• CMS Issues Draft Policy Concerning Erythropoietin (EPO) Monitoring
  • July 15, 2004
  • Law Firm: Waller Lansden Dortch & Davis, PLLC - Nashville Office
  • In July 2004, the Centers for Medicare & Medicaid Services (CMS) issued its draft policy concerning the monitoring of erythropoietin (EPO) utilization for beneficiaries with End Stage Renal Disease (ESRD). This draft policy proposes monitoring EPO utilization through a combination of blood hematocrit levels and EPO dosages. The draft policy is subject to a 60-day public comment period.

    EPO is a drug utilized in the management of anemia and is reimbursed currently pursuant to a payment formula of $10 per 1,000 units of administered EPO. The Medicare Modernization Act of 2003 provided that, effective January 1, 2005, this payment formula will change to a new payment for EPO based on acquisition costs. EPO utilization has had the attention of CMS for quite some time, particularly given the large amount of Medicare payments made for administered EPO. CMS has expressed concern on a number of occasions that the current payment formula for EPO may result in patients receiving more EPO than is required to maintain hematocrit levels within a target range of 30 percent to 36 percent (or the blood hemoglobin to a range of 10 to 12 grams per deciliter). This is the range recommended by the Kidney Dialysis Outcomes Quality Initiative (KDOQI). The change in the payment methodology for EPO and other separately billed drugs in 2005 is part of CMS' effort to reduce the financial incentive for over-utilization of EPO and other drugs. The newly issued draft policy discussed in this bulletin is also a part of that effort.

    In 1997, CMS issued a policy instructing Medicare contractors to monitor ESRD patient blood hematocrit levels. This policy provided for pre-payment review of EPO claims and denial of claims when the 90-day average level for hematocrit exceeded 36.5 percent. In the past few years, CMS issued temporary instructions to implement a revised policy allowing more flexibility at the upper end of the hematocrit range. The revised policy eliminated the pre-payment review of EPO claims and, instead, provided for post-payment review using a 90-day average hematocrit level of 37.5 percent to trigger further medical review. Because of clinical concerns and the administrative burdens of the revised policy, in 2003 CMS undertook a review of its policy on EPO utilization, and the draft policy discussed in this bulletin is the result of that review.

    Under the new draft policy, CMS continues to recognize that the KDOQI threshold range of 30 percent to 36 percent hematocrit level is appropriate but that maintaining a patient's hematocrit level within the range is difficult unless the targeted ceiling of 36 percent is exceeded on occasion. Therefore, under the draft policy, Medicare contractors would be instructed to conduct medical review of EPO claims using the following methodology:

    • For claims for EPO with hematocrit levels below 39 percent (or hemoglobin levels below 13) on a single claim, such claims should not be targeted for medical review.
    • Claims with hematocrit levels of 39 percent to 42 percent (or hemoglobin levels between 13.0 and 13.9) should be reviewed if the patient received a monthly dose of EPO greater than 40,000 units. If there is a determination that the higher dosage claimed was not medically justified, the Medicare contractor should limit payment to the 40,000 unit level.
    • Claims with hematocrit levels equal to or greater than 42 percent (or hemoglobin levels of 14.0 or greater) should be reviewed if the patient received a monthly dose of EPO greater than 20,000 units. If the higher dosage claimed was not medically justified, Medicare contractors should limit payment to the 20,000 unit level.

    These draft policies attempt to create greater flexibility in managing EPO utilization by increasing the hematocrit level at which payment review is triggered. By including consideration of dosage levels, CMS is seeking to limit EPO administration to levels which CMS deems necessary, unless medically justified otherwise. These draft policies appear to be generally favorable to dialysis providers. We will provide an additional bulletin following the issuance of the final version of the EPO policies.