Kidney Disease

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Medicare payments for outpatient dialysis

July 8, 2011 in Medicare | 1 comment

Today I will review how Medicare treats patients with end-stage renal disease (ESRD), relying largely on data from MedPAC’s 2011 Report to Congress.

In 2009, about 340,000 dialysis beneficiaries were covered by fee-for-service (FFS) Medicare. Compared with all Medicare beneficiaries, dialysis FFS beneficiaries are disproportionately younger and African American. Ninety two percent of there beneficiaries receive dialysis in freestanding facilities.  The two largest dialysis organizations provide the majority of care to Medicare beneficiaries.

Although most dialysis patients are Medicare covered, (95%) Medicare is the secondary payer for about one-quarter of new dialysis patients who are insured by an employer group health plan (EGHP) at the time they are diagnosed with ESRD. If an EGHP covers a beneficiary at the time of ESRD diagnosis, it is the primary payer for the first 33 months of care (as long as the individual maintains the EGHP coverage).

In 2009, Medicare spending for dialysis services, including dialysis drugs, totaled about $9.2 billion, an increase of 7 percent compared with 2008. These expenditures averaged about $27,000 per beneficiary.

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Investigative Journalism: Medicare’s ESRD Program

November 10, 2010 in Medicare | 1 comment

Today, I will review an excellent piece of investigative journalism on Medicare’s end-stage renal disease (ESRD) program.  The program provides free access to medical care for patients with kidney disease.  Some highlights of these ProPublica report include the following:

Program Inception

“…the new program would help about 11,000 Americans, just for starters. For a modest initial price tag of $135 million, it would cover not only their dialysis and transplants, but all of their medical needs. Some consider it the closest that the United States has come to socialized medicine.

Now, almost four decades later, a program once envisioned as a model for a national health care system has evolved into a hulking monster. Taxpayers spend more than $20 billion a year to care for those on dialysis — about $77,000 per patient, more, by some accounts, than any other nation. Yet the United States continues to have one of the industrialized world’s highest mortality rates for dialysis care. Even taking into account differences in patient characteristics, studies suggest that if our system performed as well as Italy’s, or France’s, or Japan’s, thousands fewer patients would die each year. ”

Report Findings

  • Patients commonly receive treatment in settings that are unsanitary and prone to perilous lapses in care.
  • Regulators have few tools and little will to enforce quality standards…CMS can demand that facilities submit correction plans, but it cannot fine violators as it can nursing homes.
  • Industry consolidation has left patients with fewer choices of provider.  Two corporate chains that dominate the dialysis-care system are consistently profitable, together making about $2 billion in operating profits a year.
  • The government has withheld critical data about clinics’ performance from patients, the very people who need it most.

Italian Alternative

“Italy has one of the lowest mortality rates for dialysis care — about one in nine patients dies each year, compared with one in five here. Yet Italy spends about one-third less than we do per patient.” However, the article also notes that patients in Italy tend to start dialysis in better overall health. Thus, higher U.S. mortality rates may be due to the fact that American who receive dialysis treatment have more advanced kidney disease than their Italian counterparts.

“Regional health authorities pay more per treatment than Medicare – roughly 50 percent more… But per-patient costs are lower because Italy’s indirect expenses, particularly for hospitalization, are smaller and because coverage includes drugs as well as dialysis. A 2004 study found that Italian patients got half the average dose of Epogen given to U.S. patients…”

The Healthcare Economist’s Take

The ESRD program represents a poor balance between access, cost and quality. To much effort has been focused on increasing access and not enough directed towards reducing cost or improving quality.

For instance, from the patient’s perspective, the access to care is amazing. Patient do not pay for any treatment. This access, however, comes at a price. Quality is poor due to a limited choice of providers.  Increasing reimbursement rates would allow for entry into the dialysis market, but with the tradeoff of increased cost. Further, the $20 billion price tag may be unsustainable in the coming years.

Taking an international perspective, systems that allow unlimited access often incorporate significant restrictions on care and/or significant quality monitoring. In the UK, where there is little cost-sharing on the patient side, the government plays a more active role in rationing and regulating the health care sector.  Other countries thought to have socialized medicine, such as France, do less rationing, but higher levels of cost sharing curb patient demand for unnecessary services.  Allowing for balance billing could allow for superior providers to charge Medicare patients additional fees in return for higher quality services. The Medicare ESRD program does not ration care, neither of these and as a consequence, has become a financial sink hole.

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