESRD), Health professions, Laboratories, Medicare.

42 CFR CHAPTER IV HEALTH CARE FINANCING ADMINISTRATION, DEPARTMENT OF

HEALTH AND HUMAN SERVICES

The interim rule with comment period that was published on

September 4, 1991, at 56 FR 43706, to amend Parts 405, 410, 413, and

414 of this chapter is adopted as final with the changes set forth

below.

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart U--Conditions for Coverage of Suppliers of End-Stage Renal

Disease (ESRD) Services

1. The authority citation for subpart U continues to read as

follows:

Authority: Secs. 1102, 1861, 1862(a), 1871, 1874, and 1881 of

the Social Security Act (42 U.S.C. 1302, 1395x, 1395y(a), 1395hh,

1395kk, and 1395rr), unless otherwise noted.

2. Section 405.2137 is amended to revise paragraph (b)(7), to read

as follows:

Sec. 405.2137 Condition: Patient long-term program and patient care

plan.

* * * * *

(b) Standard: Patient care plan. * * *

(7) For a home dialysis patient who uses EPO in the home, the plan

must provide for monitoring home use of EPO that includes the

following:

(i) Review of diet and fluid intake for indiscretions as indicated

by hyperkalemia and elevated blood pressure secondary to volume

overload.

(ii) Review of medications to ensure adequate provision of

supplemental iron.

(iii) Ongoing evaluations of hematocrit and iron stores.

(iv) A reevaluation of the dialysis prescription taking into

account the patient's increased appetite and red blood cell volume.

(v) A method for physician followup on blood tests and a mechanism

(such as a patient log) for keeping the physician informed of the

results.

(vi) Training of the patient to identify the signs and symptoms of

hypotension and hypertension.

(vii) The decrease or discontinuance of EPO if hypertension is

uncontrollable.

3. Section 405.2163 is amended to revise paragraph (g) and add a

new paragraph (h), to read as follows:

Sec. 405.2163 Condition: Minimal service requirements for a renal

dialysis facility or renal dialysis center.

* * * * *

(g) Use of EPO at home: Patient selection. The dialysis facility,

or the physician responsible for all dialysis-related services

furnished to the patient, must make a comprehensive assessment that

includes the following:

(1) Pre-selection monitoring. The patient's hematocrit (or

hemoglobin), serum iron, transferrin saturation, serum ferritin, and

blood pressure must be measured.

(2) Conditions the patient must meet. The assessment must find that

the patient meets the following conditions:

(i) Is a home dialysis patient.

(ii) Has a hematocrit (or comparable hemoglobin level) that is as

follows:

(A) For a patient who is initiating EPO treatment, no higher than

30 percent unless there is medical documentation showing the need for

EPO despite a hematocrit (or comparable hemoglobin level) higher than

30 percent. (Patients with severe angina, severe pulmonary distress, or

severe hypertension may require EPO to prevent adverse symptoms even if

they have higher hematocrit or hemoglobin levels.)

(B) For a patient who has been receiving EPO from the facility or

the physician, between 30 and 33 percent.

(iii) Is under the care of--

(A) A physician who is responsible for all dialysis-related

services and who prescribes the EPO and follows the drug labeling

instructions when monitoring the EPO home therapy; and

(B) A renal dialysis facility that establishes the plan of care and

monitors the progress of the home EPO therapy.

(3) Conditions the patient or the patient's caregiver must meet.

The assessment must find that the patient or a caregiver who assists

the patient in performing self-dialysis meets the following conditions:

(i) Is trained by the facility to inject EPO and is capable of

carrying out the procedure.

(ii) Is capable of reading and understanding the drug labeling.

(iii) Is trained in, and capable of observing, aseptic techniques.

(4) Care and storage of drug. The assessment must find that EPO can

be stored in the patient's residence under refrigeration and that the

patient is aware of the potential hazard of a child's having access to

the drug and syringes.

(h) Use of EPO at home: Responsibilities of the physician or the

dialysis facility. The patient's physician or dialysis facility must--

(1) Develop a protocol that follows the drug label instructions;

(2) Make the protocol available to the patient to ensure safe and

effective home use of EPO; and

(3) Through the amounts prescribed, ensure that the drug ``on

hand'' at any time does not exceed a 2-month supply.

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

1. The authority citation for part 410 continues to read as

follows:

Authority: Secs. 1102, 1832, 1833, 1835, 1861 (r), (s), and

(cc), 1871, and 1881 of the Social Security Act. (42 U.S.C. 1302,

1395k, 1395l, 1395n, 1395x (r), (s), and (cc), 1395hh, and 1395rr).

2. Nomenclature change.

In Secs. 410.10(k), 410.50(d), and 410.52(a)(4), ``erythropoietin''

is revised to read ``epoetin''.

PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT

1. The authority citation for part 413 is revised to read as

follows:

Authority: Secs. 1102, 1122, 1814(b), 1815, 1833(a), 1861(v),

1871, 1881, 1883, and 1886 of the Social Security Act (42 U.S.C.

1302, 1320a-1, 1395f(b), 1395g, 1395l(a), 1395x(v), 1395hh, 1395rr,

1395tt, and 1395ww).

Sec. 413.170 [Amended]

2. In Sec. 413.170(c)(6), ``Erythropoietin'' is revised to read

``Epoetin'', and ``Sec. 413.170(c)(5)(iii)'' is revised to read

``paragraph (c)(6)(iii) of this section.''

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

1. The authority citation for part 414 continues to read as

follows:

Authority: Secs. 1102, 1833(a), 1871, and 1881 of the Social

Security Act (42 U.S.C. 1302, 1395l(a), 1395hh, and 1395rr).

Sec. 414.300 [Amended]

2. In Sec. 414.300(d), ``Erythropoietin'' is revised to read

``Epoetin''.

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance; and Program No. 93.774, Medicare--

Supplementary Medical Insurance Program)

Dated: September 23, 1993.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Approved: October 13, 1993.

Donna E. Shalala,

Secretary.

[FR Doc. 94-480 Filed 1-7-94; 8:45 am]

BILLING CODE 4120-01-P