[Federal Register Volume 59, Number 4 (Thursday, January 6, 1994)]
[Proposed Rules]
[Pages 714-717]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-65]


[[Page Unknown]]

[Federal Register: January 6, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 406

[BPD-738-P]
RIN: 0938-AG19

 

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

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

ACTION: Proposed rule.

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SUMMARY: We propose to revise the definition of end-stage renal disease 
to reflect that more than one dialysis treatment is required for there 
to be a ``regular course of dialysis'' and to require that generally 
accepted diagnostic criteria and laboratory findings must form the 
basis of the physician's certification of end-stage renal disease. The 
purpose of this proposed revision is to eliminate any misinterpretation 
of the definition of end-stage renal disease. We propose to do so by 
clarifying that only those individuals whose kidneys have failed and 
for whom the disease is expected to be a lifelong affliction are 
eligible for Medicare end-stage renal disease benefits.
    We also propose to amend the regulations to specify that Medicare 
entitlement is resumed for individuals who again begin a regular course 
of renal dialysis treatments after a previous course is terminated 
(with or without a transplant), and to add the same considerations for 
those who have a second transplant. Therefore, the purpose of these 
proposed revisions is to conform the regulations more closely to the 
intent of sections 226A (c)(2) and (c)(3) of the Social Security Act 
regarding resumption of entitlement to Medicare.

DATES: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on March 
7, 1994.

ADDRESSES: Mail comments to the following address:

Health Care Financing Administration, Department of Health and Human 
Services, Attention: BPD-738-P, P.O. Box 26676, Baltimore, MD 21207.

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

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC. 20201, or

Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore, 
Maryland 21207.

    Due to staffing and resource limitations, we cannot accept 
facsimile (FAX) copies of comments. In commenting, please refer to file 
code BPD-738-P. Comments received timely will be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, in room 309-G of the 
Department's offices at 200 Independence Avenue, SW., Washington, DC, 
on Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone: 
(202) 690-7890).

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

SUPPLEMENTARY INFORMATION:

I. Background

    End-stage renal disease (ESRD) is a disease which occurs from the 
destruction of normal kidney tissues over a long period of time. The 
individual often does not experience any symptoms until the kidney has 
lost more than half of its function. The loss of kidney function in 
ESRD is usually irreversible and permanent.

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

    Section 226A(a)(2) of the Social Security Act (the Act) provides 
for Medicare coverage for certain individuals who are medically 
determined to have end-stage renal disease. Once an individual is 
medically determined to have ESRD, section 226A(b) of the Act specifies 
that one of two conditions must be met before entitlement begins. That 
is, a regular course of dialysis must begin or a kidney transplant must 
be performed. Section 226A(b)(1)(A) of the Act provides that 
entitlement begins with the third month after the month in which a 
regular course of renal dialysis is initiated.
    The statute does not give a definition of ESRD; however, the 
Medicare regulations in title 42 of the Code of Federal Regulations do 
define the term. The definition of ESRD is given in two sections of the 
regulations. For purposes of Medicare eligibility and entitlement, ESRD 
is currently defined in Sec. 406.13(b) as that stage of kidney 
impairment that appears irreversible and permanent and requires a 
regular course of dialysis or kidney transplantation to maintain life. 
A parallel definition of ESRD also appears in Sec. 405.2102 which 
defines ESRD as it relates to the conditions for coverage that must be 
met by suppliers furnishing ESRD care to Medicare beneficiaries.

B. Potential Misinterpretation of the Current ESRD Definition

    In calendar year 1989, 21,200 individuals were certified by their 
physicians as having an irreversible, permanent kidney impairment and 
obtained Medicare entitlement solely because of this certification. 
That is, they could not qualify for Medicare on any other basis, such 
as age or disability status. In calendar year 1990, the number of 
similar new beneficiaries was 22,800. Soon after obtaining Medicare 
eligibility, nearly 1 percent of these individuals terminated their 
course of dialysis with a return of kidney function. We are concerned 
that the diagnosis and certification of ESRD for these individuals was 
incorrect. The regulations in Secs. 405.2102 and 406.13(b) define ESRD 
as a condition that appears irreversible and permanent; Medicare 
entitlement on the basis of the patient's need for dialysis is usually 
terminated only if the individual dies or receives a kidney transplant.
    Any severe kidney condition (particularly acute kidney failure) may 
appear to be irreversible and permanent if the diagnosis is based on 
only limited tests and criteria. We believe that certifications for the 
patients who terminated dialysis may have arisen from a 
misunderstanding of the extent of the kidney failure which constitutes 
ESRD for which the law grants Medicare entitlement. We believe that 
specifying that the diagnosis must be based on generally accepted 
diagnostic criteria and laboratory findings may result in not enrolling 
in Medicare those patients whose renal disease is not ``end-stage''. 
However, we do not wish to eliminate the word, ``appears,'' from the 
regulation since the law recognizes that dialysis treatments may end in 
some ESRD cases.

C. Related Laws and Regulations for Termination of Medicare Entitlement 
and Resumption of Entitlement to ESRD Benefits

    Section 226A(b)(2) of the Act specifies that Medicare entitlement 
for individuals on the basis of ESRD terminates with the end of the 
36th month after the month of transplant or with the end of the 12th 
month after the last month of renal dialysis treatments. Section 
226A(c)(2) and (c)(3) of the Act specifically provides for beginning a 
new period of entitlement when a kidney transplant fails or a course of 
renal dialysis begins again, whether during or after the 36 or 12 
months, as applicable. Current regulations in Sec. 406.13(f) address 
these situations by specifying that entitlement does not end as 
scheduled if the treatment begins again during the applicable periods. 
The regulations in Sec. 406.13(g) deal with resumption of entitlement 
after termination of entitlement has occurred and require the 
submission of a new application.
    In addition, the provisions in section 226A(c)(2) and (c)(3) of the 
Act ensure that resumption of entitlement to Medicare will begin 
without the 3-month waiting period that usually applies in cases when 
Medicare entitlement is sought on the basis of dialysis (except for 
certain cases involving self-care training).

II. Provisions of the Proposed Regulations

A. Proposed Revision to ESRD Definition

    We analyzed the payment records of patients who terminated dialysis 
shortly after becoming eligible for Medicare based on a diagnosis of 
ESRD. Our records indicate an annual mean cost per patient of 
approximately $8,000, which is significantly below the average annual 
cost of $40,000 for a patient who remains on dialysis. Because these 
individuals were able to discontinue dialysis shortly after beginning a 
course of treatment and incurred only limited medical costs, we believe 
that many of these patients may have been incorrectly certified as 
having ESRD as a result of physicians misinterpreting the ESRD 
definition as it appears in Sec. 406.13(b). We also find the current 
ESRD definition (Sec. 406.13(b)) inadequate for Medicare Part A 
(hospital insurance) eligibility and entitlement purposes because 
entitlement to Medicare based on ESRD depends on the existence of ESRD, 
not on the sole fact that dialysis treatments are being given. 
Therefore, in order to eliminate any possible misinterpretation, we 
propose to revise the definition of ESRD in Sec. 406.13(b). After the 
phrase ``* * * a regular course of dialysis'', we propose to add the 
word ``treatments''. This revision would clarify that more than one 
dialysis treatment is required for there to be a regular course of 
dialysis.
    We also propose to add to the end of the definition of ESRD, the 
phrase ``as evidenced by generally accepted diagnostic criteria and 
laboratory findings''. We believe that requiring generally accepted 
diagnostic criteria and laboratory findings as the basis for diagnosis 
of ESRD serves as a reminder to physicians that they must have medical 
evidence to substantiate their certification of ESRD. We do not believe 
this addition to the definition would have a substantial effect on most 
physicians since they already depend on such medical information.
    We do not believe it is necessary to add the word ``treatments'' or 
the phrase ``as evidenced by generally accepted diagnostic criteria and 
laboratory findings'' to the definition of ESRD in Sec. 405.2102, which 
defines ESRD as it relates to the conditions for coverage of suppliers 
of ESRD services. This is because that section does not establish who 
is eligible or entitled to Medicare ESRD benefits, which is the purpose 
of this proposed rule.

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

    Section 226A(c)(2) and (c)(3) of the Act specifies the conditions 
for beginning a new period of entitlement when a kidney transplant 
fails or a regular course of dialysis begins again. However, this 
section refers to those instances when entitlement has not yet ended 
and specifies that Part A entitlement ``begins'' (although it may not 
yet have ended) with the month when regular dialysis treatments begin 
again. The importance of ``beginning'' Part A entitlement is that it 
offers the opportunity for those who do not have Part B (Supplementary 
Medical Insurance) entitlement to enroll in Part B without waiting for 
the annual general enrollment period (January through March). 
Supplementary Medical Insurance is a voluntary program available to 
most individuals age 65 or over and to disabled individuals who are 
under age 65 and entitled to Medicare Part A. In addition, since Part A 
entitlement has not ended, we believe that the intention is to re-
enroll the individual in Part A with that month, without a new 
application.
    Therefore, we propose to treat the situation where dialysis or 
transplant recurs during the 12-month or 36-month periods as a 
resumption of entitlement. Accordingly, we delete from Sec. 406.13(f) 
the reference to continuation of entitlement, and instead revise 
Sec. 406.13(g), which specifies the conditions for resumption of 
entitlement, to include this situation where coverage resumes despite a 
previous course of treatment.
    We propose to revise Sec. 406.13(g) to state that entitlement would 
be resumed under any one of three conditions. Using the language we 
propose to remove from paragraph (f), a new period of entitlement would 
begin if an individual initiates a regular course of renal dialysis 
during the 12-month period after the previous course of dialysis ended, 
and he or she would be entitled to resume Part A benefits and eligible 
to enroll in Part B benefits effective with the month the regular 
course of dialysis is resumed.
    The statute does not mention the beginning of a new period of 
entitlement when a second kidney transplant occurs during the 36-month 
period following the initial transplant, since there is never a waiting 
period for entitlement based on a transplant. However, we believe that, 
by analogy, the provisions for beginning a new period of entitlement in 
cases where a regular course of dialysis begins or recurs during the 36 
months indicate that we should construe the law as requiring resumption 
of entitlement and a new period of Part B enrollment in cases of re-
transplantation that occur without the beneficiary's resuming (or 
initiating) dialysis treatments. We, therefore, propose to revise 
Sec. 406.13(g) to state that entitlement would begin when an individual 
initiates a new, regular course of renal dialysis, or has a kidney 
transplant, during the 36-month period after an earlier kidney 
transplant, and that he or she would be entitled to resume Part A 
benefits and eligible to enroll in Part B benefits effective with the 
month the regular course of dialysis begins or with the month the 
subsequent kidney transplant occurs.
    We also propose to make technical revisions to Sec. 406.13(g) to 
clarify the other condition for resumption of entitlement. That is, 
entitlement is resumed if an individual initiates a regular course of 
renal dialysis more than 12 months after the previous regular course of 
dialysis ended or more than 36 months after the month of a kidney 
transplant, and the individual is eligible to enroll in Part A and Part 
B benefits effective with the month in which the regular course of 
dialysis treatment is resumed. If he or she is otherwise entitled to 
Part A benefits under the conditions specified in Sec. 406.13(c), and 
files an application, entitlement would begin with the month in which 
dialysis treatments are initiated or resumed, without a waiting period, 
subject to the basic limitations of entitlement in Sec. 406.13(e)(1).

C. Proposed Revisions' Effect on Medicare Part B

    The revised definition of ESRD in Sec. 406.13(b) and revisions to 
resumption of entitlement in Sec. 406.13(g) would also be used as the 
basis for eligibility for Medicare Part B. This is because, in 
accordance with Sec. 407.10(a)(1), an individual who qualifies for 
Medicare Part A on the basis of ESRD is also eligible for Medicare Part 
B.

D. Manuals Affected

    When we publish these proposed requirements as a final rule, the 
Social Security Program Operations Manual System, Part 6, ``HI''; the 
Medicare Part A Intermediary Manual, Part 3, ``Claims Processing''; the 
Medicare Part B Carriers Manual, Part 3, ``Claims Processing''; and the 
Medicare Renal Dialysis Facilities Manual, would be revised to reflect 
the changes made to the definition of ESRD and the resumption of 
entitlement.

III. Collection of Information Requirements

    This rule contains no information collection requirements. 
Consequently, this rule need not be reviewed by the Office of 
Management and Budget under the authority of the Paperwork Reduction 
Act of 1980 (44 U.S.C. 3501 et seq.).

IV. Response to Comments

    Because of the large number of items of correspondence we normally 
receive on a proposed rule, we are not able to acknowledge or respond 
to them individually. However, we will consider all comments that we 
receive by the date and time specified in the ``Dates'' section of this 
preamble, and if we proceed with the final rule, we will respond to the 
comments in the preamble to the final rule.

V. Regulatory Impact Statement

    In calendar year 1989, over 21,200 individuals were certified by 
their physicians as having an irreversible, permanent kidney 
impairment, and obtained Medicare entitlement solely on the basis of 
this certification. In 1990, that number was 22,800. As reported in the 
National Institute of Diabetes and Digestive and Kidney Disease's U.S. 
Renal Data System Annual Data Report, approximately 1 percent of 
individuals receiving dialysis treatments during these years were able 
to terminate their course of dialysis treatment because kidney function 
returned. This figure is consistent with data that we maintain on the 
number of individuals whose Medicare eligibility terminated.
    We analyzed the Medicare payment records of beneficiaries whose 
sole reason for Medicare entitlement was ESRD, and who discontinued 
dialysis (and thus, Medicare eligibility) within 2 years after 
enrollment. Our records indicate that 70 percent of the individuals 
incurred annual costs of less than $10,000, with an annual mean cost 
per beneficiary to the Medicare program of approximately $8,000. This 
is significantly below the average annual cost to the Medicare program 
of $40,000 for a patient receiving regular dialysis treatments. Because 
these beneficiaries were able to discontinue dialysis after incurring 
only limited medical costs, we believe that most of these patients may 
have been incorrectly certified as having ESRD, which requires long-
term maintenance dialysis or a kidney transplant. Although the number 
of individuals who may have been incorrectly certified was less than 
250 per year, they accounted for nearly $2 million in annual Medicare 
program expenditures. These expenditures were unintended because the 
disease did not reach ``end-stage'' in these individuals. As a result 
of this proposed revision, we estimate the projected savings to the 
Medicare program for the next 5 calendar years to be as follows: 

                                                                        
                          [Millions of Dollars]                         
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     1994           1995           1996           1997          1998    
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2.8..........         3.1            3.4            3.8           4.2   
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    With regard to the portion of this proposed rule concerning 
resumption or continuation of entitlement after a terminating event, we 
have no reason to believe, based on 13 years' experience, that more 
than one or two people would have had their entitlement resumed earlier 
under the proposed revised regulation relating to that issue.
    We generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612) unless the Secretary certifies that a proposed rule would 
not have a significant economic impact on a substantial number of small 
entities. For purposes of the RFA, we consider all physicians and 
dialysis facilities to be small entities.
    Also, section 1102(b) of the Act requires the Secretary to prepare 
a regulatory impact analysis if a proposed rule may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. This analysis must conform to the provisions of section 603 
of the RFA. For purposes of section 1102(b) of the Act, we define a 
small rural hospital as a hospital that is located outside of a 
Metropolitan Statistical Area and has fewer than 50 beds.
    No additional time burden or monetary requirements would be placed 
on physicians or dialysis facilities in order to comply with the 
provisions of this proposed rule since physicians should already have 
appropriate laboratory findings and generally accepted diagnostic 
criteria to confirm a diagnosis of ESRD.
    In addition, changes in the resumption of entitlement regulations 
would have no effect on physicians or on dialysis facilities.
    For the reasons stated above, we have determined, and the Secretary 
certifies, that this proposed rule would not result in a significant 
economic impact on a substantial number of small entities or on the 
operations of a substantial number of small rural hospitals. We are, 
therefore, not preparing analyses for either the RFA or section 1102(b) 
of the Act.

List of Subjects in 42 CFR Part 406

    Health facilities, Kidney diseases, Medicare.

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

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

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

    Authority: Secs. 202(t), 202(u), 226, 226A, 1102, 1818, and 1871 
of the Social Security Act (42 U.S.C. 402(t), 402(u), 426, 426-1, 
1302, 1395i-2, and 1395hh), and 3103 of Public Law 89-97 (42 U.S.C. 
426a) unless otherwise noted.

    2. In Sec. 406.13, the heading and introductory language in 
paragraph (b) is republished, the definition of ``End-stage renal 
disease'' in paragraph (b) is revised, and paragraphs (f) and (g) are 
revised to read as follows:


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

* * * * *
    (b) Definitions. As used in this section:
    End-stage renal disease (ESRD) means that stage of kidney 
impairment that appears irreversible and permanent and requires a 
regular course of dialysis treatments or kidney transplantation to 
maintain life, as evidenced by generally accepted diagnostic criteria 
and laboratory findings.
* * * * *
    (f) End of entitlement. Entitlement ends with--
    (1) The end of the 12th month after the month in which a regular 
course of dialysis ends; or
    (2) The end of the 36th month after the month in which the 
individual has received a kidney transplant.
    (g) Resumption of entitlement. Entitlement is resumed under the 
following conditions:
    (1) An individual who initiates a regular course of renal dialysis 
during the 12-month period after the previous course of dialysis ended 
is entitled to Part A benefits and eligible to enroll in Part B with 
the month the regular course of dialysis is resumed.
    (2) An individual who initiates a regular course of renal dialysis, 
or has a kidney transplant, during the 36-month period after an earlier 
kidney transplant is entitled to Part A benefits and eligible to enroll 
in Part B with the month the regular course of dialysis begins or with 
the month the subsequent kidney transplant occurs.
    (3) An individual who initiates a regular course of renal dialysis 
more than 12 months after the previous course of regular dialysis ended 
or more than 36 months after the month of a kidney transplant is 
eligible to enroll in Part A and Part B with the month in which the 
regular course of dialysis is resumed. If he or she is otherwise 
entitled under the conditions specified in paragraph (c) of this 
section, including the filing of an application, entitlement begins 
with the month in which dialysis is initiated or resumed, without a 
waiting period, subject to the limitations of paragraph (e)(1) of this 
section.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: June 4, 1993.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
    Approved: October 4, 1993.
Donna E. Shalala,
Secretary.
[FR Doc. 94-65 Filed 1-5-94; 8:45 am]
BILLING CODE 4120-01-P