Medicare Program; Revisions to the Definition of End-Stage Renal Disease and Resumption of Entitlement

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 406

[BPD-738-P]

RIN: 0938-AG19

Medicare Program; Revisions to the Definition of End-Stage Renal

Disease and Resumption of Entitlement

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

ACTION: Proposed rule.

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SUMMARY: We propose to revise the definition of end-stage renal disease

to reflect that more than one dialysis treatment is required for there

to be a ``regular course of dialysis'' and to require that generally

accepted diagnostic criteria and laboratory findings must form the

basis of the physician's certification of end-stage renal disease. The

purpose of this proposed revision is to eliminate any misinterpretation

of the definition of end-stage renal disease. We propose to do so by

clarifying that only those individuals whose kidneys have failed and

for whom the disease is expected to be a lifelong affliction are

eligible for Medicare end-stage renal disease benefits.

We also propose to amend the regulations to specify that Medicare

entitlement is resumed for individuals who again begin a regular course

of renal dialysis treatments after a previous course is terminated

(with or without a transplant), and to add the same considerations for

those who have a second transplant. Therefore, the purpose of these

proposed revisions is to conform the regulations more closely to the

intent of sections 226A (c)(2) and (c)(3) of the Social Security Act

regarding resumption of entitlement to Medicare.

DATES: Comments will be considered if we receive them at the

appropriate address, as provided below, no later than 5 p.m. on March

7, 1994.

ADDRESSES: Mail comments to the following address:

Health Care Financing Administration, Department of Health and Human

Services, Attention: BPD-738-P, P.O. Box 26676, Baltimore, MD 21207.

If you prefer, you may deliver your written comments to one of the

following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC. 20201, or

Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,

Maryland 21207.

Due to staffing and resource limitations, we cannot accept

facsimile (FAX) copies of comments. In commenting, please refer to file

code BPD-738-P. Comments received timely will be available for public

inspection as they are received, generally beginning approximately 3

weeks after publication of a document, in room 309-G of the

Department's offices at 200 Independence Avenue, SW., Washington, DC,

on Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone:

(202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Denis Garrison, (410) 966-5643.

SUPPLEMENTARY INFORMATION:

I. Background

End-stage renal disease (ESRD) is a disease which occurs from the

destruction of normal kidney tissues over a long period of time. The

individual often does not experience any symptoms until the kidney has

lost more than half of its function. The loss of kidney function in

ESRD is usually irreversible and permanent.

A. Related Law and Regulations for Medicare Coverage of ESRD and the

Definition of ESRD

Section 226A(a)(2) of the Social Security Act (the Act) provides

for Medicare coverage for certain individuals who are medically

determined to have end-stage renal disease. Once an individual is

medically determined to have ESRD, section 226A(b) of the Act specifies

that one of two conditions must be met before entitlement begins. That

is, a regular course of dialysis must begin or a kidney transplant must

be performed. Section 226A(b)(1)(A) of the Act provides that

entitlement begins with the third month after the month in which a

regular course of renal dialysis is initiated.

The statute does not give a definition of ESRD; however, the

Medicare regulations in title 42 of the Code of Federal Regulations do

define the term. The definition of ESRD is given in two sections of the

regulations. For purposes of Medicare eligibility and entitlement, ESRD

is currently defined in Sec. 406.13(b) as that stage of kidney

impairment that appears irreversible and permanent and requires a

regular course of dialysis or kidney transplantation to maintain life.

A parallel definition of ESRD also appears in Sec. 405.2102 which

defines ESRD as it relates to the conditions for coverage that must be

met by suppliers furnishing ESRD care to Medicare beneficiaries.

B. Potential Misinterpretation of the Current ESRD Definition

In calendar year 1989, 21,200 individuals were certified by their

physicians as having an irreversible, permanent kidney impairment and

obtained Medicare entitlement solely because of this certification.

That is, they could not qualify for Medicare on any other basis, such

as age or disability status. In calendar year 1990, the number of

similar new beneficiaries was 22,800. Soon after obtaining Medicare

eligibility, nearly 1 percent of these individuals terminated their

course of dialysis with a return of kidney function. We are concerned

that the diagnosis and certification of ESRD for these individuals was

incorrect. The regulations in Secs. 405.2102 and 406.13(b) define ESRD

as a condition that appears irreversible and permanent; Medicare

entitlement on the basis of the patient's need for dialysis is usually

terminated only if the individual dies or receives a kidney transplant.

Any severe kidney condition (particularly acute kidney failure) may

appear to be irreversible and permanent if the diagnosis is based on

only limited tests and criteria. We believe that certifications for the

patients who terminated dialysis may have arisen from a

misunderstanding of the extent of the kidney failure which constitutes

ESRD for which the law grants Medicare entitlement. We believe that

specifying that the diagnosis must be based on generally accepted

diagnostic criteria and laboratory findings may result in not enrolling

in Medicare those patients whose renal disease is not ``end-stage''.

However, we do not wish to eliminate the word, ``appears,'' from the

regulation since the law recognizes that dialysis treatments may end in

some ESRD cases.

C. Related Laws and Regulations for Termination of Medicare Entitlement

and Resumption of Entitlement to ESRD Benefits

Section 226A(b)(2) of the Act specifies that Medicare entitlement

for individuals on the basis of ESRD terminates with the end of the

36th month after the month of transplant or with the end of the 12th

month after the last month of renal dialysis treatments. Section

226A(c)(2) and (c)(3) of the Act specifically provides for beginning a

new period of entitlement when a kidney transplant fails or a course of

renal dialysis begins again, whether during or after the 36 or 12

months, as applicable. Current regulations in Sec. 406.13(f) address

these situations by specifying that entitlement does not end as

scheduled if the treatment begins again during the applicable periods.

The regulations in Sec. 406.13(g) deal with resumption of entitlement

after termination of entitlement has occurred and require the

submission of a new application.

In addition, the provisions in section 226A(c)(2) and (c)(3) of the

Act ensure that resumption of entitlement to Medicare will begin

without the 3-month waiting period that usually applies in cases when

Medicare entitlement is sought on the basis of dialysis (except for

certain cases involving self-care training).

II. Provisions of the Proposed Regulations

A. Proposed Revision to ESRD Definition

We analyzed the payment records of patients who terminated dialysis

shortly after becoming eligible for Medicare based on a diagnosis of

ESRD. Our records indicate an annual mean cost per patient of

approximately $8,000, which is significantly below the average annual

cost of $40,000 for a patient who remains on dialysis. Because these

individuals were able to discontinue dialysis shortly after beginning a

course of treatment and incurred only limited medical costs, we believe

that many of these patients may have been incorrectly certified as

having ESRD as a result of physicians misinterpreting the ESRD

definition as it appears in Sec. 406.13(b). We also find the current

ESRD definition (Sec. 406.13(b)) inadequate for Medicare Part A

(hospital insurance) eligibility and entitlement purposes because

entitlement to Medicare based on ESRD depends on the existence of ESRD,

not on the sole fact that dialysis treatments are being given.

Therefore, in order to eliminate any possible misinterpretation, we

propose to revise the definition of ESRD in Sec. 406.13(b). After the

phrase ``* * * a regular course of dialysis'', we propose to add the

word ``treatments''. This revision would clarify that more than one

dialysis treatment is required for there to be a regular course of

dialysis.

We also propose to add to the end of the definition of ESRD, the

phrase ``as evidenced by generally accepted diagnostic criteria and

laboratory findings''. We believe that requiring generally accepted

diagnostic criteria and laboratory findings as the basis for diagnosis

of ESRD serves as a reminder to physicians that they must have medical

evidence to substantiate their certification of ESRD. We do not believe

this addition to the definition would have a substantial effect on most

physicians since they already depend on such medical information.

We do not believe it is necessary to add the word ``treatments'' or

the phrase ``as evidenced by generally accepted diagnostic criteria and

laboratory findings'' to the definition of ESRD in Sec. 405.2102, which

defines ESRD as it relates to the conditions for coverage of suppliers

of ESRD services. This is because that section does not establish who

is eligible or entitled to Medicare ESRD benefits, which is the purpose

of this proposed rule.

B. Proposed Revisions to the Termination of Entitlement and to the

Resumption of Entitlement

Section 226A(c)(2) and (c)(3) of the Act specifies the conditions

for beginning a new period of entitlement when a kidney transplant

fails or a regular course of dialysis begins again. However, this

section refers to those instances when entitlement has not yet ended

and specifies that Part A entitlement ``begins'' (although it may not

yet have ended) with the month when regular dialysis treatments begin

again. The importance of ``beginning'' Part A entitlement is that it

offers the opportunity for those who do not have Part B (Supplementary

Medical Insurance) entitlement to enroll in Part B without waiting for

the annual general enrollment period (January through March).

Supplementary Medical Insurance is a voluntary program available to

most individuals age 65 or over and to disabled individuals who are

under age 65 and entitled to Medicare Part A. In addition, since Part A

entitlement has not ended, we believe that the intention is to re-

enroll the individual in Part A with that month, without a new

application.

Therefore, we propose to treat the situation where dialysis or

transplant recurs during the 12-month or 36-month periods as a

resumption of entitlement. Accordingly, we delete from Sec. 406.13(f)

the reference to continuation of entitlement, and instead revise

Sec. 406.13(g), which specifies the conditions for resumption of

entitlement, to include this situation where coverage resumes despite a

previous course of treatment.

We propose to revise Sec. 406.13(g) to state that entitlement would

be resumed under any one of three conditions. Using the language we

propose to remove from paragraph (f), a new period of entitlement would

begin if an individual initiates a regular course of renal dialysis

during the 12-month period after the previous course of dialysis ended,

and he or she would be entitled to resume Part A benefits and eligible

to enroll in Part B benefits effective with the month the regular

course of dialysis is resumed.

The statute does not mention the beginning of a new period of

entitlement when a second kidney transplant occurs during the 36-month

period following the initial transplant, since there is never a waiting

period for entitlement based on a transplant. However, we believe that,

by analogy, the provisions for beginning a new period of entitlement in

cases where a regular course of dialysis begins or recurs during the 36

months indicate that we should construe the law as requiring resumption

of entitlement and a new period of Part B enrollment in cases of re-

transplantation that occur without the beneficiary's resuming (or

initiating) dialysis treatments. We, therefore, propose to revise

Sec. 406.13(g) to state that entitlement would begin when an individual

initiates a new, regular course of renal dialysis, or has a kidney

transplant, during the 36-month period after an earlier kidney

transplant, and that he or she would be entitled to resume Part A

benefits and eligible to enroll in Part B benefits effective with the

month the regular course of dialysis begins or with the month the

subsequent kidney transplant occurs.

We also propose to make technical revisions to Sec. 406.13(g) to

clarify the other condition for resumption of entitlement. That is,

entitlement is resumed if an individual initiates a regular course of

renal dialysis more than 12 months after the previous regular course of

dialysis ended or more than 36 months after the month of a kidney

transplant, and the individual is eligible to enroll in Part A and Part

B benefits effective with the month in which the regular course of

dialysis treatment is resumed. If he or she is otherwise entitled to

Part A benefits under the conditions specified in Sec. 406.13(c), and

files an application, entitlement would begin with the month in which

dialysis treatments are initiated or resumed, without a waiting period,

subject to the basic limitations of entitlement in Sec. 406.13(e)(1).

C. Proposed Revisions' Effect on Medicare Part B

The revised definition of ESRD in Sec. 406.13(b) and revisions to

resumption of entitlement in Sec. 406.13(g) would also be used as the

basis for eligibility for Medicare Part B. This is because, in

accordance with Sec. 407.10(a)(1), an individual who qualifies for

Medicare Part A on the basis of ESRD is also eligible for Medicare Part

B.

D. Manuals Affected

When we publish these proposed requirements as a final rule, the

Social Security Program Operations Manual System, Part 6, ``HI''; the

Medicare Part A Intermediary Manual, Part 3, ``Claims Processing''; the

Medicare Part B Carriers Manual, Part 3, ``Claims Processing''; and the

Medicare Renal Dialysis Facilities Manual, would be revised to reflect

the changes made to the definition of ESRD and the resumption of

entitlement.

III. Collection of Information Requirements

This rule contains no information collection requirements.

Consequently, this rule need not be reviewed by the Office of

Management and Budget under the authority of the Paperwork Reduction

Act of 1980 (44 U.S.C. 3501 et seq.).

IV. Response to Comments

Because of the large number of items of correspondence we normally

receive on a proposed rule, we are not able to acknowledge or respond

to them individually. However, we will consider all comments that we

receive by the date and time specified in the ``Dates'' section of this

preamble, and if we proceed with the final rule, we will respond to the

comments in the preamble to the final rule.

V. Regulatory Impact Statement

In calendar year 1989, over 21,200 individuals were certified by

their physicians as having an irreversible, permanent kidney

impairment, and obtained Medicare entitlement solely on the basis of

this certification. In 1990, that number was 22,800. As reported in the

National Institute of Diabetes and Digestive and Kidney Disease's U.S.

Renal Data System Annual Data Report, approximately 1 percent of

individuals receiving dialysis treatments during these years were able

to terminate their course of dialysis treatment because kidney function

returned. This figure is consistent with data that we maintain on the

number of individuals whose Medicare eligibility terminated.

We analyzed the Medicare payment records of beneficiaries whose

sole reason for Medicare entitlement was ESRD, and who discontinued

dialysis (and thus, Medicare eligibility) within 2 years after

enrollment. Our records indicate that 70 percent of the individuals

incurred annual costs of less than $10,000, with an annual mean cost

per beneficiary to the Medicare program of approximately $8,000. This

is significantly below the average annual cost to the Medicare program

of $40,000 for a patient receiving regular dialysis treatments. Because

these beneficiaries were able to discontinue dialysis after incurring

only limited medical costs, we believe that most of these patients may

have been incorrectly certified as having ESRD, which requires long-

term maintenance dialysis or a kidney transplant. Although the number

of individuals who may have been incorrectly certified was less than

250 per year, they accounted for nearly $2 million in annual Medicare

program expenditures. These expenditures were unintended because the

disease did not reach ``end-stage'' in these individuals. As a result

of this proposed revision, we estimate the projected savings to the

Medicare program for the next 5 calendar years to be as follows:

[Millions of Dollars]

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

1994 1995 1996 1997 1998

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2.8.......... 3.1 3.4 3.8 4.2

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With regard to the portion of this proposed rule concerning

resumption or continuation of entitlement after a terminating event, we

have no reason to believe, based on 13 years' experience, that more

than one or two people would have had their entitlement resumed earlier

under the proposed revised regulation relating to that issue.

We generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612) unless the Secretary certifies that a proposed rule would

not have a significant economic impact on a substantial number of small

entities. For purposes of the RFA, we consider all physicians and

dialysis facilities to be small entities.

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

a regulatory impact analysis if a proposed 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 603

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.

No additional time burden or monetary requirements would be placed

on physicians or dialysis facilities in order to comply with the

provisions of this proposed rule since physicians should already have

appropriate laboratory findings and generally accepted diagnostic

criteria to confirm a diagnosis of ESRD.

In addition, changes in the resumption of entitlement regulations

would have no effect on physicians or on dialysis facilities.

For the reasons stated above, we have determined, and the Secretary

certifies, that this proposed rule would not result in a significant

economic impact on a substantial number of small entities or on the

operations of a substantial number of small rural hospitals. We are,

therefore, not preparing analyses for either the RFA or section 1102(b)

of the Act.

List of Subjects in 42 CFR Part 406

Health facilities, Kidney diseases, Medicare.

42 CFR chapter IV, part 406 is amended as follows:

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

1. The authority citation for part 406 continues to read as

follows:

Authority: Secs. 202(t), 202(u), 226, 226A, 1102, 1818, and 1871

of the Social Security Act (42 U.S.C. 402(t), 402(u), 426, 426-1,

1302, 1395i-2, and 1395hh), and 3103 of Public Law 89-97 (42 U.S.C.

426a) unless otherwise noted.

2. In Sec. 406.13, the heading and introductory language in

paragraph (b) is republished, the definition of ``End-stage renal

disease'' in paragraph (b) is revised, and paragraphs (f) and (g) are

revised to read as follows:

Sec. 406.13 Individual who has end-stage renal disease.

* * * * *

(b) Definitions. As used in this section:

End-stage renal disease (ESRD) means that stage of kidney

impairment that appears irreversible and permanent and requires a

regular course of dialysis treatments or kidney transplantation to

maintain life, as evidenced by generally accepted diagnostic criteria

and laboratory findings.

* * * * *

(f) End of entitlement. Entitlement ends with--

(1) The end of the 12th month after the month in which a regular

course of dialysis ends; or

(2) The end of the 36th month after the month in which the

individual has received a kidney transplant.

(g) Resumption of entitlement. Entitlement is resumed under the

following conditions:

(1) An individual who initiates a regular course of renal dialysis

during the 12-month period after the previous course of dialysis ended

is entitled to Part A benefits and eligible to enroll in Part B with

the month the regular course of dialysis is resumed.

(2) An individual who initiates a regular course of renal dialysis,

or has a kidney transplant, during the 36-month period after an earlier

kidney transplant is entitled to Part A benefits and eligible to enroll

in Part B with the month the regular course of dialysis begins or with

the month the subsequent kidney transplant occurs.

(3) An individual who initiates a regular course of renal dialysis

more than 12 months after the previous course of regular dialysis ended

or more than 36 months after the month of a kidney transplant is

eligible to enroll in Part A and Part B with the month in which the

regular course of dialysis is resumed. If he or she is otherwise

entitled under the conditions specified in paragraph (c) of this

section, including the filing of an application, entitlement begins

with the month in which dialysis is initiated or resumed, without a

waiting period, subject to the limitations of paragraph (e)(1) of this

section.

(Catalog of Federal Domestic Assistance Program No. 93.773,

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

Supplementary Medical Insurance Program)

Dated: June 4, 1993.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Approved: October 4, 1993.

Donna E. Shalala,

Secretary.

[FR Doc. 94-65 Filed 1-5-94; 8:45 am]

BILLING CODE 4120-01-P