Dialysis is big business.
Unlike the private-sector health plans, Medicare has a “Most Favored Nation” clause which means that providers cannot give a discount on billed charges to health plans or others that is greater than what they give to Medicare.
It is difficult to find documented dialysis costs applicable to the private-sector health plans, because the “totals” often include only actual dialysis and some direct associated costs, but don’t include additional associated costs from complications and acute emergency and hospital admissions that often occur from dialysis and other health conditions that these members may have. When these additional associated costs are added in, the real Plan claims paid by commercial health plans vary from $350,000 to $700,000 annually. What’s worse is that the “Stop Loss,” or re-insurance carrier may “laser” the member, meaning that the individual dialysis patient has to reach a higher individual Plan claims payment level than other members before reinsurance is triggered. That threshold could be $350,000 or more, based on what the fixed ongoing Plan claims are for a particular member.
According to one recent publication, dialysis costs vary, but a typical cost of one dialysis session is $500 or more. This appears to be the amount that the government pays, not the amount paid by private health plans. That cost does not include surgery for the vascular access to place the catheter for hemodialysis, or the surgery to place the peritoneal catheter into the abdomen for peritoneal dialysis which adds between $1,000 to $7,500 each time the catheter gets clogged, becomes non-functional and has to be replaced. If home dialysis is being done with a machine, there are additional costs for the machine, supplies, utilities, special plumbing and home wiring.
Sometimes the quoted cost is higher for dialysis treatments, because the charge is bundled to include not only the dialysis procedure, but also medications (like epoetin, heparin, etc.), as well as supplies and labs. The bundled rate is the most commonly quoted rate, and is usually the most cost-effective route.
The U.S. Renal Data System indicated that hemodialysis came in at an annual cost of $72,000 (at $500 per treatment and the typical 3 treatments per week), whereas peritoneal dialysis was about $53,000, which is well below the total cost for a private-sector health plan.
If possible, it’s important to establish a direct contract with dialysis providers in order to keep the costs stable across members.
You may be approached by a dialysis management company, which is a middleman vendor, who will use the average regional pricing to provide its quote. Carefully analyze this deal, since these dialysis management vendors typically keep about 35% of the savings realized, which is added to the negotiated cost. Be sure to understand what costs and services are included in the dialysis management firm’s bundled costs. If the final cost plus the dialysis management vendor’s percent of savings is greater than the regional dialysis cost, you may want to pass up the deal.
Advanced Plan for Health (APH)’s expert clinical and healthcare administration consulting resources help clients negotiate favorable bundled agreements. These negotiations consider that there will be extra high costs for the health problems and complications that result generally, and due to complications of treatment. APH’s Poindexter advanced and predictive analytics system clearly outlines all of these costs, and also helps case managers monitor and manage members with chronic kidney disease to avoid dialysis and / or help those on dialysis to manage their health and compliance as much as possible.
How Medicare Fits Into the Picture
If dialysis patients are not insured, they will have to wait four months after the first outpatient dialysis treatment for Medicare to pay. However, in order for Medicare to pay for dialysis, recipients are required to pay the monthly premium for Medicare Part B benefits. Medications that must be professionally administered – like infusions and some injectable medications – are grouped under medical costs, rather than with traditional pharmacy claims and therefore are not covered under Medicare Part D or Plan pharmacy benefits. It is also prudent for individuals to purchase Medicare Part D, if they lack secondary drug benefits, to cover medications that are filled at the pharmacy and not administered by a healthcare professional.
When health plan members have private insurance, this payer is always primary for medical care, even during the coordination period where dialysis patients are waiting for Medicare benefits. After the coordination period, primary Medicare benefits for End-Stage Renal Disease (ESRD) are possible and provided through a special federal law just for individuals with ESRD.
The National Kidney Foundation® ESRD Medicare Guidelines state that in accord with the Centers for Medicare and Medicaid Services (CMS) eligibility and enrollment requirements, the 30-month coordination period starts on the first day of the fourth month following the initial outpatient dialysis service, even though the person has not signed up for Medicare. As an example, if the person started dialysis on July 1, 2015, the coordination period would end on December 31, 2017 and Medicare coverage would be primary starting January 1, 2018. During the 30-month coordination period, the person may enroll in Medicare Part A and B, and needs to do this though they will not have to pay for Part B until the coordination period is over. While many people wait until they are primary on Medicare to enroll in Part A and B, the disadvantage is that they may have to wait for the next Medicare Open Enrollment period to do so. That could leave them uncovered for medical costs, unless they remain on the health plan for medications and other services that may be covered under the health plan. This delay in buying Part B would also impact the employer, so timely enrollment in Part B is essential. Study the Medicare official regulations and comply fully to take full advantage of these benefits.
While Part A benefits are provided at no cost to the individual, there is a monthly charge of more than $100 for the Part B coverage, which pays physicians, durable medical equipment (DME), and various outpatient services. There is also an annual co-pay. Medicare Part D is advisable for those without prescription drug coverage and has a monthly individual cost of between $100 and $150 per month.
When a member becomes primary on the Medicare dialysis program, the employer is no longer the primary payer of the dialysis patient. Caveat: The failure to monitor a dialysis patient to be sure they have enrolled successfully and timely in Medicare means that the employer keeps paying for dialysis instead of Medicare becoming the primary payor. Medicare will not send a reminder, and Medicare will not reimburse these extra health plan payments for the member on dialysis. To avoid leaving money on the table, Plans need to be particularly careful in checking on new Plan members whose dialysis may have started on a different health plan before they became active on your health plan. Those months count even though they were not paid for by your health plan.
Readers should know that Congress has introduced a bipartisan bill entitled Dialysis PATIENTS Demonstration Act (PATIENTS Act) H.R. 4143/S.2065, designed to offer dialysis patients a dedicated care coordination team and care planning, once they are covered by Medicare. If enacted, this bill strives for cost containment, improved access to preventive and other health care services and other personalized assistance for covered individuals.
TPA and Medical Management Kidney Disease & Dialysis Best Practices
Joy McGee-Cory, Sr. VP of Consulting Services at APH, is passionate about ensuring that members with chronic kidney disease have the medical management they need. She has assisted many clients in successfully navigating Medicare requirements for dialysis and obtaining favorable provider and facility contracts.
From years of experience, she has written a Kidney Disease and Dialysis best practice guide. Click here to download a PDF of these best practices.
Also, to learn more about how Poindexter and the APH team of expert analytics and clinical experts help clients to better control the costs of kidney disease, kidney failure and dialysis while keeping quality high, please contact us here and we’d be happy to connect to learn more about your needs.