- The largest Medicare Advantage plans pay hefty markups for kidney dialysis, especially to large dialysis providers, and those inflated amounts could increase patients’ out-of-pocket spending for treatment, a study published in the August edition of Health Affairs found.
- The 21st Century Cures Act could expose MA plans to a greater share of dialysis patients, creating a financial burden to the program that results in reduced benefits to MA enrollees overall, the University of Southern California researchers warned.
- Reforms that would increase market competition may be needed to address the payment disparities, and policymakers should consider regulations that limit consolidation among dialysis providers, the study authors concluded.
The 21st Century Cures Act of 2016 lifted regulations in 2021 that prohibited Medicare Advantage enrollment after patients began dialysis treatment, prompting increased MA enrollment among dialysis patients, the Health Affairs study said.
Dialysis is the primary treatment for end stage renal disease patients, who are typically eligible for Medicare regardless of age. In 2020, more than 80% of the 525,000 patients receiving dialysis treatment were enrolled in Medicare, the report said, citing federal data.
A large shift of dialysis patients into Medicare Advantage could disrupt the market, the study said, because the consolidated dialysis industry would be able to negotiate payment from MA plans higher than for fee-for-service Medicare. In the dialysis market, large suppliers provide more than three-quarters of all dialysis treatment, the report said.
The study found that MA plans at three large insurers representing nearly half of the Medicare Advantage market in 2016 to 2017 paid 27% more for the median outpatient dialysis treatment than fee-for-service Medicare, with larger dialysis center chains commanding higher markups. Nearly all facilities of the two largest chains were in network, suggesting that larger dialysis chains leverage their market power into all-or-nothing negotiations with plans, the report said.
The findings contrast with those from non-dialysis settings, where MA provider payments are similar to or lower than those for fee-for-service Medicare, the researchers said.
Increasing MA plans’ risk-adjusted payments for patients with end stage renal disease could temporarily alleviate the financial pressure on some plans but inflate the overall cost of care to Medicare, the study said.