Dialysis consolidation dangerous for Medicare Benefit plan well being, research says

Policymakers ought to deal with the consolidation of dialysis suppliers, because it may result in detrimental downstream results for Medicare Benefit beneficiaries, a research printed Monday in Well being Affairs instructed. 

Researchers on the College of Southern California discovered three massive Medicare Benefit insurers paid 127% of fee-for-service Medicare prices for dialysis remedy in 2016 and 2017. If the variety of dialysis sufferers enrolling in Medicare Benefit continues to develop following current coverage adjustments, insurers could possibly be compelled to chop again on different advantages to pay for dialysis remedies. 

Whereas the current elimination of dialysis community adequacy necessities for Medicare Benefit might alleviate some issues, policymakers ought to search for methods to extend competitors within the dialysis market, the research mentioned. 

“If we expect that selection is a vital worth within the Medicare program, is plan well being vital?” mentioned Dr. Eugene Lin, a medical and resident fellow on the USC Schaeffer Heart and one of many research’s authors. “This sort of makes it tougher to run a Medicare Benefit plan, and you then may not have as many choices accessible for sufferers.” 

Dialysis for end-stage renal illness is likely one of the few situations that qualifies an individual for Medicare, no matter age. Till 2021, sufferers may typically solely enroll in Medicare Benefit earlier than they developed ESRD. In 2018, solely 22% of Medicare sufferers with ESRD enrolled in Medicare Benefit, in contrast with 34% of beneficiaries total, the research mentioned. 

However after Congress lifted the prohibition, dialysis big DaVita Kidney Care reported that 42% of its Medicare sufferers had Medicare Benefit plans by the top of 2021, in response to the research. DaVita is likely one of the largest dialysis chains within the nation, together with Fresenius Medical Care North America. 

In 2018, 44% of Medicare Benefit beneficiaries with ESRD had been enrolled in plans with detrimental ESRD margins, in response to the Medicare Fee Advisory Fee. An inflow of ESRD sufferers may exacerbate monetary difficulties for the insurers: Whereas Medicare Benefit pays suppliers the identical or barely lower than conventional Medicare for many non-dialysis providers, the identical was not true for dialysis cost, the research discovered. 

Researchers in contrast fee-for-service claims to multiple million outpatient dialysis claims from 2016 and 2017 paid for by UnitedHealth Group, Aetna and Humana. Within the pattern, the median Medicare Benefit hemodialysis worth was $296, or 127% of the fee-for-service Medicare worth. 

“As dialysis grows to be a bigger share of the [Medicare Advantage] inhabitants, which may have implications on issues like whether or not [plans] cost a premium, whether or not they can supply as many prolonged advantages that do or the forms of rebates,” mentioned Lin, who can be an assistant professor on the College of Southern California. 

Market consolidation within the dialysis trade could be on the root of the distinction in cost, the researchers mentioned. DaVita and Fresenius supplied 75% of the full fee-for-service Medicare dialysis providers in 2018, in response to MedPAC. Information analyzed for Well being Affairs indicated the companies had been in a position to leverage their maintain available on the market to barter increased charges with Medicare Benefit plans. 

The researchers discovered little regional variation within the markups negotiated by massive dialysis organizations, suggesting dialysis services require Medicare Benefit insurers to incorporate all their services in a community—even in hypercompetitive dialysis markets. 

Dialysis chains had much more negotiating energy earlier than 2021, as a result of regulators required Medicare Benefit insurers to make sure at the least 90% of beneficiaries lived inside a sure distance of an in-network dialysis facility. Because of this, in-network dialysis turned extra in depth than out-of-network remedy, the research discovered.

The Facilities for Medicare and Medicaid Companies tossed this requirement in 2021, and the Well being Affairs research’s knowledge doesn’t seize this variation. Rising Medicare Benefit enrollment additionally might give plans extra leverage to barter decrease charges with dialysis chains. 

However policymakers ought to take into consideration market reforms to lower dialysis consolidation, the researchers argue. 

Policymakers may ban so-called all-or-nothing contracting, the researchers instructed. There’s precedent for this: Sutter Well being agreed in 2019 to finish its all-inclusive contracting practices and pay $575 million to settle a 2014 lawsuit that alleged its used anti-competitive contracting practices.

“When a big chain is working in areas with little competitors, however then they use that as leverage in areas which have a variety of competitors to get the identical worth markup… then that does begin to develop into extra anti-competitive,” Lin mentioned. 

Policymakers must also pay extra consideration to how dialysis contract negotiations have an effect on Medicare Benefit insurers’ monetary well being, Lin added. Lin mentioned he’s hesitant to suggest policymakers shore up the losses insurers have confronted from dialysis community negotiations however they might suppose extra creatively about how networks are constructed.

“How will we navigate an trade that’s already develop into consolidated? That results in various points, not simply within the Medicare Benefit market,” he mentioned. “Possibly that’s one thing the federal government ought to take into consideration regulating.” 

The federal authorities has dipped its toes into dialysis market regulation, together with by limiting DaVita’s potential to accumulate new clinics in Utah for the following 10 years. 

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