[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
                   PATIENT SAFETY AND QUALITY ISSUES

                  IN END STAGE RENAL DISEASE TREATMENT

=======================================================================



                                HEARING

                               before the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                            DECEMBER 6, 2006

                               __________

                           Serial No. 109-87

                               __________

         Printed for the use of the Committee on Ways and Means




                      U.S. GOVERNMENT PRINTING OFFICE
35-773 PDF                    WASHINGTON  :  2007
---------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government
Printing Office Internet:  bookstore.gpo.gov Phone:  toll free (866)
512-1800; DC area (202) 512-1800 Fax: (202)512-2250 Mail: Stop SSOP,
Washington, DC 20402-0001 



                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

E. CLAY SHAW, JR., Florida           CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut        FORTNEY PETE STARK, California
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania           JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona               XAVIER BECERRA, California
JERRY WELLER, Illinois               LLOYD DOGGETT, Texas
KENNY C. HULSHOF, Missouri           EARL POMEROY, North Dakota
RON LEWIS, Kentucky                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas                   MIKE THOMPSON, California
THOMAS M. REYNOLDS, New York         JOHN B. LARSON, Connecticut
PAUL RYAN, Wisconsin                 RAHM EMANUEL, Illinois
ERIC CANTOR, Virginia
JOHN LINDER, Georgia
BOB BEAUPREZ, Colorado
MELISSA A. HART, Pennsylvania
CHRIS CHOCOLA, Indiana
DEVIN NUNES, California

                    Allison H. Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________
                                                                   Page

Advisory of November 29, announcing the hearing..................     2

                               WITNESSES

The Honorable David M. Walker, Comptroller General, U.S. 
  Government Accountability Office...............................    26
Leslie V. Norwalk, Acting Administrator, Centers for Medicare and 
  Medicaid Services..............................................    45

                                 ______

Ajay K. Singh, Associate Professor of Medicine, Brigham and 
  Women's Hospital, Harvard Medical School, Boston, Massachusetts    12
Laura T. Pizzi, Research Associate Professor of Health Policy, 
  Department of Health Policy, Thomas Jefferson University, 
  Philadelphia, Pennsylvania.....................................     8
Dennis J. Cotter, President, Medical Technology and Practice 
  Patterns Institute, Inc., Bethesda, Maryland...................    18

                       SUBMISSIONS FOR THE RECORD

American Society of Pediatric Nephrology, Indianapolis, IN, 
  statement......................................................    66
Amgen, statement.................................................    67
Carrancejie, Richard, Birmingham, AL, statement..................    75
DaVita Patient Citizens, statement...............................    76
Henrich, William, Anemia Management, letter......................    76
Ishak, Noshi, Central New Hampshire Kidney Center, Laconia, NH, 
  letter.........................................................    78
Kidney Care Partners, statement..................................    81
National Kidney Foundation, Inc., New York, NY, statement........    83
Renal Physicians Association, Rockville, MD, statement...........    85
Robinson, Kris, American Association of Kidney Patients, Tampa, 
  FL, statement..................................................    86
Schatell, Dori, Medical Education Institute, Madison, WI, 
  statement......................................................    88
Sweeney, Jim, Coalition for Dialysis Patient Choice, letter......    90
Tate-Harris, Patricia, Association of Dialysis Advocates, Baton 
  Rouge, LA, statement...........................................    92


                   PATIENT SAFETY AND QUALITY ISSUES



                  IN END STAGE RENAL DISEASE TREATMENT

                              ----------                              


                      WEDNESDAY, DECEMBER 6, 2006

                     U.S. House of Representatives,
                               Committee on Ways and Means,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:45 a.m., in 
Room 1100, Longworth House Office Building, Hon. William M. 
Thomas (Chairman of the Committee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
November 29, 2006
FC-27

                      Thomas Announces Hearing on

                  Patient Safety and Quality Issues in

                   End Stage Renal Disease Treatment

    Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways 
and Means, today announced that the Committee will hold a hearing on 
safety and quality for Medicare beneficiaries with End Stage Renal 
Disease (ESRD). The hearing will take place on Wednesday, December 6, 
2006, in the main Committee hearing room, 1100 Longworth House Office 
Building, beginning at 10:30 a.m.
      
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include experts on Medicare payment and treatment of 
beneficiaries with ESRD and government officials. However, any 
individual or organization not scheduled for an oral appearance may 
submit a written statement for consideration by the Committee and for 
inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    In 1972, Medicare began to cover treatment for patients with kidney 
failure, known as ESRD. Patients with kidney failure are typically 
treated with dialysis and are prescribed medication to address anemia, 
calcium and other deficiencies.
      
    Between 1998 and 2003, ESRD treatment spending increased by almost 
50 percent. In 2004, Medicare covered about 309,300 dialysis patients, 
nearly 93 percent of all such patients in the United States. According 
to U.S. Renal Data System (USRDS) and the Medicare Payment Advisory 
Commission (MedPAC), Medicare spends about $64,000 per year for each 
person on hemodialysis for all medical services.
      
    In the last 10 years, mortality rates for ESRD patients have 
declined except for patients that have been receiving therapy for 5 or 
more years. During the same time period, however, hospitalizations for 
infections and cardiovascular complications are up 20 and 10 percent, 
respectively. To address these problems, the Centers for Medicare and 
Medicaid Services (CMS) has taken steps to improve quality and safety 
in ESRD facilities. For instance, in 2004, CMS developed a dialysis 
facility comparison website that contains service and quality 
information on all Medicare approved dialysis facilities.
      
    However, significant problems remain with the quality of care for 
patients that receive dialysis for kidney failure as well as the 
payments for this population. Two recent studies have indicated two 
specific concerns:
      
    1.  Patient safety. USRDS data show that 40 percent of patients in 
the dialysis population that are being treated with an anemia drug have 
a red blood cell count above the Food and Drug Administration (FDA) 
recommended level. Moreover, half of the 40 percent have a level 
associated with the higher risk of cardiovascular events and mortality, 
according to a November 2006 study published in the New England Journal 
of Medicine.
      
    2.  Inefficient and unnecessary Medicare spending. A recent study 
from November 2006 in Dialysis and Transplantation found that the 
population with a red blood cell count above industry guidelines also 
has higher drug costs, specifically, $3,100 per patient per year more 
just on the anemia drug.
      
    In March 2006, the MedPAC reported that dialysis facilities 
continue to lose money on the composite rate, which includes the costs 
of nursing services, equipment and supplies. However, the losses are 
partially recouped by Medicare payment for drugs at Average Sales Price 
plus 6 percent. The Commission reported that the Medicare Modernization 
Act of 2003 (P.L. 108-173) made Medicare's drug payments less 
profitable in total, but also reported that the financial incentive to 
use more drugs persist even under the revised payment policy.
      
    In announcing the hearing, Chairman Thomas stated, ``While we have 
made gains in improving the End Stage Renal Disease program, clearly we 
need to continue to explore what more can be done to improve patient 
safety and quality of care. Patient safety and efficient use of 
taxpayer dollars are critical. We should examine the increased dosage 
of these drugs and the possible detrimental health effects. I am also 
concerned that Medicare has not been a prudent purchaser in this arena, 
given its rapid growth in spending. ESRD providers do not receive an 
annual update which is why a permanent solution that provides payment 
stability is critical to end perverse incentives based on the 
utilization of drugs.''
      

FOCUS OF THE HEARING:

      
    In continuing the Committee's consideration of improving the 
quality of health care in the Medicare program, the hearing will focus 
on recent research on the Medicare payment for drugs used in treating 
ESRD patients, the quality and safety of the treatment for ESRD 
patients as well as oversight on the CMS operations related to ESRD.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
for the hearing record must follow the appropriate link on the hearing 
page of the Committee website and complete the informational forms. 
From the Committee homepage, http://waysandmeans.house.gov, select 
``109th Congress'' from the menu entitled, ``Hearing Archives'' (http:/
/waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing 
for which you would like to submit, and click on the link entitled, 
``Click here to provide a submission for the record.'' Once you have 
followed the online instructions, completing all informational forms 
and clicking ``submit'' on the final page, an email will be sent to the 
address which you supply confirming your interest in providing a 
submission for the record. You MUST REPLY to the email and ATTACH your 
submission as a Word or WordPerfect document, in compliance with the 
formatting requirements listed below, by close of business Wednesday, 
December 20, 2006. Finally, please note that due to the change in House 
mail policy, the U.S. Capitol Police will refuse sealed-package 
deliveries to all House Office Buildings. For questions, or if you 
encounter technical problems, please call (202) 225-1721.
      

FORMATTING REQUIREMENTS:

      
    The Committee relies on electronic submissions for printing the 
official hearing record. As always, submissions will be included in the 
record according to the discretion of the Committee. The Committee will 
not alter the content of your submission, but we reserve the right to 
format it according to our guidelines. Any submission provided to the 
Committee by a witness, any supplementary materials submitted for the 
printed record, and any written comments in response to a request for 
written comments must conform to the guidelines listed below. Any 
submission or supplementary item not in compliance with these 
guidelines will not be printed, but will be maintained in the Committee 
files for review and use by the Committee.
      
    1. All submissions and supplementary materials must be provided in 
Word or WordPerfect format and MUST NOT exceed a total of 10 pages, 
including attachments. Witnesses and submitters are advised that the 
Committee relies on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. All submissions must include a list of all clients, persons, 
and/or organizations on whose behalf the witness appears. A 
supplemental sheet must accompany each submission listing the name, 
company, address, telephone and fax numbers of each witness.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.
      
    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.

                               

    Chairman THOMAS. Good morning. First of all, I want to 
thank our witnesses and the Members of the Committee. In an 
attempt to make sure that we can utilize the time as usefully 
as possible on a very important hearing--made more timely by 
recent publications that were released in a GAO study--
notwithstanding the fact we are in a lame duck session in which 
system negotiations are occurring between the House and the 
Senate; therefore, we have asked the panel of specific experts 
who have a body of written information that has been available, 
and they will comment directly on that. The Chair would request 
that Members limit any questioning if at all possible, so that 
we could delve then relatively quickly to members of the 
administration of the GAO, who have time constraints of their 
own.
    The Committee will hear from our distinguished panel of 
witnesses, basically, whether Medicare is appropriately 
safeguarding the packets and the integrity of the trust funds 
because, recently, the scientific and even mainstream press 
have pointed out a growing concern about unsafe and 
questionable treatment for Medicare's coverage for kidney 
failure, also known as End Stage Renal Disease.
    We know that for more than 30 years Medicare has covered 
treatments for patients with ESRD. Treatments usually consist 
of dialysis, also with anemia, a lower number of red blood 
cells, drugs. Medicare payments for these treatments have 
increased rapidly by almost 50 percent between 1998 and 2003. 
In fact, one of the drugs to treat ESRD has been identified as 
the single largest expenditure in Medicare part B each year, 
notwithstanding the small population that receives the drug. 
More importantly, there has been longstanding safety concerns 
about whether patients receiving treatment for ESRD are 
actually being harmed by the perhaps high doses of anemia drugs 
they are prescribed. According to the U.S. Renal Data System 40 
percent of the dialysis patients treated for low red blood 
cells with anemia drugs actually have a red blood cell count 
above the FDA recommended levels. In fact, after the drugs, 
beneficiaries have a level high enough to trigger serious 
cardiovascular problems, some resulting in death. So, the 
question is not only one of taxpayers' money being spent on a 
monopoly drug; it is the question of what is reasonable and 
appropriate from a health point of view.
    We are also anxious to hear testimony from the Centers for 
Medicare and Medicaid Services, CMS. In April of this year, the 
Chair wrote to then administrator Mark McClellan asking several 
pointed questions about why CMS had developed the policy to 
deal with what we considered to a certain extent out-of-control 
dosing of ESRD patients at a different level than the FDA 
recommended and the labels on the drugs prescribed.
    If this was the right policy, the Chair believes it should 
have been easy to answer the letter. It took CMS 8 months, 
until this week in fact, to respond. Then, again, in November, 
not having that in a response, House Subcommittee Ranking 
Member Stark and the Chairman wrote a letter to Acting 
Administrator Norwalk--and the Committee appreciates her 
ability to attend today--reiterating our concerns. Again, the 
letter was not responded to until Monday night. Obviously, 
today we are going to talk about the letter response but, more 
importantly, the concerns that the letter reflected.
    Now, after a number of months and having seen a significant 
number of publications focusing on exactly those issues, 
hopefully, we will be able to get some understanding of the 
issue of the treatment for patients. Obviously, we are going to 
solicit ideas for improving qualities for these beneficiaries, 
and we are interested in hearing now the GAO's testimony 
following the release yesterday of their report on Medicare 
payment for ESRD services. We have a significant document, a 
printed evidentiary record, that will be in front of us, and we 
want to know where we are going to go from here.
    So I am excited about this hearing. Obviously, this is the 
beginning, notwithstanding the fact it is coming at the end of 
this Congress; these questions will obviously carryover. I 
appreciate the ongoing bipartisan working relationship that we 
have had on this very important issue, and I will recognize the 
gentleman from New York for any statement he may wish to make.
    Mr. RANGEL. Thank you, Mr. Chairman. This meeting is 
historic for a variety of reasons. One, because you visited 
with us in the Democratic Caucus together and made it clear 
that you and Peter Stark were in agreement on this subject 
matter. For us, that is a gigantic step, and we wanted that to 
be properly recorded.
    The second thing----
    Chairman THOMAS. Would the gentleman yield?
    Mr. RANGEL. I would be pleased.
    Chairman THOMAS. I am pleased you finally got it right.
    Mr. RANGEL. The second thing is this probably will be the 
last formal hearing that you will be chairing. I think the 
audience should know that, notwithstanding what the record 
would indicate, these Committee hearings, as it relates to your 
relationship with me, that the audience should know that Bill 
Thomas and I have never, but never, in the years that we have 
served in the House of Representatives had an unpleasant 
conversation outside of the Committee room.
    I also would like to say that the Committee has agreed, and 
I have agreed, to host the reception that was supposed to be a 
surprise, but knowing how difficult it is in the last few days 
of our work, that we hope that you will be available at 5:00 
tomorrow when the Committee members and staff would like to 
thank you for the dedication which you have given to the 
Committee, the Congress, and the country.
    Lastly, we would like to wish you a happy birthday. This is 
your 65th birthday, and now I can see why you are concerned 
about Social Security, as you become eligible for Medicare, and 
I have personally had a special Social Security card made up in 
connection with reform that Jim McCrery and I are going to be 
working on, and I have signed this so that if you have any 
problems at all, you can rest assured that this will be able to 
get you the proper health care that you might need.
    Chairman THOMAS. I want to thank the--this looks like the 
$3 bill he gave me last year. The gentleman needs to know that, 
unfortunately, I voted for the extension of age not nearly long 
enough based on life expectancy so I don't get to use my Social 
Security card until I am 65 years, 8 months. However, Medicare 
kicks in immediately and hence the reason for this particular 
hearing.
    Mr. RANGEL. I would like to yield the substantive questions 
to your colleague, Peter Stark.
    Mr. STARK. Thank you.
    Thanks, Bill. My wishes for a happy 65th birthday. I wish I 
could remember what I did on mine.
    But now that you are no longer just an observer, I want to 
ensure you that we will do our best to make it a successful 
program for you and all Americans.
    I am pleased to call this hearing. It is--the ESRD policy 
is unique in our country. Some may say it is our only form of 
socialized medicine. Almost everybody who is involved in 
dialysis is involved in the government finance program. One of 
the problems that we have had is that we have been involved in 
using these drugs which have cost us a couple billion dollars a 
year, and many of us have maintained for a long time that we 
should be getting a better deal. We are now faced with the 
potential that we may actually, through policies of 
reimbursement, be putting people at risk for danger to their 
health, and that is something that I don't think we should 
tolerate.
    I wanted as many of you in the room to know I have a long 
history on this issue, and it has come to my attention, Mr. 
Chairman, that recently certain interests may be 
misrepresenting my past positions, and I would just like to 
submit for the record a copy of a letter I wrote to CMS in 1997 
that has been circulated and a written response from my then 
lead staff person Bill Vaughan who helped draft my response, 
and I just add this to clarify the record if Mr. Chairman would 
accept.
    Chairman THOMAS. Without objection.
    [The information follows:]

                                                  November 29, 2006

The Honorable Fortney H. (Pete) Stark
Ranking Member, Subcommittee on Health
Committee on Ways and Means
239 Cannon House Office Building

Dear Congressman Stark:

    As a former staff member who served on the Ways and Means Health 
Subcommittee between 1996 and the spring of 2001, your current staff 
has asked me to elaborate on the letter you asked me to draft, and 
which you signed, addressed to former Health Care Financing 
Administrator Nancy-Ann DeParle dated December 8, 1997 relating to 
Medicare coverage of EPO.
    Apparently someone--who has not read the letter thoroughly--is 
alleging that this letter indicates your support of higher dosages of 
EPO. That is a complete misreading of your letter. Your letter was an 
effort to encourage the removal of financial incentives that have long 
distorted the administration of EPO--a distortion that has cost 
taxpayers hundreds of millions--perhaps billions!--of dollars and which 
we now find may have been hurting the health of hundreds of thousands 
of patients. As you repeatedly stressed to me, your goal on the 
Subcommittee has always been to encourage the best practice of 
medicine, without financial influences to over--or under--treat 
patients. This letter is part of that theme--a theme seen in your other 
efforts, such as the physician referral laws (Stark I and II) and your 
successful amendment to limit the amount that managed care physicians 
can be financially placed at risk for under-treatment of patients.
    Because historically there has been a spread between what Medicare 
reimburses a dialysis center for a unit of EPO and what the company's 
net selling cost of the product to the center is, centers have profited 
by increasing their use of EPO. I once even saw a chart that a 
salesperson for the company gave to dialysis clients showing how profit 
would increase as dosage was increased!
    Only by eliminating the profit incentive to administer higher and 
higher doses can patients have the peace of mind that they are getting 
an appropriate level of EPO. Ideally, in my opinion, centers would be 
reimbursed for their net acquisition cost plus a dollar for 
administration (since it is generally administered through an existing 
line to the patient).
    The VA, Kaiser, and most of Europe generally (but on a case by case 
basis) administers EPO subcutaneously, which in most people results in 
the more efficient uptake of the medicine and can save substantial 
amounts of money because less EPO is necessary to achieve the same 
hematocrits. I urge you to encourage such a policy, perhaps sharing the 
savings with beneficiaries through reduced copayments as compensation 
for the inconvenience of the injection. It would also be useful to ask 
if the company has finally made a dose formulation that minimizes any 
pain of injection.
    The December 8, 1997 letter was written before I remember ever 
seeing any studies (such as those excellent papers by Dennis Cotter, 
et. al) raising safety concerns of over-dosage. It was written before 
the recent important discussion of CMS dosage rates exceeding FDA 
recommended dosages. In writing the letter, we were concerned that the 
HCFA policy would cause centers to under-dose because of fear of non-
payment. Under-dosing for financial reasons is clearly as bad as over-
dosing for financial gain. Your letter was designed to deal with both 
issues: allow upward dosing where a physician thought it was 
appropriate, but take away almost all of the overpayment incentive that 
was causing over-dosing for financial gain.
    As a former staffer, who organized the very first Ways and Means 
oversight hearings on the ESRD program in 1975, I have long felt that 
the financial incentives in this program have been an abuse to the 
taxpayer and to the best care of patients. I deeply regret that we did 
not make more progress on this issue when I was one of your staff 
members, and I wish you the best in finally achieving good health 
policy at a reasonable cost to taxpayers.
            Sincerely,
                                                    William Vaughan

    P.S. Don't cap medical malpractice! Maybe it's time for someone to 
get sued for the abuse of patients in this sector.

    Mr. STARK. I look forward to hearing from our witnesses.
    Chairman THOMAS. Any other member may put a written 
statement in the record. Our witnesses have an extensive body 
of studies and the rest, and my goal would be to have you 
present in a very succinct way, in the time you have available, 
the key points you might want to make based upon these recent 
studies, which have obviously been very timely and focused us 
on the concerns that we had, some general concerns that clearly 
now have been evidenced by clinical studies as well. It seems 
to me, given the three panelists, that we would start with Dr. 
Pizzi for no other reason than the fact that you are in the 
middle.

 STATEMENT OF LAURA T. PIZZI, PharmD, MPH, RESEARCH ASSOCIATE 
PROFESSOR OF HEALTH POLICY, DEPARTMENT OF HEALTH POLICY, THOMAS 
        JEFFERSON UNIVERSITY, PHILADELPHIA, PENNSYLVANIA

    Dr. PIZZI. Chairman Thomas and distinguished Committee 
members. My name is Dr. Laura Pizzi. I am research associate 
professor of health policy at Jefferson Medical College in 
Philadelphia. I am a pharmacist by training but for the past 10 
years have worked as a researcher on issues related to the 
costs and outcomes of pharmaceuticals and presently lead a 
group of six researchers at Jefferson who are dedicated to this 
topic. I hold the secondary appointment as adjunct assistant 
professor in pharmaceutical business at the University of 
Sciences in Philadelphia and am co-editor of the text entitled, 
Economic Evaluation in U.S. Health Care, Principles and 
Applications, which was released last year.
    I am here today to discuss the results of a study that I 
led at Jefferson which was published in the November 2006 
journal, Dialysis and Transplantation. This study was conducted 
by our team at Jefferson along with Dr. David Goldfarb, who is 
a nephrologist at the New York Harbor Veterans Affairs Medical 
Center in New York City, and Dr. Joseph Fuhr, who is a 
professor of economics in Chester, Pennsylvania. The study was 
funded by a grant from Watson: Laboratories. While we received 
funding from Watson, our team formulated the research 
objective, designed the study, and performed the analysis 
independently. My testimony does not reflect the views of the 
sponsor nor of Jefferson.
    The objective of this study was to determine the extent to 
which health care providers adhered to clinical practice 
guidelines for the treatment of anemia in patients receiving 
hemodialysis. The guidelines that we used were those published 
by the Kidney Disease Outcomes Qualified Initiative, also known 
as KDOQI, released in the year 2000 by the National Kidney 
Foundation. We compared actual utilization in practice for the 
anemia drugs, erythropoietin, or EPO, and intravenous iron to 
the KDOQI 2000 guideline recommendations. Actual utilization 
was obtained from the United States Renal Data Service annual 
report for 2004.
    The critical target for anemia in this population was a 
hemoglobin of 11-12 mg/dL. To reach this hemoglobin level, 
patients need to have their iron stores replenished with 
intravenous iron, and they also need to receive EPO to 
stimulate red blood cell production. The guideline calls for an 
initial EPO of 120-180 units per kg per week, which we assumed 
remained the dose during the study period. We calculated 
recommended dosages based on the average weight of an adult 
receiving hemodialysis, 159.5 pounds.
    For iron, we used recommended doses from KDOQI. We then 
examined actual utilization per the United States Renal Data 
Service Data and compared it to what was recommended by the 
KDOQI 2000 guidelines. Our findings indicated that there was 
significant overuse of EPO and slight underuse of intravenous 
iron. Although we were not surprised to see that the providers 
were not strictly adhering to the guideline, we were quite 
surprised by the extent to which EPO use in practice deviated 
from KDOQI recommendations.
    Next, we converted the difference in utilization to dollars 
based on 2005 Medicare reimbursement rates. We estimate that 
CMS could have reduced expenditures for these drugs by 36 
percent if dialysis facilities adhered to the guidelines. If 
CMS spends $2 billion per year on EPO, it is reasonable to say 
that several hundred million dollars could have been saved if 
the providers followed the guidelines.
    Chairman THOMAS. Dr. Pizzi, you are down to about a minute, 
and I would prefer that you move to your recommendations and 
conclusions, because we have your written testimony, and it 
will be made a part of the record.
    Dr. PIZZI. I believe the best way to address the matter of 
EPO overuse is to reward dialysis providers who achieve an 
appropriate hemoglobin target--whether the target is based on 
KDOQI recommendations, product labeling, expert opinion, or a 
combination of these sources. Once the target has been agreed 
upon, CMS may wish to consider a pay-for-performance 
reimbursement policy centered upon that hemoglobin target as 
follows: Lower the reimbursement rate for EPO such that it is 
cost neutral to the facilities and reward facilities with a 
higher reimbursement rate for the dialysis session for patients 
whose hemoglobin is in the target range.
    In conclusion, the results of our study indicate that EPO 
use far exceeded what was recommended in the KDOQI guideline 
during the study period. Despite changes in the guideline as 
well as the Medicare reimbursement policy, I believe EPO is 
still being used in excess today.
    I thank you very much for your consideration and hope that 
a pay-for-performance-based reimbursement policy will be 
evaluated as a means to ensure sufficient treatment for this 
vulnerable population.
    Thank you very much.
    [The prepared statement of Dr. Pizzi follows:]
  Statement of Laura T. Pizzi, Research Associate Professor of Health 
   Policy, Department of Health Policy, Thomas Jefferson University, 
                       Philadelphia, Pennsylvania
    Chairman Thomas and distinguished Committee Members, my name is Dr. 
Laura Pizzi and I am a Research Associate Professor of Health Policy at 
Jefferson Medical College in Philadelphia. I am a pharmacist by 
training, but for the past 10 years have worked as a researcher on 
issues related to pharmaceutical cost and outcomes and presently lead a 
group of 6 researchers at Jefferson who are dedicated to this topic. I 
hold a secondary appointment as Adjunct Assistant Professor of 
Pharmaceutical Business at the University of the Sciences in 
Philadelphia and am co-editor of the text entitled ``Economic 
Evaluation in U.S. Healthcare: Principles and Applications'' which was 
released last year.
    I am here today to discuss the results of a study that I led at 
Jefferson, which was published in the November 2006 issue of the 
journal Dialysis and Transplantation.\1\ This study was conducted by 
our team at Jefferson, along with Dr. David Goldfarb who is a 
nephrologist at New York Harbor Department of Veterans Affairs Medical 
Center in New York City and Dr. Joseph Fuhr who is a professor of 
economics at Widener University in Chester, Pennsylvania.
---------------------------------------------------------------------------
    \1\ Pizzi LT, Patel NM, Maio VM, Goldfarb DS, Michael B, Fuhr JP, 
and Goldfarb NI. Economic Implications of Non-adherence to Treatment 
Recommendations for Hemodialysis Patients with Anemia. Dialysis and 
Transplantation 2006;1-7.
---------------------------------------------------------------------------
    The study was funded by a grant from Watson Laboratories in 
Morristown NJ. While we received funding from Watson, our team 
formulated the research objective, designed the study, and performed 
the analysis independently. My testimony does not reflect the views of 
the sponsor nor of Jefferson.
Summary of the Study
    The objective of this study was to determine the extent to which 
healthcare providers adhere to clinical practice guidelines for the 
treatment of anemia in patients receiving hemodialysis. The guidelines 
that we used were those published by the Kidney Disease Outcomes 
Quality Initiative (KDOQI), released in the year 2000 by the National 
Kidney Foundation.\2\
---------------------------------------------------------------------------
    \2\ National Kidney Foundation. KDOQI Clinical Practice Guidelines 
for Anemia of Chronic Kidney Disease 2000. American Journal of Kidney 
Disease 2000; 37:S182-S238 (suppl 1).
---------------------------------------------------------------------------
    We compared actual utilization in practice for the anemia drugs, 
erythropoietin or ``EPO'' and intravenous iron to the KDOQI 2000 
guideline recommendations. Actual utilization was obtained from the 
United States Renal Data Service (USRDS) Annual Report for 2004, which 
includes 431,284 active patients.\3\ This data source captures patient 
and facility records from the CMS End Stage Renal Disease (ESRD) 
Program's Management and Medical Information System, an Annual Facility 
Survey, and data related to services delivered via Medicare, including 
treatments administered to ESRD patients, patient outcomes, and costs. 
The report is updated annually.
---------------------------------------------------------------------------
    \3\ USRDS Annual Data Report 2004. Available at: http://
www.usrds.org/adr_2004.htm (Accessed 27 Nov 2006)
---------------------------------------------------------------------------
    From USRDS, we obtained the total number of Medicare beneficiaries 
who received hemodialysis, which was 372,643. Approximately 96% 
received EPO at least once during a 3 month period.
    The clinical target for treatment of anemia in this population, per 
the KDOQI 2000 recommendations, was a hemoglobin level of 11-12 mg/dL. 
To reach this hemoglobin level, patients need to have their iron stores 
replenished with intravenous iron, and they also need to receive EPO, 
which stimulates red blood cell production and thereby works to correct 
the anemia. The recommended target for iron stores was a serum ferritin 
level of at least 100ng/mL.
    The guideline called for an initial EPO dose of 120-180 units per 
kg per week, which we assume remained the dose during the study period. 
We calculated the recommended dosage of EPO based on a 72.5 kg adult, 
which is the average weight of hemodialysis patients reported by USRDS. 
For iron, the recommended dose for adults was 100-125mg given 
intravenously at every hemodialysis session for 8-10 doses followed by 
a maintenance dose of 25-125mg per week upon reaching the target 
ferritin level.
    We then examined actual utilization, per USRDS 2004, and compared 
it to what was recommended by the KDOQI 2000 guidelines. Our findings 
indicated that there was significant over use of EPO and slight under 
use of intravenous iron. Although we were not surprised to see that 
providers were not strictly adhering to the guideline, we were quite 
surprised by the extent to which EPO use in practice deviated from 
KDOQI recommendations.
    Next, we converted the difference in utilization, which was actual 
versus recommended practice, to dollars based on 2005 Medicare 
reimbursement rates for EPO and iron. We estimate that CMS could have 
reduced expenditures for these drugs by 36% if dialysis facilities 
adhered to the guidelines. If CMS spends $2 billion per year on EPO, it 
is reasonable to say that several hundred million dollars could have 
been saved on the drug if providers followed the guidelines.
Recent Data
    If we were to repeat our study today using the same clinical target 
but newer data from the 2006 USRDS Annual Report, our findings 
regarding EPO over use would hold, because the mean EPO dose according 
to this latest report is similar to what we used in our study. 
Specifically, the mean monthly EPO dose that we used in our study was 
76,473 units per month, and data from 2006 USRDS shows a mean monthly 
EPO dose ranging from approximately 72,000-81,000 units per month in 
calendar year 2005.\4\
---------------------------------------------------------------------------
    \4\ USRDS Annual Data Report 2006. Table 5.37. Available at: http:/
/www.usrds.org/atlas.htm (Accessed 29 Nov 2006)
---------------------------------------------------------------------------
    In addition to the costs resulting from EPO overuse, safety 
concerns have emerged about maintaining hemoglobin levels above 13.5mg/
dL, as we know from Dr. Singh's testimony on the findings from the 
Correction of Hemoglobin and Outcomes in Renal Insufficiency (CHOIR) 
trial.\5\ In response to this study, the FDA issued an Alert on 
November 16, 2006, which states that the target hemoglobin for EPO 
should not exceed 12 g/dL.\6\ Although the KDOQI guidelines were 
recently updated in 2006 and now recommend a hemoglobin 11g/dL while 
not routinely maintaining the level 13g/dL, the upper threshold of 
13g/dL was established prior to publication of the CHOIR. As a result 
of these developments, the National Kidney Foundation announced last 
week that it will convene an expert panel to assess EPO use.\7\
---------------------------------------------------------------------------
    \5\ Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, 
and Reddan D, for the Correction of Hemoglobin and Outcomes in Renal 
Insufficiency (CHOIR) Investigators. Correction of anemia with epoetin 
alfa in chronic kidney disease. New England Journal of Medicine 2006; 
355:2085-98.
    \6\ Information for Healthcare Professionals: Erythropoiesis 
Stimulating Agents (ESA) [Aranesp (darbepoetin), Epogen (epoetin alfa), 
and Procrit (epoetin alfa)]. FDA ALERT 11/16/2006. Available at: http:/
/www.fda.gov/cder/drug/InfoSheets/HCP/RHE_HCP.pdf (Accessed 27 Nov 
2006)
    \7\ Berenson A. Treatment of anemia questioned. New York Times, 
November 30, 2006.
---------------------------------------------------------------------------
    Hence, though our study focused on the economic impact of non-
adherence to the guidelines, very recent data and concerns have emerged 
about the safety impact of maintaining a hemoglobin level exceeding 
12g/dL. These recent events, coupled with the results from our study, 
provide evidence that it is time to more aggressively manage EPO use in 
dialysis facilities.
Recommendations
    In the time since our study was completed, CMS did change the 
reimbursement policy for EPO. The revised payment policy required the 
dose to be reduced by 25% when the hemoglobin exceeded 13g/dL.\8\, \9\ 
Providers who failed to reduce the EPO dose by 25% received a payment 
reduced by 25%, unless the higher dose was approved through an appeals 
process. This policy change marked a step towards more efficient 
treatment, however in my opinion, it will not sufficiently stimulate 
renal dialysis facilities to achieve the clinical target.
---------------------------------------------------------------------------
    \8\ Claims Monitoring Policy: Erythropoietin/Darbopoietin Alfa 
Usage for Beneficiaries with End Stage Renal Disease. Center for 
Medicare and Medicaid Services, 2005. Available at: www.cms.hhs.gov/
coverage/8b5.pdf Accessed 12/02/05.
    \9\ Levy R. The new CMS monitoring policy for anemia drug 
reimbursement: Implications for providers. Dialysis and Transplantation 
2006; 35(2): 88-90.
---------------------------------------------------------------------------
    I believe that the best way to address the matter of EPO over use 
is to reward dialysis providers who achieve an appropriate hemoglobin 
target--whether that target is based on the KDOQI recommendations, 
product labeling, expert opinion, or a combination of those sources. 
Clearly, a target hemoglobin of 11-12mg/dL is appropriate, but there is 
uncertainty about whether the window should be expanded to include 
hemoglobin levels between 12 and 13mg/dL. I trust that Dr. Singh's 
research along with the recommendations from the National Kidney 
Foundation's expert panel will help to inform this matter.
    Once the target has been agreed upon, CMS may wish to consider a 
pay-for-performance reimbursement policy centered upon that hemoglobin 
target as follows:

    1.  Lower the reimbursement for EPO such that it is cost-neutral to 
the facility
    2.  Reward facilities with a higher reimbursement rate for the 
dialysis session (composite rate) for patients' whose hemoglobin is in 
the target range

    CMS might also consider further boosting the composite rate for 
patients who are given subcutaneous EPO (as opposed to intravenous 
EPO), because administering the drug subcutaneously has been shown to 
require significantly lower dosages.\10\, \11\, \12\, \13\
---------------------------------------------------------------------------
    \10\ Hynes D, Stroupe KT, Kaufman JS, Reda DJ, Peterman A, Browning 
MM, Huo Z, and Sorbara D. Adherence to guidelines for ESRD anemia 
management. American Journal of Kidney Diseases 2006;47(3):455-6.
    \11\ Thamer M, Zhang Y, Kaufman J, Stefanik K, Cotter DJ. Factors 
influencing route of administration for epoetin treatment among 
hemodialysis patients in the United States. American Journal of Kidney 
Diseases 2006;48(1): 77-87
    \12\ Besarab A. Optimizing Anemia Management with Subcutaneous 
Administration of Epoetin. Nephrology Dialysis Transplantation 20(6): 
vi10-vi16, 2005.
    \13\ Besarab A. Reyes CM. Hornberger J. Meta-analysis of 
Subcutaneous versus Intravenous Epoetin in Maintenance Treatment of 
Anemia in Hemodialysis Patients. American Journal of Kidney Diseases 
2002; 40(3):439-46.
---------------------------------------------------------------------------
    It is important to keep in mind, however, that pay-for-performance 
measures do not necessarily reduce costs, and an increase in the base 
composite rate may be necessary to maintain the supply of dialysis 
facilities. In other words, some amount of monies that would have 
otherwise been spent on EPO would be re-allocated to dialysis 
facilities through the composite rate. However, implementation of the 
policy would stimulate dialysis facilities to use EPO more efficiently 
and would reduce their reliance on revenues from the product.
Conclusion
    In conclusion, the results of our study indicate that EPO use far 
exceeded what was recommended in the KDOQI guideline during the study 
period. Despite changes in the guideline as well as the Medicare 
reimbursement policy, I believe that EPO is still used in excess today, 
primarily because dialysis facilities do not have a financial incentive 
to manage its use. Thank you very much for your consideration and I 
hope that a pay-for-performance based reimbursement policy for EPO will 
be evaluated as a means of ensuring the safe and efficient treatment of 
anemia in this vulnerable population.

                                 

    Chairman THOMAS. Thank you. I apologize moving you to that, 
but the statement that you have made is based upon data that is 
well known and published.
    Dr. Singh.

  STATEMENT OF AJAY K. SINGH, MBBS, MRCP (UK), MBA, CLINICAL 
CHIEF, RENAL DIVISION, DIRECTOR, DIALYSIS SERVICES, BRIGHAM AND 
            WOMEN'S HOSPITAL, HARVARD MEDICAL SCHOOL

    Dr. SINGH. Chairman Thomas and distinguished Committee 
members. My name is Dr. Ajay Singh. I am the clinical chief of 
the Renal Division and director of dialysis Services and a 
physician at the Brigham and Women's Hospital and an associate 
professor of medicine at Harvard Medical School. I practice 
medicine, teach physicians and students, and conduct patient-
oriented research. I am the first author and one of the 
principal investigators of the CHOIR study. My written remarks 
will be submitted as part of the record, and I wish to just 
focus on the top conclusions from the CHOIR study.
    In the CHOIR study, we tested whether targeting a 
hemoglobin of 13.5 grams per deciliter versus a hemoglobin of 
11.3 grams per deciliter in patients with chronic kidney 
disease not on dialysis was associated with a survival benefit 
and lower cardiovascular complications. To our surprise, 
patients who were randomized with the higher hemoglobin group 
had an excess risk of 34 percent with respect to death and 
cardiovascular complications compared to those patients 
randomized to the lower hemoglobin group.
    Of note, we also found there were 52 deaths in the higher 
hemoglobin group versus 36 deaths in the lower hemoglobin 
group, a hazard ratio of 1.48 or a 48 percent higher risk. We 
also found a higher risk for hospitalization for heart failure 
to 41 percent higher risk. We did not find any incremental 
improvement in quality of life for three different parameters 
of quality of life that we tested, and we also found that for 
cardiovascular risk adverse events, there were more adverse 
events in the higher hemoglobin group versus the lower. 
Therefore, the conclusion was there was both increased risk and 
no substantive incremental quality of life benefit in raising 
the hemoglobin among patients with chronic kidney disease not 
on dialysis.
    Now, some have argued that while this study looked at 
patients with chronic kidney disease not on dialysis and this 
data should not apply to patients on dialysis, I would 
respectfully disagree with that. Both the National Kidney 
Foundation guidelines, the European Best Practice guidelines of 
anemia as well as the FDA label have aggregated patients not on 
dialysis with kidney disease with those on dialysis and have 
framed guidelines with respect to the higher hemoglobin level. 
Until we get further data, I would argue that we should default 
in the direction of patient safety by aiming for hemoglobin 
levels no higher than 12 grams per deciliter, and our 
recommendation of the paper was 11-12 grams a deciliter of 
hemoglobin.
    The other aspect of this was the issue of what one should 
do with the rising number of proportional patients on dialysis 
that have hemoglobin levels beyond 12 grams per deciliter. As 
the Committee will note as part of the record information, 
there are a number--there are a number of dialysis providers 
who have patients who have hemoglobin levels above this 12-
grams-per-deciliter-range. Based on this study and some other 
controlled studies, I would suggest and agree with the notion 
that we should adopt a bundling for epoetin because it confers 
with the potential of benefit without incentives, financial 
incentives, to use higher levels of epoetin or aim for higher 
hemoglobin levels. The only caveat I would suggest, there would 
be some form of risk assessment in the patient population so 
that providers are not disincentivized to treat sicker 
patients.
    So, in conclusion, our study as well as studies that have 
been published prior to this suggest increased risk in raising 
the hemoglobin level beyond 12 grams. I believe that this will 
further reinforce the FDA label, which is clear, and a new 
alert was published recently. I believe that this 
recommendation should apply to both dialysis patients as well 
as pre-dialysis patients until we have more evidence from 
studies that hopefully will be funded in the future. I believe 
that the best recourse to try and prevent hemoglobin levels 
rising in both the dialysis population is to take the approach 
of bundling of services so that there is--we remove the 
financial incentives to use larger doses of EPO and aim for 
higher hemoglobin levels.
    [The prepared statement of Dr. Singh follows:]
 Statement of Ajay K. Singh, Associate Professor of Medicine, Brigham 
  and Women's Hospital, Harvard Medical School, Boston, Massachusetts
    I am Dr. Ajay K. Singh, Clinical Chief, Renal Division and 
Director, Dialysis Services and a physician at the Brigham and Women's 
Hospital and an Associate Professor of Medicine at Harvard Medical 
School. I practice medicine, teach physicians and students, and conduct 
patient-oriented research. I am the first author and one of the 
Principal Investigators of the CHOIR study. This study examined the 
effect of normalizing the hemoglobin with epoetin alfa in patients with 
chronic kidney disease not receiving dialysis. My comments today solely 
reflect my own views. I plan to discuss 3 issues:
    (1) The importance of treating anemia in kidney disease patients, 
(2) the optimal hemoglobin in patients with kidney disease, and (3) My 
support for bundling of epoetin and other injectibles into the dialysis 
composite rate to remove incentives for over-treatment.
1. Anemia of Chronic Kidney Disease
    Anemia is highly prevalent among patients with chronic kidney 
disease (CKD). By the time patients develop advanced kidney disease 
over 60% are anemic and need treatment with an erythropoiesis 
stimulating agent (ESA). On dialysis, over 95% of patients require an 
ESA. Erythropoetin is the most costly drug for CMS/Medicare--accounting 
for over $2 billion.
    There is a good body of evidence that supports anemia treatment--
fewer transfusions and improved quality of life, upto a hemoglobin of 
10 to 11 grams per deciliter. The recommended strategy for treatment of 
anemia is based on guidelines disseminated by the National Kidney 
Foundation and the FDA label for epoetin and darbepoetin.
2. The Optimal hemoglobin in patients with kidney disease, based on 
        current evidence, should be no higher than 12 grams per 
        deciliter, conforming to the FDA label.
    Several randomized controlled studies, both in dialysis and in 
predialysis patients, demonstrate at best only modest benefit in 
quality of life and increased risk of cardiovascular complications and 
death in patients treated to a hemoglobin level that exceeds 12 grams 
per deciliter.
    It is important to note:
    a.) Studies that have shown benefit for cardiovascular outcomes or 
survival are retrospective and observational in design. There is broad 
consensus that even the best designed and conducted retrospective 
observational studies are inferior to randomized controlled studies.
    b.) Randomized controlled studies that have looked at patients with 
kidney disease, whether on dialysis or not, i.e., in the aggregate, 
have demonstrated increased risk.

      The normal hematocrit study--increased risk for clotting 
of dialysis access, and risk of death or heart attack
      The Canada-Europe study--increased risk of stroke
      The CHOIR study: a hazard ratio of 1.34 (or a 34% higher 
risk) of death and cardiovascular complications.

    The higher rate of composite events was explained by a higher rate 
of death (48% higher risk, P=0.07) and heart failure hospitalization 
(41% higher risk, P=0.07). While quality of life showed improvement 
from baseline values in both groups it was similar between the two 
groups. However, more patients in the high hemoglobin group experienced 
least one serious adverse event compared to the low hemoglobin group.

      The CREATE study: an absolute increase in cardiovascular 
events and in the time to dialysis.

    Whether one looks at studies focused narrowly on the dialysis 
population or on predialysis patients, signals for increased risk are 
evident with only very modest benefit in quality of life.The National 
Kidney Foundation (NKF) Kidney Disease Quality Initiative (KDOQI), the 
European Best Practice Guidelines for Anemia and the FDA have all 
considered both dialysis and pre-dialysis patients together. The data 
on the optimal hemoglobin level has been considered in the aggregate 
and applied to both populations.
    Collectively, these studies demonstrated risk with normalizing the 
hemoglobin in patients with kidney disease on dialysis. The results 
reinforce the FDA label for epoetin of not recommending hemoglobin 
levels of greater than 12 grams per deciliter in patients with kidney 
disease. A final point, it is reassuring that the FDA is empowered with 
evaluating the efficacy and safety of drugs in the United States. The 
primacy of the FDA in regulating epoetin therapy in the United States 
should be maintained.
Hemoglobin levels among Dialysis Patients in the United States
    Despite the FDA label, the United States Renal Data System (USRDS) 
a large federally funded registry of patients on dialysis, in its 2006 
report indicates that more than 40% of dialysis patients have a 
hemoglobin level greater than 12 g/dL. Over 20% have hemoglobin levels 
above 13 g/dL.
    The explanations provided for this include the inability to target 
a narrow range of hemoglobin because of a phenomenon termed hemoglobin 
cycling and that patients have excursions in hemoglobin levels beyond 
the 12 grams per deciliter range for only a very brief period of time. 
However, achieving the FDA recommended range is achievable by some 
dialysis chains. Only 30% of patients dialyzed at Davita facilities 
have hemoglobin levels of less than 12 grams per deciliter, whereas 
over 80% of DCI patients are able to maintain their hemoglobin level at 
less than 12 grams per deciliter. As well, USRDS data suggests that 
excursions over 12 g/dL may occur for 3 or more months. The strategy of 
targeting patients using higher epoetin doses to a higher hemoglobin 
with these transient excursions could be harmful.
    The use of subcutaneous epoetin has been clearly shown to result in 
the use of approximately 1/3rd less epoetin yet only a small minority 
of dialysis facilities use the subcutaneous route for epoetin 
administration.
    Despite CMS reimbursement changes, or because of them, data 
suggests that the proportion of patients outside of the FDA label 
appears to be increasing--some have termed the reason for this as being 
driven by ``perverse incentives''.
3. Bundling of injectibles, including epoetin, offers several benefits 
        and ought to be adopted.
    The bundling of injectible drugs into the reimbursement of the 
dialysis procedure, i.e., into the composite rate offers several 
benefits and should be adopted.

    a.) It removes incentives for over-treatment--aiming for higher 
hemoglobin levels using higher and higher doses of epoetin.
    b.) It will likely reduce the escalating costs for injectible 
drugs, particularly epoetin, in the treatment of dialysis patients.
    c.) It will encourage the use of subcutaneous administration of 
epoetin--a practice widely used in Europe, Canada, and in our own VA 
system. This should facilitate lower doses of epoetin in the treatment 
of anemia.
Summary:
    I recommend that the importance of following the FDA label for 
epoetin in the treatment of anemia of kidney disease should be 
followed.

    a.) The hemoglobin target should not be greater than 12 grams per 
deciliter as iterated in the FDA label.
    b.) Medicare should modify its reimbursement policy to comply with 
the FDA label. Adopting a bundled reimbursement schedule will likely 
remove the incentive for higher epoetin use and should increase 
subcutaneous administration of epoetin.

The Target Hemoglobin in Patients with Chronic Kidney Disease
Introduction
    Anemia is highly prevalent among patients with chronic kidney 
disease (CKD) (1). Treatment of CKD anemia with erythropoietin has been 
shown to enhance quality of life (2,3), however, evidence supporting a 
benefit of anemia correction in improving cardiovascular morbidity and 
mortality has been limited and based largely on observational studies 
and smaller interventional trials (4-6). These studies have 
demonstrated an association of high hemoglobin (>12.0 g/dL) with a 
lower rate of cardiovascular morbidity and death (5,6). However, as 
others have pointed out elsewhere, observational studies have 
limitations (7,8). Primarily, observational designs are unable to 
easily adjust for the effect of confounding. Indeed, Parfrey has 
recently pointed out that survivor bias could be an important reason 
for explaining the discordant findings between observational studies 
and randomized controlled trials in anemia (7). Related to this, Cotter 
and colleagues have also presented data suggesting that the hemoglobin 
level per se may not be a valid surrogate outcome in assessing the true 
effect of anemia correction in kidney disease patients (8). A further 
problem with the published studies has been that assessment of quality 
life may be limited by the open label design of some studies or have 
used quality of life instruments that have not been adequately 
validated in kidney disease patients (9). The purpose of this article 
is to critically appraise these studies in an attempt to arrive at some 
conclusions about the optimal target hemoglobin in CKD patients.
Randomized Studies show No Benefit of a Higher Hemoglobin level
    Several randomized controlled studies have been published thus far 
(10-15). With the exception of two studies, the Normal Hematocrit Study 
(10) and the Canada-Europe Study (11), observations have been limited 
by the sample size used or premature discontinuation of the study. The 
Normal Hematocrit study was a randomized controlled study of 
hemodialysis patients with established heart disease comparing a 
hematocrit target of 42% to 30%. The study was stopped by the Data 
Safety Monitoring Board because of a higher rate of vascular thrombosis 
in the patients randomized to the higher hematocrit group. However, the 
patients in the higher hematocrit group also had a higher, although not 
statistically significantly higher, rate of non-fatal myocardial 
infarction (MI) and death. Several explanations were entertained to 
explain these findings. These included: the possibility of very high 
hematocrit's in the higher hemoglobin group resulted in 
hemoconcentration and therefore thrombosis, greater use of iron, and a 
lower dialysis dose. The Canada-Europe study also randomized 
hemodialysis patients to a higher versus lower hemoglobin (hemoglobin 
values of 13.0 versus 11.0 g/dL, respectively). However, in contrast to 
the Normal Hematocrit Study, Parfrey et al selected patients that were 
not at high risk of cardiovascular disease by excluding patients with 
symptomatic heart disease as well as those with left ventricular 
dilatation at baseline. Moreover they enrolled incident dialysis 
patients. While they did not evaluate hard endpoints such as death, or 
myocardial infarction, or stroke, they did evaluate changes in cardiac 
geometry (left ventricular volume index (LVVI) and left ventricular 
mass index (LVMI). Moreover, they assessed heart failure and quality of 
life. No significant benefit in either of the cardiac structural or 
functional parameters was observed in the high versus low hemoglobin 
groups. However, a statistically significantly higher rate of 
cerebrovascular accident in the higher hemoglobin group was observed on 
secondary analysis. Quality of life did show an important difference in 
the high versus lower hemoglobin group with respect to the Vitality 
score, which was improved over time in patients randomized to the 
higher hemoglobin. In this regard, the Canada-Europe results were 
concordant with the Normal Hematocrit Study that also showed 
improvement in specific quality of life domains in the high versus low 
hematocrit groups.
Hemoglobin Variability Necessitates a Broader Hemoglobin Range
    An important problem with setting hemoglobin targets has become 
apparent from recent studies that have evaluated the variability of 
hemoglobin levels in patients on epoetin treatment in the dialysis 
setting. Three studies collectively suggest that it is difficult to 
maintain the hemoglobin level in the 11 to 12 g/dL range (16-18). In 
the study by Fishbane et al >90% of dialysis patients studied 
experienced hemoglobin cycling (16). These investigators reported that 
the mean number of hemoglobin excursions was 3.1 1.1 per 
patient/year. The mean amplitude per hemoglobin excursion was 2.51 
0.89 g/dL, and the mean duration of hemoglobin excursions 
was 10.3 5.1 weeks. Indeed, the NKF Work Group has 
``rejected, identifying a target hemoglobin level bounded by narrow 
upper and lower values (e.g., 11.0 to 12.0 g/dL) (15). Such a target 
affords neither clarity nor simplicity, is possible to achieve in only 
a minority of patients, discourages flexibility in managing individual 
patients, and likely promotes cycling of hemoglobin results greater 
than and less than the target.''
Recent New Data from Randomized Controlled Trials
    The recent publication of the CHOIR and CREATE studies informs the 
debate regarding the target hemoglobin level in CKD patients (19,20). 
CHOIR was an open-label,randomized trial that studied 1432 patients 
with CKD: 715 patients randomized to receive epoetin alfa targeted to 
achieve a hemoglobin of 13.5 g/dL, and 717 were randomized to receive 
epoetin alfa targeted to achieve a hemoglobin of 11.3 g/dL (19). The 
median study duration was 16 months. The primary end point was a 
composite of death, myocardial infarction, congestive heart failure 
(CHF) hospitalization (excluding hospitalization during which renal 
replacement therapy occurred), and stroke. Two-hundred-twenty-two 
composite events occurred: 125 events among the high hemoglobin group 
and 97 events among the low hemoglobin group P=0.03, hazard ratio of 
1.34; with 95 percent confidence interval of 1.03 and 1.74. The higher 
rate of composite events was explained largely by a higher rate of 
death (48% higher risk, P=0.07) or CHF hospitalization (41%, P=0.07). 
Although neither death nor CHF hospitalization were statistically 
significantly higher in the higher versus lower hemoglobin group, the 
study was not powered for this purpose. While quality of life showed 
improvement from baseline values in both groups and were similar 
between the two groups. However, more subjects in the high hemoglobin 
group experienced least one serious adverse event compared to the low 
hemoglobin group. The Cardiovascular Risk Reduction by Early Anemia 
Treatment with Epoetin beta (CREATE) study enrolled approximately 600 
patients. Subjects were randomized to an early anemia correction or a 
late anemia correction group (20). The early anemia correction group 
received epoetin beta therapy immediately for a target hemoglobin 13-15 
g/dL. The late anemia correction group did not receive treatment until 
their hemoglobin is >10.5 g/dL; their target hemoglobin was 10.5-11.5 
g/dL. The study showed that ``complete correction'' was not associated 
with a statistically significantly higher rate of the first 
cardiovascular event (58 events in the high hemoglobin group versus 47 
events in the low hemoglobin group; hazard ratio of 0.78, 95% 
confidence interval, 0.53 to 1.14; P=0.20). However, left ventricular 
mass index remained stable in both groups but dialysis was required in 
more patients in the higher versus lowed hemoglobin group (127 vs. 111, 
p=0.03). On the other hand, unlike CHOIR, in CREATE a quality of life 
benefit, at least in year 1 of the study, was observed for the higher 
versus lower hemoglobin group.
    Therefore, both studies showed either risk or no benefit in aiming 
to completely correct the hemoglobin in CKD patients, not receiving 
dialysis. The CHOIR study was larger and showed a statistically 
significant difference for the primary endpoint, whereas the CREATE 
study was much smaller and showed a trend for increased risk but did 
not reveal statistically significant differences for the primary 
endpoint. It is important to note that, unlike the Normal Hematocrit or 
Canada-Europe studies, both CHOIR and CREATE evaluated pre-dialysis CKD 
patients and so the results may not be generalizable to the dialysis 
community. However, both the Normal Hematocrit and the Canada-
Europestudies in dialysis patients also demonstrated either no benefit 
or increased risk. Collectively, this data strongly suggests that the 
most prudent course is to partially correct the hemoglobin in all 
chronic kidney disease patients, whether on dialysis or not, until more 
data is available in future studies.
    References
    1. Astor BC, Muntner P, Levin A, Eustace JA, Coresh J. Association 
of kidney function with anemia: the Third National Health and Nutrition 
Examination Survey (1988-1994). Arch Intern Med. 2002 Jun 
24;162(12):1401-8.
    2. Jones M, Ibels L, Schenkel B, Zagari M. Impact of epoetin alfa 
on clinical end points in patients with chronic renal failure: a meta-
analysis. Kidney Int. 2004 Mar;65(3):757-67.
    3. Ross SD, Fahrbach K, Frame D, Scheye R, Connelly JE, Glaspy J. 
The effect of anemia treatment on selected health-related quality-of-
life domains: a systematic review. Clin Ther. 2003 Jun;25(6):1786-805.
    4. Levin A. Anemia and left ventricular hypertrophy in chronic 
kidney disease populations: a review of the current state of knowledge. 
Kidney Int Suppl. 2002 May;(80):35-8.
    5. Collins AJ, Li S, St Peter W, Ebben J, Roberts T, Ma JZ, Manning 
W. Death, hospitalization, and economic associations among incident 
hemodialysis patients with hematocrit values of 36 to 39%. J Am Soc 
Nephrol. 2001 Nov;12(11):2465-73.
    6. Xue JL, St Peter WL, Ebben JP, Everson SE, Collins AJ. Anemia 
treatment in the pre-ESRD period and associated mortality in elderly 
patients. Am J Kidney Dis. 2002 Dec;40(6):1153-61.
    7. Parfrey PS. Target hemoglobin level for EPO therapy in CKD. Am J 
Kidney Dis. 2006 Jan;47(1):171-3.
    8. Dennis J. Cotter, Kevin Stefanika, Yi Zhang, Mae Thamer, Daniel 
Scharfstein, James Kaufman: Hematocrit was not validated as a surrogate 
end point for survival among epoetin-treated hemodialysis patients 
Journal of Clinical Epidemiology 57 (2004) 1086--1095
    9. Strippoli GF, Manno C, Schena FP, Craig JC.Paoletti E, Cannella 
G. Haemoglobin and haematocrit targets for the anaemia of chronic renal 
disease. Cochrane Database Syst Rev. 2003;(1):CD003967.
    10. Besarab A, Bolton WK, Browne JK, Egrie JC, Nissenson AR, 
Okamoto DM, Schwab SJ, Goodkin DA. The effects of normal as compared 
with low hematocrit values in patients with cardiac disease who are 
receiving hemodialysis and epoetin. N Engl J Med. 1998 Aug 
27;339(9):584-90.
    11. Parfrey PS, Foley RN, Wittreich BH, Sullivan DJ, Zagari MJ, 
Frei D. Double-blind comparison of full and partial anemia correction 
in incident hemodialysis patients without symptomatic heart disease. J 
Am Soc Nephrol. 2005 Jul;16(7):2180-9. Epub 2005 May 18.
    12. Foley RN, Parfrey PS, Morgan J, Barre PE, Campbell P, Cartier 
P, Coyle D, Fine A, Handa P, Kingma I, Lau CY, Levin A, Mendelssohn D, 
Muirhead N, Murphy B, Plante RK, Posen G, Wells GA. Effect of 
hemoglobin levels in hemodialysis patients with asymptomatic 
cardiomyopathy. Kidney Int. 2000 Sep;58(3):1325-35.
    13. Roger SD, McMahon LP, Clarkson A, Disney A, Harris D, Hawley C, 
Healy H, Kerr P, Lynn K, Parnham A, Pascoe R, Voss D, Walker R, Levin 
A. Effects of early and late intervention with epoetin alpha on left 
ventricular mass among patients with chronic kidney disease (stage 3 or 
4): results of a randomized clinical trial. J Am Soc Nephrol. 2004 
Jan;15(1):148-56.
    14. Levin A, Djurdjev O, Thompson C, Barrett B, Ethier J, Carlisle 
E, Barre P, Magner P, Muirhead N, Tobe S, Tam P, Wadgymar JA, Kappel J, 
Holland D, Pichette V, Shoker A, Soltys G, Verrelli M, Singer J. 
Canadian randomized trial of hemoglobin maintenance to prevent or delay 
left ventricular mass growth in patients with CKD. Am J Kidney Dis. 
2005 Nov;46(5):799-811.
    15. McMahon LP, Roger SD, Levin A; Slimheart Investigators Group. 
Development, prevention, and potential reversal of left ventricular 
hypertrophy in chronic kidney disease. J Am Soc Nephrol. 2004 
Jun;15(6):1640-7.
    16. Fishemoglobinane S, Berns JS: Hemoglobin cycling in 
hemodialysis patients treated with recombinant human erythropoietin. 
Kidney Int 68:1337-1343, 2005
    17. Lacson E Jr, Ofsthun N, Lazarus JM: Effect of variability in 
anemia management on hemoglobin outcomes in ESRD. Am J Kidney Dis 
41:111-124, 2003
    18. Berns JS, Elzein H, Lynn RI, Fishemoglobinane S, Meisels IS, 
Deoreo PB: Hemoglobin variability in epoetin-treated hemodialysis 
patients. Kidney Int 64:1514-1521, 2003
    19. Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, 
Reddan D: Correction of Anemia with epoetin alfa in chronic kidney 
disease. New Engl J Med 2006; 355: 2085-98
    20. Drueke TB, Locatelli F, Clyne N, Eckhardt KU, Macdougall IC, 
Tsakiris D, Burger HU, Scherhag A. Normalization of hemoglobin levels 
in Chronic Kidney Disease and Anemia. New Engl J Med 2006; 355: 2071-84

                                 

    Chairman THOMAS. Thank you very much, Dr. Singh.
    Mr. Cotter.

 STATEMENT OF DENNIS J. COTTER, PRESIDENT, MEDICAL TECHNOLOGY 
               AND PRACTICE PATTERNS INSTITUTE, 
                       BETHESDA, MARYLAND

    Mr. COTTER. Chairman Thomas, Congressman Rangel, 
Congressman Stark, distinguished members. Good morning. I am 
Dennis Cotter, President of the Medical Technology and Practice 
Patterns Institute. I appreciate the opportunity today to talk 
about patient safety and quality issues. We have studied 
clinical outcomes of ESRD patients for more than 10 years. For 
almost two decades great controversy has surrounded the anemia 
treatment management goal; that is the target hematocrit. 
During this time, they have increased hematocrit from 33 
percent to 37.5 percent; most recently to 39 percent and 
higher. Were these charges warranted? The answer to this 
question became clear when results of new clinical trials 
joined with earlier clinical trials demonstrated that patients 
targeted to higher hematocrit levels have increased mortality 
and many other adverse side effects. Through the current rules 
which endorse expanding EPO reimbursement to allow hematocrit 
to be targeted to any level, CMS has implemented a policy that 
can be harmful to its beneficiaries and will cost hundreds of 
millions of dollars in additional expenditures.
    For some patients, it takes a small amount of EPO to 
elevate EPO hematocrit. For others, it takes a large amount. 
Clinical trials have shown that those targeted to high 
hematocrits and high EPO doses have higher mortality rates to 
those targeted to low hematocrit and low EPO doses. Because the 
population is made up of both EPO responders and EPO non-
responders, the question remains whether patients who 
experience higher mortality rates were predominantly EPO 
responders or non-responders.
    It is unlikely that industry sponsored research will answer 
this important question. Answering this question is the subject 
of our ongoing NIH funded research that addresses the concern 
that EPO therapy itself might contribute to harmful outcomes. 
Current CMS policy and industry sponsored clinical practice 
guidelines support both high target hematocrit and high EPO 
doses, assuming that high hematocrits improve outcomes, an 
assumption that is contrary to clinical trial. To date, no 
normal assessment of the appropriate dosing level has been 
conducted nor has a payment policy been implemented to 
encourage optimal dosing. Removal of a profit incentive by 
adding EPO to the composite rate should reduce over utilization 
and would also encourage research to determine optimal dosing. 
CMS policy appears to be heavily weighted on both the opinion 
and the notion that hematocrit variability is the overriding 
problem. As a result, this has encouraged EPO over-utilization, 
driving higher Medicare payments. Given the new policy, which 
opens up the upper limit of the target hematocrit, it is 
anticipated that providers will respond to the financial 
incentive with even more aggressive use of EPO.
    Our recommendations: Adhere to the FDA label until further 
studies clarify the causal link between EPO, hemocrit and 
patient outcomes. Following FDA dose titration recommendations 
should be sufficient to maintain hematocrits within the 30-36 
percent hematocrit range, deemed to be the safest range for all 
patients.
    Treatment guidelines and reimbursement policies must put 
restrictions on the level of EPO dose, if necessary.
    Further studies are needed to study patients that are 
hyporesponsive to high EPO doses. Regarding EPO and for all 
future drug evaluations, avoid the over reliance on 
observational studies, often industry sponsored as opposed to 
rigorously controlled randomized clinical trials. It is 
imperative that EPO coverage decisions adhere to established 
hierarchy of evidence that focuses primarily on RCTs and 
systematic reviews.
    Finally, promote research which is independently funded 
rather than industry sponsored for the development of treatment 
guidelines and payment policies.
    Thank you for your consideration of our concerns.
    [The prepared statement of Mr. Cotter follows:]
   Statement of Dennis J. Cotter, President, Medical Technology and 
         Practice Patterns Institute, Inc., Bethesda, Maryland
    Chairman Thomas, Congressman Stark, distinguished Committee 
members, good morning. I am Dennis J. Cotter, President of the Medical 
Technology and Practice Patterns Institute. I appreciate the 
opportunity to talk about patient safety and quality issues. We have 
studied clinical outcomes of ESRD patients for more than 10 years.
    For almost two decades, great controversy has surrounded the anemia 
management treatment goal, that is, the target hematocrit. During this 
time, CMS has increased hematocrit targets, from 33% to 37.5%, and most 
recently, to 39% and higher. Were these changes warranted? The answer 
to that question became clear when results of new clinical trials, 
joined with earlier trial results, demonstrated that patients, targeted 
to higher hematocrit levels, have increased mortality and many other 
adverse side effects. Through the current rules which endorse expanding 
EPO reimbursement to allow hematocrit to be targeted to any level, CMS 
tacitly has implemented a policy that can be harmful to its 
beneficiaries and will cost hundreds of millions of dollars in 
additional expenditures.
THE SCIENCE
    For some patients, it takes a small amount of EPO to elevate the 
hematocrit (EPO responders) and, for others, its takes a large amount 
(EPO non-responders). Clinical trials have shown that those targeted to 
high hematocrits and high EPO doses have higher mortality rates than 
those targeted to low hematocrits and low EPO doses. Because the 
population is made up of both EPO responders and EPO non-responders, 
the question remains whether patients who experienced higher mortality 
rates were predominately EPO responders or EPO non-responders. It is 
unlikely that industry-sponsored research will answer this important 
question. Answering this question is the subject of our on-going NIH 
funded research which addresses the concern that EPO therapy, itself, 
might contribute to harmful outcomes. Current CMS policy and industry-
sponsored clinical practice guidelines support both high target 
hematocrit and high EPO doses, assuming that high hematocrits improve 
outcomes, an assumption that is contrary to clinical trial results. To 
date, no formal assessment of the appropriate dosing levels has been 
conducted, nor has a payment policy been implemented to encourage 
optimal dosing. Removing the profit incentive, by adding EPO to the 
composite rate should reduce over-utilization and would also encourage 
research to determine optimal dosing.
THE POLICY
    CMS policy appears to be heavily weighted both on opinion and on 
the notion that hematocrit variability is the over-riding problem. As a 
result, over the years this policy has encouraged EPO over-utilization, 
driving higher Medicare payments. Given the new policy, which opens the 
upper limit of the target hematocrit, it is anticipated that providers 
will respond to the new financial incentive with even more aggressive 
use of EPO.
WHERE WE GO FROM HERE
    Our recommendations are the following:

      Adhere to the FDA-approved label until further studies 
clarify the causal link among EPO, hematocrit, and patient outcome. 
Following FDA dose titration recommendations should be sufficient to 
maintain hematocrits within the 30-36% hematocrit range, deemed to be 
the safest range for all patients.
      Treatment guidelines and reimbursement policies must put 
restrictions on the level of EPO dose, if necessary. Further studies 
are needed of patients who are hypo-responsive to high EPO doses.
      Regarding EPO, and for all future drug evaluations, avoid 
over-reliance on observational studies, often industry-sponsored, as 
opposed to rigorously controlled randomized clinical trials. It is 
imperative that the EPO coverage decisions adhere to established 
hierarchy of evidence that focuses primarily on RCTs and systematic 
reviews.
      Promote research which is independently funded, rather 
than industry-sponsored, for the development of treatment guidelines 
and payment policies

    Thank you for your consideration of our concerns.

                                 

    Chairman THOMAS. Thank you all very much.
    I will ask a couple of questions and urge my colleagues to 
focus their responses as well. History is history, but we now 
have some fairly clear evidence. Can you think of a worse 
system to treat patients with End Stage Renal Disease than 
having facilities offering the service not getting updates or 
cost-of-living adjustments but in fact a fixed dollar payment 
for years and having a drug which is a significant assistance 
in a monopoly situation with no competitive pricing structure 
being available and, in fact, encouraged in terms of increased 
uses. Now we see clearly beyond what most people are now 
beginning to believe would be appropriate standards. What would 
we add to that to make it worse than the structure we now have? 
Is there anything we are missing in terms of policy that could 
make sure that we don't endanger these people even more?
    Mr. COTTER. This is a recipe for disaster. That is why we 
are here today. EPO dosing is a--it is done under the notion 
that the drug does no harm. Because of that notion, there is a 
very aggressive attitude toward using high doses of EPO to 
continue.
    Chairman THOMAS. That, my understanding, is the way it is 
administered, in terms of not allowing any new or inventive 
approaches, for example subcutaneous, in terms of advantages. 
There is no ability to continue to move toward better practices 
within the structure that we have established, i.e., there is 
no incentive and I don't think anyone should focus on the 
people who are running these services and who are doing the 
best job they can. It is the structure under which they are 
operating these services that don't allow them to move into 
those. Is that an appropriate statement?
    Mr. COTTER. This is viewed as an income stream. If it was 
viewed by providers as a cost, then the incentive would be to 
provide optimum dosing as does the VA. The VA doses using the 
subcutaneous route, and that, within the VA, EPO treatment is 
viewed as a cost. So, if you change the incentives around, you 
will motivate providers to become much more efficient.
    Chairman THOMAS. Dr. Singh, you made a statement about your 
study about comparisons with people who are not in end stage 
renal but obviously chronic kidney disease and other patients. 
Notwithstanding the exclusivity of drugs used in each of these 
areas, i.e. monopoly, did you find any difference, any 
significant difference that would require a maintenance of 
drugs dealt with in a different way for those populations, or 
was there sufficient commonality from your study that we should 
look at that was more of a combined group and therefore 
possibly have an opportunity to deal with what is now a 
monopoly in the End Stage Renal Disease of administering of 
drugs?
    Dr. SINGH. I agree with you. I think the study that we 
published as well as other studies do not provide sufficient 
evidence at the present time to distinguish treatment in one 
population versus the other. In other words, at this moment I 
think, like the approach taken by the FDA as well as by the 
National Kidney Foundation, it seems reasonable to consider 
these populations and studies on these populations in the 
aggregate and nothing--there has been no convincing evidence 
that has supported the idea of separating these populations 
out. There is no reason in my mind to think that the dialysis 
population will benefit from higher doses of EPO or from higher 
hemoglobin levels beyond what we have found in our studies. In 
fact two other randomized controlled studies support the notion 
of increased risk in the dialysis population.
    Chairman THOMAS. Why was the CHOIR trial terminated?
    Dr. SINGH. It was terminated because the Data Safety 
Monitoring Board saw evidence for increased risk for adverse 
risk in the higher hemoglobin group, and they found that there 
was going to be no likelihood of showing any benefit, and 
therefore, the DSMB terminated the study. We followed that 
recommendation.
    Chairman THOMAS. The policies that were currently 
advocating under CMS are which end of the spectrum vis-a-vis 
the CHOIR trial? At the high end or the low end?
    Dr. SINGH. The Medicare policy recommends there be a 25-
percent reduction in the epoetin dose when the hemoglobin level 
hits 13 grams or hematocrit at 39 percent what's remarkable is 
that as recent, as the same week as the CHOIR study was 
published, one of the largest dialysis providers circulated a 
guideline for protocol for hemoglobin management which 
recommended only a 10-percent reduction in epoetin dose when 
the hemoglobin level reaches 13 grams and a 25-percent 
reduction when it reaches 14 grams or higher, so, clearly, even 
beyond what Medicare recommends and certainly well beyond what 
the CHOIR data suggests, which is considered safe. So, you are 
absolutely right. There is--not only does this study suggest 
increased risk beyond 13, beyond actually 12.5 because that was 
the achieved hemoglobin level. But Medicaid guidelines are at 
13, where there is a reduction and dialysis providers are even 
flaunting that and going for higher levels still.
    Chairman THOMAS. It is in large part because of the payment 
system and the structure we are dealing with and some 
incentives of the structure.
    Can you give us--is there agreement between the three of 
you and more than the decade long study and others that would 
give us one, two, three fairly simplified steps that we could 
take that could at least get us significantly in a different 
direction? Can you give it to me in just a few terms? 
Obviously, you have advocated bundling. Are there any other 
suggestions?
    Dr. SINGH. I would recommend they should be--risk 
adjustment of the population has been recommended by CMS 
because these are complicated sick dialysis patients and we do 
not want to actually disincentivize the treatments of patients 
who are sick.
    Chairman THOMAS. I understand that. Have you read the GAO 
study?
    Dr. SINGH. Yes.
    Chairman THOMAS. One of the concerns that we have that we 
will be presented shortly is we have made recommendations; we 
have demanded certain aspects. The argument has been that we 
have not been able to develop them.
    Thank you very much.
    Mr. Rangel.
    Mr. RANGEL. Thank you so much for sharing your views with 
us.
    Could you tell us, why in the world would the CMS have a 
policy that differs from with the GAO, the FDA, the National 
Kidney Foundation, the National Institutes of Health, the 
providers of health care, as to why they would want to 
encourage through policy the overuse of a drug that places 
peoples' lives at risk and even death and is more costly to the 
Federal Government? Now just try to think of any reason why any 
agency or department of the Federal Government would want to do 
this.
    Mr. COTTER. Yes, I think, from my understanding of this, we 
wrote a policy analysis of this and published in the Health 
Affairs Journal, is that there is a notion that the policy must 
impress hematocrit variability. However, that is driven by 
aggressive dosing so it is a self-fulfilling prophecy. If you 
raise the hematocrit target, you encourage more aggressive 
dosing which in turn raises more variability. That is the only 
argument that CMS has had that they have claimed that the 
policy is based on. They have claimed that there is no science 
to support these high levels. It is only this issue that is 
non-scientific of hematocrit variability.
    Dr. PIZZI. Mr. Cotter used the word notion. The notion has 
been in the dialysis community for several years that the 
higher the hemocrit, the better the outcome. Even the National 
Kidney Foundation updated their guideline this year to increase 
the upper hemoglobin limit to 13 without founded evidence to 
support that. Now the results of the trials testing these 
levels doses are starting to come back, and, in fact, we have 
found out that 13 is too high. CMS, as well as the National 
Kidney Foundation, I believe and I agree with Mr. Cotter and 
Dr. Singh that it is time to revert back to the label, which is 
a hemoglobin of 10 to 12.
    Dr. SINGH. I think we have limited presentation at the 
present time as to why this occurs and whether it is related to 
factors such as high dosing or frequent measurement of 
hemoglobin. Nevertheless, we certainly should seek increased 
risk of hemoglobin levels that are beyond the current label of 
the drug and my advice would be that we take greater pains and 
I think CMS takes greater pains to ensure that the population 
of dialysis patients that this represents a vulnerable 
population of hemoglobin levels that are below that level until 
we get more data, until more studies are published to indicate 
this is a--that the alternative is a reasonable strategy.
    Mr. RANGEL. Thank you. Mr. Chairman, I want to congratulate 
you for the order of the witnesses, to have the experts testify 
early. Whether we can establish this as some kind of a policy, 
that makes it easier for us.
    Chairman THOMAS. I appreciate the gentleman. I am doing 
this for pure convenience of members in a very extreme time, 
and I don't intend to make any kind of a precedent. I am 
walking out the door in a few days, and you can deal with it on 
your own time.
    The gentlewoman from Connecticut wish to you inquire.
    Ms. JOHNSON OF CONNECTICUT. How easy is it to achieve 
stability in a patient to--how big an issue is this hematocrit 
variability? I gather from you that we really don't know enough 
to actually keep a patient stable at 12, or we would be doing 
it.
    Mr. COTTER. We have done a study of this because we wanted 
to prepare something for this hearing. It is simply that if you 
maintain a prudent dosing strategy as recommended in the FDA 
labeling, you start off in small doses and you tritiate up 
until the patient responds to the drug, you do not have this 
variability. What providers are doing now, they are starting 
with very high doses beyond the FDA label and these patients, 
some of them overshoot. Some don't. Remember, I said we have 
responders and non-responders to EPO therapy. So, for those 
both responders and non-responders, they get the same dose.
    Ms. JOHNSON OF CONNECTICUT. Thank you. So, the variability 
issue can be addressed by titrating up, and if you do that, 
then there is no difference in frailty or nature of the patient 
as to how variable, how much their swings and their hemocrit 
levels as you dose.
    Mr. COTTER. That is why you want to titrate up.
    Ms. JOHNSON OF CONNECTICUT. Once you get there, are there 
still those swings?
    Mr. COTTER. There could be swings, sure. But the FDA label 
says that the target should be 30 to 26, so that allows the 
swings.
    Ms. JOHNSON OF CONNECTICUT. So, you think the swing being 
allowed to go up to 13 is too big a swing?
    Mr. COTTER. Absolutely.
    Ms. JOHNSON OF CONNECTICUT. How effective has the CMS new 
payment policy adopted in April been in at least bringing down 
dosing above 13?
    Mr. COTTER. Well, according to the GAO report, I will let 
them tell you about that, but it looks like dosing is migrating 
up slightly right now, but they are reporting an average dose. 
That means there are some patients on the high end of that 
average are getting very high doses.
    Ms. JOHNSON OF CONNECTICUT. On the bell curve, their new 
payment policy penalizes high doses of patients that are at 12/
13, and my understanding is, we will hear more from the next 
panel, but that has brought down the outliers. Is that your 
understanding?
    Mr. COTTER. I would like to hear CMS defend that because, 
in October of this year, they virtually annihilated that 
restriction. It is basically not there any longer.
    Ms. JOHNSON OF CONNECTICUT. The 25 percent payment cut?
    Mr. COTTER. I don't know how a contractor could implement 
that direction that they are giving him, and by the way, the 
target is not even 39 percent. It could go higher. It can go to 
42. It can go to 50. There is no higher bound.
    Ms. JOHNSON OF CONNECTICUT. But there are payment cuts----
    Mr. COTTER. The only payments cut is that, if a monthly 
dose goes over 500,000 units per or more, which is 5 to 10 
times above the FDA label; it is bizarre.
    Chairman THOMAS. Thank you.
    Mr. Stark, do you wish to inquire.
    Mr. STARK. I want to thank the panel for all of the work 
they have done in this area. I have a couple of, I guess, less 
technical questions.
    But my understanding is that if we--I can't pronounce 
subcutaneous, but I am going to ask Dr. Pizzi, if we inject the 
drug, then we might be able to use about 30 percent less; is 
that correct?
    Dr. PIZZI. That is true. There are numerous studies that 
indicate that. That is one of the standard ways to introduce 
savings because the drug essentially acts as a depot.
    Mr. STARK. Could the makers of the drug make it more 
comfortable for us who don't like getting stuck?
    Dr. PIZZI. The key is that to make it more comfortable, the 
clinics have a multi-dose vial which has a benzyl-alcohol in 
it, and that reduces some of the stinging. There are other 
techniques that can be used to reduce discomfort, too.
    Mr. STARK. I am all for that.
    Then the other question is, would it make any sense, Dr. 
Singh, if you know, in paying for the application of this drug 
as it is now used in the dialysis system, why we should pay 
more than a dollar per application, not counting the cost of 
the drug? It is just dumped in the system, I gather, and takes 
no particular--nothing more than adding it to the mix. Is that 
a fair layman's description of how you would add this if you 
are not injecting it?
    Dr. SINGH. I think that is, sir. It is a little bit more 
complicated than just adding it. I think that there is a 
significant--there is a significant amount of work that goes in 
to the administration in a safe manner to prevent----
    Mr. STARK. Even when it is done as----
    Dr. SINGH. Even when it is done as part of it. So, I don't 
think I would advocate the idea that we just add it in a sort 
of routine manner. However, I would just add that the notion 
that we can give it subcutaneously is not a bad idea. After 
all, our veterans in this country received this drug 
subcutaneously largely. People in Europe and people in Canada. 
So, I do agree that it is--there is some discomfort giving it 
subcutaneously, but it is certainly good enough for some of our 
finest people.
    Mr. STARK. We are talking about saving 600 million bucks a 
year, which is not chump change.
    Final question, Dr. Singh. With all of this recent 
information about overdosing things, how have you changed both 
your own practice, and at Brigham Young, how are you changing 
what you teach your residents or interns?
    Dr. SINGH. I am the medical director of a dialysis unit in 
Boston. We have instituted a new protocol to ensure that the 
patients' hemoglobin levels stay below the--to the degree we 
can help it below 12 grams per deciliter. The USRDS shows that 
chain in which I practice has 80 percent of their patients that 
are below 12 grams per deciliter in contradistinction to other 
dialysis providers who have higher proportional patients.
    We have also instituted modifications for our health care 
system partners, health care in Boston, to try to ensure that 
we follow the FDA label. Certainly teaching people out there 
both at the American Society of Nephrology and elsewhere, I 
certainly advocate the notion that we should follow the FDA 
level and stay below 12 grams per deciliter.
    Mr. STARK. There is always the danger of underdosing. We 
certainly don't want to have payment practices that would 
encourage that. But in the general practice in dialysis today, 
how would you rank the danger of overdosing as a--or 
underdosing? Is there as much danger in underdosing as 
overdosing?
    Dr. SINGH. I think the biggest problem currently is the 
fact that patients are coming to dialysis still who have never 
ever been treated with epoetin and should be. So, certainly, we 
could increase the awareness with the population with 
increasing treatment well before they start dialysis. However, 
I do not believe that underdosing will be as much of an issue 
as much as overdosing, especially since the studies now show 
continued increased risk.
    Chairman THOMAS. Did I hear you say, Dr. Singh, given the 
current payment system and the structure of the monopoly drug, 
that you are following a policy which reduces the income to 
those dialysis centers that you are involved with?
    Dr. SINGH. We have taken the approach that we will follow 
what is appropriate from a clinical standpoint, and if that 
means that we get paid less, that is appropriate. But we want 
to make sure that we treat patients to a level of hemoglobin--
--
    Chairman THOMAS. I understand that, but what you have done 
is made a conscious decision based upon your knowledge not to 
follow a system which you could easily follow. Wouldn't it make 
a whole lot of sense to change the system so you don't have to 
make that decision?
    Dr. SINGH. Yes, sir. I agree with you.
    Chairman THOMAS. Any additional questions?
    Mr. CAMP. I don't have a question. I want to associate with 
your remarks.
    Mr. LEWIS OF GEORGIA. Mr. Singh, I understand that 30 
percent of dialysis patients are African-American, but yet we 
are only 8 to 12 percent of the total population. These numbers 
are not improving, and we are not seeing any improvement in 
keeping patients off of dialysis. What do you need from 
Congress to help prevent patients from going on dialysis? In 
the minority community, what needs to be done to address this 
disparity.
    Dr. SINGH. Thank you, sir. Recent data from the--published 
from the United States Renal Data System from the NIH suggest 
there may be a leveling off of the incident rate of patients 
starting dialysis. But the--but your point is well taken. We 
still have an unsatisfactory number of people starting dialysis 
in the United States, and it is over-representative of 
minorities, particularly African-Americans. We also have no 
change in the mortality or no significant change in the 
mortality of patients on dialysis.
    If you ask me, what we need to do is to increase the 
greater funding to the NIH so that independent research can be 
performed by investigators in the United States to understand 
what factors increased the risk of progression of patients, 
particularly African-Americans, to dialysis; what are the 
factors that account for this very high risk of cardiovascular 
disease among dialysis patients; as well as studies on anemia, 
to try and truly understand this issue of hemoglobin cycling 
and why there is this excess risk should be funded by Congress. 
I think we need--we certainly need more money funded through 
the appropriate channels through the NIH to fund more studies.
    But I certainly agree with you that African-Americans 
represent a disproportionate amount of people on dialysis, and 
the mortality of these people have not changed significantly 
over the past decades. So, we do need help, and we need help in 
terms of funding in the research community to gain a great 
understanding and develop better strategies.
    Chairman THOMAS. Thank the gentleman. We are calling it End 
Stage Renal Disease, and what we really need to put emphasis on 
is prevention and education so they never reach the end stage 
along with the additional study that you are making, and 
frankly, that doesn't take an NIH study. That takes talking 
about diet, lifestyle and the rest.
    Thank you very much for your research.
    Again, it is quite amazing that, all of a sudden, in a 
couple of months, significant research is coming out focusing 
on this issue. I assume that there is going to be continued 
examination of this. Obviously, we need all the help we can get 
in terms of not only understanding the application of these 
drugs that are literally miracle drugs but the manner in which 
we provide it to people who provide the service and in fact the 
taxpayers pay for it. Thank you very much.
    I would now ask the second panel to please come before us. 
The Chair is conscious of the time restraints on very busy 
people.
    The Chair is pleased to have, once again, the Honorable 
David M. Walker, and I would like to welcome Leslie Norwalk, 
who is the new Acting Administrator for the Centers for 
Medicare and Medicaid Services. Thank you very much for 
attending.
    Dr. Walker, obviously, you have just concluded the study. 
Again, interestingly, all of this is coming together at the 
same time, and we have it available if anyone hasn't seen a 
copy of it. I do think it is very useful, and as is customary, 
any testimony that you have written will be made a part of the 
record, and you can address us in any way you see fit in terms 
of what we now have before us in the GAO study.

    STATEMENT OF THE HONORABLE DAVID M. WALKER, COMPTROLLER 
         GENERAL, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. WALKER. Thank you, Mr. Chairman. I appreciate the 
opportunity to be here today to participate in the hearing on 
Medicare patients with End Stage Renal Disease. Let me also 
note, happy birthday and all of the best to you in retirement 
from the Congress.
    As you know, from a broader perspective, the level and 
growth of Medicare spending combined with the over $30 
trillion-plus amount of unfunded obligations for Medicare 
serves as evidence that the current program is unsustainable in 
its present form. Furthermore, Medicare's sheer size and 
complexity make it vulnerable to improper payments and 
inefficient payment systems. Over the years, the GAO has worked 
with this Committee to try to address these challenges. CMS has 
taken a number of related efforts, and some progress clearly 
has been made, but as most GAO reports note, more remains to be 
done.
    With regard to End Stage Renal Disease drug reimbursements, 
the GAO report which you held up--and I have a copy as well 
that you requested--points to ways to improve the efficiency of 
Medicare's payments in connection with the End Stage Renal 
Disease program. Over the years, we have observed that bundled 
payments tend to be more efficient than paying for services one 
at a time. Bundled payments cover a range of services delivered 
to the patient. As such, they give providers an incentive to 
furnish only those services that patients truly need because 
providers can not prosper by providing extra services.
    Today's hearing focuses on End Stage Renal Disease paid 
under part B of Medicare. But one has to look at the whole part 
of part B to see the inefficiencies inherent in paying for 
services one at a time. Spending for physician services and 
other part B services over the past several years has been 
growing at an alarming rate. It is essential that Congress find 
ways to restructure payments to institute necessary 
efficiencies and control spending growth while maintaining 
quality and assuring patient safety.
    Our report on End Stage Renal Disease drug payments 
observes that the current method of setting drug payment rates 
is an improvement over the previous system. However, it does 
not provide appropriate incentives. It does not control the 
incentive to over-utilize such drugs. The system in place pays 
providers the manufacturers' average sales price for the drug, 
plus 6 percent. Any system that provides for cost-plus payments 
provides an incentive for related parties to provide 
unnecessary care and extra services. Indeed, this is one of the 
reasons that the Congress changed Medicare's inpatient hospital 
payment to a bundle payment system in the mid-eighties.
    We also observed in our report that Medicare's End Stage 
Renal Disease drug payment is dominated by a single drug, 
Epogen, which for several years has been Medicare part B's 
highest spending drug, approximately $2 billion in 2005. We 
also expressed concerns that there are currently no direct 
competitor drugs in the End Stage Renal Disease market. The 
lack of effective price competition could be having 
considerable adverse effects on Medicare's overall spending. 
Furthermore, the lack of significant efforts to verify the 
accuracy of the average sales price for drugs that are 
separately billable under part B is also a matter of concern, 
and that goes beyond End Stage Renal Disease.
    Finally, returning to the bundling theme. We observed that, 
currently, congressionally mandated research on creating a 
bundled system for End Stage Renal Disease services, including 
drugs, has been delayed. The research being conducted by CMS 
would, among other things, ensure that providers are 
appropriately compensated for variations of complexity in 
patients' treatment. While this is important, we do not believe 
it is necessary or desirable to delay movement to a bundled 
rate for End Stage Renal Disease services any longer than 
absolutely necessary. For this reason, we have suggested that 
Congress consider mandating the establishment of a bundle 
payment system for all ESRD services, including drugs, as soon 
as possible.
    Mr. Chairman, this concludes my prepared remarks. I look 
forward to responding to your questions.
    Thank you.
    [The prepared statement of Mr. Walker follows:]
 Statement of The Honorable David M. Walker, Comptroller General, U.S. 
                    Government Accountability Office
    Mr. Chairman and Members of the Committee:
    I am pleased to be here to discuss highlights from our report 
entitled End-Stage Renal Disease: Bundling Medicare's Payment for Drugs 
with Payment for All ESRD Services Would Promote Efficiency and 
Clinical Flexibility.\1\ The report examines Medicare payments for 
certain drugs provided to patients with end-stage renal disease (ESRD), 
a condition of permanent kidney failure.\2\
---------------------------------------------------------------------------
    \1\ GAO, End-Stage Renal Disease: Bundling Medicare's Payment for 
Drugs with Payment for All Services Would Promote Efficiency and 
Clinical Flexibility, GAO-07-77 (Washington, D.C.: Nov. 13, 2006).
    \2\ These drugs are covered under Medicare Part B, the part of 
Medicare that covers a broad range of medical services, including 
physician, laboratory, and hospital outpatient services and durable 
medical equipment. Part B-covered drugs are typically administered by a 
physician or other medical professional rather than by patients 
themselves. In contrast, drugs covered under the new prescription drug 
benefit, known as Part D, are generally self-administered by patients.
---------------------------------------------------------------------------
    Through Medicare's ESRD benefit, patients receive a treatment known 
as dialysis, which removes excess fluids and toxins from the 
bloodstream. Patients also receive items and services related to their 
dialysis treatments, including drugs to treat conditions resulting from 
the loss of kidney function, such as anemia and low blood calcium. The 
Centers for Medicare & Medicaid Services (CMS), the agency that 
administers the Medicare program, divides ESRD items and services into 
two groups for payment purposes. In the first group are dialysis and 
associated routine services--such as nursing, supplies, equipment, and 
certain laboratory tests. These items and services are paid for under a 
composite rate--that is, one rate for a defined set of services. Paying 
under a composite rate is a common form of Medicare payment, also known 
as bundling. In the second group are primarily injectable drugs and 
certain laboratory tests that were either not routine or not available 
in 1983 when Medicare implemented the ESRD composite rate. These items 
and services are paid for separately on a per-service basis and are 
referred to as ``separately billable.''
    Over time, Medicare's composite rate, which was not automatically 
adjusted for inflation, covered progressively less of the costs to 
provide routine dialysis services, while program payments for the 
separately billable drugs generally exceeded providers' costs to obtain 
these drugs. As a result, dialysis facilities relied on Medicare's 
generous payments for separately billable drugs to subsidize the 
composite rate payments that had remained nearly flat for two decades. 
In addition, the use of the separately billable drugs by facilities 
became routine, and program payments for these drugs grew 
substantially. In 2005, program spending for the separately billable 
drugs accounted for about $2.9 billion. Medicare's payment for these 
separately billable drugs is the focus of my remarks today. My remarks 
are based on the information included in our aforementioned report.
Background
    Since the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) was passed,\3\ how separately billable 
drugs are paid for has changed--from payment based on each drug's 
average wholesale price (AWP),\4\ to payment based on each drug's 
average acquisition cost, to payment based on the manufacturer's 
average sales price (ASP) for each drug. Specifically, beginning in 
2006, payment for each drug is set at ASP + percent.
---------------------------------------------------------------------------
    \3\ Pub. L. No. 108-173, 117 Stat. 2066.
    \4\ Epogen, one of the separately billable drugs, was not paid 
under the AWP method. The method Medicare used to pay for Epogen was an 
amount set in statute for a single year--$10.00 per 1,000 units in 
1994. CMS continued to pay this rate at its discretion until 2005.
---------------------------------------------------------------------------
    In recent years, CMS has been exploring, as required by the 
Congress, the creation of a bundled payment for all ESRD services, 
including the drugs that facilities currently bill for separately. In 
response to a mandate that CMS study the feasibility of creating a 
bundled payment,\5\ the agency issued a study in 2003 concluding that 
developing a bundled ESRD payment rate was feasible and that further 
study of case-mix adjustment--that is, a mechanism to account for 
differences in patients' use of resources--was needed. In the MMA, the 
Congress required that CMS report on the design of a bundled 
prospective payment system for ESRD services, including a case-mix 
adjustment methodology, and conduct a 3-year demonstration to test the 
design of a bundled ESRD payment system.\6\
---------------------------------------------------------------------------
    \5\ Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000, Pub L. No. 106-554, app. F, Sec. 422(b),(c), 
114 Stat. 2763A-463, 2763A-516-517.
    \6\ Pub. L. No. 108-173, Sec. 623(e),(f), 117 Stat. 2066, 2315-
2317.
---------------------------------------------------------------------------
New Payment Provisions Reduced Subsidy from Separately Billable Drugs 
        but Did not Eliminate Incentives to Ovceruse These Drugs
    The effect of several legislative and regulatory changes since 2003 
has been to raise the composite rate for dialysis services while 
reducing Medicare's pre-2005 generous payments for separately billable 
ESRD drugs. Under the first legislative change in 2005, Medicare 
expenditures for certain of these drugs dropped 11.8 percent. Under the 
current payment method, based on the ASP for each drug, Medicare's 
payment rates have varied from quarter to quarter but have remained 
relatively consistent with the lower 2005 payment rates.
    The ASP-based rates are an improvement over the pre-MMA method, as 
ASP is based on actual transactions. However, certain unknowns about 
the composition of ASP and the ASP-based payment formula make it 
difficult for CMS to determine whether the ASP-based payment rates are 
no greater than necessary to achieve appropriate beneficiary access. 
For one thing, CMS has no procedures for validating the accuracy of a 
manufacturer's ASP, which is computed by the manufacturer. For another, 
CMS has no empirical justification for the 6 percent add-on to ASP. 
Regardless of how payment for these drugs is calculated, as long as 
facilities receive a separate payment for each administration of each 
drug and the payment exceeds the cost of acquiring the drug, an 
incentive remains to use more of these drugs than necessary.
    The ASP payment method is of particular concern with respect to 
Epogen, which in 2005 accounted for $2 billion in Medicare payments and 
is Medicare's highest Part B expenditure drug. Introduced in 1989, 
Epogen--the brand name for epoetin alpha--was an expensive breakthrough 
drug used to treat anemia in patients with ESRD. Most ESRD patients 
receive injections of Epogen at nearly every dialysis treatment. 
Preliminary data for 2006 suggest that Epogen use, which grew rapidly 
in the years before the MMA provisions took effect, continues to grow, 
although at a slower rate than previously. Epogen is the only product 
available in the domestic ESRD market for anemia management. However, 
the ASP method relies on market forces to achieve a favorable rate for 
Medicare. When a product is available through only one manufacturer, 
Medicare's ASP rate lacks the moderating influence of competition. The 
lack of price competition may be financially insignificant for 
noncompetitive products that are rarely used, but for Epogen, which is 
pervasively and frequently used, the lack of price competition could be 
having a considerable adverse effect on Medicare spending.
Bundled Payment System for ESRD Services, Including Injectable Drugs, 
        Would Promote Efficiency and Clinical Flexibility
    Medicare's approach to paying for most services provided by health 
care facilities is to pay for a group--or bundle--of services using a 
prospectively set rate. For example, under prospective payment systems, 
Medicare makes bundled payments for services provided by acute care 
hospitals, skilled nursing facilities, home health agencies, and 
inpatient rehabilitation facilities. In creating one payment bundle for 
a group of associated items and services provided during an episode of 
care, Medicare encourages providers to operate efficiently, as 
providers retain the difference if Medicare's payment exceeds the costs 
they incur to provide the services. Medicare's composite rate for 
routine dialysis and related services was introduced in 1983 and was 
the program's first bundled rate.
    Experts contend that a bundled payment for all dialysis-related 
services would have two principal advantages. First, it would encourage 
facilities to provide services efficiently; in particular, under a 
fixed, bundled rate for a defined episode of care,\7\ facilities would 
no longer have an incentive to provide more ESRD drugs than clinically 
necessary. Second, bundled payments would afford clinicians more 
flexibility in decision making because incentives to prescribe a 
particular drug or treatment are reduced. For example, providers might 
be more willing to explore alternative methods of treatment and modes 
of drug delivery if there were no financial benefit to providing more 
services than necessary.
---------------------------------------------------------------------------
    \7\ In the case of the composite rate, one dialysis session 
constitutes an episode of care. Unlike the current composite rate 
payment method, a newly designed payment bundle could define the 
episode of care more broadly. For example, the new payment bundle could 
cover dialysis and related items and services for 1 month.
---------------------------------------------------------------------------
    In the MMA, the Congress required CMS to issue a report and conduct 
a demonstration of a system that would bundle payment for ESRD 
services, including drugs that are currently billed separately, under a 
single rate. Any payment changes based on CMS's report or demonstration 
would require legislation.\8\ Both the report, due in October 2005, and 
demonstration, mandated to start in 2006, are delayed, and CMS 
officials could not tell us when the report or results from the 
demonstration would be available.
---------------------------------------------------------------------------
    \8\ The MMA specified that drugs billed separately at the time the 
legislation was enacted continue to be billed separately and not 
bundled in the composite rate. MMA sec. 623 (d)(1),  1881 (b)(13)(B), 
117 Stat. 2314-15 (to be codified at 42 U.S.C.  1395rr(b)(13)(B)).
---------------------------------------------------------------------------
    In light of these circumstances, we have asked the Congress to 
consider establishing a bundled payment for all ESRD services as soon 
as possible. In our view, Medicare could realize greater system 
efficiency if all drugs and services were bundled under a single 
payment. A bundled payment would encourage facilities to use drugs more 
prudently, as they would have no financial incentive to use more than 
necessary and could retain the difference between Medicare's payment 
and their costs. To account for facilities' increased or decreased 
costs over time, a periodic reexamination of the bundled rate may be 
necessary. This would ensure that facilities would be paid 
appropriately and that Medicare could realize the benefit of any cost 
reductions.
    Mr. Chairman, this concludes my prepared statement. I will be happy 
to answer any questions you or the other Committee Members may have.

                                 

    Chairman THOMAS. Thank you.
    Prior to going to Ms. Norwalk, because I know you have an 
important meeting to go to, if it is okay, and we will 
determine the length of the questioning perhaps like to just 
draw you out a bit in terms of your statement prior to moving 
to the CMS testimony.
    As you know, I am very loathe to have Congress attempt to 
legislate the ways in which services are offered, but I want to 
understand in your underscore in your GAO in page 6 that in 
2003 the Medicare Modernization Act required CMS to design a 
system that would no longer pay for each injectable ESRD drug 
in a separate rate. You then go on in the same paragraph to 
conclude CMS report is designing a report for bundled ESRD 
payment was due in September 2005. However, as of November of 
2006, CMS officials could not tell us when the report would be 
issued. The demonstration testing the feasibility of a bundled 
rate mandated to start in July 2006 is also delayed.
    If in fact this is what CMS has been doing, what is it that 
we are going to do as a Congress to put together a package 
which would answer those issues? You said perhaps it isn't as 
complicated as other others are talking about. What we heard 
from the previous panel is, there are drugs, and my 
understanding is they are identical, notwithstanding the fact 
they are used in separate purposes. The separate purposes are 
far closer together, if we can believe Dr. Singh's testimony, 
than we would have thought and that could possibly create a 
competitive model rather than a monopoly. Notwithstanding--
since 2003--CMS can't put together a bundling package and 
present it to us based upon our requirements in MMA, what is it 
that you would be suggesting that we might do? That is what I 
am looking for.
    Mr. WALKER. What I am suggesting is, there appears to be 
agreement that it makes sense to move to a bundled approval for 
payment for these drugs. And----
    Chairman THOMAS. I believe the Congress certainly believes 
that.
    Mr. WALKER. I believe that CMS believes that as well, and I 
think it is important that it is the Congress's will to say 
that while CMS needs to do demonstration work and while I think 
additional consideration needs to be given to drugs that are 
essentially identical or similar to Epogen that are not used in 
End Stage Renal Disease but are used for other purposes, I 
think it is important that the Congress's will be noted to say 
we expect you to move to bundled services by X date and you 
have to decide what X date is.
    Chairman THOMAS. But we did, in essence, in 2003, while 
leaving it to the professional competence of CMS to move 
forward with that.
    Mr. WALKER. My understanding is that you required something 
be done and a report be issued by a date certain rather than 
necessarily move to the bundled services by a date certain.
    Chairman THOMAS. Okay. I think, possibly given the 
commonality of our position here, a more insistent direction 
with the specific date could produce something, but I will go 
back to the recent attempt to get letters answered and the 
dateline in terms of answering simple letters. So, to a certain 
extent, I appreciate the requirement to put a firm date, but I 
will tell you, I have no assurance that any firm date will be 
met.[11:45 a.m.]
    Chairman THOMAS. If they cannot answer letters, I doubt if 
they are going to give us a program. That is my concern. 
Therefore, I also want to focus on how we can create a degree 
of competition and how we can create an opportunity to allow 
dialysis facilities to utilize various methods of infusion, 
injection, subcutaneous, others that are not absolutely 
dictated to by a policy that controls price and circumstances; 
and that perhaps is an area we might be able to move with, as 
well as bundling.
    Mr. WALKER. Well, as you know, there is another drug 
company that is proposing to bring a drug to market that 
potentially would be used for End-Stage Renal Disease. There is 
litigation that is currently pending with regard to that. That 
was obviously beyond the scope of our study, but it is a fact, 
and so that is one possibility for competition.
    Another thing that you touched on, Mr. Chairman, which I 
think is appropriate, is there are at least two drugs that are 
used, one of which is identical to Epogen and one of which is 
similar but not identical to Epogen. They are not used for End-
Stage Renal Disease, but they are used for chronic kidney 
disease, and one would think that you could look at some of the 
pricing arrangements and other types of activities going on 
there. You are not requiring them to be used for End-Stage 
Renal Disease, but there is information there that I think 
would be relevant in determining, in effect, what should be 
paid for these drugs.
    Chairman THOMAS. Thank you.
    The gentleman from New York.
    Mr. RANGEL. I have no questions. I just would like to thank 
you, Mr. Walker, for the dedicated service that you have 
provided over the years for the Congress and the country.
    Chairman THOMAS. The gentlewoman from Connecticut, the 
Chairman of the House Subcommittee.
    Ms. JOHNSON OF CONNECTICUT. Mr. Walker, did you look at the 
policy that CMS adopted in April?
    Mr. WALKER. I apologize, Mrs. Johnson. My staff tells me 
that we looked primarily at the payment methodology. We looked 
at the policy, but we did not look at anything in depth other 
than the payment methodology. That is the really the only 
thing.
    Ms. JOHNSON OF CONNECTICUT. Did you also look at why the 
demonstration has been slow to come together and the issue of 
risk adjusting in the demonstration? Dr. Singh did indicate 
that he thought risk adjustment was important. My understanding 
is that risk adjustment in a demo setting is an easy--I could 
be misinformed about that. I have not had time to do an in-
depth development of my knowledge based on this issue. But I 
need to know why the demo has been hard to come together. While 
I will ask CMS that later on, since you are here and you gave 
this report I want to know, did you look at that?
    Mr. WALKER. It is clear that the delay has in large part 
been due to considerations of looking at risk adjustment. We 
are not saying that that should not be done. We are not saying 
that you should discontinue the demonstration project either. 
We think it is important that that be done.
    The bottom line point is this: It seems clear that Congress 
intended our work supports, and it is my understanding that CMS 
agrees, that we need to move to a bundled payment system as 
quickly as possible. I think the administrator is in a better 
position to answer why it has been delayed and when she thinks 
it is going to be completed. But for the interests of the 
patients and the interests of the taxpayers, I think we need to 
move to a bundled payment system as soon as possible.
    Ms. JOHNSON OF CONNECTICUT. Thank you.
    My concern is that the express purpose of the demonstration 
project was to demonstrate a bundled payment solution; and if 
risk adjustment is difficult, that will affect patients. So, we 
want a system that not only pays appropriately but makes the 
drugs available for treatment appropriately. If risk adjustment 
is the problem, why would we want to implement a bundled 
payment without having the ability to risk adjust it?
    So, I do not differ on the goal at all. I am just a little 
mystified. I want to learn more about how we are going to 
achieve that goal, and I want to be sure that the knowledge 
base is firm before we make a national change in our National 
payment system. That is my only concern.
    Chairman THOMAS. Will the gentlewoman yield in terms of 
that concern?
    Ms. JOHNSON OF CONNECTICUT. Certainly.
    Chairman THOMAS. Notwithstanding the obvious difficulty, 
given the time lag, does it make any sense at all in focusing 
on this that we could at least begin to nail down a couple of 
specifics that does not involve the universal concerns that are 
being discussed?
    Number one, at what point do we begin to focus on the 
question of the percentage dosage? When you have got an FDA 
rate, you have got a label recommendation, you have got a 
manufacturer putting out a warning label, you have got studies 
that produce it, and you have CMS continuing to increase the 
percentage, at least that could be reconciled.
    Secondly, if you have other drugs that could possibly 
provide or a structure in which when you do not have--and a lot 
of times what we have done is, when you do have a monopoly, you 
can create Government as a surrogate competitor and create a 
price which would control the amount, rather than leaving it to 
open market and incentives which are designed to require people 
to continue to use larger amounts.
    Within the current structure, you have at least several, I 
would think, abilities to adjust payment arrangement 
competition and come to some agreement at least on the 
conservative do-less-harm side about the dosage question.
    Could not we at least do those while they are trying to 
complement risk factors and other arrangements?
    Mr. WALKER. We are saying similar things, Mr. Chairman, 
just in different ways.
    The other thing I would suggest is, it seems to me that 
there is also a possibility to continue the demonstration 
project, move to some type of a bundled payment system with the 
consideration that there might be some adjustment in payment at 
some future date depending upon the results. But I would leave 
that to the CMS administrator.
    Ms. JOHNSON OF CONNECTICUT. Reclaiming my time. Let me also 
put one other thing on your agenda, because I was not aware of 
that until this hearing. If you can titrate up to a stable 
dosage or if you can deliver this treatment more cheaply 
through injection, why are we not looking at those things, too? 
Because our bundled payment ought to take into account the 
lower cost of a different delivery system. Did you look at 
those issues?
    Mr. WALKER. We did. One of the things that is included in 
our report is our point about the need for clinical flexibility 
to consider alternative means to be able to achieve the desired 
result, which includes what you said, Mrs. Johnson.
    Ms. JOHNSON OF CONNECTICUT. We certainly do want that 
clinical flexibility if the patient is going to be served. That 
goes to the bundling issues and the risk.
    Chairman THOMAS. Yes, obviously, if in fact another portion 
of the Government is using the subcutaneous method, you would 
at least think that that could be an option that you would look 
at, given the cost deferential.
    The gentleman from California.
    Mr. STARK. General Walker, thank you for this report.
    You indicate that CMS has no procedure for validating the 
accuracy of the manufacturer's average sale price, which the 
manufacturer computes. I mean, they say, here is our average 
sales price, and we have no way to verify that, as I gather.
    So, if I said what you are suggesting is that Amgen tells 
CMS what the average sales price is for Epo and then they go 
out and sell it at whatever price they want to sell it, perhaps 
there are deep discounts to volume purchasers.
    Do we know? Is that transparent to you? Do you know, are 
there big discounts? Do we have any idea how this pricing 
system works?
    Mr. WALKER. Mr. Stark, we know what the statute says. The 
administrator may want to address what, if any, concerns they 
have about what they can do, given the statutory language. But 
what we can tell you is this, is we do not think there is 
adequate transparency and we don't think there is adequate work 
being done to verify the average sales price.
    I reflect back--I am a Ronald Reagan, George Herbert Walker 
Bush and Bill Clinton Presidential appointee. We can all 
remember President Reagan saying: Trust but verify. That 
applies to drug prices, too.
    Mr. STARK. Thank you very much.
    Chairman THOMAS. We have been discussing bundling in terms 
of the Government's ability to create a structure which would 
limit controlling. It is my understanding that the private 
sector has had an ability to create bundling in terms of the 
purchase of drugs that are used. Is that--did you examine that 
at all, the way in which the provider, the manufacturer of the 
drugs is bundling the use of particular drugs as an incentive?
    Mr. WALKER. We did not look at that in the context of this 
report.
    Chairman THOMAS. Are you aware of it?
    Mr. WALKER. Somewhat, yes.
    Chairman THOMAS. We will ask that question.
    Mr. WALKER. There is unbundling that occurs, too, in order 
to affect pricing.
    Chairman THOMAS. Absolutely. So, bundling is on both sides.
    Any additional questions? Thank you very much, and I 
apologize for causing you some problem in trying to get across 
the bridge.
    Mr. WALKER. Thank you, Mr. Chairman.
    Ms. TUBBS JONES. Mr. Chairman, I want to introduce 
something for the record. Mr. Chairman, thank you very much for 
the opportunity.
    Mr. Walker, I want to introduce for the record two articles 
by a constituent of mine by the name of Dr. Wish. Dr. Wish is a 
physician at University Hospital in Cleveland; and, in that 
capacity, he is a Professor of Medicine and the Medical 
Director of Hemodialysis Services at University Hospital.
    Among other things, Dr. Wish is the President of the End-
Stage Renal Disease Network, and he is on the CMS Advisory 
Board, and he asked me to specifically introduce into the 
record two of his articles: One of them, The Economic Realities 
of Erythropoiesis-Stimulating Agent Therapy in Kidney Disease, 
and another one, an editorial, Can Evidence Drive the 
Development of a Sound National Epo Reimbursement Policy for 
the United States?
    I am assuming you know Dr. Wish and his prominence in this 
area. I thought as long as we were discussing these issues it 
would be important that we have some information from his 
background into the record.
    Mr. Chairman, I thank you very much for the opportunity.
    Chairman THOMAS. Thank you very much.
    Thank you, Mr. Walker.
    [The information follows:]

    [GRAPHIC] [TIFF OMITTED] 35773A.001
    

    [GRAPHIC] [TIFF OMITTED] 35773A.002
    

    [GRAPHIC] [TIFF OMITTED] 35773A.003
    

    [GRAPHIC] [TIFF OMITTED] 35773A.004
    

    [GRAPHIC] [TIFF OMITTED] 35773A.005
    

    [GRAPHIC] [TIFF OMITTED] 35773A.006
    

    [GRAPHIC] [TIFF OMITTED] 35773A.007
    

    [GRAPHIC] [TIFF OMITTED] 35773A.008
    

    [GRAPHIC] [TIFF OMITTED] 35773A.009
    

    [GRAPHIC] [TIFF OMITTED] 35773A.010
    

    Chairman THOMAS. Let me say at the outset, any written 
testimony you have will be made part of the record. Ms. 
Norwalk, notwithstanding the fact that you are sitting here now 
as someone who is newly arrived in the position, filling a slot 
from someone who had been the head of the FDA and was a medical 
doctor, we are completely aware of the fact that these policies 
and decisions were ongoing and that for us to ask you with the 
expectation or belief that you might be able to respond in 
depth, not saying that as you spend some time in that position 
you would not be able to but that at the onset and given the 
timing that we have, I want to encourage you, if we move into a 
questioning session, to feel perfectly comfortable asking any 
person who is part of the CMS support structure to identify 
themselves and come to the table so that you do not have to 
turn around and ask them the question and have them provide you 
the answer. Because that is a perfectly legitimate and proper 
way to operate, given how long you have been on the ground even 
in an acting capacity.
    Ms. NORWALK. Thank you, Mr. Chairman.
    Chairman THOMAS. It is not personal, and it is not directed 
toward you. You just happen to have currently moved very 
briefly into a position in which we expect you to know 
everything about everything, and that is not fair.
    So, with that, the time is yours.

  STATEMENT OF LESLIE V. NORWALK, ESQ., ACTING ADMINISTRATOR, 
           CENTERS FOR MEDICARE AND MEDICAID SERVICES

    Ms. NORWALK. Thank you, Chairman Thomas, distinguished 
Members of the Committee. Thank you for the opportunity to 
appear before you today.
    Mr. Chairman, I also would like to wish you a happy 
birthday. As the Acting Administrator of CMS, this has special 
meaning in my heart, given that you are now an official 
Medicare beneficiary, entitled to all of the benefits that you 
helped create and improve during your service in Congress.
    You asked me to be here today to discuss a very important 
issue, safety and quality in the treatment of patients with 
End-Stage Renal Disease, or ESRD. Roughly 400,000 Americans 
suffer from ESRD and are entitled to Medicare coverage on the 
basis of that diagnosis, regardless of age or disability.
    The ESRD population has grown steadily in recent years. 
Although better management of diabetes and hypertension could 
help stem the growth, initiatives to promote efficient, high-
quality ESRD care are integral to CMS's overall agenda and 
value-based payment reforms.
    This administration has demonstrated a strong commitment to 
promoting quality across the board. CMS launched the Medicare 
Quality Initiative in 2001, promoting greater accountability in 
consumer choice through unprecedented public disclosure of 
provider performance on a range of quality measures.
    To date, CMS has implemented initiatives focused on nursing 
homes, home health agencies, hospitals and dialysis facilities. 
We announced the ESRD Quality Initiative in 2004 to stimulate 
and support improving quality of dialysis care. For these and 
other efforts CMS was recognized earlier this year by the 
American Association of Kidney Patients for dedication to 
improving lives of kidney patients and strong leadership in 
health care for all Americans.
    Projects such as Dialysis Facility Compare on the Web site 
and the Fistula First Breakthrough Initiative are just two 
examples of the many steps CMS has taken to promote high-
quality care for people with ESRD.
    The Fistula First Breakthrough Initiative aims to increase 
the use of fistulas in hemodialysis treatment of patients with 
ESRD. Fistulas are considered to be the gold standard for 
establishing access to a patient's circulatory system as is 
required during hemodialysis.
    Fistulas last longer, require less rework and repair and 
are often associated with lower rates of infection, 
hospitalization and death. Simply put, appropriate use of 
fistulas optimizes patient care, including a possible reduction 
in Epo dosing.
    CMS also contracts with the End-Stage Renal Disease 
Networks across the country to help monitor and improve the 
quality of care for ESRD patients. The ESRD Networks are 
similar to the QIOs, which work with hospitals, physicians and 
other Medicare providers to promote quality and best practices.
    Our networks focus on quality treatment, quality 
improvement and promoting transparency in renal dialysis 
treatment. Their efforts are complemented by our survey and 
certification process for ESRD facilities, which enforces 
compliance with regulations prescribing minimum standards for 
Medicare-approved dialysis facilities with respect to quality, 
patient safety and access to Medicare benefits.
    I know that many of you share my strong interest in a more 
rational payment system for ESRD care, requiring a CMS report 
to Congress and demonstration under the Medicare Modernization 
Act of 2003 to advance a fully bundled ESRD prospective payment 
system. As you know, the GAO recently reported that such a 
payment structure would promote quality, safety and savings in 
the ESRD benefit; and I want to be clear that I completely 
agree.
    While the MMA-required report is now overdue, I want to 
assure you that CMS is fully committed to completing the 
analytical groundwork relevant to a fully bundled payment 
system. CMS completed an initial round of research in mid-2006, 
but developing a payment model that adequately captured 
variation of dosage of Epo was a key, but difficult, area of 
this research. CMS felt that the approach examined in the 
initial round too closely linked the payment to actual drug 
utilization and so began a new phase of research to address 
this and other areas of our new payment structure.
    Our current research, which is nearing completion, focuses 
on predictors used in the current basic system augmented by 
other adjusters such as comorbid conditions and other patient 
characteristics. I expect to receive the research findings from 
our contractor early next year and hope to detail those 
findings in our official report to you by next summer.
    With the benefit of those findings and recent work of the 
GAO, MEDPAC and others, I look forward to working with you to 
develop an effective bundling proposal. I believe that payment 
reform is critical to improving ESRD patient care.
    Finally, I have heard recently from you, Mr. Chairman, and 
from you, Mr. Stark, regarding a monitoring policy that we have 
in place to encourage appropriate use of anti-anemia agents in 
the ESRD population. Anemia can be severe and debilitating in 
ESRD patients if left untreated, but, fortunately, drug 
compounds with Epo in this context can largely alleviate the 
symptoms.
    Anemia's severity is monitored by a patient's hematocrit, 
the proportion of red blood cells in whole blood. Scientific 
evidence and, indeed, FDA labeling for Epo indicate that 
patient hematocrit should be maintained between 33 and 36 
percent for optimal results.
    In a recent letter, you noted that CMS's hematocrit 
monitoring policy does not reduce provider payment for Epo 
until a patient's hematocrit reaches 39 percent. While this is 
accurate, we believe it is important to keep in mind the 
distinction between regulating the safety and effectiveness of 
a particular drug versus determining the amount a provider 
should be paid for administering that drug to a patient.
    Our provider and contractor manuals specifically require 
providers to target a hematocrit range of 30 to 36 percent 
consistent with the FDA label. Moreover, we require that 
patient records reflect the clinical reason for dose changes 
and hematocrit levels outside of the 30 to 36 percent range.
    Medicare contractors currently may review medical records 
to ensure appropriate dose reductions are applied and 
maintained and hematological target ranges are maintained. 
Hematocrit levels can change unexpectedly for a multitude of 
reasons. Our instructions to carriers about reviewing claims 
takes this into account.
    Our monitoring policy for carriers is not establishing a 
therapeutic hematocrit target, which we believe is a clinical 
judgment appropriately left to a treating physician. Our 
monitoring threshold for carriers is slightly above the FDA 
label to avoid penalizing providers that make appropriate dose 
reductions in response to unexpected increases in their 
patients' hematocrit levels. Rather, 39 percent is a marker of 
the point at which a Medicare carrier must reduce payment to a 
provider because the reported hematocrit was not maintained at 
a level consistent with the FDA label. CMS developed this 
policy after considering the body of available scientific 
evidence as well as public comments received in response to our 
proposed policy issued in 2004.
    We are, of course, very interested in recent research 
findings regarding Epo use in patients with chronic kidney 
disease. Following publication, a study of this nature 
typically is subject to international scrutiny and examination. 
Experts will review the study design, methodology results and 
conclusions. In fact, it would be very useful for CMS to have 
access to the raw data behind the CHOIR and other similar 
studies so we may take them into account as we continue to 
review our policies.
    We look forward to further research developments on this 
issue. Like Congress, we are concerned about overuse and 
improper use of any drug we cover. We are always reassessing 
our policies to see if we can strengthen our programs to ensure 
the best possible patient outcomes.
    I would be happy to answer any questions you may have.
    [The prepared statement of Ms. Norwalk follows:]
   Statement of Leslie V. Norwalk, Acting Administrator, Centers for 
                     Medicare and Medicaid Services
    Chairman Thomas, Representative Rangel, thank you for the 
opportunity to appear before you today regarding important safety and 
quality issues in the treatment of Medicare patients with kidney 
failure, or End Stage Renal Disease (ESRD). Roughly 400,000 Americans 
suffer from ESRD and require either kidney dialysis or transplantation 
to live. ESRD is Medicare's only disease-specific program; it entitles 
people of all ages to Medicare coverage on the basis of their ESRD 
diagnosis. The number of individuals covered under Medicare by virtue 
of their ESRD diagnosis continues to grow steadily. Estimates suggest 
that as many as 20 million Americans currently are afflicted by some 
stage of Chronic Kidney Disease (CKD). Many will progress to ESRD and 
the need for some form of renal replacement therapy unless new ways of 
treating CKD are found.
    The Centers for Medicare and Medicaid Services (CMS) believes that 
in general, treatment decisions for ESRD patients are best left to the 
clinical judgment of treating physicians. The CMS is charged with 
determining appropriate coverage and payment for services to Medicare 
beneficiaries. In recent years, CMS has worked hard to ensure its 
coverage and payment policies promote high quality care, which is in 
the best interests of the beneficiaries we serve as well as the long-
term financial health of the Medicare program.
    Quality and safety initiatives have been at the center of the 
Administration's health care agenda for more than five years. We have 
made significant strides in promoting greater transparency in the 
health care industry, giving Medicare beneficiaries and all consumers 
unprecedented access to information that supports meaningful choices. 
Whether considering dialysis facilities, hospital services, skilled 
nursing providers or prescription drug benefits, people with Medicare 
can find the information they need to identify the best quality and 
value among available options. The CMS has devoted significant 
resources to ESRD quality and patient safety issues, with a 
comprehensive Quality Roadmap, the ESRD Quality Initiative, and ongoing 
research to explore ESRD payment reforms, among other efforts.
    The Congress also has been an important partner in these 
achievements. Efforts such as the Care Management for High Cost 
Beneficiaries Demonstration create a platform for research to improve 
quality care and reduce the costs of caring for fee-for-service 
beneficiaries with one or more chronic diseases, who generally incur 
high Medicare costs. CMS has selected six sites under the 
demonstration, including one in New York state that focuses on 
beneficiaries with chronic kidney disease. Programs under the 
demonstration are testing ways to increase adherence to evidence-based 
care, reduce unnecessary hospital stays and emergency room visits, and 
help participants avoid costly and debilitating complications.
The CMS Quality Roadmap & Medicare's ESRD Quality Agenda
    In 2005, CMS issued the ``CMS Quality Roadmap,'' to promote the 
right care for every person, every time. The Quality Roadmap builds on 
the Institute of Medicine's six aims for healthcare: Patient-centered; 
Safe; Accessible; Effective; Efficient; and Equitable.
    The CMS Quality Roadmap presents five strategies to achieve its 
vision:

      Partnering and collaborating with other healthcare 
stakeholders;
      Collecting and publicly reporting data that measures the 
quality, efficiency and cost of healthcare;
      Striving to reform healthcare reimbursement systems to 
promote quality and efficiency, while avoiding unnecessary costs and 
complications;
      Promoting the use and availability of clinical 
information for providers and Medicare beneficiaries, particularly 
through the adoption of health information technology, to assist them 
in providing and receiving high-quality and efficient care; and,
      Promoting the use of evidence-based healthcare 
information, in clinical, coverage, and payment systems, ensuring that 
the latest treatments, medical devices and services are available to 
clinicians and their patients, while avoiding inappropriate or wasteful 
use of those treatments.

    Significant work and leadership in clinical quality initiatives 
also preceded the adoption of the CMS Quality Roadmap. In 2001, the 
Administration launched the Medicare Quality Initiative in pursuit of 
quality health care through accountability and public disclosure not 
just for Medicare patients, but for all Americans. Following the 
implementation of specific initiatives focused on nursing homes, home 
health, and hospitals, CMS announced the ESRD Quality Initiative in 
2004.
    Specific objectives of the ESRD Quality Initiative, which focuses 
on dialysis facilities, reflect an array of goals to stimulate and 
support improvement in the quality of dialysis care:

      Refining and standardizing dialysis care measures, ESRD 
data definitions, and data transmission to support the needs of 
Medicare's ESRD program;
      Empowering patients and consumers by providing access to 
facility service and quality information;
      Providing quality improvement support to dialysis 
providers;
      Assuring compliance with conditions of coverage; and,
      Building strategic partnerships with patients, providers, 
professionals, and other stakeholders.

    While all efforts under the ESRD Quality Initiative are 
significant, the Fistula First Breakthrough Initiative is particularly 
noteworthy. Under the initiative, facilities submit data to Medicare 
contractors charged with quality review of dialysis facilities (``ESRD 
Network Organizations'') to facilitate a more coordinated approach to 
care. The initiative has led to a significant increase in the use of AV 
Fistulas in treating dialysis patients--a measure associated with 
considerable reductions in avoidable hospitalization and death for ESRD 
beneficiaries.
    The ESRD Quality Initiative also supports the annual collection of 
Clinical Performance Measures (CPMs) for a random sample of dialysis 
patients nationwide. With these measures, CMS can identify and track 
opportunities for improvement in areas such as the adequacy of 
hemodialysis and peritoneal dialysis, anemia management, and vascular 
access management. The Quality Initiative also includes the Dialysis 
Facility Compare resource on www.medicare.gov, which contains quality 
information for all Medicare approved dialysis facilities in the United 
States. Patients and consumers are able to search and compare 
facilities on this site and choose a dialysis facility that best meets 
their needs.
    In addition to various efforts under the ESRD Quality Initiative, 
CMS partners with states to conduct regulation and enforcement 
activities to ensure that dialysis facilities comply with federal 
safety and quality standards. Under this survey and certification 
program, CMS establishes standards for safe and effective operation of 
dialysis facilities; develops guidelines and procedures; provides 
training for surveyors; and coordinates state activities. Currently, 
dialysis facilities are surveyed roughly every 36 months. State survey 
agencies also will investigate specific complaints on an as needed 
basis, outside of the regular survey cycle.
    Finally, nearly all patients with ESRD suffer from debilitating 
anemia. Much of this anemia can be managed through drug therapy. CMS 
has had a quality initiative for years to encourage appropriate 
management of anemia in ESRD patients, including an active monitoring 
policy for patients being treated with erythropoietin.
    All of these examples demonstrate a commitment by the 
Administration and CMS to ensuring and improving high quality care for 
the ESRD population. We have made significant strides over the last 5 
years, and will continue to work to increase the availability of 
consistent, standardized core data elements that promote greater 
transparency and better care outcomes for ESRD patients.
Anti-Anemia Agents Used in ESRD Patients
    Two prescription drugs commonly are used for anemia management in 
patients with ESRD who are dialyzed in renal facilities: epoetin alfa 
(Epogen') and darbepoetin alfa (Aranesp'). These 
products rely on erythropoietin to help control anemia. To promote 
appropriate usage, CMS has in place a monitoring policy that considers 
both hematocrit levels and erythropoietin dosage levels.\1\
---------------------------------------------------------------------------
    \1\ Anemia severity is monitored by measuring the hematocrit with a 
simple blood test that reveals the proportion of red blood cells in 
whole blood. The hematocrit result is expressed as a percentage. 
Alternatively, the hemoglobin concentration in whole blood may be used 
to monitor anemia. The numeric value of the hematocrit is generally 
three times the value of the hemoglobin measured simultaneously, though 
they are expressed using different units. Thus, for example, a 
hematocrit of 30 percent corresponds to a hemoglobin concentration of 
10 g/dl.
---------------------------------------------------------------------------
    Current kidney disease clinical guidelines, determined through 
national consensus processes by multiple ESRD experts and stakeholders, 
call for maintaining the hematocrit level of patients receiving 
erythropoietin within a narrow target range of 33-36 percent. Because 
many factors such as nutritional status, infection, and bleeding may 
cause the hematocrit to fluctuate, it is not easy to manage patients to 
this narrow range. Some patients might be above (or below) the target 
in one month, for example, but below (or above) it in others. If one 
superimposes frequent and significant changes in doses of anemia 
management drugs on these existing fluctuations, patient hematocrit 
fluctuations can become even more variable and difficult to interpret 
and manage, particularly within the narrow target range of 33-36 
percent.
Promoting Appropriate Payment through Hematocrit Monitoring
    ESRD treatment facilities submit claims to CMS monthly for 
erythropoietin, which is billed separately from other dialysis 
services. The claim form includes fields where the facility must report 
the beneficiary's hematocrit test result. Commonly, a dialysis 
patient's hematocrit level is tested many times during a month.
    CMS is committed to establishing and maintaining policies in all 
areas of the Medicare program that protect beneficiaries, promote 
efficient and appropriate use of medical interventions, and enable 
providers to render excellent care. The newly revised CMS monitoring 
policy for erythropoietin used in ESRD patients instructs providers on 
how to submit claims, and instructs CMS contractors on how to 
adjudicate the claim. Under the policy, Medicare expects a 25 percent 
reduction in the dosage of erythropoietin for patients whose hematocrit 
exceeds 39.0. If the dosage is not reduced, payment is made for the 
drugs as if the reduction occurred.
    The new monitoring policy is not a national coverage determination, 
and thus it is not a determination of the reasonableness and necessity 
of using an anti-anemia agent to maintain hematocrit levels above 36 
percent. The monitoring policy clearly articulates that providers 
should adhere to the FDA label instructions for erythropoietin, i.e, 
seeking to achieve a hematocrit of 30-36 percent. The instruction to 
carriers to initiate monitoring when the hematocrit reaches 39 percent 
is not a new hematocrit range policy, but instead establishes a marker 
of the point at which payment must be reduced because the reported 
hematocrit was not maintained at levels consistent with FDA labeling.
    The value 39 percent is not a therapeutic hematocrit target, which 
CMS believes is appropriately left to a treating physicians' clinical 
judgment. Rather, it is the target to initiate reduction in payment, a 
function appropriate to the mission of CMS. To be clear, it recognizes 
the difficulty in the clinical setting of maintaining the hematocrit in 
the narrow clinical guideline range of 33-36 percent, and therefore 
does not immediately cut off payment for a single hematocrit value that 
fluctuates above this narrow range. However, it does set in motion a 
policy that will reduce reimbursement if the hematocrit level remains 
above 39 and the provider does not reduce erythropoietin dosage as FDA 
labeling and national clinical guidelines indicate.\2\
---------------------------------------------------------------------------
    \2\ The FDA labeling for Epogen' and Aranesp' 
notes that as the hematocrit approaches a reading of 36, the dose of 
the drug should be reduced by 25 percent.
---------------------------------------------------------------------------
    A provider submitting a claim for erythropoietin in an ESRD patient 
with a hematocrit above 39 may inform CMS that a dose reduction has 
occurred, despite the continued high hematocrit, using a modifier on 
the claim form. If the provider has not reduced the dose or informed 
CMS that a dose reduction has occurred, however, Medicare's payment 
systems will apply a 25 percent reduction in payment. The provider is 
given appropriate notice of the payment reduction and may appeal the 
determination.
Promoting Ptient Savety through Hematocrit Monitoring
    Consistent with the approach taken to advance all of its quality 
and transparency initiatives, CMS worked closely with the ESRD 
community and other stakeholders in developing the revised hematocrit 
monitoring policy. CMS announced its intent to develop the new policy 
in fall 2003, along with a solicitation of scientific literature from 
the industry. In the interest of promoting quality and efficiency in 
the care of ESRD patients, CMS was determined to develop a permanent, 
evidence-based policy for erythropoietin payment and hematocrit 
monitoring.
    Scientific literature submitted to CMS demonstrated that patients 
with hematocrit levels within the target range had better health 
outcomes than those with hematocrits below the target level. The data 
also demonstrated that there is considerable natural variability in 
individual patient hematocrit levels, making it difficult to 
consistently maintain a hematocrit within the narrow range of 33-36 
percent.
    After analyzing the literature CMS developed a proposed policy, 
published in July 2004. The CMS reviewed available scientific evidence 
along with a large volume of public comments from the stakeholder 
community in developing the final policy. The final policy issued in 
November 2005 reflected a careful balance to ensure proper patient care 
while allowing appropriate payment for services rendered by treating 
physicians. In attempting to implement this policy, CMS became aware 
that there were process issues in collecting the claims-based 
information necessary to adjudicate these claims and, after working 
with stakeholders and CMS contractors, a revised erythropoietin 
monitoring policy was issued in April, 2006.
    Appropriate interpretation of the evidence for erythropoietin 
treatment of anemia in the ESRD population is disputed within the 
stakeholder community. Several reasons for this dispute are not readily 
amenable to correction by CMS. In addition, many clinical trials have 
methodological restrictions that limit the degree to which their 
findings can be generalized among the Medicare population. Other 
published reports of clinical trials do not necessarily present all of 
the available data due to limitations of space and other factors. It is 
possible that some of the outstanding questions could be addressed in 
part by analyzing collected but unpublished data.
    CMS believes that, in general, medical decisions are best made by 
the treating physician. The human physiologic response to 
erythropoietin is not immediate, and the effect of a given dosage on 
the hematocrit or hemoglobin of a given individual can vary widely. 
This variation also is reflected in the wide and unpredictable 
variation in the dosage needed to achieve and maintain hematocrit 
within the target range, although other factors also contribute to 
variation in dosage. Current accepted medical practice may also include 
the use of drugs for indications that are not covered by an FDA label, 
but that are supported by clinical evidence in peer reviewed medical 
literature. Medicare may provide coverage for off-label uses of drugs 
and biologics when those items are considered reasonable and necessary.
    Mainstream press has recently focused on two trials published in 
the New England Journal of Medicine (NEJM) regarding erythropoietin use 
in chronic kidney disease (CKD) patients. However, the study 
populations for these trials do not necessarily reflect the Medicare 
ESRD patient population. Both studies addressthe optimal target level 
for hemoglobin in CKD patients who do not yet need dialysis. It is 
possible, if not probable, that many of the study subjects were not 
Medicare beneficiaries because they were too young to qualify for 
Medicare and were not disabled. Only patients with ESRD, who require 
dialysis or transplant, are eligible for Medicare regardless of age or 
disability; other patients with CKD are not Medicare beneficiaries 
(unless their age or a disability qualifies them). This distinction is 
important.
    Anemia management for patients with ESRD cannot be assumed to be 
the same for patients, often younger, with CKD (who do not yet require 
dialysis). The NEJM study authors did not generalize their findings to 
the ESRD population. Patients receiving dialysis are exposed to 
clinical situations that patients with CKD not requiring dialysis are 
not exposed to, including: artificial kidney membrane exposure; large 
fluid shifts during dialysis; anti-coagulation received while on 
dialysis; different medications or other treatments. Finally, the NEJM 
studies looked at patients who were intentionally maintained at high 
hematocrit levels (the clinical study, research goal), as opposed to 
the typical ESRD patient who may fluctuate periodically above a 
hematocrit of 39 percent, but is not maintained at that level (the 
clinical practice situation).
    In spite of the NEJM studies' focus on patients with CKD, not ESRD, 
CMS considers the findings significant. Any scientific study published 
in a peer-reviewed journal such as the NEJM will be subject to 
international scrutiny and examination. Experts review the study 
design, methodology, results and conclusions. CMS will be participating 
in that scrutiny, which may include the need to design and implement 
further randomized clinical trials.
    CMS is committed to establishing and maintaining policies in all 
areas of the Medicare program that protect beneficiaries, promote 
efficient and appropriate use of medical interventions, and enable 
providers to render excellent care. In the case of ESRD, and 
specifically the monitoring policy for anti-anemia therapies, CMS is 
exploring a number of approaches to collecting additional data. The 
current policy was developed after carefully analyzing and weighing a 
significant body of data and clinical evidence from a variety of 
sources; additionally, the policy was reviewed and reassessed 6 months 
after its initial publication. CMS is just now beginning to obtain 
sufficient claims data to attempt to assess whether the monitoring 
policy is achieving its stated goals: encouraging providers to try to 
maintain hematocrits in the range consistent with FDA labeling and 
national clinical guidelines, while not paying for unjustified dosages 
that maintain patients outside that range. Additional data sources will 
allow CMS to continue this pattern of vigilant, ongoing assessment of 
the monitoring policy. Further data also could support the possibility 
of an alternative CMS policy for anemia management and treatment.
    The current monitoring policy relies on data submitted on the 
claims form. This effort could be expanded; in fact, CMS already is 
pursuing a number of enhancements. Currently, claims data do not 
provide either the route of administration for erythropoietin or the 
size of individual doses. CMS is implementing changes that will 
introduce a 100 unit code to capture dosing information with greater 
precision and, in conjunction with line item billing, will permit 
tracking of individually prescribed doses versus an aggregate monthly 
total for facilities.
    In addition, CMS is implementing requirements to include the route 
of administration on claims for erythropoietin administered to ESRD 
beneficiaries (not chronic kidney disease patients). Existing CMS 
survey data suggest that subcutaneous administration is employed in 
only 7 percent of hemodialysis patients, differs by geographic location 
(more likely in the Midwest and West), and differs by dialysis facility 
ownership. Inasmuch as studies have suggested that subcutaneous may be 
a preferred route of administration, potentially requiring lower levels 
of erythropoietin to achieve the desired therapeutic effect, data of 
this nature is critical to continuous evaluation of the hematocrit 
monitoring policy.
    Using the information currently collected, CMS also is able to 
quantify monthly utilization of erythropoietin, though the accuracy of 
these data is limited to what providers report on the claims--typically 
including quantities of the drug that have been opened but not 
necessarily provided to any patient (referred to as wastage). These and 
other limitations result in current claims data providing only a 
limited picture of erythropoietin utilization and anemia management. 
Additional data would be helpful.
    One possible approach is to collect data--such as the dosage of 
erythropoietin actually administered or additional hemoglobin / 
hematocrit measurements--through clinical trials. Such an approach is a 
challenge to implement, however. The CMS' authority to condition 
Medicare coverage on participation in clinical trials and collection of 
data is could be constrained by the Health Insurance Portability and 
Accountability Act, the Privacy Act, and other concerns.
    Another approach might be to create registries of data submitted by 
hospitals and other facilities. Such registries could be a robust data 
collection mechanism, pursuing elements beyond what can be collected on 
the claim form. Before such an approach could be adopted, however, CMS 
must assess potential restrictions to requiring hospitals and 
facilities to report information to a registry. Provider burden also 
would be an important consideration.
    CMS could consider requiring additional Clinical Performance 
Measures through the existing Quality Initiative. The CPM project 
collects clinical information on dialysis patients in order to measure 
and track quality of care received by patients in dialysis facilities. 
However, CPMs currently are collected on just a 5-percent sample of 
dialysis patients nationwide. It will take a number of years before 
CPMs can be collected more broadly--ideally for all dialysis patients--
due to limitations in facilities' and with CMS' own data collection 
systems.
Bundled Payment
    In addition to significant quality efforts, CMS is committed to 
efficient and appropriate payment for all Medicare providers. In the 
context of ESRD care, many have urged a shift from the current model of 
paying independently for dialysis treatments and separately billable 
drugs, to a system of bundled payment. CMS is generally supportive of 
such reforms, and has devoted resources to research and development of 
a system that encourages high quality and efficient care through 
mechanisms such as value-based purchasing.
    The CMS believes that a bundled payment system should promote 
efficiency and clinical flexibility for ESRD facilities. The system 
should guard against incentives to under-treat patients or to ``cherry-
pick'' patients in order to maximize facility profits. Accomplishing 
these goals will require (1) research to support the development of an 
adequate case mix adjustment for a fully bundled system, and (2) 
mechanisms to ensure beneficiary protections and promote quality care.
    The CMS has made significant accomplishments towards implementing a 
basic case mix adjusted composite rate system, as required by the 
Medicare Modernization Act of 2003 (MMA). Following the MMA's 
enactment, CMS funded research activities to develop new case-mix 
adjustments, which were implemented in April 2005. Since then, CMS has 
pursued several research approaches that could be used in a 
demonstration of a bundled PPS for ESRD facilities.
    At this point, CMS is continuing its research on approaches that 
achieve our goals related to quality and payment accuracy. Development 
of a payment model that addresses the substantial variation in the 
dosage of erythropoietin has been a key area of this research. We 
continue to devote a considerable amount of time and resources to 
developing an appropriate ESRD payment system, including further 
research on targeted case-mix adjusters and quality incentives. We 
expect to detail the results of this work in the report to Congress 
required by section 623 of the MMA and move forward with a 
demonstration to further test these approaches, as the law requires. We 
expect these efforts, coupled with prior research, will provide a well-
informed basis for comprehensive ESRD payment reform in the future.
Conclusion
    This Administration has made significant strides in promoting and 
ensuring quality care for ESRD patients. From the CMS Quality Roadmap 
and efforts under the ESRD Quality Initiative like Fistula First, to 
selecting a Chronic Kidney Disease--focused site under the Care 
Management for High Cost Beneficiaries Demonstration, to ongoing 
research in support of comprehensive ESRD payment reform, CMS is 
helping to improve quality and efficiency in the care of ESRD patients. 
The significant strides made over the last 5 years have laid important 
groundwork for further improvement. The CMS will continue to build on 
these efforts, and looks forward to further work with the Congress and 
the ESRD community to achieve our common goals.

                                 

    Ms. NORWALK. Before we start, if I might ask my colleague, 
the Chief Medical Officer of CMS, who is a nephrologist, Barry 
Straube, to sit with me, that would be great.
    Chairman THOMAS. Welcome, Dr. Straube.
    You indicated--and all of us, obviously, have been 
interested in this focus at the continuing increase percentage, 
now to 39; and your argument, as I heard it, was that this was 
done in an attempt to provide a payment regulation structure. 
Because, obviously, a physician should be the one to determine 
that level.
    I guess the difficulty I have in responding to that is 
that, notwithstanding the FDA label position, the manufacturer 
itself responding to concerns about that, the studies that we 
now have, which certainly any scientific method needs to be 
duplicated, followed up, examined, CMS continues to increase 
the percentage; and the argument for it, as I hear from you, is 
that it is a payment construction.
    Of course, we understand your need to create systems that 
assist you in making payments. In fact, the whole discussion of 
bundling is to try to change the payment system. I guess, based 
upon the studies that we have seen, which certainly have to be 
validated and duplicated, this is something that probably 
should not be looked at as a payment question, absent pretty 
clear evidence of what is happening on overdosage, which if you 
had kept the policy at, say, the FDA label which it was at one 
time of 33 percent we would not be having those consequences.
    So, it is difficult for me to listen to a justification for 
a level driven by a payment policy, when all of the evidence I 
have heard is focusing on the medical. I understand you are not 
supposed to make the medical decision. But if that is the case, 
why would you then go ahead and change the FDA labeling? For 
payment purposes?
    Ms. NORWALK. I think there are a couple of different points 
I would make, Mr. Chairman.
    The first is that the change in monitoring policy over this 
past year was critically important because our prior policy was 
not doing an effective job in reducing the dosage of Epo. At 
37.5 and a 3-month rolling average, it was phenomenally 
difficult for our carriers to implement and actually go after 
those providers who were actually overdosing on Epo. It was 
difficult for the providers to follow that rolling average.
    So, we felt it important, in order to keep the dosage down, 
to readjust our policies so that carriers could follow as well 
as the providers; and I can--I will talk in a second about how 
exactly that policy works.
    But I would like to point out a couple of things in the FDA 
label, because I think it is important for this discussion as 
we focus on the clinical need. Of course, understanding that 
this is something that we have asked providers to follow, there 
are a number of things.
    One, the label talks about the idea that sufficient time 
should be allowed to determine a patient's responsiveness to a 
dosage of Epo before adjusting the dose. In fact, the label 
talks about an interval of 2 to 6 weeks that may occur between 
the time of dose adjustment and a significant change in 
hematocrit levels. That is important because our payment 
systems are on a monthly basis.
    Since it may take 2 to 6 weeks--in fact, at the longer 
weeks, 6 weeks--for that to adjust, we did not want to have a 
payment system that penalized a provider who was actually doing 
the right thing, because the patient, for whatever reason, has 
his own physiological change to the drug which had not yet gone 
into effect.
    Moreover, the label talks about dose adjustment as saying 
that if the hematocrit level exceeds 40 percent, the dose of 
Epo should be withheld until the hematocrit falls to 36 
percent. So, one thing that the label does do in terms of a 
number is not actually 39, which is our level for payment 
changes, but is in fact 40 before the dose would be withheld.
    Chairman THOMAS. I understand that. That gets back, I 
guess, to an earlier question that still perplexes a number of 
us.
    In dealing with the payment concerns in allowing for an 
adequate leeway for the medical decisions, was there any 
discussion at all about trying to go public and push the idea 
that perhaps no update for this particular area of Medicare 
services, as opposed to skilled nursing, as opposed to any of 
the others, would be one of the fundamental changes that you 
could make and that income from drug usage which is used to try 
to augment the fact that there is no update could easily be 
changed, which would be payment questions--instead of dealing 
with the dosage on payment questions, which continues the 
perverse aspect of a monopoly drug being overused to help 
compensate for the cost structure in what you are monitoring 
says is important for payment purposes?
    Ms. NORWALK. I think----
    Chairman THOMAS. In other words, you created a trough--not 
you, CMS--and CMS is staying in this trough in trying to 
control the payment structure. When all you had to do is take a 
step back and say they are not getting an update. They should 
be updated regularly like everyone else, and it should not be a 
monopoly drug.
    For example, I would be interested in asking a question 
along this line, and that is that what we did with the part B 
drugs in MMA was to require a single rate based on sales across 
all settings. So my question then, going to this issue, would 
be: Why does Medicare and the beneficiaries pay more for Epogen 
Alpha per 1,000 units to treat anemia in a dialysis center, 
compared to the same 1,000 units administered to cancer 
patients in the physician office setting?
    Clearly, part of Dr. Singh's and other testimony is that 
there is a whole lot more of an analogous relationship than it 
appears to be and that that goes to the payment question again 
on a monopoly structure. Why are you paying two different rates 
for similar usages?
    Ms. NORWALK. One of the things that the MMA does under 
section 303(c) is require that single-source drugs be paid by 
ASP plus 6. That is in the physician office setting.
    The interesting piece here is that when we looked at the 
OIG study--and I think the GAO has a table of this in its 
report--that if you look at the OIG study, the OIG study 
details what the acquisition costs were for Epo in 2005. The 
ASP plus 6 percent is slightly lower, depending on the quarter, 
relative to the acquisition cost.
    For CMS to update--actually, we found this actually going 
down. So, in terms of whether there was an update, I am not 
sure that an update was necessary, that ASP plus 6 has actually 
come in slightly lower than the OIG's.
    Chairman THOMAS. First of all, that is an arbitrary 
structure in dealing with a noncompetitive drug, for which I 
thought was inadequate at the time we wrote the bill. That is 
okay. My question is simply why, in two different settings, for 
similar uses, identical drugs are paid at different prices?
    Ms. NORWALK. Well, they are both paid at ASP plus 6 
percent. In terms of why is really an issue between the 
companies and their marketing side.
    Chairman THOMAS. One arena is a competitive one and the 
other is not. Would that be one of the reasons?
    Ms. NORWALK. It may well be that ASP plus 6 in the non-ESRD 
market is competitive and may reduce the rate. But at the end 
of the day for this, to solve this problem, I agree with the 
GAO and, clearly, members of this Committee who think that a 
bundled payment, including everything, including currently 
separately payable drugs, makes the most sense, provided that 
we can get it right to provide the quality for beneficiaries 
and appropriately risk adjusted.
    Chairman THOMAS. Appreciate that position.
    I do believe that I do want to communicate, notwithstanding 
the fact that you are new on the job, to those who have been 
dealing with this decisionmaking and who have been less than 
timely in responding to letters that Congress has written that 
you have had since 2003. You are moving forward on it. I 
believe the Congress will move if you do not. I am urging that 
you do.
    Does the gentlewoman from Connecticut have any questions.
    Ms. JOHNSON OF CONNECTICUT. Let me just inquire a little 
bit more about the demonstration project that you are working 
on and the apparent difficulty of establishing an appropriate 
case mix adjuster. Could you talk about that a little bit?
    Then, also, could you talk about the issues raised by the 
preceding panel that implied that if you titrate up you can get 
to stability--I do not want to paraphrase them too flippantly, 
but it sounded like easily and reliably. If that is the case, 
does Medicare reimbursement policy encourage titrating up and 
does Medicare reimbursement policy take any position in regard 
to what is apparently a more cost-effective delivery system 
that is widely used of injection?
    Ms. NORWALK. To your first question, Mrs. Johnson, in terms 
of the demo, one of the things that we have been struggling 
with internally with our report to Congress in putting this 
together, we have had an expanded bundle demo where we are 
working with members of a FACA Committee that represents 
patient groups, clinicians and other stakeholders.
    But we have struggled with the ability to predict resource 
utilization, which in a sense gets to some of the other 
questions that you are asking. Since that is the basis of a 
prospective payment system, we have taken longer than we would 
like to take. But given that 93 percent of this population is 
covered by Medicare, it is so critical that we get it right. 
For that reason and because so many of these patients are 
disproportionately either African American, Hispanic or 
American Indian, this is critical to be accurate, to get it as 
close to right as possible before it is implemented.
    It is also important because of the small size of some of 
the facilities. There are a couple of very big chains here, but 
not all of them are big. Consequently, we want to ensure that 
we do not put the small companies out of business with our 
payment policies.
    I think that the FACA Committee will be meeting again early 
next year; and, hopefully, we will be moving forward. As we get 
the research back, we will be working on our demonstration 
project at the same time we are writing our report to Congress 
as to not waste any time with either of those so we can get 
them done as quickly as possible to you.
    In terms of titration--and one of the things I will ask, if 
it is okay, my colleague, Dr. Straube, to speak on the more 
clinical issues. But in terms of titration, generally one of 
things that the label talks about is the variability among 
patients. In the label it talks about one of the largest 
clinical trials, that approximately 65 percent of the patients 
required doses of 100 units or less to maintain their 
hematocrit levels at approximately 35 percent, almost 10 
percent of patients required a dose of 25 units or less, and 
approximately 10 percent required a dose of more than 200 units 
to maintain their hematocrit at this level. So, there is a 
pretty significant amount of variability there.
    You also asked about subcutaneous administration or--
something that I was talking about in my opening statement--
about the use of fistulas, and the fistula first policy. Very, 
very important. We would like to see more patients have access 
to this. We have been promoting that policy.
    I would anticipate under a bundled payment system that we 
would see more use of this use of fistulas rather than being as 
a apart of the whole dialysis treatment. It may be better for 
patients, and I would anticipate that it would also reduce the 
amount of Epo that needs to be administered. So, that is why we 
have been supporting it.
    Finally, if I may, Mrs. Johnson, I think that--I do not 
know if we have got copies of this, but one of things when we 
are talking about the payment policy here that we in no way at 
CMS would like patients to stay at a hematocrit level of 39. 
That is not our policy. But what happens is these patients may 
be at 39--the hematocrit level may be at 39 for between 2 and 6 
weeks; and then they come down to a more reasonable range where 
we like to see it because of dosing changes, for example.
    Over time--this is something in the American Journal of 
Kidney Disease--nearly 30 percent of patients in the first 
quarter of the year 2000 were at a hematocrit level that was 
over 12. But by the end of the year only 5 percent from that 
initial group. So, the numbers actually decreased very 
significantly. So, that, over time, the number of patients who 
were persistently above 12 in hemoglobin levels had come down 
significantly.
    You simply have a great deal of variability from one 
quarter to the next. That is something that we thought was 
important that our policy take into account.
    Ms. JOHNSON OF CONNECTICUT. That issue of variability that 
you have just described, does that--in other words, if you are 
aiming for--if your policy is 33 to 36 percent, any bundled--
any policy has to take into account that you can go above that 
and below that and not we lower quality treatment. Am I 
understanding you correctly?
    Ms. NORWALK. That is exactly the point that we were 
concerned about.
    One of the things that initially this Committee brought to 
CMS's or then HCFA's attention in the late nineties was in fact 
underdosing and that we have a policy that does not promote 
underdosing because we cut off payment too soon.
    Likewise, I appreciate that there is a concern about 
overdosing, both for clinical reasons and I want to be sure 
that we are walking that very narrow line so that physicians 
can follow the label and do what is best for the patients and 
not be adversely impacted, that the patient not be adversely 
impacted by our payment requirements, something that is 
reasonable and necessary versus what might be safe and 
efficacious as the FDA determines.
    Dr. STRAUBE. Mrs. Johnson, I think--just to reiterate a few 
of the points that Leslie made, and you have asked some 
important questions here. I think when I look back 
historically--and I have taken care of many patients with 
eopetin myself as a nephrologist--the first focus back in the 
late nineties was the fact that 42 percent of patients had a 
hemoglobin of 11 grams per deciliter or greater. So, there was 
a preponderance of patients who were very low, and research 
studies at that time clearly showed an association with 
increased morbidity and increased mortality for people under a 
hemoglobin of 11.
    So, the trend of everybody involved with this, including 
Congress, recommended CMS at the time increase its hematocrit; 
and the 90-day rolling average monitoring policy that was put 
into effect then was to get people--and has gone from 42 
percent to 82 percent in 2005 now----
    Ms. JOHNSON OF CONNECTICUT. Eighty-two percent complying?
    Dr. STRAUBE [continuing]. that are over 11 grams per 
deciliter.
    The slide that Leslie has distributed to the Committee is 
very, very important. Because people who are correctly 
reporting that--at any given point in time there may be 30 or 
more percent of people who exceed the 12 grams per deciliter of 
the FDA label.
    If you look at those patients who consistently stay above 
that label, as opposed to occasionally going above it, it does 
come down to only 5 percent.
    Ms. JOHNSON OF CONNECTICUT. In other words, you do not want 
your payment policy to penalize some variation but just to 
penalize staying at high levels?
    Dr. STRAUBE. Correct. Those patients who consistently 
exceed that level. Because most patients do have some 
variability; some patients considerable variability. It is in 
contrast to perhaps some of the comments in the first panel. I 
believe it is very difficult to maintain patients particularly 
in that narrow range of 33 to 36 percent hematocrit or 11 to 12 
grams per deciliter hemoglobin.
    Ms. JOHNSON OF CONNECTICUT. So, you are saying it is very 
difficult to maintain them. Because I tried to bring that out. 
How easy is stability? They basically all said it is easy.
    Dr. STRAUBE. I think it is more easy in the chronic kidney 
disease patients who have less factors going on compared to 
dialysis patients. But that narrower range, 11 to 12, is 
difficult; and some patients just naturally will go in and out 
without actually doing anything.
    When you are changing doses of erythropoietin, when you are 
being exposed to an artificial kidney membrane in a dialysis 
machine, when they have other illnesses going on with chronic 
inflammation and acute inflammation affecting the possible dose 
of Epogen, it is not easy.
    Ms. JOHNSON OF CONNECTICUT. So, different categories of 
patients may need to be looked at slightly differently, or at 
least your payment system wants to be able to take into account 
case mix?
    Dr. STRAUBE. Yes, indeed.
    Ms. JOHNSON OF CONNECTICUT. Thank you. Thank you for these 
charts.
    Mr. STARK. Thank you, Mr. Chairman.
    Welcome to the Committee, Ms. Norwalk.
    Ms. NORWALK. Thank you.
    Mr. STARK. I just wanted to know, is there any--I do not 
know what a valid clinical study would be, but is there a valid 
clinical study--I will use that word--that provides clinical 
justification for not reducing the dosage until it gets to 39?
    Ms. NORWALK. I think our point----
    Mr. STARK. Is there any study that would support that that 
you know of?
    Ms. NORWALK. To not reducing it?
    Dr. STRAUBE. Mr. Stark, I do not believe for a general 
population there probably is such a study. I would agree. I 
think for individual patients there might be indications for 
not reducing it.
    Mr. STARK. But you do not know of a clinical study?
    Dr. STRAUBE. Not in terms of a general population, no.
    Mr. STARK. Ms. Norwalk, it is my understanding that CMS 
created something called the Epo Monitoring Policy Group, 
right?
    Ms. NORWALK. Yes.
    Mr. STARK. They were supposed to advise CMS on policies 
dealing with Epo, right? Now what troubles me is that of the 24 
members--I am looking at the list here of maybe 22--18 of them 
disclosed financial associations with Amgen or Johnson & 
Johnson. Would not that, in fact, indicate that there might be 
some prejudice on the part of the people that you picked to 
advise you on this policy?
    Ms. NORWALK. Either that or they happen to know a fair 
amount about the topic. At the end of the day----
    Mr. STARK. I know they did. But let's talk about DaVita, 
Incorporated and AAMA and Gambro Health Care. They are also 
putting a lot of our taxpayers' money in their pockets. When 
you got two-thirds of your supposedly independent advisors--if 
I may use term loosely--on the take from the people that we are 
paying $2 billion a year to, does not that raise the issue that 
maybe you are not getting the straight skinny?
    Ms. NORWALK. I think it is important--and one of the 
reasons you have seen our monitoring policy, that it be put out 
publicly, it is important to get comment from across the board.
    Mr. STARK. Oh, come on.
    Ms. NORWALK. Whether it is that group or whether there is 
another group, and at the end of the day----
    Mr. STARK. You and I are not doctors, but you are a very 
good lawyer. You would tear these guys apart on the witness 
stand in 2 seconds, if you found out how much money they were 
getting from Amgen. Look, you got the American Kidney Fund. 
Amgen funds their clinical fellowship program.
    You have got DaVita--that is self-explanatory; the Kidney 
Care Partners, a lobbying group for all of the dialysis guys; 
the National Kidney Foundation; 19--almost $20 million in 
corporate donations from the platinum friends, Amgen, DaVita.
    Ms. NORWALK. It is clear that you--how you feel about how 
much we pay them.
    Mr. STARK. It is a cozy club, isn't it?
    Ms. NORWALK. That is one of the reasons why it is so 
important that our Chief Medical Officer is a nephrologist. 
Barry is not allowed to be paid by any of these groups.
    Mr. STARK. I understand. But he is getting advice from 
these guys. It just seems to me that the time has come to 
understand, you know, these guys are not Bechtel in Iraq, and 
we should be getting reasonable and decent advice.
    It just seems to me that it is difficult to support, when 
you empanel this group, knowing that most of them, your 
organization--I am sure you had nothing to do with selecting 
them, but it does lead us to become somewhat suspicious that we 
are not----
    Now I might say there is probably no nephrologist in the 
United States--I will give Dr. Singh a chance to get out of 
this--that has not received something from Amgen, a golf ball 
or a dinner or something over time. So, it might be very hard--
--
    Ms. NORWALK. Absolutely.
    Mr. STARK [continuing]. to find. Billy Bud would have been 
a good three-act play if he had not jumped in the first act. 
But, nonetheless, this does seem rather suspect, overloaded 
with lobbyists and people who stand to benefit financially, 
tremendously, just to be selected.
    Chairman THOMAS. I do understand the normal reaction would 
be dollars paid to entities as a link that might occur.
    I think you also have to take into consideration the fact 
that you are dealing with a monopoly drug; and, notwithstanding 
it is a monopoly, the Government, unwilling to create a 
surrogate monitor for those prices and the fact that their 
business is focused solely on use of that drug and the ability 
to put pressure on the availability, the cost or the linkage of 
that drug, may have as much to do with the positions that 
people take than the dollar amounts paid----
    That is just the other side of the coin, on allowing a 
monopoly not only in the private sector but in terms of those 
in Government positions making decisions.
    I thank you for yielding.
    Mr. STARK. I hope we will have a chance to explore this 
further in the months ahead; and we will have ask Chairman 
Thomas if he will agree, on a pro bono basis, to continue 
advising us for all of the work that he has done on this. Maybe 
we can come to a conclusion which would have us, I think, and 
what I think my principal concern is is that CMS is the only 
group here that we have heard from today--and this is the 
troubling part--that has not erred on the side of caution.
    I do not buy--and you are the only one who suggests the 
lower limits are a danger. Dr. Singh says it is much less of a 
danger than going over. So, that I would hope that that could 
be the principal change in policy as we try and revise these 
payment standards.
    Ms. NORWALK. Well, I would be interested in hearing Dr. 
Straube talk a little bit about the underdosing of this, which 
clearly was a problem once upon a time, as you wrote to us 
about it. It may well be that the literature has changed since 
then, but in terms of the side of caution I think that we are 
cautious.
    We do require that providers use the FDA label as a policy. 
We tell our contractors that they can, in fact, perform medical 
review at lower levels than 39. I think we are working with 
what is reasonable and necessary with a patient population that 
even the FDA label admits to having variability and want to 
ensure that those patients who for whatever reason in a 
particular month or 6-week period may find their hematocrit 
level above 39 and the doctor does the right thing in reducing 
the Epo dosage, not wanting to penalize that doctor.
    On the flip side of that, it is not reasonable and 
necessary to have a patient persistently at that hematocrit 
level of 39; and, consequently, that is why we are taking the 
payment reductions there. I just want to be clear that our 
policy is: Follow the FDA label.
    Now I appreciate we may have--this CHOIR study is a new 
study. It is something that we would like to take into account, 
like to look at the data there. In particular, I would be 
interested in reviewing the data around the 11.3 population, 
because they, too, are going to have a bell curve, where they 
will have people on the bell curve that are above a certain 
number--above 12, I would suspect--and perhaps maybe at any 
point in time a number of patients that may be above 13 or 39, 
and not wanting to penalize even in that study--when the target 
was the appropriate target, not wanting to penalize physicians 
because a patient physiology was such that for a particular 
moment in time, a static moment, that patient was above 39.
    Mr. STARK. Thank you.
    Dr. STRAUBE. Mr. Stark, I think we do very seriously take 
Dr. Singh's study, for instance, and are considering that.
    As you know, when a scientific study is presented in the 
peer review literature, it has to get first by the review board 
of the journal of which it is published. But, subsequently, the 
medical community has to look at that article and put it into 
context, having scrutiny of the whole methodology behind it, as 
well as the conclusions.
    We are going to be participating with that. I have already 
talked with Dr. Singh. We would like some more of his data. But 
we should also have caution against jumping to one--to taking 
action that might have perverse consequences if we jump too 
soon.
    The bell curve--there is evidence that the bell curve that 
we have described in terms of what dosage patients require, 
when you shift patients from the high end to the left, that is, 
to lower hemoglobins, you drive other patients down below 11. 
As we talked about earlier, it is just as dangerous, if not 
more so, to have low hemoglobin and hemocratics. So, we do not 
want to have unintended consequences from jumping to take 
action from a study that has just come out and has not had full 
scrutiny yet.
    Just to end, there was a report in the last week, as an 
example, reiterating some reports that have come out over the 
years that, for instance, patients who were End-Stage Renal 
Disease patients and are obese do better than non-obese 
dialysis patients. If we were to respond to that and say, gee, 
we ought to recommend obesity in all of our dialysis patients 
because their outcomes are better, I think people would not 
think that was a smart thing to do.
    So, I think that we have to have some caution, although we 
are very seriously looking at Dr. Singh's research.
    Chairman THOMAS. Thank you.
    Dr. Straube, your last statement was, as far as I am 
concerned, absolutely insulting, coming from a doctor, 
indicating an example of what you would not do, okay?
    Number one, I think you need to seriously consider that 
your payment policy is killing people, okay?
    The gentleman from California introduced a letter in the 
record from 1997 because there is a whisper campaign going on 
utilizing data from statements from that long ago to try to 
intimidate, which is a typical practice in this area.
    I did not even bother to introduce my letter from 1998, 
which is also being used. Because, frankly, there was a problem 
then. It was too low. At some point somebody has got to 
consider that perhaps it is now too high, okay?
    Ms. Norwalk, for you to say it may well be that literature 
has changed since that time, what do you think that whole first 
panel consisted of?
    Ms. NORWALK. That is my point. The point I have is that 
both underdosing and overdosing is something that is important.
    Chairman THOMAS. Absolutely. Now we are focusing on 
overdosing, whereas letters from 1997 or 1998 were focusing on 
underdosing. In between those two periods, we have turned a 
monopoly into a multi-billion dollar proposition.
    I will tell you, as far as the Chair is concerned and other 
Members of the Committee who are not here--and I can assure you 
that it is shared broadly by the Committee, perhaps not as 
vocally as the Chairman would present it--it is absolutely 
unconscionable for CMS to allow a monopoly drug to be bundled 
with other drugs in an attempt to force usage; and that is what 
is going on.
    Ms. NORWALK. Well, I look forward to our report to Congress 
coming to you and be able to come up with a bundled system 
where payment--where we do not have separate payment.
    Chairman THOMAS. I am not talking about that. I am talking 
about current practice in which we pointed that out to CMS, and 
I haven't gotten an adequate response. Why would you allow 
anyone to take a monopoly product--monopoly by the decision of 
policy, not by the uniqueness in the industry--to be bundled 
with other drugs that are also necessary, to create an 
artificial demand for a product in which they control the 
absolute existence of the business? That is what is going on 
right now.
    Ms. NORWALK. So, your point is, the payment rate should be 
the same in the ESRD facility as the ASP plus 6 is in other 
payments?
    Chairman THOMAS. No. My only point was, why would you take 
a drug which is a monopoly and allow the industry, the person 
who produces it, to bundle it with other products they are 
using to influence how much they can use and when, based upon a 
pure pricing policy that we have created? That is what we are 
doing right now.
    Ms. NORWALK. So, when you talk about the monopoly--are you 
referring to the Neulasta and the bundling? Is that what your 
concern is?
    Chairman THOMAS. I am concerned with any monopoly drug 
accompanied with others that are not in which there could be a 
control of supply, utilizing the monopoly drug as the key.
    Ms. NORWALK. I misunderstood your original question. I 
apologize.
    Chairman THOMAS. I am not trying to not to get into very 
narrow, particular examples. I would have that same feeling 
about any monopoly drug being allowed to be combined with 
others in which you can control the market and the purchase of 
other drugs, and CMS has not addressed that. We have pointed it 
out, we have asked you to respond, and we haven't had an 
addressing on that.
    Ms. NORWALK. I think it is something that we will clearly 
continue to review. It is something that I would imagine that 
the Antitrust Division at Justice and the FTC should be 
reviewing. I also imagine that it is something that--it may 
have other implications for fraud and abuse.
    Chairman THOMAS. I do not think we have to go through the 
Justice Department when all you have to say is, if we have 
created a monopoly by virtue of our decisions, you do not get 
to do that. You do not need the Justice Department to make the 
decision. Perhaps your lawyer side is genuflecting in that 
directing. Your medical side, which you are now beginning to 
learn, ought not to go in that direction, but simply say, if we 
are creating an artificial monopoly for you, you ought not to 
be able to do those sorts of things, or it won't be a monopoly. 
In fact, I think it should have a surrogate price, anyway.
    Ms. NORWALK. We will go ahead and take a look at that 
particular issue and ensure, as we always do, that whatever our 
policy is it does not have impacts to the patient that are in 
any way, shape or form a negative, and appreciating, of course, 
that we want to always want to watch the public fisc, as we are 
required to do.
    Chairman THOMAS. Where we are now is we have a payment 
policy that perhaps is killing people; and we are using $2 
billion, the highest price paid in a relatively narrow area for 
the use of the drug through the payment policy, that may in 
fact be doing that. That is exactly where we are today.
    Ms. NORWALK. Well, I will not quibble with your last part 
of the statement. I will look at that.
    I would disagree that, respectfully, Mr. Chairman, I do not 
believe our payment policy in any way, shape or form is out to 
kill people. In fact, what it is intended to do is ensure that 
the physician has the ability to monitor where the patient is 
so that the physician can appropriately titrate the dose for 
that patient, for that patient's best interest.
    Chairman THOMAS. I put it in that phrase because I have 
learned over the years--and this is the only way you can do 
it--that somebody is actually going to pay attention to what I 
say if I put it in that extreme position.
    But just as we were not doing a medical service to those 
patients when we were underdosing, the argument that somehow we 
do not want to take away the opportunity on the upper end, with 
the understanding, not just the doctor making a decision but a 
perverse payment system in which the providers of the services 
are not given any kind of an ongoing periodic update, and that 
they have gone for literally decades without a payment, and 
that the only way they make the margin of the income is on a 
drug which is an artificial monopoly imposed by Government 
itself.
    When you begin building that kind of a structure, to argue 
that you are not going to examine the upper level because you 
want to leave it to the physicians is to ignore the entire 
dynamic and let me say also ignore the kind of business 
practices that have been carried out by these people in the 
shadows for a number of years.
    One of the reasons I want to compliment the people who are 
now putting out the kinds of studies which you are going to 
look at and are going to find they are good is the fact that 
within a 3-month period we have turned completely around that 
shadowy area in which various pressures have been carried on 
for years in which they cannot now be done, because it is 
clearly public, and that if that kind of behavior continues it 
will be exposed more in the popular press.
    But we now have a series of studies I expect you to look 
at. You are new. It was 8 months that you were not there, that 
you did not respond to the letters that we wrote. But I expect 
to see where you are on your bundling package.
    As the gentleman from California indicated, it will be pro 
bono, but he means I am going to be able to participate. I do 
not believe in life after death, but I do not believe 
retirement is death, either.
    We are going to continue to look at this area for two 
fundamental reasons: I am very much concerned about the health 
of these patients, and I am very much concerned about the 
enormous dollar amount that will produce the kind of behavior 
in both the manufacturers of this and the users of it if we do 
not create an opportunity for medically appropriate alternate 
patterns to live.
    We have a monopoly on the structure, we have a monopoly on 
the drug, we have a monopoly on what they are required to do 
because of the payment system. We have got to free it up, even 
if we free it up with an artificial competition structure; and, 
in my opinion, we are a little overdue from the Medicare 
Modernization Act of 2003.
    You may not be able to get your risk adjustment right. You 
can deal with something like the monopoly payment structure. 
You can deal with something like--and I really applaud you on 
the fistula first. As far as I am concerned, that ought to be 
an incentive in the payment structure to allow those various 
functions.
    All of those can be put in place without waiting for a risk 
assessment structure. Those are pure payment policies devoid of 
any concern about the dosage structure and the rest. I do not 
know why those are not done already.
    Ms. NORWALK. We will take a look at that.
    Chairman THOMAS. I appreciate every time you said, ``We 
will take a look at that.'' What we are trying to tell you is 
we directed you in MMA. Taking a look at it is not enough. We 
expect behavior on a relatively short timeframe or I might be 
able, in a pro bono way, to convince Congress that we perhaps 
begin to move from a legislative point of view. That would not 
be the desired choice, but it will be a choice if we do not 
begin to see in the ancillary areas, not the core, changes.
    Ms. NORWALK. As I noted, we hope to have the report to 
Congress research to us where we will be building the demo and 
the actual report to Congress itself in short order; and I hope 
to have the report to the Committee by the summer.
    Chairman THOMAS. Thank you very much.
    With that, the Committee stands adjourned.
    [Whereupon, at 12:45 p.m., the hearing was adjourned.]

    [Questions submitted from Mr. Johnson of Texas and Mr. 
Weller to Ms. Norwalk, and their responses follow:]

           Question from Mr. Johnson of Texas to Ms. Norwalk

    Question: As someone who is vigilant over taxpayer dollars, I 
appreciate the GAO being here today, and the way CMS has taken steps to 
check the economic incentives for the utilization of drugs in the ESRD 
program. But while removing incentives that might encourage the over-
utilization of drugs may benefit the taxpayer, it's also very important 
to focus on ways to improve the quality of care provided to 
beneficiaries.
    I have here a list of clinical studies [attached below] that 
suggest that more frequent dialysis--which is often provided in one's 
own home--may significantly reduce the need for Epogen and other costly 
medications.
    Earlier this year, MedPAC raised some issues with the payment 
surrounding home dialysis in its March report to Congress. Is CMS 
exploring other potential policy changes that support more frequent 
dialysis, which may reduce the clinical need for Epogen while improving 
the quality of life for the patient?
    [The studies referred to by Mr. Johnson of Texas are being retained 
in the Committee files.]

    Answer: Yes, the Centers for Medicare & Medicaid Services (CMS) is 
exploring other potential policy changes that support more frequent 
dialysis. Currently, there are two clinical trials in frequent dialysis 
sponsored by National Institutes of Diabetes and Digestive and Kidney 
Disease (NIDDK) and CMS. The goal of these trials is to test the 
clinical outcomes relative to daily hemodialysis (five or six times per 
week) compared to conventional hemodialysis (three times per week). The 
trials are expected to be completed in 2010 at the earliest. Data 
collection has already begun, starting in 2005.
                                 ______
                                 

                Question from Mr. Weller to Ms. Norwalk

    Question: The Hearing Notice cited that ``Between 1998 and 2003, 
ESRD treatment spending increased by almost 50 percent.'' Obviously, we 
want and need to be good fiscal stewards of the Medicare Program. My 
concern is that we're jumping to conclusions on over-utilization of 
EPOGEN with no accounting for ESRD patient growth, how co-morbidities 
affect the treatment (for instance, diabetes is a major contributing 
factor to ESRD--does that affect spending), the increased frequencies 
of those co-morbidities, and the fact that the ASP system has driven 
down Medicare payments for drugs and biologics since 2003 (including 
for EPOGEN). Further, the EMP is now in place to catch any doctors who 
are dosing patients to maintain them above the target hemoglobin 
levels. Don't you think we need to move slowly and be fully informed 
prior to legislating on the ESRD program?

    Answer: Yes, we agree that additional information on the 
appropriate use of erythropoietin stimulating agents (ESAs) in the 
treatment of anemia is needed to develop a more complete picture of its 
effect on different patient populations. Precipitous action could 
actually harm patients unless we are clear regarding the benefits to be 
gained from policy changes in this area.
    The recent FDA black box warning for erythropoietin and 
darbepoietin clearly indicates that there is significant concern that 
Medicare beneficiaries may be harmed by these drugs. This warning was 
precipitated by a number of new clinical studies relevant to the use of 
ESAs to treat anemia in cancer patients. In light of this recent 
research and the FDA warning, we have taken immediate steps to address 
patient safety concerns for the non-ESRD Medicare population, such as 
opening a national coverage analysis on the use of ESAs for conditions 
other than ESRD. In addition, we made sure that Medicare's local claims 
processing contractors were aware of the FDA warning. We understand 
that, following the FDA warning and the subsequent revision of the 
compendium citation, most if not all local Medicare contractors have 
reviewed their policies on the use of ESAs in beneficiaries whose 
anemia is related to cancer
    For Medicare beneficiaries with ESRD, we are working closely with 
the FDA to better understand potential patient safety concerns 
associated with the use of ESAs to treat this patient population. In 
May, the FDA will be holding an advisory Committee meeting to discuss 
the use of ESAs in cancer treatment. CMS is working with the FDA to 
plan a similar advisory Committee meeting on the use of ESAs for 
patients with chronic kidney disease and ESRD to be held later this 
year. In addition, we have been discussing safety concerns regarding 
the use of ESAs in ESRD patients with renal professional associations, 
large dialysis organizations, academic medical centers, pharmaceutical 
companies, and other interested parties to gather as much information 
as possible. In the course of gathering this information, it has become 
apparent that additional research is needed to address all of the 
questions being raised about the use of ESAs for this patient 
population. As a result, CMS has begun preliminary discussions with the 
National Institutes of Health about the possibility of collaborating on 
a large clinical trial of ESA effects in ESRD patients to assess these 
patient safety issues. At the same time, CMS is reviewing its recently 
improved ESA monitoring policy and is in the process of implementing a 
requirement for the use of modifiers to identify the route of 
administration of ESAs. All of these actions will help produce the 
information that is needed to support more definitive conclusions in 
this area.
                                 ______
                                 
    Question: At the end of the day, aren't physicians responsible for 
hemoglobin levels and the EPO doses?

    Answer: Yes. Medicare policy for the ESRD setting is intended to 
ensure that medical decisions are made by physicians, generally 
adhering to national guidelines and expert recommendations, such as the 
Kidney Dialysis Outcomes Quality Initiative (KDOQI) guidelines. 
However, our payment policy takes the FDA label safety issues into 
account.
                                 ______
                                 
    Question: In a recent New England Journal of Medicine article there 
was reference to patients being treated with Procrit in the CHOIR study 
at an average hemoglobin level of 12.6 grams per deciliter. From the 
testimony today, it is clear that CHOIR was a clinical trial and that 
patients were being treated toward a target hemoglobin that exceeds the 
FDA label for EPOGEN.
    Another problem I'm having with details of this study is that these 
were non-dialysis patients that were treated as part of a clinical 
trial. Lastly, I understand that CHOIR study did not follow the gold 
standard of a double blinded design. Therefore, I don't see how 
findings from a clinical trial on non-dialysis patients can be linked 
across to ESRD patients. If Medicare dialysis patients were being 
maintained at this level, wouldn't these patients be flagged by the EMP 
and their doses reduced per the new CMS policy?

    Answer: The new Medicare policy was not in effect during the CHOIR 
study. As mentioned earlier, the Medicare policy is intended to ensure 
that medical decisions are made by physicians and is consistent with 
the FDA label and current kidney disease industry guidelines to 
maintain a target hemoglobin level in the range of 10 g/dl to 12 g/dl.
                                  02___
                                 
    [Submissions for the record follow:]
        Statement of American Society of Pediatric Nephrology, 
                         Indianapolis, Indiana
    The American Society of Pediatric Nephrology (ASPN) appreciates 
this opportunity to submit testimony for the record of the Committee on 
Ways and Means hearing on ``Patient Safety and Quality Issues in End-
Stage Renal Disease Treatment.'' The ASPN is a professional society 
composed of pediatric kidney specialists whose goal is to promote 
optimal care for children with kidney disease and to disseminate 
advances in the clinical practice and basic science of pediatric 
nephrology. The ASPN currently has over 600 members, making it the 
primary representative of the pediatric nephrology community in North 
America.
Background
    Anemia is a complication of kidney disease, known as Chronic Kidney 
Disease (CKD) or kidney failure, and End Stage Renal Disease (ESRD) or 
Stage V CKD. Patients with kidney failure suffer from anemia because 
their kidneys do not produce a hormone (erythropoietin) that regulates 
red blood cell production. Anemia directly affects a pediatric 
patient's quality of life, including neurocognitive development, school 
attendance, exercise capacity and family support,\1\ making proper 
anemia management critical to a patient's well-being. One of the key 
medications used to treat anemia in this population of patients is 
recombinant human erythropoietin (rHuEPO), commonly referred to as EPO.
---------------------------------------------------------------------------
    \1\ American Journal of Kidney Diseases, S90-S92 (May 2006).
---------------------------------------------------------------------------
    Doctors determine a patient's degree of anemia with simple blood 
tests, measuring the hemoglobin level. The hemoglobin levels that 
define anemia in children with kidney disease differ from those in 
adults, as they depend on the age and gender of the patient. In the 
case of those patients who are then treated with EPO, the existing 
National Kidney Foundation Kidney Disease Outcomes Quality Initiative 
(NKF KDOQI TM) or KDOQI TM opinion-based 
guidelines recommend a target hemoglobin level of 11.0 to 13.0 g/dl, 
for children up to 19 years of age. Treatment thresholds in anemia 
management should always be individualized to the needs of the patient, 
allowing a trained professional, in consultation with the patient, to 
determine the optimal dosing of EPO.
    In light of the recent studies published in the New England Journal 
of Medicine, ASPN agrees that it is essential for the kidney care 
community to continue examining all available data to ensure that 
public policies reflect appropriate anemia management for all patients, 
both children and adults, with kidney disease and kidney failure. 
However, it is important to point out that no reliable scientific 
studies have been published that examine optimal hemoglobin levels for 
children with CKD. For this reason, the ASPN requests that Congress 
commission a study through the National Institutes of Health to test 
and evaluate optimal hemoglobin levels specific to children with kidney 
disease. Armed with this scientific literature, the kidney community 
and government can work to promote the safest practices with the 
highest quality of care for children with this chronic disease. ASPN is 
committed to working with clinical researchers to carry out such 
scientific studies.
Children Are More Vulnerable Than Adults
    It has been said that children are not little adults, and this is 
especially pertinent in the treatment of children with both CKD and 
ESRD. Proper EPO dosing must take the age of the patient into 
consideration. Furthermore, and in contrast to the adult patient, the 
developing minds and bodies of children with kidney disease places them 
at a disproportionate risk in the event of inappropriate anemia 
management. Poor statural growth, impaired nutrition and abnormal 
cognitive development are all potential adverse outcomes of poor anemia 
management that mandate prospective study.
Children Have Unique Treatment Needs
    Once children are diagnosed with CKD or ESRD, it is critical that 
the pediatric nephrologist be able to adequately target the proper 
hemoglobin level for the patient. Due to their size and age, a child's 
body will respond differently than adults in similar stages of CKD or 
ESRD. Consequently, pediatric treatment needs are unique in several 
ways:

      Children need different dosages of erythropoietin than 
adults--not only because they are smaller, but also because the way 
their bodies metabolize the drug may be different than what occurs in 
adults.
      Children sustain unique developmental and psychological 
responses to kidney disease and kidney failure. The identification and 
optimal management of these disorders in children and their 
relationship to anemia management requires professionals with expertise 
in pediatric nephrology.
      Most importantly, there are distinct differences in the 
frequency and type of co-existing illnesses that characterize the adult 
and pediatric CKD populations which may result in the optimal 
hemoglobin targets for children and adults receiving EPO to be 
different.
Conclusion
    ASPN appreciates the opportunity to provide these comments to the 
Committee. The kidney community is largely unified in communicating a 
concern that actions taken by Congress and the Centers for Medicare and 
Medicaid Services (CMS) to revise anemia management guidelines must be 
based on all available scientific literature. The recent studies 
published in the New England Journal of Medicine only address the adult 
chronic kidney disease population. For this reason, it is imperative 
that further anemia management studies be conducted in all CKD and ESRD 
populations, including children, to ensure that revised government 
policies reflect sound scientific evidence.
    The Society remains dedicated to providing the highest standard of 
care and ensuring patient safety for our nation's pediatric kidney 
disease patients.

                                 

                           Statement of Amgen
    Mr. Chairman, Mr. Rangel and Members of the Committee,
    Amgen is pleased to submit this testimony for the record of the 
Committee on Ways & Means Hearing on patient safety and quality of care 
for Medicare beneficiaries with End Stage Renal Disease (ESRD).
    Amgen, one of the biotechnology industry's founders and pioneers, 
delivers vital medicines to fight serious illness. Amgen scientists 
have discovered and brought to market novel therapies that have helped 
millions of patients. Today, with a robust pipeline of potential new 
medicines, Amgen is investing billions of dollars in research and 
development to bring promising new therapeutics to patients.
I. The Benefits of EPOGEN' (epoetin alfa) for Treating 
        Anemia in KIDNEY DISEASE
    Chronic kidney disease is an increasingly recognized and important 
public health issue, affecting approximately 20 million Americans. The 
most advanced stage of chronic kidney disease is ESRD. Patients at this 
stage have inadequate kidney function to rid the body of harmful 
toxins, and it is fatal unless treated with dialysis, an artificial 
means of filtering the blood. In 1972, Congress enacted legislation 
ensuring that people with advanced kidney failure would be able to 
receive dialysis and other potentially life-saving treatments under 
Medicare.
    ESRD patients are highly vulnerable, and there are more than 
300,000 people with kidney failure being treated with dialysis in the 
United States today. Approximately one-third are African-American, and 
1 in 5 are Hispanic. The mean age of dialysis patients in the U.S. is 
approximately 65. Dialysis patients typically carry a heavy burden of 
other medical conditions, including high blood pressure, diabetes, 
heart disease and anemia. Given these facts, it is not surprising that 
the survival rate of dialysis patients is quite low. In fact, 
approximately 1 in 5 dialysis patients die every year--a death rate as 
high as that seen with many cancers. Indeed, patients who require 
dialysis are very sick, and the health care professionals who care for 
them are highly specialized in their understanding of how best to treat 
this precarious patient population.
    Over 90% of ESRD patients develop anemia, a serious health 
condition that places patients at increased risk of hospitalization and 
mortality.
    The kidneys produce a hormone called erythropoietin, which signals 
the body to make red blood cells in the bone marrow. Red blood cells 
carry life-sustaining oxygen from the lungs to all the vital tissues in 
the body. Without enough erythropoietin, patients develop anemia, or 
low numbers of red blood cells. Anemia is measured by a lab test called 
hemoglobin. Healthy people have hemoglobin levels in the 14-16 grams 
per deciliter (g/dL) range. If untreated, dialysis patients have 
hemoglobin levels that are much lower, often in the range of 8-10 g/dL 
or lower.
    Anemia affects approximately 9 out of every 10 dialysis 
patients.\1\ Patients with anemia suffer from severe fatigue and 
markedly reduced quality of life. Anemia increases the likelihood of 
being hospitalized and using more health care resources.\2,3\ In 
addition, dialysis patients with anemia are at risk for cardiovascular 
events like heart attack or stroke. And dialysis patients with anemia 
are more likely to die than those without anemia.\4\
---------------------------------------------------------------------------
    \1\ USRDS 2006 Annual Data Report
    \2\ Collins AJ. Li S. Ebben J. Ma JZ. Manning W. Hematocrit levels 
and associated medicare expenditures. American Journal of Kidney 
Diseases. 2000 36(2):282-293.
    \3\ Collins AJ, Li S, St Peter W, Ebben J, Roberts T, Ma JZ, 
Manning W. Death, hospitalization, and economic associations among 
incident hemodialysis patients with hematocrit values of 36 to 39%. J 
Am Soc Nephrol. 2001 Nov;12(11):2465-73.
    \4\ Roberts TL, Foley RN, Weinhandl ED, Gilbertson DT, Collins AJ. 
Anaemia and mortality in haemodialysis patients: interaction of 
propensity score for predicted anaemia and actual haemoglobin levels. 
Nephrol Dial Transplant. 2006 Jun;21(6):1652-62.
---------------------------------------------------------------------------
    Before the advent of EPOGEN' more than a decade and a 
half ago, physicians had few options for treating anemia in ESRD 
patients, and had to rely on blood transfusions. Unfortunately, blood 
transfusions put patients at risk for complications such as blood-borne 
infections and iron overload. Blood transfusions also limit the chances 
for patients to successfully receive kidney transplants.\5\
---------------------------------------------------------------------------
    \5\ Lietz K, Lao M, Paczek L, Gorski A, Gaciong Z. The impact of 
pretransplant erythropoietin therapy on late outcomes of renal 
transplantation. Ann Transplant. 2003;8(2):17-24.
---------------------------------------------------------------------------
    EPOGEN' has reduced the need for blood transfusions and 
improved health-related quality of life in dialysis patients.
    Amgen has pioneered the development of innovative medicines that 
safely and effectively treat anemia. EPOGEN' was developed 
by Amgen scientists using recombinant DNA technology, and has the same 
biological effects as naturally occurring erythropoietin. 
EPOGEN' was approved by the FDA in 1989 for the treatment of 
anemia in patients on dialysis.
    The availability of EPOGEN' as a medicine to treat 
anemia has been one of the major breakthroughs in treatment for 
dialysis patients. Patients who are treated with EPOGEN' 
have a dramatic reduction in the need for red blood cell transfusions, 
and their quality of life is markedly improved by reducing fatigue 
symptoms, increasing energy level, improving physical function, and 
improving sleep.\6,7\
---------------------------------------------------------------------------
    \6\ Eschbach JW, Abdulhadi MH, Browne JK, Delano BG, Downing MR, 
Egrie JC, Evans RW, Friedman EA, Graber SE, Haley NR, et al. 
Recombinant human erythropoietin in anemic patients with end-stage 
renal disease. Results of a phase III multicenter clinical trial. Ann 
Intern Med. 1989 Dec 15;111(12):992-1000.
    \7\ Evans RW, Rader B, Manninen DL. The quality of life of 
hemodialysis recipients treated with recombinant human erythropoietin. 
Cooperative Multicenter EPO Clinical Trial Group. JAMA. 1990 Feb 
9;263(6):825-30.
---------------------------------------------------------------------------
II. Quality of care and Safety profile of EPOGEN' in esrd
    In its hearing notice, the Committee appears to have specific 
concerns about safety and quality of care with regard to anemia 
treatment in ESRD. Amgen shares the Committee's concerns for patient 
safety and quality of care and appreciates this opportunity to respond 
and to correct misinformation that the Committee has received.
EPOGEN has enabled the safe and effective treatment of anemia in 
        patients with ESRD.
    EPOGEN' has been shown to be safe and effective in 
multiple clinical trials and has over a decade and a half of safety 
monitoring of real world use in more than 1.5 million dialysis 
patients. When used according to its FDA-approved label, 
EPOGEN''s safety profile is well-established and widely 
known. The most frequently reported adverse events are detailed in the 
product's label, which accompanies every vial of the product that is 
sold. Recent safety concerns have arisen from experiments which target 
and maintain hemoglobin levels above those recommended by the FDA 
(discussed in later section).
Quality of care for anemia treatment in dialysis patients is measured 
        by the percentage of patients whose hemoglobin level is 
        maintained > 11 g/dL.
    While the FDA label directs clinicians to target a range of 10-12 
g/dL, U.S. clinical practice guidelines reflect a review of the 
totality of evidence\8\, including United States Renal Data System 
(USRDS) data showing that dialysis patients who have hemoglobin levels 
of 10-11 g/dL have an 18% increase in their risk of death and an 8% 
increase in their risk of being hospitalized when compared to patients 
with hemoglobin levels between 11-12 g/dL.\9\ At the recent annual 
meeting of the American Society of Nephrology in San Diego last month, 
Allen Nissenson, M.D., Professor of Medicine at UCLA reminded the 
community that clinical practice guidelines state that ``. . . 
Hemoglobin should be 11.0 g/dL or greater.'' He noted that this 
evidence-based recommendation was the result of review of 22 
randomized, controlled clinical trials and evaluated a number of key 
clinical outcomes such as mortality, cardiovascular events, 
hospitalization and quality of life.\10\
---------------------------------------------------------------------------
    \8\ KDOQI; National Kidney Foundation. Clinical practice guidelines 
and clinical practice recommendations for anemia in chronic kidney 
disease in adults. Am J Kidney Dis. 2006 May;47(5 Suppl 3):S16-85.
    \9\ Roberts TL, Foley RN, Weinhandl ED, Gilbertson DT, Collins AJ. 
Anemia and mortality in haemodialysis patients: interaction of 
propensity score for predicted anemia and actual hemoglobin levels. 
Nephrol Dial Transplant. 2006 Jun;21(6):1652-62. KDOQI; National Kidney 
Foundation. Clinical practice guidelines and clinical practice 
recommendations for anemia in chronic kidney disease in adults. Am J 
Kidney Dis. 2006 May;47(5 Suppl 3):S16-85.
    \10\ Slides presented by Allen Nissenson, MD. Professor, David 
Geffen School of Medicine at UCLA at the 36th Annual American Society 
of Nephrology Meeting. San Diego, CA. November 2006.
---------------------------------------------------------------------------
    It is well documented, in both domestic and international studies, 
that maintaining patients with a hemoglobin of less than 11 g/dL is 
associated with increased hospitalization, healthcare expenditure, and 
mortality.\11,12,13\ This finding has been reflected in the National 
Kidney Foundation (NKF) 2000 and 2006 K/DOQIT Guidelines. Moreover, CMS 
has developed and implemented clinical performance measures (CPM), 
which can be used to assess the quality of care in dialysis facilities 
across the U.S. One CPM (or quality indicator) has been defined as the 
percentage of patients with a hemoglobin level greater than 11 g/dL. 
This same quality indicator has been employed in Europe through the 
European Best Practices Guidelines (EBPGs) and in Australia through 
Australian guidelines.\14,15\
---------------------------------------------------------------------------
    \11\ Wolfe RA, Hulbert-Shearon TE, Ashby VB, Mahadevan S, Port FK. 
Improvements in dialysis patient mortality are associated with 
improvements in urea reduction ratio and hematocrit, 1999 to 2002. Am J 
Kidney Dis. 2005 Jan;45(1):127-35.
    \12\ Locatelli F, Pisoni RL, Combe C, Bommer J, Andreucci VE, Piera 
L, Greenwood R, Feldman HI, Port FK, Held PJ. Anemia in haemodialysis 
patients of five European countries: association with morbidity and 
mortality in the Dialysis Outcomes and Practice Patterns Study (DOPPS 
Nephrol Dial Transplant. 2004 Jan;19(1):121-32.
    \13\ Volkova N, Arab L. Evidence-based systematic literature review 
of hemoglobin/hematocrit and all-cause mortality in dialysis patients. 
Am J Kidney Dis. 2006 Jan;47(1):24-36.
    \14\ Locatelli F, Aljama P, Barany P, Canaud B, Carrera F, Eckardt 
KU, Horl WH, Macdougal IC, Macleod A, Wiecek A, Cameron S; European 
Best Practice Guidelines Working Group. Revised European best practice 
guidelines for the management of anaemia in patients with chronic renal 
failure. Nephrol Dial Transplant. 2004 May;19 Suppl 2:ii1-47.
    \15\ Roger S; Caring for Australians with Renal Impairment 
(CARI).The CARI guidelines. Haematological targets. Iron. Nephrology 
(Carlton). 2006 Apr;11 Suppl 1:S217-29.
---------------------------------------------------------------------------
    In addition to the wealth of clinical data that supports 
maintaining hemoglobin levels above 11 g/dL, there is strong evidence 
that this is also cost-effective. Data from the USRDS demonstrate that 
patients who achieve hemoglobin levels between 11-12 g/dL save the 
Medicare system approximately $675 per member per month as compared 
with patients who achieve hemoglobin levels between 10-11 g/dL.\16\
---------------------------------------------------------------------------
    \16\ Collins AJ, Li S, St Peter W, Ebben J, Roberts T, Ma JZ, 
Manning W. Death, hospitalization, and economic associations among 
incident hemodialysis patients with hematocrit values of 36 to 39%. J 
Am Soc Nephrol. 2001 Nov;12(11):2465-73.
---------------------------------------------------------------------------
    Importantly, there have been tremendous improvements in the quality 
of care for dialysis patients over the past decade. According to the 
USRDS 2006 Annual Data Report and the CMS 2005 Annual Report for ESRD 
Clinical Performance Measures Project, the percentage of patients with 
hemoglobin < 11 g/dL has decreased from 84% in 1991 to 17% in 2004, a 
remarkable achievement by the nephrology community for patients. In the 
past, efforts to modify policy to control utilization of 
EPOGEN' at the upper values of the hemoglobin range have 
actually increased the number of patients with hemoglobins below 11 g/
dL. As a result, extreme caution must be exercised when considering any 
policy changes that may affect this precarious population.
Hemoglobin levels fluctuate and must be measured repeatedly over time.
    When targeting hemoglobin in the 10 to 12 g/dL range, hemoglobin 
values will fluctuate. Because of the constantly changing environment 
of a dialysis patient's body, the same individual will be more or less 
anemic and will sometimes react more strongly to EPOGEN' and 
sometimes less, thus having excursions above and below the target 
hemoglobin range. For example, infections are known to lower hemoglobin 
and erythropoietin responsiveness, while iron supplementation will help 
increase both. Thus, the physician must monitor hemoglobin and adjust 
the EPOGEN' dose as needed with the goal of keeping the 
patient's hemoglobin level in the target range for as much time as 
possible. These temporary hemoglobin fluctuations are universally 
understood by practicing nephrologists, and have been described in 
multiple publications using USRDS and other data.\17,18\
---------------------------------------------------------------------------
    \17\ Ebben JP, Gilbertson DT, Roberts TL, Foley RN, Collins AJ. 
Hemoglobin Level Variability: Associations with Comorbidity, 
Intercurrent Events, and Hospitalizations. Clin J Am Soc Nephrol 2006 
1(6):1205-1210.
    \18\ Lacson E Jr, Ofsthun N, Lazarus JM. Effect of variability in 
anemia management on hemoglobin outcomes in ESRD. Am J Kidney Dis. 2003 
Jan;41(1):111-24.
---------------------------------------------------------------------------
The USRDS data cited in the Committee hearing notice states that 40% of 
        dialysis patients have hemoglobins over the FDA approved label 
        of 12 g/dL. However, this USRDS estimate is at a single point, 
        or ``snapshot'', in time, which does not give an accurate 
        picture of anemia management.
    Dr. Collins, who leads the analysis of USRDS data, describes the 
percentage of patients at a single point in time that have a hemoglobin 
level above 12 g/dL or above 13 g/dL. The recently reported figures 
appear to have raised concerns that physicians may be targeting higher 
hemoglobin levels than those recommended by the FDA or established 
guidelines. However, because of the routine and expected fluctuations 
in hemoglobin levels, it can be extremely misleading to draw any 
conclusions from a single hemoglobin measure without considering how 
physicians respond to the hemoglobin level.
    Dr. Collins and colleagues state ``. . . hemoglobin levels in 
almost 90% of patients seem to be in flux across the K/DOQI target 
boundaries such that a cross-sectional assessment of anemia management 
cannot give an accurate picture of anemia treatment.''
    In 2005, Dr. Collins published a paper demonstrating that in the 
vast majority of cases, providers responded promptly to temporary 
elevations in the hemoglobin level by appropriately adjusting the dose 
and bringing patients back into the target range.\19\
---------------------------------------------------------------------------
    \19\ Collins AJ, Brenner RM, Ofman JJ, Chi EM, Stuccio-White N, 
Krishnan M, Solid C, Ofsthun NJ, Lazarus JM. Epoetin alfa use in 
patients with ESRD: an analysis of recent US prescribing patterns and 
hemoglobin outcomes. Am J Kidney Dis. 2005 Sep;46(3):481-8.
---------------------------------------------------------------------------
III. existing scientific evidence does not provide justification for 
        congress to introduce new legislation
    Several recent studies have raised concerns regarding the benefit-
risk profile of EPOGEN'.
Recently published studies do not provide the definitive information 
        needed to guide policy decisions.
    The first paper, by Zhang and Cotter et al, is an article that 
analyzes medical claims data generated by Medicare in an attempt to 
link greater EPOGEN' use with higher hematocrit levels and 
increased mortality.\20\ Zhang and Cotter conclude that high 
EPOGEN' doses are associated with an increased risk of 
death. This analysis suffers from a distortion commonly referred to as 
``confounding by indication'' bias. Confounding occurs when another 
variable (the confounder) other than that being studied affects the 
outcome and leads to a false conclusion. For example: Analysis of 
Medicare data has shown that people who visit the doctor more often are 
significantly more likely to die. Therefore, it could be concluded that 
visiting doctors causes people to die! Of course, this is not the case. 
In reality, sicker patients see the doctor more frequently and sicker 
patients are more likely to die than those who are less ill. The same 
is true for Epoetin utilization. Sicker patients typically require more 
Epoetin to achieve the desired hemoglobin response, and sicker patents 
are also more likely to die.
---------------------------------------------------------------------------
    \20\ Zhang Y, Thamer M, Stefanik K, Kaufman J, Cotter DJ. Epoetin 
requirements predict mortality in hemodialysis patients. Am J Kidney 
Dis. 2004 Nov;44(5):866-76.
---------------------------------------------------------------------------
    Mr. Cotter and colleagues acknowledge this important limitation in 
their paper (p. 874): ``this study has 2 noteworthy limitations. First 
and most important, when interpreting patient outcomes associated with 
prescribed epoetin dose, treatment-by-indication bias may exaggerate 
hazards and obscure benefits.''
    A more recent analysis, presented at the American Society for 
Nephrology, replicated the Cotter analysis but introduced more 
comprehensive adjustments for `confounding' using appropriate methods. 
This study found no association between mortality risk and 
EPOGEN' dose.\21\
---------------------------------------------------------------------------
    \21\ Wang et al. Exploring Relative Mortality and Epoetin Alfa 
(EPO) Dose Among Hemodialysis Patients. Poster presented at the 36th 
Annual American Society of Nephrology Meeting, San Diego CA November 
2006.
---------------------------------------------------------------------------
    The New England Journal of Medicine (NEJM) recently released the 
results of two studies, CHOIR (sponsored by Johnson and Johnson and 
CREATE (sponsored by Roche).\22,23\ These studies examined the effects 
of more aggressive anemia treatment, not consistent with the FDA 
approved prescribing instructions, in kidney disease patients who were 
not receiving dialysis.
---------------------------------------------------------------------------
    \22\ Drueke TB, Locatelli F, Clyne N, Eckardt KU, Macdougall IC, 
Tsakiris D, Burger HU, Scherhag A; CREATE Investigators. Normalization 
of hemoglobin level in patients with chronic kidney disease and anemia. 
N Engl J Med. 2006 Nov 16;355(20):2071-84.
    \23\ Singh AK, Szczech L, Tang KL, Barnhart H, Sapp S, Wolfson M, 
Reddan D; CHOIR Investigators. Correction of anemia with epoetin alfa 
in chronic kidney disease. N Engl J Med. 2006 Nov 16;355(20):2085-98.
---------------------------------------------------------------------------
    The CHOIR study treated anemic patients with chronic kidney disease 
with Procritr (Epoetin alfa), targeting a hemoglobin level of 13.5 g/dL 
versus a control group targeting a hemoglobin of 11.3 g/dl. In the 
CHOIR study, adverse events, including deaths, were greater in the 
group with the targeted hemoglobin of 13.5 g/dL.
    Amgen takes the recent results of these trials very seriously. 
However, there are some limitations in the CHOIR study which make 
drawing definitive conclusions challenging. The gold standard in 
clinical research is the randomized, double-blind, placebo controlled 
trial, and this was an ``open label'' study where both clinicians and 
patients knew they were receiving Procritr, and the dose of the drug. 
Importantly, there was an unusually high drop-out rate in this trial 
(38% of patients), raising concerns about the ability to draw 
conclusions from the data presented. Most importantly, this study was 
not conducted in patients undergoing hemodialysis.
    In a recently published article, the principle investigator for 
CHOIR, Dr Ajay Singh stated: ``It is important to note that, unlike the 
Normal Hematocrit or the Canada-Europe studies, both CHOIR and CREATE 
evaluated pre-dialysis patients and so the results may not be 
generalizable to the dialysis community.'' \24\
---------------------------------------------------------------------------
    \24\Singh AK. The target hemoglobin in patients with chronic kidney 
disease. Nephrology News and Issues. 2006 Dec 20(13): p 29-30.
---------------------------------------------------------------------------
    Importantly, this was an experiment conducted to test practices 
that are not consistent with the FDA label or the way that Amgen 
promotes the use of EPOGEN'. The results of this study 
reaffirm Amgen's commitment to using the FDA-approved prescribing 
instructions to inform clinicians about how to use EPOGEN'. 
In U.S. clinical practice today, there is little evidence that 
clinicians purposefully maintain hemoglobin levels above the FDA-
approved target range. Thus, the risks associated with persistently 
elevated hemoglobin levels seen in the CHOIR study and other 
experiments should not be applied to the transient elevations in 
hemoglobin levels described in dialysis patients treated under real 
world conditions.
Amgen promotes EPOGEN according to the FDA label, and is 
        proactively educating the clinical community about a recent FDA 
        advisory for erythropoietic therapies.
    In response to the CHOIR study, an FDA advisory was issued. Amgen 
is actively working with the FDA (in cooperation with Johnson and 
Johnson) to update the EPOGEN' product label with 
information about the CHOIR results and to inform prescribers. Amgen is 
proactively sending copies of the FDA advisory to all nephrologists, 
and our sales team is hand-carrying the advisory into physicians' 
offices. Amgen continues to recommend, as we always have, that 
physicians use our products in accordance with their FDA-approved 
labels. Although these studies in non-dialysis patients should not 
readily be generalized to patients receiving hemodialysis, we believe 
it is important for Amgen to help educate the clinical community about 
new scientific information, even if it is not definitive.
CMS coverage policy for EPOGEN, as well as its claims 
        monitoring policy for EPOGEN, are consistent with 
        the FDA approved prescribing instructions.
    In the announcement for this hearing, concerns about patient safety 
and Medicare spending on anemia treatments in ESRD were raised. 
Further, the November 15, 2006 letter to CMS indicates a belief that 
current CMS policies for EPOGEN' establish ``reimbursement 
incentives for providers to increase hemoglobin doses'' and that these 
CMS policies are in conflict with FDA labeling.
    Below, Amgen would like to address apparent confusion of the CMS 
coverage policy for EPOGEN' and a claims monitoring policy 
CMS employs to ensure it is paying for appropriate use. Since its 
inception, the CMS coverage policy for EPOGEN' has been 
consistent with the FDA approved label. The claims monitoring policy 
(also known as Erythropoietin Monitoring Policy or EMP) explicitly 
refers to the coverage policy for EPOGEN' as well as the FDA 
label in the manual instructions.
    ``. . . While Medicare is not changing its coverage policy on 
erythropoietin use to maintain a target hematocrit level between 30% 
and 36%, we believe the variability in response to EPO warrants 
postponing requiring monitoring until the hematocrit reaches higher 
levels. For dates of services April 1, 2006 and later, CMS will not 
require contractors to initiate monitoring until the hematocrit level 
reaches 39.0 (or hemoglobin of 13.0). This does not preclude the 
contractors from performing medical review at lower levels. The Food 
and Drug Administration labeling for EPO notes that as the hematocrit 
approaches a reading of 36, the dose of the drug should be reduced by 
25%. . . . Providers are reminded that CMS expects that as hematocrit 
approaches 36% (hemoglobin 12 g/dL), a dosage reduction occurs.'' 
Medicare Claims Processing Manual (CMS Pub. 100-04), ch. 8,  60.4
The CMS Erythropoietin Monitoring Policy (EMP) has evolved based on 
        extensive scientific deliberation. The current policy 
        represents an important improvement, focusing on how physicians 
        manage anemia, by monitoring whether physicians appropriately 
        adjust the EPOGEN dose in response to elevated 
        hemoglobin levels.
    The EMP has evolved over time to account for the expected temporary 
fluctuations of hematocrit levels in different patients. When 
physicians target hematocrit levels of 30-36% (consistent with the FDA 
approved label hemoglobin target 10-12 g/dL\25\), the majority of those 
patients--even on a stable dose of EPOGEN'--will experience 
temporary elevations above 12 g/dL, as discussed earlier.
---------------------------------------------------------------------------
    \25\ Hematocrit is a percentage of packed red blood cells in a 
given volume of blood, and is approximately equal to 3X hemoglobin. 
Thus, a hematocrit of 36 corresponds to a hemoglobin of 12 g/dL.
---------------------------------------------------------------------------
    To account for these frequent temporary elevations, CMS has long 
recognized the need for a monitoring threshold above 36%. In 1997, CMS 
instituted monitoring for a 90-day rolling average hematocrit in excess 
of 36.5% (in effect, hemoglobins that were persistently above 12 g/dL). 
CMS revised this policy in 1998, implementing a 90-day rolling average 
where monitoring would occur when the hematocrit exceeded 37.5% 
(hemoglobin of 12.5 g/dL).
    In April of 2006, after several years of extensive deliberation and 
consultation with clinical experts, CMS implemented a revised 
monitoring policy. Under the 2006 EMP, providers are still responsible 
for achieving the target hemoglobin in the FDA label range, and CMS 
expects that providers will follow the package insert and reduce the 
dose as hemoglobin levels approach 12 g/dL. If providers fail to reduce 
the dose of EPOGEN' when the hemoglobin exceeds 13 g/dL they 
are subject to a payment reduction.
    Comments by former CMS administrator Dr. Mark McClellan, and by the 
CMS Chief Medical Officer Dr. Barry Straube, reiterate the importance 
of developing an appropriate monitoring policy that does not have a 
negative impact on the health outcomes of ESRD patients.
    ``Our Agency has worked to review the literature and consult with 
experts in the field to develop a means of monitoring erythropoietin 
usage without the risk of a negative impact on the healthcare outcomes 
of this vulnerable population. We are pleased to have found a 
reasonable means for monitoring erythropoietin dosages that are in line 
with the FDA-approved labeling for these drugs.'' CMS Administrator 
Mark McClellan, November 2005
    ``While we have to be concerned with patients who have hemoglobin 
[HGB] over 13 . . . Everybody has found that when you treat a group of 
patients, whatever the hemoglobin target is, if you lower that upper 
target range, you shift the hemoglobin levels. If the doctor tries to 
control everybody below 12, you will have other patients on the other 
end of the bell curve, below 11. And there are multiple studies, done 
in 1997 and 1998, that were associated with higher mortality rates, 
higher hospital admission rates and much higher complications--
cardiovascular complications [when the levels dropped below 11].'' CMS 
Chief Medical Officer Dr. Barry Straube, Inside CMS, November 28, 2006
Preliminary data indicate that under the new EMP, EPOGEN 
        doses and hemoglobin levels have slightly decreased.
    Since the EMP went into effect April 1, 2006, Amgen analysis shows 
the average dose of EPOGEN' used in dialysis has decreased 2 
percent. The average hematocrit has also decreased slightly in the few 
months since the new policy implementation, suggesting that the policy 
is having its intended effect of enforcing appropriate utilization. 
CMS's Dr. Barry Straube states that CMS claims data, as well as data 
from dialysis clinic Fresenius, demonstrate that hemoglobin levels have 
fallen since the implementation of the EMP. The impact of the EMP needs 
to be assessed over a longer period of time, but again, short-term 
analyses suggest that the policy is enforcing appropriate utilization.
IV. Medicare Expenditures for EPOGEN'
    The Committee raised concerns about Medicare spending on 
EPOGEN' in the announcement for this hearing.
Increased Medicare spending on EPOGEN reflects growth in 
        the ESRD population, and substantial improvements in the 
        quality of care.
    Growth in Medicare spending on EPOGEN' results from 
several factors. One factor is growth in the ESRD patient population, 
approximately 3% per year. A major factor has been the tremendous 
increase in effective anemia management, reflected by improved 
achievement of the CMS clinical performance measure, reducing the 
percentage of patients with hemoglobin below 11 g/dL. As previously 
stated, this percentage has decreased from 84% in 1991 to only 17% in 
2004.\26\ Finally, the patient profile has changed over time. Today, 
more ESRD patients have other serious conditions which impact anemia 
and anemia treatment. For example, from 1995 to 2004 diabetes as the 
primary cause of renal failure has increased from 36% to 46%, and the 
number of patients with cancer has gone up 30%.1 As expected, this 
improvement in hemoglobin outcomes is correlated with increased 
EPOGEN' utilization.
---------------------------------------------------------------------------
    \26\ USRDS 2006 Annual Data Report, CMS' 2005 Annual Report ESRD 
Clinical Performance Measures Project
---------------------------------------------------------------------------
    Importantly, increasing Medicare expenditures on EPOGEN' 
are not the result of higher prices. In fact, CMS per unit expenditures 
for EPOGEN' have decreased 14% in recent years, from the 
statutory rate of $11 per 1,000 units that was in effect in the early 
1990's to the current market-based ASP + 6% reimbursement of $9.446 per 
1,000 units in Q4 2006.
The hearing announcement contained estimates of increased costs 
        associated with the purported overuse of EPOGEN. 
        These estimates are incorrect and based on a flawed study and 
        should not be used as the basis for policy-making. Policy based 
        on the model in this study could seriously jeopardize the 
        quality of care for ESRD patients.
    The hearing announcement noted ``a recent study from November 2006 
in Dialysis and Transplantation\27\ that found that the population with 
a red blood cell count above industry guidelines also has higher drug 
costs, specifically, $3,100 per patient per year more just on the 
anemia drug.''
---------------------------------------------------------------------------
    \27\ Pizzi LT, Patel NM, Maio VM, Goldfarb DS, Michael B, Fuhr JP, 
Goldfarb NI. Economic implications of non-adherence to treatment 
recommendations for hemodialysis patients with anemia. Dialysis and 
Transplantation. 2006 Nov; 35(11):654-732.
---------------------------------------------------------------------------
    The economic model (the Pizzi model) used in the cited study, while 
published, is seriously flawed. Specifically, the results depend on a 
flawed assumption that individuals should start and remain on 43,500 
units of EPOGEN' a month without dose adjustments in 
response to hemoglobin levels. This assumption does not reflect K/
DOQITTM guidelines and is not consistent with the FDA 
approved prescribing instructions for EPOGEN' nor with 
published USRDS dosing patterns. Both the 2000 K/DOQITTM 
guidelines and FDA label provide a starting range of EPOGEN' 
that doctors should use the first time a patient is given 
EPOGEN', then instructs doctors to adjust the dose of 
EPOGEN' until hemoglobin is in the target range of 11-12 g/
dL. In most cases, this results in a higher maintenance dose than the 
actual starting dose. The last time the average U.S. EPOGEN' 
dose approached the level assumed in the Pizzi model was 1992-1993. At 
that time, 84% of patients were below the recommended hemoglobin level 
of 11 g/dL.
    Adopting the dosing patterns portrayed in the Pizzi model could 
seriously jeopardize patient quality of care and significantly increase 
the percentage of patients with hemoglobin below 11 g/dL, increasing 
the risk of hospitalization and death and raising overall healthcare 
costs. The $3,100 per patient per year savings are not real, and 
unlikely to be realized given what is known about the current ESRD 
population. The Dialysis and Transplantation study should not form the 
basis of any policy decision, as it relies on faulty assumptions, makes 
projections based on off-label use of the product and is not consistent 
with the best available evidence.
When rigorously analyzed, the available data show that there is no 
        systemic abuse of EPOGEN.
    In the November 15, 2006 letter to CMS, Chairman Thomas and Ranking 
Member Stark raised concerns about ``systemic abuse'' of 
EPOGEN'. Analysis of cross-sectional or ``snapshot'' in time 
analyses may give this appearance, but upon careful review of these and 
other data, EPOGEN' use appears appropriate and there is no 
evidence of systemic overuse.
    Amgen has analyzed data from provider datasets that report 
hemoglobin values and EPOGEN' dosing on a per treatment 
basis, allowing for very granular analyses, even more granular than 
USRDS data that collect monthly information. A recent analysis of 
approximately 300,000 patients demonstrated that most physicians are 
using EPOGEN' in a manner that is safe and consistent with 
its FDA label. In fact, among patients who have ever recorded an 
elevation of the hemoglobin over 12 g/dL, over 50% of those excursions 
over 12 g/dL are managed back into the recommended target range within 
one month, and over 85% of those excursions within three months. These 
data support previous analyses19 which have demonstrated that patient 
hemoglobin levels are being appropriately managed when assessed over 
time using appropriate methods.
    Moreover, the new EMP is fully aligned with the FDA label and will 
reinforce appropriate utilization of EPOGEN' by financially 
penalizing providers attempting to maintain patients at higher 
hemoglobin levels. The EMP notes that CMS expects that providers will 
follow the EPOGEN' label and reduce the dose as hemoglobin 
levels approach 12 g/dL and then requires an EPOGEN' dose 
reduction when a hemoglobin level exceeds 13 g/dL. If providers fail to 
reduce the dose of EPOGEN', they are subject to a payment 
reduction.
Congress should not implement a payment system bundling dialysis 
        services with separately billable injectable drugs (referred to 
        as ``bundled'' payment) until the MMA mandated demonstration 
        project is completed.
    Amgen does not believe that Congress should consider moving to a 
single bundled payment for drugs and dialysis services in dialysis 
until the MMA mandated three-year CMS demonstration project is 
completed. The goal of the CMS project is to determine how best to 
include separately billable drugs in the dialysis composite payment.
    A bundled payment system could be dangerous for patients, and end 
up costing the federal government more money. This is true for several 
reasons. First, unless bundling is accompanied by a robust 
scientifically valid risk adjustment system and an agreed-upon set of 
quality safeguards, it may result in perverse incentives to undertreat 
patients. Moreover, as evidenced by the broad and deep opposition of 
patient groups and medical providers, there are serious risks to rural 
patients and those in dialysis centers in underserved urban areas.
    There are two critical elements necessary for the dialysis 
composite rate to be successful, and to assure that this vulnerable 
patient population is not harmed. The first is a robust and valid case-
mix adjustment method--designing a system than can accurately predict 
which patients are most costly, and then adequately reimburse for those 
patients (a major goal of the CMS demonstration project). The second is 
a set of robust quality measures to safeguard patients against under 
treatment that may result from financial incentives that may limit 
their access to vitally necessary medical care. Congress recognized 
these requirements, and mandated the conduct of a demonstration project 
before implementing a bundled dialysis composite rate.
    ESRD patients represent a seriously vulnerable patient group, at 
high risk of death. Even among ESRD patients, there are some who are 
more gravely ill and require significantly greater health care 
intervention. Unless Medicare appropriately reimburses for these 
patients, even one or two such patients in a single dialysis center can 
literally ``tip the scales'' and cause a dialysis center to lose money, 
and even risk closure. Many believe that the risk is highest for the 
small dialysis organizations that serve poor patients in rural areas.
    Several models and real world examples have demonstrated this 
challenge and also the significant risk that a poorly designed system 
of bundled payment could have negative consequences for patient care.

      In 1989 Medicare paid for EPOGEN' at a rate of 
$40 for up to 10,000 units, a case rate. When CMS recognized that under 
this policy EPOGEN' doses were about half of what was 
needed, the policy was subsequently changed to pay per 1,000 units 
administered rather than at the case rate. This is an example of how 
fixed payments can result in undertreatment.
      A Medicare managed care capitation demonstration for ESRD 
resulted in higher costs than the fee for service comparison group. The 
additional costs to the federal government total approximately $18.5 
million across the three years of the demonstration.\28\
---------------------------------------------------------------------------
    \28\ Summary report can be accessed at www.cms.hhs.gov/
DemoProjectsEvalRpts/downloads/ESRD_Managed_Care_Summary.pdf

    An appropriate case-mix adjustment methodology has also been 
difficult to develop. A 1994 study by RAND and UCLA developed a method 
that was not shown to be adequate for dialysis patients.\29\ A 2000 
report released by the American Society of Nephrology and the Renal 
Physicians Association also attempted to create a case mix adjustment 
system, but was also found to lack the needed predictive power.\30\
---------------------------------------------------------------------------
    \29\ Farley DO, Kallich JD, Carter GM, et al. Designing a 
capitation payment plan for Medicare end stage renal disease services. 
Santa Monica (CA), RAND. 1994.
    \30\ Bouchery EE, Gaylin DS, Rubin RJ, M.D., Shapiro JR, Held PJ. 
Lewin Group: Capitation Models for ESRD: Methodologies and Results. 
Prepared for Renal Physicians Association and the American Society of 
Nephrology. 2000.
---------------------------------------------------------------------------
    ``Capitation contracts put physicians at financial risk.accepting 
global capitation for a small group of patients may entail significant 
risk on the part of the capitated physician or health plan. It would be 
necessary to spread risk over many patients in order to reduce the 
financial risk faced by the physician or health plan to an acceptable 
level.''
    In summary, eliminating separate payment for dialysis drugs, if not 
implemented thoughtfully, could lead to unintended consequences 
including:

      Poorer quality of care, as dialysis units may need to 
make compromises to offset lower overall reimbursement.
      Higher overall Medicare costs as a result of poor quality 
dialysis care.
      Threats to access for poor and rural patients treated in 
small dialysis facilities. Small rural clinics may begin to avoid 
sicker/costlier patients in order to control costs, or close as a 
result of financial burden.

    In conclusion, we want to thank the Committee for this opportunity 
to submit written testimony. We are proud of EPOGEN''s long 
history of safely and effectively treating anemia in ESRD and stand 
with nurses, physicians, and other healthcare providers in supporting 
the best possible care for highly vulnerable kidney disease patients. 
Given the current state of evidence there does not appear to be 
justification for the introduction of new legislation. We remain 
concerned that legislation based on an insufficient analysis of 
scientific data could lead to negative outcomes for patients and for 
health care in the United States.

                                 

         Statement of Richard Carrancejie, Birmingham, Alabama
    Please, read the Birmingham news article on 11/18/06 on dialysis. 
we as patients are threatened everyday. the conditions are awful. we 
have roaches, untrained staff, the staff curse the elderly and black 
patients. our Medicare money doesn't go for or medical care. we are 
threatened by management and doctors with transfers or being taken off 
dialysis during treatment. most of the patients are afraid to speak out 
because they may be harmed. local officials do nothing because it 
involves a major employer [U.A.B.]. even the president of the college 
does not care. U.A.B. had to pay back millions last year to Medicare, 
they also lost the transplant records of 10,000patient.tyis is a 
nightmare. our state health dept. has not inspected since 1998. the 
positive room [blood disease] has been used by regular patients. the 
positive machines have been used all over the facility and on holidays. 
the Katrina victims have used our facilities, we do not know their 
fate, yet. it is a tragedy, a medical nightmare. we need help and 
protection from congress and the justice department. help us. this 
tragedy has gone on to long. individuals and company must be punished 
and serve jail time for the death of so many patients. I have been on 
dialysis for three years, I have witnessed all these events. i have 
contacted the chairman of DaVita and the president of U.A.B., no reply. 
stop the Medicare money, have the FBI. and Medicare investigate, 
prosecute and make the companies and hospital repay the tax payers and 
put the worst law breakers away for along time.

                                 

                  Statement of DaVita Patient Citizens
Introduction
    As America's largest dialysis patient organization, we are proud to 
represent over 20,000 pre-dialysis and dialysis patients and their 
families. On a wide variety of issues, we seek to ensure that the 
patients' point of view is heard and considered by policy makers so 
that continued progress may be made in the quality of care and life for 
patients with kidney disease. We appreciate this opportunity to submit 
testimony to the House Ways and Means Committee's Hearing on Patient 
Safety and Quality Issues in End Stage Renal Disease.
Quality of Life
    Anemia is a serious, life-threatening problem affecting almost all 
dialysis patients. It causes fatigue, weakness and increased risk of 
hospitalization and death. In most cases, the administration of 
synthetic replacements for the hormone erythropoietin can manage our 
anemia and restore our energy. With appropriate anemia management, we 
require less medical attention and hospitalization, and we are better 
able to lead productive, quality lives.
The Experts on Quality of Care
    Every dialysis patient's anemia situation is different. The 
decision of how to manage our anemia should therefore be made by our 
physicians in consultation with ourselves. Typical physician 
prescribing practices allow for physicians to use package inserts as a 
guideline for their prescriptions. Many of us enjoy higher quality 
lives because our doctors prescribe the appropriate amount of 
erythropoietin for each of us individually. This allows each of us to 
participate in the activities of daily living.
Research Applicable to ESRD Patients is Needed
    Of course, it is critical that we, as well as our physicians, be 
informed of any increased risks associated with anemia management. The 
studies cited in recent news articles focused on Chronic Kidney Disease 
(CKD) patients in stages 1-4, who are not on dialysis. The studies did 
not focus on patients with End Stage Renal Disease (stage 5)--patients 
like us, who are on dialysis. We therefore look forward to clinical 
studies of anemia management in the ESRD population to determine the 
appropriate approach to anemia management for dialysis patients.
Community Cooperation Improves Quality of Care
    Recognizing the importance of appropriate anemia management, we 
joined with the kidney care community in asking CMS to revise the April 
2006 monitoring policy on anemia management to better align with 
physician prescribing methods and to take into consideration the 
patient's quality of life. We believe that this revised monitoring 
policy is a vast improvement over the April 2006 policy.
Conclusion
    DaVita Patient Citizens greatly appreciates this opportunity to 
comment on ESRD patient safety and quality issues. We ask that, before 
proposing further changes to the CMS monitoring policy on anemia 
management, you take into consideration all of the data and the 
population to which it applies, as well as, the patients' perspective.

                                 

                                                  December 20, 2006
    Dear Mr. Chairman and Members of the Committee,

    The American Society of Nephrology (ASN) appreciates the 
opportunity to provide a written statement for the record regarding the 
issue of anemia management. We commend the Committee for its efforts to 
learn more about anemia management for individual's with kidney disease 
and kidney failure.
    Through the Medicare program, the federal government has assumed 
primary responsibility for dialysis patients. The landmark 1972 
(Medicare) legislation ensures that dialysis care is provided to this 
most vulnerable population. We continue to support innovative policy 
initiatives that reward improvements in care and the attainment of 
quality benchmarks based on scientific findings. Our Society and its 
members are dedicated to providing the highest standard of care and 
ensuring patient safety.
    The ASN is a professional association with approximately 10,000 
members. Of this membership, about 95% are physicians, with the 
remaining members basic scientists with a primary interest in renal 
disease. Virtually every licensed nephrologist in the United States is 
a member of the ASN, with an additional 3,000 nephrologists from 82 
other countries comprising the remainder of our membership. The Society 
is focused on promulgating innovative research related to renal 
disease, and on providing continuing medical education to physicians 
and scientists dedicated to the improved understanding and treatment of 
renal disease.
    In light of the recent studies published in the New England Journal 
of Medicine, ASN agrees that it is essential for the kidney care 
community to continue examining all available scientific data to ensure 
that public policies reflect appropriate anemia management for dialysis 
patients. We also reaffirm our ongoing commitment to work with the 
Congress and CMS to ensure that Medicare policy reflects the best 
science and ensures the welfare of patients, the public interest, and 
Medicare's stewardship of patients with kidney disease.
    Anemia is a complication of kidney failure, also known as End-Stage 
Renal Disease (ESRD) and is a consequence of kidney disease in patients 
receiving dialysis. Patients with kidney failure suffer from anemia 
because their kidneys do not produce a hormone (erythropoietin) that 
regulates red blood cell production. Anemia has a profound 
physiological effect on every organ system (including the brain) and 
directly affects patients' quality of life. Anemic kidney disease 
patients have more difficulty performing every day activities, 
including maintaining employment. Physicians determine a patients' 
degree of anemia with simple blood tests, measuring the hemoglobin or 
hematocrit levels. A healthy man has a hemoglobin level of 15 (roughly 
a hematocrit level of45 percent), with slightly lower values in healthy 
women. Before effective treatment was available, a dialysis patient 
would typically have severe anemia with a hemoglobin level lower than 
11 (hematocrit level of lower than 33 percent). Prior to the 
introduction of recombinant human erythropoietin (EPO) as a therapeutic 
agent in 1989, anemia management in dialysis patients was dependent on 
transfusions and other approaches which were largely ineffective.
    ASN recognizes that the optimal target hemoglobin/hematocrit level 
for patients with kidney failure may not be straightforward. During the 
past 10 years, several observational studies have suggested that higher 
hemoglobin levels are associated with a lower risk of hospitalization 
and death, and higher levels of cognitive function.
    However, recently two clinical trials published in the New England 
Journal of Medicine (NEJM) question whether higher hemoglobin targets 
are optimal for patients with kidney failure and have fostered a great 
deal of discussion within the scientific community. The CHOIR study 
indicated an association in kidney disease patients not yet on dialysis 
(patients diagnosed with Stages III and IV kidney disease) between 
higher hemoglobin levels and an increased risk for cardiovascular 
morbidity and death. The CREATE study (which was also published in the 
same November issue of the New England Journal of Medicine), in a 
similar group of patients with chronic kidney disease not on dialysis, 
found no significant difference in the combined incidence of severe 
adverse events between the higher and lower hemoglobin groups, although 
hypertensive episodes and headaches were more frequent in the former 
group.
    A key component to any critical review of the scientific research 
data examining utilization of erythropoietin is patient variability in 
clinical response. Research has indicated that patient comorbidities, 
intercurrent events including hospitalization, and practice patterns 
contribute to this variability, which is not unique to patients with 
kidney disease. One recent study concluded that the variability in the 
response of hemoglobin levels to etythropoetin treatment over time in 
individual patients may account for moving 28 percent of all dialysis 
patients above and below the target hemoglobin levels during a one-year 
timeframe. Other studies support this finding as well. Because of this 
variability in patient physiology, optimal anemia management often 
requires a highly individualized approach to treatment.
    ASN urges that Congress and CMS should take all available studies 
into account when setting Medicare policy. For example, the recent CMS 
EPO Monitoring Policy issued before the publication of the CHOIR and 
CREATE studies recognizes the need for reimbursement policy to take 
into account patient variability. When reviewing this policy, it is 
important to understand that it is not a treatment guideline. Rather, 
it is an auditing tool. Under the policy, if a patients' hemoglobin 
reaches 13 and the dose is not reduced, then CMS will reduce the 
payment 25 percent. It does not call for, nor recommend, that patients' 
hemoglobin levels are maintained above 12 in accordance with the Food & 
Drug Administration label.
    Congress should examine all of the available scientific literature 
before advising any policy changes. The recent trials should be 
reviewed along with those that are already a part of the literature, as 
well as the Food and Drug Administration package insert, to determine 
the optimal policies to be based on safety and efficacy. Policy should 
not be based upon the result of a single clinical trial. ASN is 
committed to working with the Congress and CMS to ensure that Medicare 
policy reflects the consensus of the scientific community.
    ASN appreciates the opportunity to provide the Committee this 
statement for the record. ASN cannot emphasis enough that this debate 
on anemia management is about patient safety and quality of life, 
quality care and policy based and grounded in scientific findings. It 
is imperative that the scientific community and government work 
together to promote the highest quality of patient care. We look 
forward to working with the Committee as we continue to evaluate 
clinical data.
            Sincerely,
                                                     , M.D.
                                                          President

                                 

                                Central New Hampshire Kidney Center
                                       Laconia, New Hampshire 03246
                                                  December 19, 2006
Chairman and Members of the Committee on Ways and Means

    I am a Nephrologist taking care of patients with End Stage Renal 
Disease for the last twenty years. I am the owner and medical director 
of Central New Hampshire Kidney Center (CNHKC) serving Laconia and the 
Lakes Region area of New Hampshire since 1990. As a physician, owner 
and administrator I had to make all the decisions that maintain my 
patient's safety, health and well being in addition to maintaining the 
financial viability of my dialysis unit. My choice was clear; patients 
and their needs always come first and have priority to any financial 
interest. Whenever a patient needed a medication he gets it because he 
needs it not because I will make few dollars off my patient. That was 
reflected in my use of EPO and how I was able to use 30--40% less drug 
than the national average. The following graph reflects the average 
weekly dose of EPO units used at CNHKC compared to the USA National 
average as reported by the USRDS.

[GRAPHIC] [TIFF OMITTED] 35773A.011


    In 1998 following the early results of the VA study``Subcutaneous 
Compared with Intravenous Epoetin in Patients Receiving Hemodialysis'' 
which was then published by the New England Journal of Medicine, August 
27, 1998 issue. http://content .nejm.org/cgi/content/abstract/339/9/
578?ijkey=08d84b8e606283b32c14b90c4284b3e 
ba947fa58&keytype2=tf_ipsecsha
     I switched the method of administration of EPO from intravenous to 
subcutaneous and I noticed that my usage has dropped by more than 20%. 
Since then I continued to use this method of administration. Since 1998 
I was using an average of 6000 units per week lower than the national 
average. This is equivalent to $3120.00 savings per patient per year 
for the Medicare and tax payers. By doing this I lost income that I 
could have generated from billing Medicare additional on average of 
$150,000.00 per year for the last 8 years. Also I lost rebates from 
Amgen because I did not achieve their required volume increase!!!!
    As a physician and administrator I would like to share with you my 
experience and few important points that need to be addressed in this 
forum:
1. Method of administration of EPO:
    It is a puzzle for me that the subcutaneous method is not the 
standard method up till now. It is the standard method throughout 
Europe, Canada and the Veterans Administration. By the year 2002 about 
70% of VA patients were switched to subcutaneous administration 
according to a VA press release http://www1.va.gov/resdev/news/
press_releases/epoetin-022802.cfm
    It is clear in the literature that approximately 20 to 30 percent 
of patients who receive EPO intravenously for the anemia of chronic 
renal failure may develop an elevation in diastolic pressure of 10 mmHg 
or more. In comparison, the blood pressure is less likely to rise after 
subcutaneous administration.
    Also it is clear that the main advantage of subcutaneous EPO is its 
longer half-life: 24 hours versus four to nine hours when given 
intravenously.
    So just by changing the method of administration this drug becomes 
safer and more effective and as an added bonus we will save the tax 
payers a lot of wasted money.
    Why for all those years this is not the standard of care?? What's 
going on??
    Why Amgen is not promoting a safer efficient way for using its 
drug??
    Since August 27, 1998 an Amgen sponsored study was published in the 
New England Journal of Medicine ``The Effects of Normal as Compared 
with Low Hematocrit Values in Patients with Cardiac Disease Who 
AreReceiving Hemodialysis and Epoetin'' http://content.nejm.org/cgi/
content/short/339/9/584, we learned from this study that higher 
hematocrit can kill dialysis patients. Yes, since 1998 not just in 2006 
we learned that higher hematocrit can be dangerous to our patients. Did 
this prompt Amgen to ensure safety of its drug? On the contrary Amgen 
and its consultants shoved the results of its own study under the rug 
and promoted achieving higher hematocrit!!
    Why a chronic kidney disease patient receiving the EPO 
subcutaneously will get switched to intravenous once he starts on 
dialysis? Is this better for the patient or better for the bottom line? 
All of a sudden ``it hurts''!! Yes, the bottom line!!
    Those issues needs to be addressed and investigated as for the last 
eight years tax payers paid at least 20% more for an expensive drug and 
patients where unnecessarily subjected to potential worsening of their 
blood pressure, which is the major cause of morbidity and mortality in 
those patients, and probably was a contributing factor to the early 
death for some of those patients.
2. Rebates:
    This is a total disgrace to the practice of medicine. It is 
shameful to allow rebates for achieving larger volume for the use of a 
drug. It is shameful that the physician is forced to increase the dose 
of EPO for a patient who has hemoglobin of 10.8 or 10.9 so the center 
can meet the rebate threshold yet he knows that it will not do the 
patient any good. It is a disgrace that we submit patient's labs to a 
drug manufacturer so we can get a rebate.
    This should STOP. It should have never been allowed. This is a 
shameful black spot on the practice of medicine.
3. Average Sale Price + 6%:
    What a joke? It will never cut on the use of drugs; it will make 
the fat cats fatter and it is not just killing patients it will also be 
killing the small providers and the competition or what ever left of 
it!! If the ASP of a drug is $1.00 this means that someone is paying 
$0.90 and another is paying $1.10 so the large provider will make a 
profit of about 18% and the small independent provider like me will 
lose about 5%. I don't think this is fair and it will never achieve 
what it is intended for. You have to level the field by using the 
Actual Sale Price or compensate the small provider different than the 
large provider. It is ridiculous that the small provider will end up 
contributing to the bottom line of Amgen and the large providers!!! 
That's why Fresenius made a deal with Amgen to be its sole provider of 
anemia drugs for the next five years to guarantee a lower price. This 
policy did nothing but gave Amgen the green light to keep increasing 
its price and Amgen delivered!!
4. EPO PRICE and COMPOSITE RATE:
    For each dialysis treatment I get paid an average of $130.00 while 
Amgen gets paid an average of $70.00 considering the current national 
average use per treatment. It is amazing that the price of this drug is 
more than 50% of the composite rate and yet the government is willing 
to pay??!!!. I have to provide 3-4 hours of nursing care, dietician, 
social worker, maintain equipment, maintain building and grounds, 
provide supplies, provide labs, insurance . . . etc. and yet on the 
other hand Amgen can decide it's own price no matter how ridiculous it 
is and increase it whenever it wants, no questions asked!!! The 
government controls the price for health care, the hospitals, clinics 
and physicians but when it comes to pharmaceuticals, they have a free 
ride. With the current drugs payment system as a small provider I end 
losing about 5% on EPO which means that I end up contributing to Amgen 
almost $3 every dialysis treatment. I don't think this is fair, this is 
nothing but ridiculous. It may be appropriate to let the free market 
work between the provider and the supplier but when the payer fixes the 
price on the providers that messes the whole picture, this economical 
concept is not an economy of capitalism not even economy of communism 
this is nothing but an economy of terrorism for the small provider. It 
is nothing but the pill of death for small providers. If the government 
wants to maintain healthy competition between providers then it will 
have to fix the price of EPO or force Amgen to sell it at a declared 
fixed price which is the same to every provider with no rebates or 
gimmicks. Amgen is a major partner in providing care for the ESRD 
program, Amgen had a free ride for many years and at this stage it 
needs to step up to its responsibilities and stop its practice of greed 
and back door gimmicks.
    I hope by sharing my concerns and frustrations as a small provider 
you will have a better vision and understanding to what at stakes here 
as our main goal is providing the best care to our patients in the most 
efficient way and at the highest standards medically and ethically. I 
will be glad to answer any question.
            Sincerely
                                                  Noshi Ishak, M.D.
                                              CEO, Medical Director

                                 

                   Statement of Kidney Care Partners
    The undersigned members of Kidney Care Partners (KCP) appreciate 
the opportunity to provide written testimony to the Committee regarding 
the intersection of anemia management and Medicare policy. We commend 
the Committee for its efforts to learn more about anemia management for 
individuals with kidney disease and kidney failure. Through the 
Medicare program, the federal government has assumed responsibility for 
the health and safety of dialysis patients. Therefore, it is 
appropriate that the Committee examine the optimum care patients should 
receive, including issues related to drug utilization.
    KCP is a coalition of patient advocates, dialysis providers, 
physicians, nurses, and manufacturers. Our mission, individually and 
collectively, is to ensure: (1) chronic kidney disease patients receive 
safe and optimal care; (2) chronic kidney disease patients are able to 
live quality lives; (3) dialysis care is readily accessible to all 
those in need; and (4) research and development leads to enhanced 
therapies and innovative products.
    Our members are dedicated to providing the highest standard of care 
and ensuring patient safety. The Centers for Medicare and Medicaid 
Services (CMS), the Government Accountability Office (GAO), the 
Medicare Payment Advisory Commission, and other organization have 
recognized the improvement of quality by the kidney care community 
during the last ten years. We continue to support innovative policy 
initiatives that reward improvements in care and the attainment of 
quality benchmarks. As part of our efforts, KCP launched the Kidney 
Care Quality Alliance, which has developed a starter set of quality-
related measures that could be used to evaluate and reward high quality 
care in the kidney care community.
    In light of the recent studies published in the New England Journal 
of Medicine, KCP agrees that it is essential for the kidney care 
community to continue examining all available data to ensure that 
public policies reflect appropriate anemia management for patients with 
kidney disease and kidney failure. We are committed to working with 
clinical researchers to determine the appropriate hemoglobin levels for 
these patients. We also reaffirm our ongoing commitment to work with 
the Congress and CMS to ensure that Medicare policy reflects the best 
science and ensures the welfare of patients, the public interest, and 
Medicare's stewardship of patients with kidney disease.
    Anemia is a complication of kidney disease, which is known as 
Chronic Kidney Disease (CKD) and kidney failure, also known as End 
Stage Renal Disease (ESRD or Stage V kidney disease). Patients with 
kidney failure suffer from anemia because their kidneys do not produce 
a hormone (erythropoietin) that regulates red blood cell production. 
Anemia has a profound physiological effect \1\ on every organ system 
(including the brain) and directly affects patients' quality of 
life.\2\ Anemic kidney disease patients have more difficulty performing 
activities of daily living and maintaining employment. They experience 
lower vitality and may suffer from depression.\3\ Doctors determine a 
patients' degree of anemia with simple blood tests, measuring the 
hemoglobin or hematocrit levels. A healthy man has a hemoglobin level 
of 15 (roughly a hematocrit level of 45 percent), with slightly lower 
values in healthy women. Before effective treatment was available, a 
dialysis patient would typically have severe anemia with a hemoglobin 
level lower than 11 (hematocrit level of lower than 33 percent).
---------------------------------------------------------------------------
    \1\ Morrell Michael Avram, et al., ``Hemoglobin Predicts Long-Term 
Survival in Dialysis Patients: A 15-Year Single-Center Longitudinal 
Study and a Correlation Trend between Prealbumin and Hemoglobin'' 87 
Kidney Internat'l (Supp.) S6-S11, S9 (2003).
    \2\ Allen R. Nissenson & Lawrence T. Goodnough, ``Anemia: Not Just 
an Innocent Bystander?'' 163 Arch. Intern. Med. 1400 (June 23, 2003).
    \3\ Hans Furuland et. al., ``A Randomized Controlled Trial of 
Haemoglobin Normalization with Epoetin Alfa in Pre-Dialysis Patients'' 
18 Nephrol. Dial. Transplant 353-61 (2003);
---------------------------------------------------------------------------
    There is a large and extensive peer-reviewed volume of literature 
discussing what the optimal target hemoglobin/hematocrit level for 
patients with kidney failure should be. For example during the past ten 
years, several observational studies have suggested that higher 
hemoglobin levels reduce the risk of hospitalization and death, while 
increasing cognitive function.\4\ As one of these studies suggests, 
these outcomes could result in lower costs to the Medicare program. 
Specifically, it found that Medicare patients with hematocrit values of 
36 to less than 39 cost the program significantly less than those 
patients with hematocrit values of less than 30.\5\ Other prospective 
clinical trials have not observed benefits with higher hematocrit 
levels.\6\ The FDA label recommends maintaining patients at a 
hemoglobin level of 10-12.
---------------------------------------------------------------------------
    \4\ S. Li & A.J. Collins, ``Association of Hematocrit Value with 
Cardiovascular Morbidity and Mortality in Incident Hemodialysis 
Patients'' 65 Kidney Int. 626-33 (2004); A.J. Collins, et al. ``Death, 
Hospitalization, and Economic Associations among Incident Hemodialysis 
Patients with Hematocrit Levels of 36 to 39%'' 12 J. Am. Soc. Nephrol. 
2465-73 (2001); A.J. Collins, et al., ``Hematocrit Levels and 
Associated Medicare Expenditures'' 36 [ 282-93 (2000); F. Locatelli, et 
al., ``Anemia in Haemodialysis Patients of Five European countries: 
Association with Morbidity and Mortality in the Dialysis Outcomes and 
Practice Patterns Study (DOPPS) 19 Nephrol. Dial. Transplant 121-32 
(2004); N. Ofsthun et al., ``The Effects of Higher Hemoglobin Levels on 
Mortality and Hospitalization in Hemodialysis Patients'' 63 Kidney Int. 
1908-14 (2003); E.G. Lowrie et al., ``Medical Outcomes Study Short 
Form-36: A Consistent and Powerful Predictor of Morbidity and Mortality 
in Dialysis Patients'' 41 Am. J. Kidney Dis. 610-9 (2003).
    \5\ Allan J. Collins et al. ``Death, Hospitalization, and Economic 
Associations among Incident Hemodialysis Patients with Hematocrit 
Values of 36 to 39%'' 12 J. Am. Soc. Nephrol. 2465-73 (2001).
    \6\ A. Besarab et. al., ``The effects of normal as compared with 
low hematocrit values in patients with cardiac disease who are 
receiving hemodialysis and epoetin'' 339 N Engl J Med. 584-90 (1998).
---------------------------------------------------------------------------
    Two recent studies published in the New England Journal of 
Medicine, which have engendered substantial controversy and 
discussion,demonstrate the continuing debate within the scientific 
community. The CHOIR study \7\ indicated an association in kidney 
disease patients not yet on dialysis (patients diagnosed with Stages 
III and IV kidney disease) between higher hemoglobin levels and an 
increased risk for cardiovascular morbidity and death. The CREATE study 
\8\ (which was also published in the same November issue of the New 
England Journal of Medicine), in a similar group of patients not yet on 
dialysis, found no significant difference in the combined incidence of 
severe adverse events between the higher and lower hemoglobin groups, 
although hypertensive episodes and headaches were more frequent in the 
former group.
---------------------------------------------------------------------------
    \7\ Ajay K. Singh, et al., ``Correction of Anemia with Epoetin Alfa 
in Chronic Kidney Disease'' 355 N Engl J Med 2085-98 (2006).
    \8\ Tilman B. Drueke, et al., ``Normalization of Hemoglobin Level 
in Patients with Chronic Kidney Disease and Anemia'' 355 N Engl J Med 
2071-84 (2006).
---------------------------------------------------------------------------
    Clinical studies have found that determining optimal hemoglobin 
levels is also complicated by patient variability in their response to 
the drug. Researchers believe patient comorbidities, intercurrent 
events like hospitalization, and practice patterns contribute to this 
variability, which is not unique to the kidney care community. One 
recent study concluded that the variability in the response of 
hemoglobin levels to epoetin treatment over time in individual patients 
may account for moving 28 percent of all dialysis patients above and 
below the target hemoglobin levels during a one-year timeframe.\9\ 
Other studies support this finding as well.\10\ Because of this 
variability in patient physiology, optimal anemia management requires a 
highly individualized approach to treatment.\11\
---------------------------------------------------------------------------
    \9\ E Lacson et al., ``Effect of Variability in Anemia Management 
on Hemoglobin Outcomes in ESRD'' 41 Am J. Kidney Dis. 111-24 (2003).
    \10\ Norma J. Ofsthun, et al., ``The Impact of the Change in CMS 
Billing Rules for Erythropoietin on Hemoglobin Outcomes in Dialysis 
Patients'' To Be Presented at RRI International Dialysis Conference 
(January 2007).
    \11\ Norma Ofthun et al., ``The Effects of Higher Hemoglobin Levels 
on Mortality and Hospitalization in Hemodialysis Patients'' 63 Kidney 
Internat'l 1908-14, 1913 (2003).
---------------------------------------------------------------------------
    Congress and CMS should take all available studies, as well as the 
Food and Drug Administration (FDA) label, into account when setting 
Medicare policy. For example, the recent CMS EPO Monitoring Policy, 
issued before the publication of the CHOIR and CREATE studies 
recognizes the need for reimbursement policy to take into account 
patient variability. When reviewing this policy, it is important to 
understand that it is not a treatment guideline. Rather, it is a 
reimbursement auditing tool. Under the policy, if a patients' 
hemoglobin reaches 13 and the dose is not reduced, then CMS will reduce 
the payment 25 percent. It does not call for, nor recommend, that 
patients' hemoglobin levels should be maintained above 12.
    In addition to the EPO Monitoring Policy, Congress may also 
consider anemia management studies when discussing reforms to the ESRD 
payment system. If Congress is considering payment revisions that 
incorporate any or all separately billable drugs or biologics into the 
composite rate, it is vital that an appropriate case-mix adjuster be 
developed that accounts for the variability in patient response to 
medications and the lack of predictability. Currently, there are no 
universally accepted case-mix adjustors for patients on dialysis that 
address patient variability in drug utilization. In its attempts to 
develop an ESRD bundle, CMS has recognized the difficulties of 
accounting for this variability as well: ``Implementation of a revised 
outpatient ESRD payment system without consideration of this patient 
specific variability may compromise patient access to quality of 
care.'' \12\ In addition, it is critically important that if a bundle 
is adopted, Congress also provide an annual update mechanism that would 
allow CMS to provide updates to the base rate. Currently, the Medicare 
ESRD program is the only Medicare program without such an update 
mechanism. These challenges must be met before such revisions are made.
---------------------------------------------------------------------------
    \12\ Department of Health and Human Services, ``Report to Congress: 
Toward a Bundled Outpatient Medicare ESRD Prospective Payment System'' 
22 (2003).
---------------------------------------------------------------------------
    Congress should examine all of the literature before advising any 
policy changes. The recent trials should be reviewed along with those 
that are already a part of the literature, as well as the FDA package 
insert. Policy should not be based upon the result of a single clinical 
trial. KCP members are committed to continuing their work with experts 
in the kidney care community to determine appropriate hemoglobin levels 
for patients with kidney failure, as well as with the Congress and CMS 
to ensure that Medicare policy reflects the consensus of the scientific 
community.
    KCP appreciates the opportunity to provide these comments to the 
Committee. Patient safety and quality care are at the heart of this 
discussion. It is imperative that the community and government promote 
the safest practices with the highest quality of care. We look forward 
to expanding upon our comments based upon today's discussion as well.
                                                Abbott Laboratories
                                               American Kidney Fund
                            American Nephrology Nurses' Association
                                              American Regent, Inc.
                                    American Renal Associates, Inc.
                                     American Society of Nephrology
                           American Society of Pediatric Nephrology
                                                              Amgen
                                        California Dialysis Council
                                          Centers for Dialysis Care
                                                       DaVita, Inc.
                                            DaVita Patient Citizens
                               Fresenius Medical Care North America
                                                            Genzyme
                                        Medical Education Institute
                                            Nabi Biopharmaceuticals
                          National Renal Administrators Association
                                           Northwest Kidney Centers
                                               Renal Advantage Inc.
                                      Renal Physician's Association
                                              Renal Support Network
                                               Satellite Healthcare
                                                    U.S. Renal Care
                                                Watson Pharma, Inc.

                                 

   Statement of National Kidney Foundation, Inc., New York, New York
    The National Kidney Foundation (NKF) is the nation's oldest and 
largest voluntary health organization serving the needs of patients 
with kidney disease (CKD) and the health care professionals who care 
for them. Our role is challenging since chronic kidney disease (CKD) 
patients often have multiple related diseases and complications 
including cardiovascular disease, hypertension, dyslipidemia, anemia, 
and bone and mineral metabolism problems. NKF appreciates the concern 
of the Ways and Means Committee for the quality of care for and safety 
of end stage renal disease patients. A similar dedication has driven 
the NKF's clinical practice guideline development program, known as the 
Kidney Disease Outcomes Quality Initiative (KDOQI).
    Since its inception in 1995, NKF's KDOQI has transformed medical 
practice, community and public awareness, healthy policy, and patient 
outcomes. KDOQI's 12 evidence-based clinical practice guidelines have 
shaped the way we look at kidney disease and how it is treated in the 
United States and around the world. The KDOQI process has always relied 
on a structured review of the evidence and the independence of the work 
group assembled to review each topic. Updates to the original KDOQI 
clinical practice guidelines for hemodialysis, peritoneal dialysis, and 
vascular access were published as a supplement to the July 2006 edition 
of the American Journal of Kidney Diseases. A new version of the KDOQI 
anemia guidelines, the Clinical Practice Guidelines for Anemia of 
Chronic Kidney Disease, was published as a supplement to the May 2006 
issue of the American Journal of Kidney Diseases. The KDOQI anemia 
guidelines were originally published in 1997, and updated in 2001. This 
new guideline has been expanded to cover all stages of chronic kidney 
disease (CKD). Anemia often negatively affects the quality of life for 
patients with CKD. However, among all the potential complications of 
CKD, anemia is perhaps the most responsive to treatment.
    The National Kidney Foundation has finalized plans for a formal 
review of new information that might have an impact on these recent 
recommendations from KDOQI on anemia management. This confirms KDOQI's 
announcement last month that it would continue its decade-long process 
of timely review of new data relevant to published KDOQI Clinical 
Practice Guidelines. The Co-Chairs of KDOQI have asked the anemia work 
group to reconvene on February 3, 2007, to discuss the implications of 
recently published studies and studies accepted for publication on 
anemia.
    The first step in this process will be a structured review of the 
new evidence by the NKF Evidence Review Team headquartered at Tufts New 
England Medical Center in Boston. This evidence will then be examined 
by the work group to determine if it has a material impact on any 
recommendations made in the KDOQI Clinical Practice Guidelines and 
Clinical Practice Recommendations for Anemia in Chronic Kidney Disease 
published in May, 2006. When the anemia work group and the evidence 
center complete the analysis of the new studies for both safety and 
efficacy, appropriate announcements or publications will be developed.
    This same concern for patient safety and quality of care for 
Medicare beneficiaries in the End Stage Renal Disease Program leads the 
NKF to urge Congress and the Centers for Medicare and Medicaid Services 
to analyze with caution the recommendations from the Government 
Accountability Office for bundled payment for dialysis services. We 
draw the Committee's attention to a Report that Secretary Thompson sent 
to Congress in 2003. The title of the Report is: ``Toward a Bundled 
Outpatient Medicare ESRD Prospective Payment System.'' On page 22 there 
is the following statement: ``Implementation of a revised outpatient 
ESRD payment system without consideration of this patient specific 
variability may compromise patient access to quality care.'' On page 
31, ``The changes in practice patterns resulting from a bundled ESRD 
(Prospective Payment System) will require monitoring to determine 
whether clinical outcomes improve or decline as a result of the 
system's financial incentives.'' On page 33, ``Several of the K/DOQI 
clinical practice guidelines provide measures and minimum values of 
quality dialysis. Efforts to collect and evaluate such measures will be 
essential in order to ensure that clinical outcomes do not decline as 
facilities respond to the new financial incentives created by a bundled 
(Prospective Payment System).''
    The recommendation for a bundled payment for dialysis services 
reflects a concern about the potential for over-utilization that exists 
under the current reimbursement policy. Nevertheless, a bundled system 
creates incentives for underutilization that could negatively affect 
dialysis patient outcomes. This is of particular concern in that higher 
doses of epoetin are required in the African American population, those 
individuals that have vasculitis as a cause of their kidney failure and 
cancers such as Multiple Myeloma (United States Renal Data System 2003 
Annual Data Report). Also, patients with chronic infections and 
dialysis catheters also require more epoetin secondary to resistance to 
the medication. As far as anemia therapy is concerned, the effect of 
Medicare's early payment policy suggests that the threat of 
underutilization is real. Medicare initially provided a flat payment 
for erythropoietin, without regard to dosage. Under that payment 
system, dosage was low and there was little improvement in the anemia 
experienced by dialysis patients. There was also evidence of racial 
disparities that developed based on the responsiveness to treatment 
noted above (United States Renal Data System 2003 Annual Data Report). 
We are concerned that these areas need to be given careful 
consideration.
    There are additional concerns about a bundled payment system that 
should be addressed. Many patients have bone and mineral metabolism 
disorders that require treatment with active vitamin D analogs. A 
bundled payment system could result in a substitution of oral vitamin D 
for injected vitamin D preparations. Not only would this shift cost 
from Medicare Part B to Medicare Part D, but the effect of vitamin D 
therapy could be much more dependent upon patient compliance. According 
to the United States Renal Data System 2006 Annual Data Report, only 
65% of individuals with Employer Group Health Plan medication coverage 
routinely took their medications. This area should also be given 
careful consideration. The potential for undertreatment may also lead 
to elevated parathyroid hormone levels which is associated with epoetin 
hyporesponsiveness, thereby compromising the bundled amount to cover 
this medication.
    Similarly, we are concerned that a bundled payment system could 
lead providers to revert to the use of blood transfusions to treat 
anemia in dialysis patients who are not responsive to erythropoiesis 
stimulating agents. Not only would such a change in practice patterns 
expose this vulnerable patient population to unknown risks from the 
nation's blood supply but it would also make it difficult to consider 
these patients for kidney transplantation since the transfusions 
introduce antibodies that complicate organ matching.
    These are only a few examples of the concerns with bundling. It was 
stated at the hearing that it would be possible to make retroactive 
adjustments should the bundling formula prove to be problematic. 
However, there will be no way to reverse the negative patient outcomes 
that could result from adoption of a bundled reimbursement policy that 
does not address these issues.
    The National Kidney Foundation appreciates the opportunity to 
submit this testimony. The Committee members should consider the 
National Kidney Foundation as a resource while it continues to 
deliberate these issues. Thank you!

                                 

   Statement of the Renal Physicians Association, Rockville, Maryland
    The Renal Physicians Association (RPA) is the professional 
organization of nephrologists whose goals are to ensure optimal care 
under the highest standards of medical practice for patients with renal 
disease and related disorders. RPA acts as the national representative 
for physicians engaged in the study and management of patients with 
renal disease. RPA greatly appreciates the interest of Committee Chair 
William Thomas and Ranking Member Charles Rangel in the issues 
surrounding anemia management services provided to patients with kidney 
disease and kidney failure. We welcome the opportunity to offer our 
perspective on these complex issues. Our testimony will focus on the 
use of clinical practice guidelines and best evidence in healthcare 
delivery, the role of the nephrologist in the care of patients with 
kidney disease and the importance of maintaining physician prescribing 
autonomy, the issue of ESRD patient variability related to EPO dose, 
and common misperceptions regarding anemia management and reimbursement 
for these services.
Clinical Practice Guidelines and Physician Prescribing Autonomy
    RPA believes that clinical practice guidelines in renal care, like 
those in other medical disciplines, should be evaluated on the basis of 
the strength of evidence, an assessment of harms and benefits, and 
should benefit from robust physician and other multidisciplinary input 
and review. Guidelines developed with these considerations in mind will 
enhance the delivery of high quality patient care and help ensure 
kidney patient safety. RPA also believes that the current body of 
literature in the area of anemia management fulfills these criteria, 
and forms a solid foundation for public policy making efforts such as 
the Centers for Medicare and Medicaid Services (CMS) recently finalized 
EPO Monitoring Policy (EMP). Further, it is our opinion that the CHOIR 
and CREATE studies recently published in the New England Journal of 
Medicine, once they have been subject to the full measure of robust 
scientific review, will likely represent an important addition to this 
already significant body of literature, and should be considered 
thoughtfully and thoroughly by care providers and policymakers.
    However, RPA also feels compelled to note that clinical practice 
guidelines are in fact guidelines, not required protocols, and that the 
most important determining factor in the care of the patient should be 
the physician's clinical judgment considered in the context of the 
physician-patient relationship. RPA believes that it is of paramount 
importance to maintain the physician's autonomy and ability to exercise 
clinical judgment in prescribing for the individual patient. Decisions 
for the individual may and should be permitted to deviate from the norm 
on the basis of individualized clinical evaluation and specific patient 
needs. This is a fundamental and well-recognized clinical principle in 
medicine, and it is mandatory that it be maintained and protected. RPA 
believes the CMS' EPO Monitoring Policy accounts for such use of the 
physician's clinical judgment.
Variability in ESRD Patient Hemoglobin Levels
    RPA believes that in the recent discourse on national coverage of 
EPO, the critical issue of variability of individual patient response 
to EPO dose has been understated. As noted in RPA's previous 
correspondence to CMS on EPO coverage policy development, attempts to 
assess or quantify individual sensitivities (i.e. responsiveness) to 
EPO at a narrow level have not been successful. Thus,there is no 
single, predictable response to a given dose of EPO, a fact that 
accounts for the wide range in individual responses to treatment. As a 
result, in the aggregate it is physiologically not rational to tailor a 
normal distribution of patient responses to a payment limit: such a 
paradigm cannot be successful in delivering optimaltreatment with 
sophisticated agents to complicated patients. Payment limits structured 
in this fashion place emphasis on the wrong arm of therapy: emphasis 
should be placed rather on reducing the number of patients with low 
hematocrits/hemoglobins (>30%/10 gm/dL). At the same time, Medicare 
coverage policy should strive to maintain levels in all patients <11 
gm/dL, given the ample data disclosing the adverse short and long-term 
effects to patients with persistent anemia. Simply put, overemphasis on 
monitoring patients at the upper end of the range should not create 
problems for patients at the lower end, and RPA believes that the 
current CMS EPO Monitoring Policy strives to avoid such problems in the 
broad Medicare ESRD beneficiary population.
Misperceptions Regarding EPO Requirement
    Finally, RPA would also like to take this opportunity to dispel 
some common misperceptions regarding reimbursement for erythropoietin. 
There have been articles in both the mainstream and medical trade press 
implying that nephrologists have a financial incentive to prescribe 
higher doses of erythropoietin to ESRD patients. This is simply not 
true. Nephrologists prescribe EPO based on their clinical judgment of 
what will optimize the individual patient's hemoglobin level. Moreover, 
it is the dialysis facility that receives reimbursement for EPO 
prescribed to ESRD patients, not the nephrologist, and thus any 
inference that the nephrologist will personally benefit from 
prescribing higher doses of EPO, or any drug, to ESRD patients is 
erroneous.
Conclusion
    In conclusion, RPA supports the use of clinical practice guidelines 
in the development of protocols enhancing the delivery of high quality 
patient care but believes they must be considered in the context of the 
physician's clinical judgment. RPA believes that physician prescribing 
autonomy must be maintained, and that the variability in ESRD patient 
hemoglobin levels must be accounted for in the development of national 
coverage policy for EPO. Finally, the misperception that nephrologists 
have a financial incentive to prescribe high doses of EPO to ESRD 
patients is erroneous. Once again, RPA appreciates the opportunity to 
provide our perspective on these issues to the Committee, and we make 
ourselves available as a resource to the Committee in its future 
efforts to ensure the best possible health outcomes and quality of life 
for Medicare beneficiaries with ESRD.

                                 

 Statement of Kris Robinson, American Association of Kidney Patients, 
                             Tampa, Florida
    The American Association of Kidney Patients (AAKP) (www.aakp.org), 
founded in 1969, is the nation's only kidney patient-led and managed 
education and advocacy organization for people with kidney disease. 
AAKP serves over one million Americans annually who have either lost 
kidney function (and live with dialysis or transplant) or have chronic 
kidney disease (CKD). As you may know, the average life expectancy for 
individuals following initiation of dialysis therapy is short, less 
than 5 years. As patients ourselves, we realize the important need to 
ensure quality of care and access for all dialysis and potential 
dialysis patients.
    AAKP was instrumental in the fight for the enactment of the 
Medicare ESRD Program. In 1972, Shep Glazer, the Vice President of our 
forerunner organization, testified before the House Ways and Means 
Committee while being dialyzed. This effort was crowned with success in 
1972 when Congress enacted the program that continues to provide 
Medicare funding for dialysis and kidney transplantation.
    AAKP appreciates the opportunity to provide written testimony to 
the House Ways and Means Committee. We are available to assist the 
Committee with needed information as it continues to review quality of 
care issues for today's dialysis patients. AAKP's written testimony 
will provide patients' views on safety and efficacy in healthcare and 
provide insight into what patients need to ensure a high quality of 
life and health.
    AAKP commends the Committee for assessing and reviewing patient 
safety and quality issues for care received by dialysis patients. 
AAKP's mission has always been to help all kidney patients achieve the 
best possible quality of life and longevity.
    Regarding specific issues under review by the Committee, AAKP has 
developed and distributed position papers on the following topics in 
recent years: 1). Support for the continuation of the patient and 
physician relationship in medical care; 2). Support for continuous 
quality care and improvement and 3). Support for continuous safety 
monitoring. The content of these positions is summarized below:
    Patient/Physician Relationship--AAKP strongly believes the 
principle that a physician and patient must be permitted to decide a 
care plan best suited for that patient. Averages and other statistics 
are fine for certain purposes, but medicine is fundamentally about the 
treatment of a unique individual. In this light, we worry that any 
legislation that mandates particular treatment options may impede the 
doctor/patient decision-making relationship.
    ESRD Continuous Quality Improvement--AAKP supports legislation to 
provide data on outcomes and quality of care for kidney patents. We 
worry that piecemeal approaches to improving quality may not offer the 
best health outcomes for patients and is why we have continuously asked 
Congress to establish a ``National Commission on Improved Kidney 
Patient Outcomes.''
    Safety Monitoring--AAKP supports legislation to ensure safety in 
healthcare settings. We applaud Congress, the Centers for Medicare and 
Medicaid Services (CMS) and the renal community as a whole for 
developing programs to ensure safety for all patients. However, we wish 
to encourage Congress to look at the major safety issues that impact 
all patients.
    With regard specifically to the administration of erythropoietin 
(EPO) to patients, AAKP has previously addressed CMS with comments and 
questions regarding dosing policies. Though recent clinical studies 
such as CHOIR have demonstrated mortality in non-dialysis patients, we 
have asked CMS ``Is there any clinical data that demonstrates that 
dialysis patients--either nationally or regionally--are in fact 
receiving more EPO than necessary to maintain an appropriate hematocrit 
level, or that inappropriate EPO prescribing by physicians is the 
driver for increased EPO spending?'' We are awaiting a response.
    Furthermore, AAKP is also interested in how the issues currently 
being discussed about EPO will be affected by the ``Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003'' (DIMA) 
(P.L. 108-173). In particular, section 623 of DIMA instructs CMS to 
implement effective January 1, 2005, a new ``basic case-mix adjusted 
composite rate,'' which would, inter alia, transfer the dollar 
difference (the ``spread'') between acquisition and Medicare payment 
rates for separately billed drugs and biologicals (including 
erythropoietin) to the per-session composite rate for dialysis 
treatment. Even if there is some current law financial incentive for 
overutilization of EPO, would not that incentive be eliminated by 
section 623? We are concerned that section 623 has not occurred as 
scheduled.
    National Commission on Improved Kidney Patient Outcomes--AAKP 
previously wrote to the House Ways and Means Committee calling for a 
``National Commission on Improved Kidney Patient Outcomes.'' We believe 
a global perspective--rather than a piecemeal approach--is needed to 
improve quality and coordination of medical care for dialysis patients, 
and perhaps even create savings to Medicare. Indeed, as payor for the 
medical care of about 75 percent of all kidney patients receiving 
dialysis in the United States, CMS bears a special responsibility to 
ensure that dialysis patients not only receive quality medical care--
but that care is provided in a manner that maximizes positive outcomes. 
We would note the November 21 report by the HHS Inspector General 
calling for more collection of quality of care date in the ESRD 
program. AAKP believes these issues will become even more urgent as the 
nation's dialysis population is expected to grow three-fold over the 
next decade.
    Moreover, in the kidney community today, there is a vigorous debate 
about the adequacy of medical care of dialysis patients, prompted by 
apparently higher U.S. dialysis patient disability, morbidity, and 
mortality in cross-national studies. Some have argued that it is a 
``national disgrace that the death rate now solidly stays in the region 
of 24% every year and has more than doubled over the last 30 years'' 
(Kjellstrand, CM, Blagg, CR, ``Differences in dialysis practice are the 
main reasons for the high mortality rate in the United States compared 
to Japan,'' Hemodial Int. 2003; 7(1): 70). Others believe that cross-
national comparisons are flawed for selection reasons (i.e., sicker, 
older patients are denied dialysis in comparison countries) and that 
the U.S. should take pride in the unique availability of dialysis here 
(see, e.g., Friedman, EA, ``International comparisons of survival on 
dialysis: Are they reliable?'' Hemodial Int. 2003; 7(1):59-66). In any 
case, with the U.S. ranking last among industrialized countries in 
mortality for kidney patients, there is a clear need to take a close 
look at the adequacy of medical care for U.S. dialysis patients.
    Charged with a comprehensive program review, the agenda for such a 
National Commission might also include patient access to other 
important renal replacement treatments, such as home dialysis and 
transplantation; nephrologists' residency training; and reimbursement 
of rural facilities. There are also many other opportunities to improve 
care and reduce costs to Medicare, including slowing the progression to 
ESRD among chronic kidney disease patients (CKD), better chronic 
disease management, advances in new technology and biomedical 
solutions, more transplantation, and improved patient education. AAKP 
stands ready to assist the Committee on ways to implement such a 
Commission.
    AAKP commends the Committee for addressing the issues of quality of 
care as currently delivered to the over 300,000 dialysis patients. We 
appreciate the opportunity to provide input into your efforts and look 
forward to working with you to provide continuous quality improvement 
to all patients.

                                 

   Statement of Dori Schatell, Medical Education Institute, Madison, 
                               Wisconsin
    The Medical Education Institute (MEI) is a non-profit foundation 
dedicated to the mission of helping people with chronic diseases learn 
to manage and improve their health. Since 1993, MEI efforts have 
focused on improving longevity and quality of life for people with 
chronic kidney disease (CKD) through health behavior research and 
evidence-based patient and professional education materials. I 
appreciate the opportunity to provide an additional viewpoint for the 
Committee.
    To begin, I am dismayed by the implication that the K/DOQI 
Guidelines were influenced by industry participation. When the MEI 
administered the first DOQI Guidelines in 1996, I was the ``writer'' 
for the Anemia Work Group, recording their deliberations. Amgen 
requested and was denied permission to observe the proceedings of this 
Work Group--they read the final Guidelines at the same time as the rest 
of the renal community and had no role in the outcome. The clinicians 
who spent many months of intensive hours reviewing hundreds of 
scientific papers and developing recommendations were a dedicated, 
conscientious group who knew they were making history. I am very 
saddened to hear their labors and the subsequent results of groups that 
updated the National Kidney Foundation K/DOQI Guidelines denigrated and 
their ethics called into question. Industry support from Amgen and 
others for the original DOQI Guidelines and subsequent K/DOQI 
Guidelines has moved the practice of nephrology forward by helping to 
establish key clinical benchmarks in a number of vital areas of 
practice, including nutrition, bone disease, dialysis adequacy, 
vascular access, etc. Where would patients be today if those Guidelines 
had not been written? Who would have supported their development if 
industry had not stepped up to the plate?
    Second, much of the criticism of current CMS policy regarding 
anemia treatment for people on dialysis is based on the recently-
published CHOIR study. Having reviewed the results, which concluded 
that patients with stages 3-4 CKD had a 34% higher risk of adverse 
outcomes if their hemoglobin levels were 13.5 g/dL, several aspects of 
this paper were of sufficient concern to possibly call the conclusions 
into question:

      Study power: A power analysis revealed that 1,352 
patients would need to be enrolled; data were reported for 1,432 
patients on the basis of intent to treat. But 549 patients withdrew 
from the study without having had a composite event. Did this bias the 
findings?
      Baseline differences between the high and low hemoglobin 
groups: There were significant differences in baseline data for 
cardiovascular history. Those in the high Hgb group had a significantly 
higher rate of high blood pressure (p=0.03) and coronary artery bypass 
graft (p=0.05) prior to the study. Did this influence the results?
      Differences in baseline GFR: It is unclear whether the 
time to renal replacement therapy (RRT) analysis accounted for baseline 
variations in GFR. Clearly individuals with a GFR of 15 at baseline are 
much closer to needing RRT than those whose GFR was 50.
      No blood pressure changes: Despite worse cardiovascular 
outcomes in the high hemoglobin group, there were no significant 
changes in blood pressure in the high vs. low hemoglobin group. This 
seems odd.
      Lack of statistical significance: The CHOIR authors state 
that there were, ``no significant differences between the two groups in 
the four individual components of the primary composite end point 
(hospitalization, MI, stroke, or death). . . . However, the hazard 
ratios for death and hospitalization for CHF had strong trends toward a 
higher risk in the high-hemoglobin group than in the low-hemoglobin 
group.'' Also, the risk of heart attack (MI) with high hemoglobin 
was.91 (less than 1.00); thus those with higher hemoglobin actually had 
a lower risk of MI.
      Non-standard measurement of quality of life: It is 
unclear why three separate tools were used to assess quality of life 
(QOL). Given the highly unusual finding of no QOL benefit to a higher 
vs. a lower hemoglobin, one must wonder if patients were overwhelmed by 
the sheer number of survey items (a total of 83 questions, many with 
sub-questions). Multiple studies in CKD and dialysis patients have 
shown that those with higher hemoglobin levels score significantly 
higher in physical and mental functioning on the SF-36 and Kidney 
Disease Quality of Life (KDQOL).\1\ \2\ And, in the dialysis 
population, higher physical and mental functioning independently 
predict lower rates of hospitalization and death.\3\ One of the tools 
used in the CHOIR study (LASA) was developed for breast cancer and has 
been used only twice before in kidney patients. Interestingly, in one 
of those two studies, 1,557 non-randomized predialysis CKD patients 
received r-HuEPO, and their hemoglobin levels rose from 9.1 g/dL to 
11.6 g/dL in 16 weeks with significant improvement in all QOL 
parameters.\4\ In the other analysis by some of the same researchers, 
there was ``a positive and significant relationship between Hb levels 
and QOL.''\5\

    \1\ Perlman RL, Finkelstein FO, Liu L, Roys E, Kiser M, Eisele G, 
Burrows-Hudson S, Messana JM, Levin N, Rajagopalan S, Port FK, Wolfe 
RA, Saran R. Quality of life in chronic kidney disease (CKD): a cross-
sectional analysis in the Renal Research Institute-CKD study. Am J 
Kidney Dis. 45(4):658-66, 2005.
    \2\ Mapes DL, Bragg-Gresham JL, Bommer J, Fukuhara S, McKevitt P, 
Wikstrom B, Lopes AA. Health-related quality of life in the Dialysis 
Outcomes and Practice Patterns Study (DOPPS). Am J Kidney Dis. 2004 
Nov;44(5 Suppl 2):54-60
    \3\ Lowrie EG, Curtin RB, LePain N, Schatell D. Medical outcomes 
study short form-36: a consistent and powerful predictor of morbidity 
and mortality in dialysis patients. Am J Kidney Dis. 2003 
Jun;41(6):1286-92.
    \4\ Provenzano R, Garcia-Mayol L, Suchinda P, Von Hartitzsch B, 
Woollen SB, Zabaneh R, Fink JC; POWER Study Group. Once-weekly epoetin 
alfa for treating the anemia of chronic kidney disease. Clin Nephrol 
61(6):392-405, 2004.
    \5\ Lefebvre P, Vekeman F, Sarokhan B, Enny C, Provenzano R, 
Cremieux PY. Relationship between hemoglobin level and quality of life 
in anemic patients with chronic kidney disease receiving epoetin alfa. 
Curr Med Res Opin. 22(10):1929-37, 2006.

    In light of these concerns--and of the exactly contradictory 
findings of the CREATE study in a similar population published in the 
same issue of the New England Journal of Medicine--the MEI urges the 
Committee to proceed with caution and consider all of the available 
data.
    Third, previous CMS policies related to use of EPO to correct 
anemia in people on dialysis have had unintended consequences that have 
harmed patients. Early reimbursement of EPO offered incentives to 
undertreat patients when dialysis centers were paid $40 for up to 
10,000 units and $30 additional for more than 10,000 units. The 
Hematocrit Measurement Audit (HMA) policy, which stopped EPO 
reimbursement to dialysis centers for patients whose hematocrit levels 
rose above a rolling average of 36.5%--without a provision to permit 
physicians to medically justify higher levels--led to lower average 
hematocrit levels and patients complained of a ``roller coaster'' 
effect that was very debilitating. Please see the attached article the 
MEI published in Nephrology News and Issues with patient interviews 
that illustrate in these individuals' own voices how difficult it is to 
care for children or grandchildren, do simple tasks around the home 
(like vacuuming, hammering nails, or washing windows), hold down a 
job--or even walk to the mailbox with inadequate anemia correction, and 
how very much better patients feel at a higher vs. a lower hematocrit. 
Anecdotally, patients report they feel every percent of difference in 
their hematocrit or hemoglobin. The MEI is concerned that bundling EPO 
with other drugs may, over time, lead to underutilization as dialysis 
centers attempt to hold down costs to compensate for inflation--unless 
an appropriate case mix adjuster is used and an annual update mechanism 
is created, as was proposed in the Kidney Care Quality and Improvement 
Act.
    Fourth, each year, according to the United States Renal Data System 
(USRDS) half of the more than 100,000 individuals who reach end-stage 
and need dialysis or transplant to survive are under age 65, or 
``working-age.'' Enabling working-age patients to keep their job 
benefits:

      Patients themselves--through improved social contacts, 
higher income than disability would pay, and access to benefits that 
may include an employer group health plan (EGHP)
      Dialysis providers--by improving payer mix for dialysis 
centers
      Medicare and Social Security--by reducing the number of 
ESRD patients who have Medicare as their primary health coverage and 
the number collecting disability benefits.

    More than 354,000 working age patients started dialysis from 1992-
2003. Of these, 102,104 were working 6 months prior. More than 71% of 
these working patients did not receive any EPO to treat their anemia 
prior to kidney failure, contributing significantly to reduction in 
employment levels in more than 31,000 patients.\6\ In 1973, the 
Medicare ESRD Program was funded based on the belief that people who 
received treatment for kidney failure would be active, productive, tax-
paying citizens. To the extent that physicians and patients are 
frightened that appropriate anemia treatment will harm them and 
patients are undertreated as a result, the goal of keeping patients 
working will become even more difficult to achieve.
---------------------------------------------------------------------------
    \6\ Hofmann RM, Schatell D, Witten B, Muehrer R, Gagnon R, Becker 
BN. Factors contributing to employment of working-age ESRD patients at 
initiation of dialysis therapy. Publication pending.
---------------------------------------------------------------------------
    Finally, if there is a trade-off to be made between length of life 
and quality of life (with a lower versus a higher hemoglobin level), 
only one person can legitimately make that choice: the person with 
anemia. I hope the Committee will bear in mind that reimbursement 
policies ultimately and dramatically affect the day-to-day lives and 
futures of people with kidney failure.
    Perhaps the Committee could consider looking at innovative ways to 
reduce costs while improving patient outcomes. For example, why not 
incentivize patients to receive their EPO doses subcutaneously, which 
is more effective and less costly--but requires more needle sticks. 
Waiving all or a portion of their Medicare Part B premiums ($93.50 
monthly in 2007) for patients who accept subcutaneous dosing would 
likely save considerably more than it would cost. (Incidentally, 
concerns about pure red cell aplasia with subcutaneous dosing of ESR 
products in Canada and Europe have now been attributed to the use of 
uncoated rubber stoppers in the vials, a practice that has now been 
stopped).\7\
---------------------------------------------------------------------------
    \7\ Boven K, Knight J, Bader F, Rossert J, Eckardt K, Casadevall N. 
Epoetin-associated pure red cell aplasia in patients with chronic 
kidney disease: Solving the mystery. Nephrol Dial Transplant. 20 Suppl 
3:iii33-40, 2005.

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

                              Coalition for Dialysis Patient Choice
                                                  December 20, 2006
    The Coalition for Dialysis Patient Choice attended the recent 
Congressional hearing on Patient Safety and Quality Issues in End Stage 
Renal Disease Treatment and appreciates the opportunity to provide 
comments to the Committee regarding reimbursement policies for anemia 
management. The Coalition is a non-profit organization formed by 
companies and organizations dedicated to increasing the availability of 
innovative, more physiologic dialysis therapies (more frequent and/or 
longer duration) and reducing the barriers to home and self-care 
dialysis.
    Given the critical role the Federal government has assumed in the 
care of dialysis patients, we commend the Committee's efforts to seek 
optimum care in anemia management. As payment methodologies are 
revised, our Coalition asks that the potential to increase patient 
access to home and more frequent dialysis modalities also be 
considered. Greater utilization of these modalities will assist in 
addressing the particular anemia management questions raised by this 
Committee, and also has the potential to lower total Medicare costs and 
improve beneficiary outcomes.
    Hemoglobin levels in the dialysis population and utilization of 
pharmaceuticals to address anemia are without doubt influenced by 
payment policy. The same ``perverse incentives'' that influence in-
center IV drug utilization also discourage home therapies. As stated in 
the Government Accountability Office's (GAO) recent report titled 
Bundling Medicare's Payment for Drugs with Payment for All ESRD 
Services Would Promote Efficiency and Clinical Flexibility, ``Studies 
have shown that daily hemodialysis--which some experts contend is 
clinically preferable--reduced the need for Epogen in some ESRD 
patients with anemia . . . [h]owever, Medicare coverage is limited to 
three dialysis treatments a week.'' Evidence supports that home 
dialysis, whether peritoneal dialysis (PD) or home hemodialysis (HHD), 
is currently underutilized--despite the continued evidence reported 
annually, using Medicare data, that the home setting leads to the 
lowest total cost of care.
    We support the GAO's recommendation for the rapid implementation of 
the ``expanded bundle'' as soon as possible. If coupled with 
appropriate safeguards and case-mix considerations to protect patients 
from EPO underutilization, this method represents a very effective way 
to reverse these perverse incentives and their negative unintended 
consequences. We further favor the implementation of the ``expanded 
bundle'' for all beneficiaries as soon as practicable.
    However, neither patients nor Medicare will realize the greatest 
potential benefit if revision in payment policy results only in more 
efficient utilization of pharmaceuticals within today's most prevalent 
treatment regimen--thrice weekly hemodialysis in the center, or 
``conventional'' hemodialysis. A large, recent randomized study of 
conventional dialysis (the NIH/NIDDK's HEMO study) showed that 
modifications within this treatment regimen were unlikely to lead to 
significant improvement in patient outcomes. To materially improve 
patient outcomes and reduce Medicare costs, more significant 
modifications are required to the way dialysis is delivered. Simply 
put, significantly better dialysis is required for further improvement, 
and more frequent/longer dialysis provides this opportunity.
    The clinical evidence supporting more frequent and longer dialysis 
modalities is compelling and growing. By closer approximation of the 
24/7 workings of the naturally functioning kidney, more frequent/longer 
dialysis leads to a number of potential patient benefits. Relevant to 
this discussion, these therapies have been shown to improve anemia 
management with lower pharmaceutical needs. In addition, however, these 
therapies can also:

      Dramatically improve blood pressure management with fewer 
antihypertensive drug needs
      Better manage patient bone disease and vascular 
calcification
      Improve patient nutrition
      Improve patient rehabilitation/functional status.

    The most natural setting for these therapies is in the home, where 
the patient retains control of his or her schedule and care. Together, 
these improvements have the potential to dramatically reduce Medicare 
ESRD drug and hospitalization expenses currently incurred by 
conventional dialysis patients (these expenses represent over 60% of 
the current total annual cost of care), and can facilitate patients' 
continued contributions as productive members of society.
    We believe that the expanded bundle structure, with appropriate 
performance measures and the implementation of ``shared savings'' 
concepts that have been discussed, can be instrumental in encouraging 
therapies beyond today's conventional, thrice weekly in-center 
dialysis.
    In summary, the Coalition asks that the Committee consider the 
anemia management questions more broadly, and to take a total cost of 
care perspective when recommending changes. We ask that you explicitly 
consider the potential to encourage appropriate utilization of home and 
more frequent/longer dialysis therapies when making payment policy 
modifications. By doing this, not only will Medicare encourage optimal 
anemia management but, at the same time, optimize patient care costs 
and outcomes.
    Again, we appreciate the opportunity to provide input into this 
important process. We stand ready to provide any additional information 
that will assist the Committee and the community in this valuable work.
            Sincerely,
                                                Joseph E. Turk, Jr.
                                                    NxStage Medical
                                                    Founding Member

                                                         Rod Kenley
                                                         Aksys Ltd.
                                                    Founding Member

                                                        Jim Sweeney
                                              Renal Solutions, Inc.
                                                    Founding Member

                                                      Dori Schatell
                                        Medical Education Institute
                                                 Supporting Partner

                                 

 Statement of Patricia Tate-Harris, Association of Dialysis Advocates, 
                         Baton Rouge, Louisiana
    The Association of Dialysis Advocates (ADA) is a grassroots 
patient/family advocacy organization dedicated to ensuring quality, 
safe care for dialysis patients. ADA is self-funded through personal 
contributions of our members. We do not accept financial or other 
contributions from the dialysis industry, pharmaceutical industry, 
healthcare industry, or any government entity so that we maintain our 
integrity and objectivity in addressing dialysis-related issues.
    ADA is encouraged by the House of Representatives Ways and Means 
Committee's hearing of December 6, 2006 re: the ESRD Program. We are 
encouraged that our congressional representatives are holding Centers 
for Medicare & Medicaid (CMS) accountable for the quality of care 
provided dialysis patients and for the efficient use of taxpayer 
dollars that fund care. We are encouraged that our representatives 
expressed favor towards a ``patients come first'' policy and pointed to 
the need for CMS policies to reflect such a policy.
    ADA is most grateful for the contributions and support of the 
Hearing panelists for bringing forth data related to the use of Epogen 
and its detrimental effect on patients. When this medication is not 
administered within established guidelines for the benefit of patients, 
poor patient outcomes can follow. We are also thankful for the recent 
media interest and coverage that brought information to dialysis 
patients and taxpayers regarding the clinical and fiscal issues related 
to use and overuse of Epogen.
    The hearing of December 6, 2006 is but another beginning. ADA 
patients and families are hopeful that the Ways and Means Committee 
will pursue all issues related to the federal ESRD program so that 
patients receive quality and safe care at a reasonable cost to 
taxpayers. ADA has longed believed that attention to the use of Epogen 
has been a necessity.
    ADA's positions regarding specific issues covered during the 
hearing follow:
EPOGEN
    ADA strongly believes that an immediate congressional directive 
should be given to CMS to incorporate into the federal ESRD Program the 
recent FDA warning regarding Epogen.
    ADA supports bundling of services and drugs, including Epogen. 
Additionally, ADA supports the clinical individualization of treatment 
to best meet the needs of the patient. It is essential, ADA believes, 
that the current financial incentive to overuse Epogen be removed and 
replaced with emphasis on patient safety. Lastly, ADA believes that the 
bundling of services and drugs will discourage the overuse of Epogen 
and focus greater attention upon the adequacy of iron stores--and at 
lesser cost--for what should be a more efficacious use of Epogen.
    ADA supports subcutaneous administration of Epogen. ADA believes 
that clinical and cost perspectives, as demonstrated by the United 
States Veterans' Administration Hospitals (as well as in Europe), are 
supported by subcutaneous administration of Epogen. Further, ADA 
believes that use of multi-dose vials of Epogen will address existing 
provider and patient concerns regarding stinging during subcutaneous 
administration.
    Lastly, we request that Congress intervene to ensure that (1) 
policies, payment and others, are based upon safe delivery of care to 
patients by experts having no conflict of interest due to their 
positions, affiliations or relationships within the dialysis industry 
and/or pharmaceutical companies and that (2) every effort be made to 
ensure that no one pharmaceutical company monopolizes any medication 
required for quality treatment of chronic renal failure and/or ESRD 
patients. This is a population that is escalating--the protection 
afforded a monopoly is not in the best interest of patients or 
taxpayers.
INCREASED FUNDING FOR PREVENTION AND SPECIAL INVESTIGATIVE STUDIES
    ADA is supportive of the suggestion that NIH be appropriated 
funding to research the factors that c ontribute to over-representation 
of minorities--particularly African-Americans, Hispanics and Native 
American Indians--among the kidney failure/dialysis population. We 
further support a focus upon prevention efforts accompanied by funding 
that ensures attainment of program goals.
    Congress has established 18 ESRD networks to provide quality 
assurance of the ESRD program. African-Americans comprise 12-13% of the 
general population yet represents, according to ESRD Networks 2005 
Annual Reports, at least 33% of the dialysis population in ten of the 
eighteen ESRD Network regions. In seven of the ten ESRD Network regions 
the African-American dialysis population is 40% or greater. Glaringly, 
the African-American dialysis population in Network 5 (Maryland, 
Virginia, Washington, DC, West Virginia) is 59%; in Network 6 (Georgia, 
North Carolina, South Carolina) African-Americans comprise 67% of the 
dialysis population; in Network 8 (Alabama, Mississippi, Tennessee) 
62.3%; and Network 13 (Arkansas, Louisiana and Oklahoma) 52.5%. Such 
over-representation is an event that cannot, and must not, be minimized 
but rather calls for assertive and aggressive prevention and treatment 
programs.
CMS' RESPONSIBILITY TO BENEFICIARIES
    Among other things, CMS' responsibility to beneficiaries is three-
fold: (1) ensuring quality, safe delivery of care (2) ensuring 
sufficient information is provided in order for beneficiaries to make 
informed decisions, and (3) ensuring an effective systematicmechanism 
through which to address patient concerns related to care.
Quality, Safe Delivery of Care
    No policy related to quality, safe care is truly meaningful unless 
it is actually incorporated intothe clinical performance measures and 
ancillary services required by its respective patient population. All 
stake-holders from patient-families to healthcare workers fully 
recognize that it will be incumbent upon Congress to ensure that CMS, 
ESRD Networks and the state survey agencies each carry out 
responsibilities related to the oversight and enforcement of ESRD 
Conditions for Coverage.
    The recent exposure of a dialysis facility in Birmingham, Alabama 
(Birmingham News, November 19, 2006, ``Patients feel they're 
mistreated: Dialysis centers focus on profits, advocates say'') that 
had not been inspected since 1998 simply demonstrates the laxity with 
which CMS, the ESRD Network and state survey agency carried out their 
statutory, contractual responsibilities. Equally revealing were (1) 
HHS, Office of Inspector General report, Availability of Quality of 
Care Data in the Medicare End Stage Renal Disease Program, November 
2006 report (OEI-05-05-0030) that reflected the ESRD networks' lack of 
necessary data to identify facilities ``with quality improvement 
needs,'' and (2) HHS, Office of Inspector General Civil Monetary 
Penalty report (November 2006) that reported a dialysis facility/
owner's agreement to pay $150,000 to resolve liability for submission 
of Medicare claims although 
``inadequate and/or worthless services had been rendered to 
patients''--worthless services that the HHS OIG alleged ``may have 
contributed to seven deaths . . .''
    Patients' lives are at stake! It is unconscionable that CMS, ESRD 
networks and state survey agencies have permitted such failures in 
oversight while dialysis chains/facilities and pharmaceutical companies 
nevertheless have experienced raging financial returns.
Making Informed Decisions
    ADA supports the 2004 ESRD Initiative for Quality Care. However, 
ADA also firmly believes that the initiative's original intention 
regarding the Dialysis Facility Compare website and chart was to 
``empower consumers with quality of care information to make more 
informed decisions about their healthcare'' and such has not been met. 
Patients and consumers still need ``to review and compare facilities 
and choose a dialysis facility that best meets their needs.'' While 
there is information posted regarding anemia, hemodialysis adequacy, 
and patient survival, ADA believes the information is limited. Dialysis 
Facility Compare does not provide other highly pertinent information 
for ordinary patients and/or consumers to truly make informed 
decisions. For instance, patients and consumers are greatly interested 
in (a) staffing--including their education, skills knowledge and 
training, and licensing and/or certification (b) inspection reports, 
and (c) infections and infection rates. And, most unfortunately, the 
information provided is not easily understood by ordinary patient-
consumers. Both the public disclosure and the simplification of the 
information found on the Dialysis Facility Compare chart will support 
informed decision-making while furthering patient education and safety.
CONCLUSION
    We, at the Association of Dialysis Advocates, are encouraged and 
confident that the Ways and Means Committee will be steadfast in its 
efforts to ensure quality care to dialysis patients and the efficient 
use of public funds. Similarly, we are encouraged and confident that 
the Ways and Means Committee will work to ensure that CMS, ESRD 
Networks, and State Survey Agencies carry forth their responsibilities 
in the best interest of dialysis patients, their families, and the 
public. ADA stands ready to participate and serve in deliberations 
related to the delivery of care in dialysis environments.
            Very truly yours,
                                               Patricia Tate-Harris
                                                          President

                                 
