HD53 - Report on the History of Medicaid Reimbursement Rates for Dialysis Services in Virginia


Executive Summary:
[09/01/05 -- The PDF Version of this report has been replaced on the web.]

Item 326 YYY of the 2005 Appropriations Act directs the Department of Medical Assistance Services (DMAS) to report on the history of reimbursement rates for dialysis services under Medicaid. DMAS staff has met with dialysis provider representatives to solicit their input in the development of this report. This report is intended to fulfill the requirement under the 2005 Appropriations Act.

End-stage renal disease (ESRD) is a clinical term for irreversible kidney impairment resulting in complete or near complete kidney failure. This results in an individual’s inability to properly excrete wastes, concentrate urine and regulate electrolytes. The only treatment options for individuals with ESRD are dialysis and/or kidney transplantation.

Due to Medicare eligibility criteria specifically for individuals with ESRD, Medicare is the primary payer for most of the recipients of dialysis treatment. However, in the case of individuals who are both Medicare and Medicaid eligible (dual-eligibles), Medicaid covers coinsurance and deductibles. Furthermore, it is possible for some individuals with ESRD to be ineligible for Medicare. To the extent these individuals qualify for Medicaid, Medicaid becomes the primary payer for dialysis services.

Virginia Medicaid’s reimbursement rate for dialysis services has been unchanged at $138 per unit/visit since 1983. Medicaid’s dialysis reimbursement rate is not directly comparable to the Medicare rate because the composite rate used by Medicare does not include identical components. Notwithstanding the different make-up of the two payment rates, the current Medicaid rate appears competitive with the current Medicare rate. Medicare reimbursement for dialysis services and related drugs was estimated at approximately 88 percent of Virginia Medicaid reimbursement prior to recent mandated changes; with Medicare methodology changes this figure increased to approximately 94 percent of Virginia Medicaid reimbursement. However, due to the enhancements to the Medicare rate under the recent Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, it is likely that the Virginia Medicaid rate will gradually lose ground relative to Medicare as the Medicare rate is adjusted to include newer pharmaceuticals under a more advantageous reimbursement method for providers and the Medicaid rate remains unchanged.