It really shouldn’t come as any surprise that dialysis companies are partial to billing commercial health plans for dialysis services. It’s survival, they say, and Medicare has always looked the other way because it helps to reduce what the ESRD program consumes each year––about 8% of the budget.

But now the agency is watching the Obama Administration’s key health care plan, the Affordable Care Act, begin to crumble and lose insurers because too many sick people are joining the Marketplace insurance plans. The Centers for Medicare & Medicaid Services is concerned that health care providers, including those in dialysis, may be “steering” new patients into these plans and away from Medicare to increase profits.

The renal community has claimed for years that it cannot survive on Medicare payments only. Before building a new clinic in any part of the United States, a provider’s first step is to check and see how many patients in the area have commercial health plans.

Congress made sure in 1972 that anyone diagnosed with end-stage renal disease automatically qualified for Medicare benefits to get dialysis, regardless of age. That was a major improvement over zero government involvement in paying for dialysis treatments. Congress’ decision to cover the treatments––the only entitlement at the time for a specific disease state and likely the last one to be approved––opened the flood gates for entrepreneurs to build clinics and start billing Medicare “fair and reasonable” fees for in-center care. Medicare has corralled those payments, but what is fair and reasonable today?

Getting caught

On July 1, United Healthcare, the largest insurer in the country, sued dialysis provider American Renal Associates for what it claimed was price gouging on dialysis bills. The insurer said ARA, which just went public three months before, was charging UHC $4,000 a treatment for some 27 patients who had signed up for UHC’s Gold Compass 1500 plan in Florida and its Compass and Navigate Plan in Ohio (UHC announced Tuesday that it was retracting charges against ARA for patients in Ohio. Only patients in Florida are now part of the suit).

Beyond the price gouging, however, UHC charged that American Renal “steered” patients into bypassing the low–paying Medicare and Medicaid programs and have them sign up for the UHC plans, thus allowing American Renal free rein on charging whatever it thought the insurer was willing to pay. In their suit, UHC claimed American Renal offered any patients who signed up for the commercial health plans that it would cover all co-pays and deductibles.

CMS zeroed in on dialysis providers as part of its solicitation for more information on patients being pushed out of Medicare and Medicaid. “We are concerned about reports that some organizations may be engaging in enrollment activities that put their profit margins ahead of their patients’ needs,” said CMS Acting Administrator Andy Slavitt in announcing on August 19 a “request for information” about providers who were dumping sicker patients into the ACA health care plans. “These actions can limit benefits for those who need them, potentially result in greater costs to patients, and ultimately increase the cost of Marketplace coverage for everyone.”

ARA has denied existence of a company policy to steer patients into commercial health plans (the 27 patients in the UHC lawsuit are part of 13,000 patients it has nationwide), and has asked the courts to dismiss the suit.

In a prepared statement about CMS’ request for information, the National Kidney Foundation said, “The (NKF) is concerned about allegations of dialysis patients potentially being steered into health insurance options that primarily benefit the provider; but may not necessarily be in the best interests of the patient.  We agree with CMS that “ ‘[E]nrollment decisions should be made, without influence, by the individual based on their specific circumstances, and health and financial needs.’ ”

It seems ironic that an industry that complains about its paycheck continues to consolidate and buy more clinics. In its March 2016 report to Congress, the Medicare Payment Advisory Commission noted that the country’s two largest dialysis providers, Fresenius Kidney Care and DaVita Kidney Care, have grown faster after the ESRD bundled payment system was   implemented in 2011 than before. Between 2011 and 2014, the total number of facilities operated by the LDOs grew in aggregate by about 21%, MedPAC noted. “By comparison, before the PPS, between 2008 and 2011, the two LDOs grew in aggregate by about 18%.”

An independent guide

Patients need independent counsel on what insurance plan is best for them. Providers have a built in (read “revenue”) bias, and are incentivized to steer patients away from Medicare/Medicaid. Plans do differ; patients who sign up for a commercial health plan, for example, may not find immunosuppressive drug coverage for three years’ post-transplant, which is offered by Medicare. If patients are interested in transplant, they should be made aware of that.

Ultimately, patients need to understand the advantages of all plans that are available, and make an informed decision.