Funding Innovative Dialysis Technology in the United States: Home Dialysis and the ESRD Transitional Add-on Payment for New and Innovative Equipment and Supplies (TPNIES)

Abstract

Innovative, patient-centered, and pragmatic dialysis technologies are urgently needed to accommodate the growing national interest in home dialysis use. To help achieve this goal, the Centers for Medicare and Medicaid Services are expanding reimbursement for eligible home dialysis machines through an existing payment mechanism, the transitional add-on payment for new and innovative equipment and supplies (TPNIES). This mechanism incentivizes the early adoption of innovative equipment into practice by reimbursing dialysis providers up to 26% of the total cost of approved home dialysis machines. Machines are evaluated for TPNIES eligibility using pre-specified substantial clinical improvement (SCI) criteria which are derived from the Inpatient Prospective Payment System (for non-nephrology technologies). While the SCI criteria may be suitable for some non-nephrology technologies, they have not been adapted to consider the unique and complex care inherent in home dialysis. Thus, many of the SCI criteria appear unsuitable for home dialysis machines. To better incentivize innovation, CMS should develop nephrology-specific transparent and pragmatic criteria for TPNIES. In this perspective, we provide an overview of the TPNIES payment mechanism, highlight areas of concern within the policy, and offer solutions for improving TPNIES that could better promote the adoption of new home dialysis machines.

Introduction

Innovative, patient-centered, and pragmatic dialysis technologies are urgently needed to accommodate the growing national interest in home dialysis use.^1,2 Although barriers to innovation exist in nephrology, recent coordinated efforts have been undertaken to overcome them.³ As the kidney community looks toward the entry of innovative technologies into the market, we must consider methods to facilitate more rapid implementation of these technologies into practice, including limiting financial disincentives that hinder adoption of newer technologies.⁴ In this perspective, we provide an overview of a recent Centers for Medicare and Medicaid Services (CMS) proposal to incentivize home dialysis innovation - the transitional add-on payment for new and innovative equipment and supplies (TPNIES).⁵ In doing so, we aim to draw attention to areas of concern within the policy, as well as the need for nephrologists, professional nephrology societies, and the greater kidney community to remain active members in decision-making in health policy.

Transitional Add-On Payment for New and Innovative Equipment and Supplies (TPNIES) – Overview

Since the implementation of bundled payments for outpatient dialysis in 2011, dialysis providers have received fixed payments for each hemodialysis session or peritoneal dialysis day, regardless of the use of novel equipment or supplies.⁴ As a result of these fixed payments, dialysis provider organizations have lacked mechanisms to help offset the cost of newer and generally more expensive equipment and supplies. Without assurance that dialysis providers would purchase new dialysis equipment, biomedical manufacturers and inventors gravitated away from the dialysis industry, leading to less competition and a stagnation in innovation.^2,6 Ultimately, the lack of incentives for newer products in the dialysis industry limited the opportunity for patients to benefit from more user-friendly, patient-centered innovations.

To combat the lack of innovation incentives, CMS has created two new-add on payments to incentivize adoption of newer products by dialysis providers: i) the 2017 transitional drug add-on payment adjustment (TDAPA), designed to foster the use of novel injectable drugs (such as etelcalcitide);⁷ and ii) the 2020 transitional add-on payment for new and innovative equipment and supplies (TPNIES), designed to foster the use of novel dialysis equipment and supplies such as dialysis cartridges and dialysis membranes (i.e., non-capital assets).⁵ Given the national interest in home dialysis, CMS expanded TPNIES in 2021 to include more expensive equipment, specifically peritoneal dialysis cyclers and home hemodialysis machines (i.e., capital assets).^5,9

Through TPNIES, CMS will reimburse dialysis providers using a rate that reflects three factors: an allowance equal to 65% of machine cost, a 5-year depreciation schedule, and a 2-year TPNIES period (Figure 1). Maximum reimbursement amounts to 26% of the Medicare Administrative Contractor-approved machine cost over two calendar years.^5,9 To illustrate, if a home dialysis machine costs $50,000 and is approved for TPNIES coverage starting in January 2022, Medicare will use a 65% allowance and 5-year straight-line depreciation to calculate an annualized reimbursement of 65% × ($50,000 / 5 years), or $6,500/year.

Figure 1. TPNIES payment for a new home dialysis machine with a hypothetical cost of $50,000, assuming the machine receives TPNIES approval for 2 years starting January 1, 2022.

Abbreviations: TPNIES, Transitional add-on payment for new and innovative equipment and supplies; CMS, Centers for Medicare and Medicaid Services

This figure demonstrates how TPNIES payments are calculated based off the cost of the approved home dialysis machine. In this example, we assume a home dialysis machine has been approved for TPNIES payments for 2 years starting January 1, 2022.

The blue box represents the hypothetical cost of a new home dialysis machine ($50,000).

The orange boxes represent the calculations made by CMS to estimate an annual TPNIES payment using the Medicare 65% allowance (65% of $50,000, or $32,500) and a 5-year straight line depreciation schedule ($32,500/5 = $6,500/year)

The green boxes represent the payment that a dialysis provider could receive based off the cost of machine and the calculations represented in the blue and orange boxes. As shown, if dialysis providers purchase and use TPNIES approved new and innovative equipment early, they receive higher reimbursements up to a maximum of 26% of the total cost of the machine. In this example, organizations can receive a maximum reimbursement of $13,000 paid over 2 years, if they purchase and use the machine to provide treatment for a patient on home dialysis immediately after TPNIES approval. In practice, this annualized amount will be divided by the expected number of treatments that a patient would receive annually, and will then be added to the base rate for each dialysis treatment in 2022–2023.

As CMS intends to incentivize early procurement and use of new equipment and supplies, TPNIES payments are only made if the equipment is used during the 2-year TPNIES period. In this example where TPNIES coverage began in January 2022 for a home dialysis machine, organizations could receive the maximum reimbursement of 26% if the machine is first used for home dialysis in January 2022, a prorated reimbursement of 13% if the machine is first used in January 2023, and no reimbursement if the machine is first used after January 2024.

The Approval Process for TPNIES – the Substantial Clinical Improvement (SCI) Criteria

To decide TPNIES eligibility, a CMS Work Group evaluates applications using pre-specified substantial clinical improvement (SCI) criteria. In 2020, prior to the expansion of TPNIES to include home dialysis machines, the CMS Work Group received applications for: i) Baxter’s Theranova dialyzer, a “new class of hollow-fiber, single-use dialyzer … that offers a higher permeability than high-flux dialyzers”; and ii) Outset Medical’s Tablo® cartridge, a dialysis cartridge designed for exclusive use with the Tablo® Hemodialysis system with the intent to “remov(e) barriers to home dialysis.”⁵ Using these two applications as an example of the approval process, this section highlights concerns regarding the TPNIES mechanism that may impede innovation.

The SCI criteria, derived from the Inpatient Prospective Payment System for non-nephrology products, have not been adapted to account for the unique and complex nature of dialysis care delivery.⁵ As such, the SCI criteria summarized in Box 1 do not appear suitable for home dialysis machines and may not be appropriate for evaluating TPNIES eligibility.

Box 1. Summary of key criteria used to evaluate Substantial Clinical Improvement (SCI) for Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies*.

Key SCI Criteria:

The Centers for Medicare and Medicaid Services uses the following criteria to assess eligibility for the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies.

“A new renal dialysis equipment or supply represents an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries.” Specifically, the new renal dialysis equipment or supply should satisfy at least one of the following:

1. Offer “a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments.”

2. Offer “the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable.”

3. Offer “the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods” with evidence that “use of the new renal dialysis service to make a diagnosis affects the management of the patient.”

4. Significantly improve “clinical outcomes relative to renal dialysis services previously available as demonstrated by one or more of the outcomes described below.”

   1. “A reduction in at least one clinically significant adverse event” (mortality or a clinically significant complication).
   2. “A decreased rate of at least one subsequent diagnostic or therapeutic intervention.”
   3. “A decreased number of future hospitalizations or physician visits.”
   4. “A more rapid beneficial resolution of the disease process treatment including, but not limited to, a reduced length of stay or recovery time.”
   5. “An improvement in one or more activities of daily living.”
   6. “An improved quality of life.”
   7. “A demonstrated greater medication adherence or compliance.”

5. “The totality of the circumstances otherwise demonstrates that the new renal dialysis equipment or supply substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries.”

Evidence required for SCI criteria:

Evidence from the following sources may be sufficient to establish SCI criteria: Clinical trials; peer reviewed journal articles; study results; meta-analyses; consensus statements; white papers; patient surveys; case studies; reports; systematic literature reviews; letters from major healthcare associations; editorials and letters to the editor; public comments.

* The full criteria list is available on the Centers for Medicare and Medicaid Services’ website.⁵

For example, according to the first 3 summarized criteria, a new home dialysis machine could qualify for TPNIES if it: i) offered a treatment option for a patient population unresponsive to (or ineligible for) currently available treatments (including in-center hemodialysis), ii) diagnosed a previously undetectable medical condition, or iii) diagnosed a condition earlier in a manner that affects management. These 3 criteria will not be satisfied by a novel home dialysis machine as i) virtually all patients who could benefit from a novel home dialysis machine are able to receive in-center hemodialysis (an existing treatment option for all eligible patients), ii) home dialysis machines are designed to offer dialysis at home and not to diagnose new medical conditions, and iii) home dialysis machines do not diagnose conditions earlier in a manner that affects management. Predictably, the CMS Work Group noted that both 2020 applications did not satisfy any of these criteria.⁵ Specifically, regarding the Tablo® cartridge for hemodialysis, the CMS Work Group noted that “(w)ith regard to the question as to whether this new renal dialysis equipment offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments, we note that patients who are eligible for this treatment would currently be eligible for in-center HD(.)”⁵

Accordingly, a home dialysis machine can qualify for TPNIES only through one of the two latter SCI criteria summarized in Box 1 – i) if it “significantly improve(s) clinical outcomes relative to renal dialysis services previously available”, or ii) “if the totality of the circumstances otherwise demonstrates that the new renal dialysis equipment or supply substantially improves (…) the diagnosis or treatment of Medicare beneficiaries”. While these criteria note specific circumstances that could qualify for TPNIES approval – e.g., reduction of at least one clinically significant adverse effect, decreased number of future hospitalizations, improved quality of life, or improved medication adherence – they do not define the clinical and statistical thresholds for a magnitude of effect required to qualify for approval. Additionally, they do not specify the level of evidence or the quality of data needed for TPNIES approval. Given this lack of clarity, it is unsurprising that the CMS Work Group rejected both applications (citing insufficient data) and requested a wide array of evidence, ranging from large randomized controlled trials (RCTs) to meta-analyses, observational studies, and public comment letters to CMS.⁵

In the specific case of the Theranova dialyzer, the application was supported by a combination of prospective clinical trial data, observational data, expert opinion, and public comments to CMS.^10,11 However, given the nature of the SCI criteria, the final determination of TPNIES eligibility was left to the interpretation of the “totality of the circumstances” regulatory criterion. This subjective and vague nature of the SCI criteria leaves more questions than answers: for a device to be approved, will observational data suffice?; are RCTs necessary?; will manufacturer-sponsored studies be considered rigorous?; how much of an improvement in quality of life is sufficient?; will new devices be compared to existing home dialysis devices, even if those devices are not widely used? Without more transparent and clear guidance from CMS, it is unclear whether existing home dialysis machines have the level of evidence required for TPNIES approval. This uncertainty in the TPNIES process may make innovators and new entrants wary of investing time and resources in home dialysis. To be clear, we do not advocate for the approval of Theranova or Tablo®; we are agnostic to the results of the TPNIES process. Rather, we advocate for the establishment of criteria that are relevant to dialysis equipment and supplies, including home dialysis machines.

TPNIES and the Approval Process – Potential Solutions

Many well-intentioned policies can have unintended consequences. For example, among the over 60 nephrology-specific quality metrics in use currently, less than half are considered highly valid.¹² Similarly, although the TPNIES payment mechanism is a welcome change that could appeal to manufacturers and the dialysis industry to innovate and adopt new home dialysis machines early, the vague and subjective nature of the approval process could ultimately frustrate and disincentivize manufacturers from innovating in this space. This could risk leaving the kidney community in the status quo. We offer a few solutions to improve TPNIES through revising the approval process and diversifying the CMS Work Group by including patients with kidney disease and home dialysis nurses.

First, as discussed, the majority of the SCI criteria are unsuitable for home dialysis machines and do not account for the complexity of dialysis care delivery. While some of the criteria could allow for TPNIES approval, they appear vague and subjective with unclear guidelines on what level of evidence is required for a product to achieve TPNIES status. Given these problems with the SCI criteria, it is contextually helpful to consider where the SCI criteria came from and how they are functioning in the non-nephrology payment system. The SCI criteria were first developed to foster innovation in inpatient hospital care through add-on payments for the Inpatient Prospective Payment System. In this inpatient setting, the SCI criteria have faced similar criticism, with organizations calling for improved transparency and guidance, as well as changes to the approval process.¹³ As a result of the challenges associated with the SCI criteria in the inpatient setting, CMS developed alternative coverage pathways that bypassed these criteria to provide incentives for innovation.^14,15 These alternative coverage pathways specifically allow for novel antimicrobials and products that are part of the FDA’s Breakthrough Device Program to receive add-on payments without the need to satisfy SCI criteria.¹⁶ For 2021, 8 out of 9 non-nephrology products received approval through the alternative pathway compared to 6 out of 15 non-nephrology products in the traditional pathway.¹⁶ Similarly, given the complexity of dialysis and the urgent need for innovation in home dialysis machines, CMS should develop more pragmatic, transparent criteria for TPNIES approval, or utilize alternative pathways for coverage. This could better incentivize companies to invest in the research required to demonstrate pragmatic outcomes such as improved quality of life, improved ease of device use, or lower conversion rate from home dialysis to in-center hemodialysis.

Second, according to CMS, the 2020 Work Group comprised Medical Officers, senior staff, a senior technical adviser, a biomedical engineer, and contracted physicians (including nephrologists).⁵ While it is reassuring that the Work Group comprised some nephrologists, the lack of inclusion of people living with kidney disease and home dialysis nurses is problematic. As the kidney community looks toward addressing barriers to care delivery, the importance of engaging people living with kidney diseases as key stakeholders who can influence research, address disparities, and transform dialysis care delivery is increasingly being recognized.^17,18,19 People living with kidney disease are some of the strongest advocates for innovation in this space and have the most real-world experience in the use of home dialysis machines; they are well-suited to determine if new equipment are innovative, user-friendly, and patient-centered.⁶ Further, home dialysis nurses provide real-time assistance for patients with kidney disease on their machines and supplies, conduct the bulk of patient training for home dialysis, and often have a detailed understanding of the user-experience from the perspective of a medical provider caring for several patients. The development of a more diverse CMS Work Group that includes all key stakeholders, including patients with kidney disease and dialysis nurses, would provide a better understanding of the needs of patients, as well as the dialysis industry. This could help improve the validity of the TPNIES evaluations on whether products meet the subjective SCI criteria. This diverse, inclusive, CMS Work Group could also be involved in developing more appropriate TPNIES criteria for dialysis equipment and supplies while continuing to encourage patient engagement.

Conclusion

TPNIES is a newly proposed mechanism that could meaningfully improve innovation in home dialysis through financial incentives. However, the SCI criteria used to approve devices for TPNIES coverage are not adapted for home dialysis devices, and key stakeholders are not involved in the decision-making process for TPNIES approval; this could impede innovation. We call upon nephrologists, home dialysis nurses, patients with kidney disease, and the kidney community to act as key stakeholders of nephrology-specific policies, advocate through their professional societies, and partner with government and industry to improve patient-centered, pragmatic innovation in dialysis. Thoughtful physician leaders and patient advocates should be involved in the decision-making process for these and future policy proposals.