Large dialysis chains charge Medicare Advantage plans 27% more than the cost of dialysis services compared to traditional fee-for-service health insurance plans, according to a new analysis by the University of Southern California.
“The dialysis industry is highly integrated, with two large national chains being the main suppliers to most communities,” says Eugene Lin , a clinical investigator at the USC Schaeffer Center and an assistant professor of nephrology at the Keck School of Medicine of USC. “Thus, these chains can exert their market power by forcing insurance companies to pay high prices. We’ve seen evidence of this in the commercial market, and now we’re seeing the same with Medicare Advantage.”
This study by researchers at the USC Shaffer Center for Health Policy and Economics was published in the August 2022 issue of Health Affairs . The researchers found:
- Two large providers dominate the dialysis market and use their influence to negotiate Medicare Advantage payments that are significantly higher than traditional Medicare payments.
- High mark-up may increase patient out-of-pocket costs and affect the financial viability of these plans.
- Researchers estimate that the number of dialysis patients covered by Medicare Advantage will be Increase. Most dialysis patients were enrolled in traditional Medicare until the 2021 rule change.
- Policy makers should address market integration among dialysis providers.
Medicare Advantage is expected to attract more and more dialysis patients
Chronic kidney disease, when the ability of the kidneys to filter toxins from the blood is impaired affects more than 15% of U.S. adults. In the most advanced stages of the disease, patients must undergo regular dialysis or undergo a kidney transplant.
Historically, people with kidney failure, regardless of age, have been able to obtain dialysis coverage by enrolling in traditional health insurance, but They are usually barred from Medicare Advantage after starting dialysis. 21st The Century of Cures Act removes those rules that bar enrollment in Medicare Advantage from 2021, and early reports suggest a major shift in those plans.
Medicare Advantage plans are private health plans that beneficiaries can enroll as an alternative to traditional Medicare. Enrollment in these plans has grown substantially in recent years because they tend to be easier for patients to navigate and often include stronger perks.
Prior to the regulatory change, patients who were already enrolled in a Medicare Advantage plan at the start of dialysis were allowed to remain in the plan. Lin and his colleagues examined the prices these patients paid for dialysis services by analyzing data from three major insurance companies representing nearly half of the Medicare Advantage market.
Medicare Advantage plans pay 27% more for the median price of outpatient dialysis treatment than traditional Medicare pays .
“Our findings contrast sharply with other areas where we have studied before — such as physician services — Medicare Advantage plans The rates that tend to pay providers are very similar to traditional Medicare,” said Erin Trish, co-director of the USC Shaffer Center and associate professor at the USC School of Pharmacy. “These high prices add to the cost of Medicare Advantage plans and beneficiaries, especially as more patients on dialysis choose to enroll in Medicare Advantage.”
Large dialysis chain supplies three-quarter of all dialysis services in the US
The dialysis industry has been significantly consolidated over the past decade . Two large dialysis facilities provide more than three-quarters of dialysis treatment in the United States and more than one-quarter of patients live in counties where one or two large dialysis facilities have all the facilities.
“It’s interesting that providers can charge more in the Medicare Advantage marketplace over the network. If the patient travels out of network to provide “But when there are only one or two providers in the market, insurers lose any potential leverage to negotiate lower payments,” said Erin Duffy, a research scientist at the USC Schaeffer Center.
Large dialysis facilities charge 31% higher markups than traditional health insurance. Regional chains charge 20% higher markups, The markup was 12% higher at independent facilities, and hospital facilities were charged at the same rate as Medicare rates. In contrast, out-of-network treatment at these facilities was comparable to what would be paid to Medicare.
While out-of-network dialysis treatment is cheaper for the plan, beneficiaries pay slightly more out-of-pocket and those with high payouts pay much more annually.
Given that more patients on dialysis are expected to switch to Medicare Advantage plans, the increase in dialysis spending could have downstream implications, the authors write policies, including higher premiums or reduced benefits. The researchers argue that policymakers should consider broad reforms to increase competition in the market.
More information: Medicare Advantage Plan Pays Big Markup to Comprehensive Dialysis Organization, Health Affairs
- High mark-up may increase patient out-of-pocket costs and affect the financial viability of these plans.
(2022). DOI: 10.1377 /hlthaff.2021.02009 Citation : Largest Medicare Advantage plan pays big for dialysis (Aug. 2, 2022) Retrieved Aug. 26, 2022 from https://medicalxpress.com/news/2022-08-largest-medicare-advantage-big- markups.html
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