DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 406

[BPDÄ738ÄP]

RIN: 0938ÄAG19

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.

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: BPDÄ738ÄP, P.O. Box 26676, Baltimore, MD 21207.

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

Room 309ÄG, 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 BPDÄ738ÄP.
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 309ÄG 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) 690Ä7890).

FOR FURTHER INFORMATION CONTACT: Denis Garrison, (410) 966Ä5643.

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
 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  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  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  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  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  406.13(b). We also find the current
ESRD definition ( 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 
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  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  406.13(f) the reference to continuation of
entitlement, and instead revise  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  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  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  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  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  406.13(e)(1).

C. Proposed Revisions' Effect on Medicare Part B

The revised definition of ESRD in  406.13(b) and revisions to resumption of
entitlement in  406.13(g) would also be used as the basis for eligibility for
Medicare Part B. This is because, in accordance with  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:

c5,L2,i1,5,5,5,5,5

I96[Millions of Dollars]

 [col head 1] 1994 [col head 1] 1995 [col head 1] 1996 [col head 1] 1997 [col
head 1] 1998

2.8 	3.1 	3.4 	3.8 	4.2

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, 426Ä1, 1302, 1395iÄ2, and
1395hh), and 3103 of Public Law 89Ä97 (42 U.S.C. 426a) unless otherwise noted.

2. In  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:

 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. 94Ä65 Filed 1Ä5Ä94; 8:45 am]

BILLING CODE 4120Ä01ÄP