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Remarks to the Kidney Health Initiative Annual Meeting

Eric D. Hargan
Kidney Health Initiative Members
May 29, 2019
Washington, D.C.

We need to shift from a system that pays for sickness and procedures to one that pays for health and outcomes. There is no better example of an area that demands this shift, and the consequences of inaction are higher nowhere else, than in kidney care.

As Prepared for Delivery

Thank you for having me here to speak today. It’s an honor to be with you, and it is a very exciting time to be able to talk with all of you about the future of American kidney care.

Before I delve into the specifics of why I’m here today, and why HHS is so interested in working with all of you to improve kidney care, I want to give you some context about my role at HHS.

As Deputy Secretary of HHS, I am the department’s Number 2 official and chief operating officer. I also serve as chief regulatory officer, which is part of why I have taken a particular lead on engagement with innovators, both in the private sector and elsewhere outside of government.

That work has included launching what we call the Deputy Secretary’s Innovation and Investment Summit, or DSIIS, to bring together innovators in the healthcare and investment realms. We believe we shouldn’t be afraid to engage with the private sector to help solve public health problems.

That belief is reflected in many ongoing efforts that involve HHS, including the Kidney Health Initiative.

Many public health problems simply will not be solved if the private sector is partitioned off from public health efforts. The private sector is always innovating; you all know this well.

The federal government is inevitably a little slow in adapting to change—many of you know that well too. There are good, legal and constitutional reasons for this to be the case.

But it’s vital for everyone outside of government to keep nudging us—and moving yourselves—in the direction of innovation. 

We need innovation in all areas of healthcare, but it’s particularly lacking in some specific realms, which is why the work of the Kidney Health Initiative is so welcome.

While we live in an era with tremendous medical progress and promise—breakthroughs in medicines and treatments seem to happen every day—we’re reminded that there are significant areas that are still lagging. In some areas, our outcomes are downright disappointing—especially given the resources we invest in our system. As all of you know, one of these areas is the way we prevent, diagnose, and treat chronic kidney disease.

Today, I want to lay out for you where the Trump administration sees some of the biggest failures in our kidney care policies—and why we believe we can begin addressing them in the years to come.

Just how bad is today’s situation? More than 30 million Americans have some stage of kidney disease—almost the population of the state of California, afflicted by one disease. In 2016, kidney disease was the ninth leading cause of death in the United States.

At the final stage of kidney disease, end-stage renal disease, the kidneys can’t function on their own, requiring frequent dialysis or a kidney transplant.

But, unfortunately, while dialysis may keep you alive, it is one of the most taxing treatments modern medicine has to offer, often requiring patients to make a trip to the dialysis center three to four times a week.

One hundred thousand Americans begin dialysis each year, and one in four of them are likely to die within that same year.

Meanwhile, kidney transplants are hard to come by. There are almost 100,000 individual Americans currently on a waiting list for a transplant.

Another way to understand the huge burden of this disease is just to look at the financial cost. In 2016, Medicare spent $79 billion to cover people with kidney disease, and $34 billion on patients with ESRD, adding up to $113 billion in total spending. That represents more than one in five dollars we spend in Medicare.

The situation I’ve laid out is discouraging: too many Americans don’t shift to more convenient dialysis options, and too many Americans never get a chance at a kidney transplant.

But with better policies, we can create better outcomes for Americans struggling with this debilitating disease, and that’s what I want to talk about today.

One of the key reasons for our failing policies is that kidney care in particular has some of the worst incentives in American healthcare.

In fact, kidney care represents a huge opportunity to deliver on the promise of one of the priorities Secretary Azar has laid out, driving toward a value-based healthcare system.

Many of you are likely familiar with what is known as the transition from “volume to value” in healthcare. Another way the Secretary likes to talk about this is saying that we need to shift from a system that pays for sickness and procedures to one that pays for health and outcomes.

There is no better example of an area that demands this shift, and the consequences of inaction are higher nowhere else, than in kidney care.

Today, I want to offer a picture of what it would look like to pay for kidney health, rather than kidney disease—and pay for Americans with kidney disease to actually get good outcomes, rather than the endless, life-consuming procedures.

I’ll mention three particular areas we’re thinking about, and already working on.

First, we need more efforts to prevent, detect, and slow the progression of kidney disease.

Second, we believe patients with kidney failure deserve more options for treatment, from both today’s technologies and those of the future.

Third, we’re going to look at how we can deliver more organs for transplants and develop wearable and implantable artificial kidneys, so we can help more Americans escape the burdens of dialysis altogether.

One reason we can make strides in this first area, prevention, is that we have so far to go on awareness and detection.

Ninety-six percent of Americans with kidney damage or mildly reduced kidney function are unaware of it, and as many as 48 percent of Americans with stage four kidney disease who aren’t on dialysis still don’t know they have it.

There are at least two main ways we can do a better job of preventing or slowing progression to later stages of kidney disease and kidney failure: better investment in effective efforts to treat early kidney disease and related conditions, and researching what drives the progression of the disease.

Happily, we already do know a good deal about what works.

Today, Medicare covers most patients with kidney failure. But we don’t begin spending a great deal on these patients until they’re already sick. It is the epitome of a system that pays for sickness rather than health, and this administration is intent on shifting these priorities.

That’s one reason why we incorporated the first-ever preventive services program into Medicare this past year, focused on diabetes, building on early development work by the CDC and NIH.

But for all we do know about prevention, we don’t know much about how to predict which patients’ conditions will worsen at what rates, and why.

This has held back targeting of prevention programs, but it has also left patients in the dark about their own condition and what they can do about it.

HHS is now undertaking investments to help change that. In 2017, NIH began the Kidney Precision Medicine Project to better understand the different types of kidney disease, and how they progress, using the same kind of techniques that have yielded leaps forward in targeted cancer treatments. Enrollment for this study will begin soon.

We’re also pursuing research about what’s known as the APOL1 gene, which is strongly associated with kidney disease and make transplants from patients with it much less successful. Enrollment in an NIH study on this gene in particular will also begin within the next several months.

Further, as we learn more about kidney disease, we will examine ways to help spur drug development to help prevent or slow the condition.

Shifting our reimbursements so that we’re actually paying to prevent kidney failure, rather than just paying to treat it, will help drive research in this area as well.

There is a final advantage to better identification of kidney disease.

Earlier detection means we have more time to educate patients, help them make informed choices about their treatment options, and prepare them for treating kidney failure as they wish—if and when that becomes necessary.

This extra time allows an optimal start for treatment, whether that’s a pre-emptive transplant without dialysis, starting home dialysis with a functioning catheter, or starting peritoneal dialysis with a safe, permanent access.  

In other words, better prevention and detection efforts will help expand options for patients, that second focus I mentioned.

Today, 88 percent of Americans with ESRD start treatment with center-based dialysis. Just 12 percent start treatment at home with hemodialysis or peritoneal dialysis.

This is the complete opposite of the situation in some of our peer nations, including Hong Kong, where more than 80 percent of patients benefit from some form of in-home dialysis.

Guatemala is at 56 percent peritoneal!

Improving this situation dramatically, as we ought to do, will mean examining the payment incentives in our programs today, while expanding access to new technologies.

There may be no better example of how outdated payment systems distort Americans’ healthcare, and lower its quality, than what we have in kidney care today.

As many of you know, while peritoneal dialysis or home hemo may not be possible for absolutely everyone, they can often be more convenient, better for patients’ independence and self-sufficiency, and better for their physical health.

But in many ways, today’s policies bias providers toward center-based dialysis—we get what we pay for. And while center-based dialysis may work for some patients, we want to pursue avenues that provide the maximum level of flexibility, convenience, and effectiveness for all patients with kidney disease.

For one, we believe we may simply underpay for these alternatives I’ve mentioned, even though we know how much they can benefit patients’ lives.

It’s also more appealing for a dialysis company to add patients to a center where one machine can accommodate multiple patients than it is to provide new services to each patient at home.

But that isn’t providing the care patients deserve, and we have the power within HHS to test out significant payment changes to boost home dialysis.

We already have some experience with new incentives in this area. We began testing one innovative payment model in 2015 that allowed traditional, center-based dialysis providers to offer more comprehensive care for their patients, in exchange for a share of the savings if their patients’ outcomes improved.

It worked remarkably well: In just the first year, the model saved almost $2,000 per patient per year in Medicare costs, reducing hospitalizations while maintaining quality of care.

One of the Secretary’s senior advisors, Adam Boehler, runs the CMS innovation center that puts out these models.

He has overseen our efforts on kidney care, and is now looking hard at new models for patients not just with ESRD, but also stage 4 and 5 kidney disease.

Changing our payment systems could also spur adoption of new, cutting-edge technology. In fact, so flexible is some of the technology we have today that HHS’s emergency-response arm is currently in the process of testing out portable dialysis machines for use after natural disasters.

As some of you may know, during 2017’s devastating Caribbean hurricanes, the federal government helped transport dialysis patients from U.S. Virgin Islands to the U.S. mainland to continue their treatment, where many of them stayed for an extended period of time—a costly journey that we could make unnecessary in many cases.

The kind of capabilities we need for these disaster settings, like the ability to use publicly available water rather than medical-grade water, will be useful in expanding portable dialysis access for Americans in all kinds of other situations.

The most transformational change for a kidney patient’s life, of course, is not portable dialysis but a kidney transplant—the third area of focus I want to discuss.

One key step is, again, reorienting our payment incentives. Today, dialysis companies are actually disincentivized from helping patients get ready for and find a transplant.

Even though a transplant improves health and dramatically lowers the cost of care, from the perspective of a dialysis company, every transplant is one less customer.

A system that pays for health, as we envision for all of healthcare, will pay for the healthiest possible outcomes.

Ideally, we’d want to offer dialysis providers incentives to get patients off dialysis through transplants, making the outcome that’s good for the patient and good for the system good for their business, too.

We also simply don’t have enough kidneys to meet demand, and there is room for improvement here as well.

One of the first steps is ensuring that we’re not discarding healthy, safe organs—which we believe we may be doing today.

Through a federal advisory committee on blood, tissue, and organ safety, HHS develops guidelines to identify organs at risk for unexpected transmission of HIV, hepatitis B, or hepatitis C. These guidelines were last updated in 2013.

Since then, the science has been advancing. We’ve been able to develop and analyze new data about our testing capabilities for HIV, hepatitis B, and hepatitis C, and the kind of surety they can provide around organ safety.

Last month, HHS hosted a gathering of technical experts as they submitted the latest scientific evidence to our advisory committee that will take advantage of this new science and offer new opportunities to improve organ utilization.

FDA also recently finalized guidance around best practices for utilizing animal studies in the evaluation of organ preservation devices.

This forward-looking guidance will provide companies and innovators with a clearer pathway forward for testing organ preservation devices, which will ultimately help to unleash innovation that could be useful to preserving kidneys and enabling more transplants.

I want to offer a special thank you to FDA for their work on this effort and their broader work on the Kidney Health Initiative. It is a wonderful example of how we can take an active role in supporting innovation.

Another issue around transplants is expanding support for Americans who are generous enough to consider being a living kidney donor.

As many of you know, organ donors today are still on the hook for all kinds of costs: not just lost wages and other expenses, but also the manageable but real health risks they may deal with down the road.

This is an area HHS is already exploring: Last fall, through the Health Resources and Services Administration, we put out two funding opportunities to support living donors.

The first will provide for continuation of a program to compensate donors’ travel and other expenses related to donation, while the second will support a new pilot program to compensate donors for lost wages.

Transplants, however, are not cures, and about 20 percent of transplant patients require dialysis again within five years. Investing in future technologies is critical to creating more choice for patients, and yet our payment policies, again, have done little to drive investment in this space.

So last year, HHS launched KidneyX, a public-private partnership with the American Society of Nephrology, to spur development through prize competitions of transformational products like wearable or implantable artificial kidneys, which could provide patients with higher quality of life.

Last month we were proud to announce the winners of phase I of the competition, called “Redesign Dialysis,” which prompted innovators to propose new technologies and approaches that could usher in the next generation of renal replacement products that are more effective and give patients their lives back.

Phase I had an impressive 165 submissions, including a number of proposals that could help advance an artificial kidney. Submissions came not only from the kidney community but from engineers, medical device companies, and many others. We’re thrilled with this level of interest, and it shows what a prize competition can drive in an otherwise neglected investment space.

Sponsoring a prize competition is itself a relatively unusual for HHS. It is a way for us to innovate about innovation, in a way—and we’re extremely grateful for the partnership ASN has provided to us on this effort.

But there’s a lot more we can do besides just prize competitions. We are also looking at how our payment and regulatory policies can help provide a pathway for new technologies in this space.

One example is a proposal we included in Medicare’s inpatient payment rule for next year, which we released recently. Medicare already provides a certain add-on payment for new technologies on top of the standard DRG payment to treat a specific ailment or injury.

But we believe that add-on may not currently be sufficient for certain innovative technologies. So, we’ve proposed to increase the maximum possible add-on from 50 percent above the cost of the existing technology to 65 percent.

In addition, we are proposing for medical devices that are part of the Food and Drug Administration’s Breakthrough Devices Program, CMS would waive certain criteria to be eligible for the new technology add-on payments.

These are an important example of a carefully considered decision to align the regulatory and scientific work we do at FDA with the payment policies we have at CMS.

We’ve heard this kind of alignment can be hugely important to investors, and we want to be responsive to that. In fact, some of the technologies that come out of KidneyX may end up being categorized as breakthrough technologies, which may make these innovative solutions eligible to be considered for this new potential payment.

These are just some of the steps that will be necessary to build an environment where American kidney patients get the quality care they deserve. President Trump, Secretary Azar, and I all believe we’ve waited long enough for better solutions and treatments in the realm of kidney care—and I know all of you agree.

This team, led by President Trump, has the kind of ambition we need to deliver much better care for Americans, even if it means bold change.

So I want to conclude by asking something of all of you: Engage with us on the ideas I’ve mentioned today. I know many of you are passionate about fighting kidney disease. Let’s work together to improve prevention, treatment, and transplants.

By the time of this gathering next year, it is my sincere hope that, together, we will have made significant progress in laying out a path for much better care for American kidney patients.

Thank you very much for having me here today.

Content created by Speechwriting and Editorial Division 
Content last reviewed on June 5, 2019