Medicare Program; Clarification of Resumption of Entitlement Rules for Medicare Patients With End-Stage Renal Disease (ESRD)

SUMMARY: In this final rule, we clarify the terms of Medicare

entitlement when an individual resumes a regular course of renal

dialysis treatment or receives a kidney transplant after a previous

course of treatment has been terminated (with or without a transplant)

and add the same considerations for those who have a second transplant

or begin dialysis after a previous transplant. We also respond to

comments on a proposal to revise the definition of ESRD for the purpose

of qualifying for Medicare.

These revisions are necessary so that beneficiaries, providers,

suppliers, and other insurers can determine with certainty when

Medicare coverage begins and ends. Beneficiaries rely on this

information to make informed decisions whether or not to enroll or re-

enroll in the Medicare Supplementary Medical Insurance Program (part

B).

EFFECTIVE DATE: These regulations are effective on June 7, 1995.

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

SUPPLEMENTARY INFORMATION:

I. Background

End-stage renal disease (ESRD) is a disease that results 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.

Definition of ESRD

Section 226A of the Social Security Act (the Act) provides for

Medicare coverage for certain individuals who are medically determined

to have ESRD. Once an individual is medically determined to have ESRD,

the Act specifies that one of two conditions must be met before

entitlement begins. That is, the individual must begin a regular course

of dialysis or receive a kidney transplant. The Act provides that

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

regular course of renal dialysis is initiated or, if earlier, with the

month the transplant occurs.

The Act does not define ESRD. Our regulations, in Sec. 406.13(b),

define it 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.)

Resumption of Entitlement to ESRD Benefits

Paragraphs (c)(2) and (c)(3) of section 226A of the Act specify 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 (Hospital Insurance) 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 again is that it offers the

opportunity for those who previously refused Part B (Supplementary

Medical Insurance) entitlement or allowed their Part B entitlement to

lapse to enroll in Part B without waiting for the annual general

enrollment period (January through March). Most kidney dialysis

treatments are covered under Part B.

Proposed Rule

On January 6, 1994, we published a proposed rule, at 59 FR 714,

which proposed a change in the definition of end-stage renal disease

(ESRD) and a clarification regarding Medicare entitlement when an

individual's regular course of renal dialysis treatment resumes after a

previous course of treatment has been terminated (with or without a

transplant). The proposal resulted from our concern that there may be a

misunderstanding of the extent of kidney failure that constitutes ESRD

for which the law grants Medicare entitlement. We were also concerned

that our regulations on resumption of entitlement based on ESRD might

be misinterpreted resulting in loss of benefits for some individuals.

Further, for those individuals whose Part A entitlement had not yet

ended, we believe that the intention is to re-enroll the individual in

Part A with that month, without a new application.

Proposed definition--We were concerned that data revealed nearly 1

percent of newly entitled individuals terminated their course of

dialysis with a return of kidney function. We believed that physicians'

certifications leading to eligibility for the patients who terminated

dialysis may have arisen from a misunderstanding of the extent of the

kidney failure that is a predicate to Medicare entitlement.

Consequently, we proposed to amend the definition of ESRD that appeared

in Sec. 406.13 to require that the condition be ``evidenced by

generally accepted diagnostic criteria and laboratory findings.'' We

believed that this addition would make clear that an individual who

receives dialysis does not necessarily have end-stage renal disease.

End of and Resumption of Entitlement--We proposed to treat the

situation in which dialysis ends, then begins again within 12 months,

or in which a second transplant is received within 36 months, as a

resumption of entitlement. Accordingly, we proposed to delete from

paragraph (f) of Sec. 406.13 the reference to continuation of

entitlement. We would revise paragraph (g), which specifies the

conditions for resumption of entitlement, to include the situation

where coverage resumes despite a previous course of treatment.

In our revision of Sec. 406.13(g) we stated that entitlement would

be resumed under any one of three conditions and we used the language

we removed from paragraph (f). Under Sec. 406.13(g)(1), 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 a new period of Part

A benefits and, therefore, eligible to enroll in Part B effective with

the month the regular course of dialysis is resumed.

The Act 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 Part A 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, proposed to revise

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

initiates a new, regular [[Page 22534]] 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 and be eligible to enroll in Part B effective with the month the

regular course of dialysis begins or with the month the subsequent

kidney transplant occurs.

We also proposed 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 effective with the month in which the regular course of dialysis

treatment is resumed. If he or she is otherwise eligible 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).

II. Analysis of and Responses to Public Comments

Comment: Several commenters were concerned that the proposed

revision to the definition of ESRD would not achieve HCFA's stated

goals of clarifying the entitlement to Medicare's ESRD benefit or

eliminating the one percent alleged error rate. In fact, the change in

the definition of ESRD to refer to ``generally accepted diagnostic

criteria and laboratory findings'' could be inappropriate if HCFA

attempts to establish one easily defined set of laboratory values or

other criteria which represent a clear boundary between cases of ESRD

and non-ESRD. One commenter remarked that patients with many

comorbidities, especially cardiovascular complications, could die of

heart attacks or other events while their physicians wait to put them

on dialysis until their laboratory values reach an arbitrary and too

strict standard. The commenters asked that any system that relies on

sets of laboratory values or other criteria should provide for medical

review of questionable cases by a group of knowledgeable physicians,

with an opportunity for input by the physician of the patient in

question.

Response: In creating the Medicare ESRD program, the Congress

clearly intended that Medicare should be available only to patients who

have ESRD and require regular dialysis treatments or a kidney

transplant to survive. It was certainly not our intent in proposing a

change in the definition of ESRD to cause physicians to delay

prescribing dialysis for patients who do not yet meet a prescribed set

of laboratory values but have other comorbid conditions that the

physicians believe would benefit from dialysis treatment. In fact, we

have always been confident that physicians who believe that dialysis is

a necessary component in treating a patient's medical condition

prescribe such treatment without regard to the expectation of Medicare

coverage.

After considering the comments, we now believe that changes being

made in the way we review medical evidence of ESRD will accomplish more

to ensure that patients meet the definition of ESRD than would a change

to the definition of ESRD in the regulations. Under the screening

process that is expected to be used by the ESRD networks in reviewing

ESRD medical evidence report forms, patients who meet certain

prescribed laboratory test values will automatically be considered to

have ESRD. Cases that fail to meet the laboratory test values will then

be sent to the network's medical review board for further review. At

this stage, the treating physician will have the opportunity to furnish

additional information on the patient's condition. Only after the

medical review board has completed its review of the case and concluded

that the patient's condition is not ESRD will the patient's Medicare

claim be denied. Therefore, we have decided not to revise the

definition of ESRD, as proposed, and are retaining the existing

definition of ESRD in Sec. 406.13(b).

Comment: The proposed rule does not address the issues of

notification to HCFA to ensure continuity of benefits when a patient

returns to dialysis within 12 months after regaining kidney function or

during the 36 months following transplantation.

Response: The actual process used to prevent terminations from

occurring when an individual resumes dialysis or receives another

transplant is not appropriate for inclusion in regulations. However, in

cases in which an individual ceases dialysis or receives a transplant,

the individual is notified immediately that Medicare will terminate in

the future (12 months after dialysis ends or 36 months after

transplant) unless by that time dialysis is resumed or another

transplant is received. Three months before the termination is

effective, we send the individual another notice and an ESRD medical

evidence form (HCFA-2728) and advise the individual to have the form

completed by the treating source without delay if dialysis has been

resumed or another transplant received. We believe this process

provides ample time for an individual to notify us about resumption of

dialysis or receipt of a new transplant in order to prevent an

incorrect termination of Medicare entitlement.

III. Provisions of the Final Regulations

Definition of ESRD--This final rule does not incorporate the

proposed definition of ESRD. We are retaining the existing definition

of ESRD in Sec. 406.13(b).

Resumption of Entitlement to ESRD Benefits--We are incorporating

the provisions of the proposed rule. In addition, we are making a

technical revision by expanding Sec. 406.13(g)(1) to indicate that a

new period of Medicare entitlement begins if an individual receives a

kidney transplant during the 12-month period after a course of dialysis

ends; he or she is entitled to resume Part A benefits and eligible to

enroll in Part B benefits effective with the month the transplant

occurs. This was inadvertently omitted from the proposed rule and

assures that both individuals who resume dialysis and those who receive

a transplant during the 12-month period after a course of dialysis ends

will be treated the same with respect to the right to immediately

enroll in Part B benefits without having to wait for the annual general

enrollment period.

IV. 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.).

V. Regulatory Impact Statement

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 final rule will 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. Individuals are not included

in the definition of a small entity.

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 [[Page 22535]] 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.

This final rule incorporates the technical provisions of the

proposed rule regarding resumption of entitlement. This rule has no

budget impact because it merely conforms the regulations more closely

to the intent of the Social Security Act in order to avoid any

ambiguity concerning the conditions for resumption of Medicare

entitlement. Therefore, 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 final rule will not result in 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. In accordance with the

provisions of Executive Order 12866, this regulation was not reviewed

by the Office of Management and Budget.

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 103 of Pub. L. 89-97 (42 U.S.C. 426a)

unless otherwise noted.

2. In Sec. 406.13, paragraphs (f) and (g) are revised to read as

follows:

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

* * * * *

(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

or has a kidney transplant 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 or the month the kidney is transplanted.

(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: November 29, 1994.

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: January 5, 1995.

Donna E. Shalala,

Secretary.

[FR Doc. 95-11173 Filed 5-5-95; 8:45 am]

BILLING CODE 4120-01-P