- A diverse group of stakeholders including insurers, unions, consumer groups and business groups are urging HHS Secretary Alex Azar to have the government reexamine a policy they argue allows providers to inappropriately steer end stage renal disease (ESRD) patients eligible for Medicare or Medicaid into commercial coverage, especially COBRA coverage, to profit from higher reimbursement rates.
- The groups argue CMS should reissue its rule on steering in the individual market to prohibit financially interested third-parties from directly or indirectly making third-party payments. Additionally, they ask lawmakers to consider legislation to protect the employer market from similar practices.
- At question is a provision of the Affordable Care Act that the groups argue allows providers to pay patient premiums through a financially interested third party. The practice, they write, allows dialysis providers to pay premiums through the American Kidney Fund, increasing overall healthcare costs to the system and threatening the sustainability of the marketplaces and employer plans’ risk pools.
The fight between the dialysis industry and the groups centers over whether patients with specific conditions such as ESRD receive more comprehensive and appropriate coverage under federal programs or commercial insurance.
The coalition writing to Azar includes America's Health Insurance Plans, Blue Cross Blue Shield Association, Families USA, National Association of Wholesalers-Distributors, National Retail Federation and the Service Employees International Union. They argue that the practice of steering patients to commercial coverage "raises overall health system costs and results in significant increases in premiums for the entire commercial population, not just those with end-stage-renal-disease (ESRD) needs."
The Obama administration also dealt with the issue, and in December 2016 issued a rule stating patient assistance groups cannot hide assistance from insurers. The rule also allowed insurers to reject assistance beneficiaries in an effort to prevent the practice of moving patients off of federal programs, according to Cowen Washington Research Group. But before the rule could go into effect, a federal judge shot it down, saying CMS didn't appropriately consider the impact of allowing insurers to deny coverage to Medicare-eligible patients.
"We do not think it is likely the Trump Administration would look to be more regulatory than the Obama Administration on the issue," the Cowen expert writes. "That likely means what was released by the Obama Administration is the worst case scenario [for dialysis companies] with, 'do nothing' as a second possibility."
The group’s letter to Azar cites an October 2017 J.P. Morgan equity research report that found the American Kidney Fund generated a rate of return on charitable donations by dialysis providers of more than 500%. It also cites a separate 2016 J.P. Morgan report that found 6,400 qualified health plans purchased through the AKF insurance premium program drove about $1.7 billion in adverse selection.
One major dialysis company has argued that the practice is appropriate.
“There couldn't be anything more explicit and more public than provider funding of the AKF in the entire pantheon of American healthcare, and it's how it's been for 20 years. It's how the government approved it, consistent with criteria the government set down,” DaVita CEO Kent Thirty said during DaVita’s 2017 Q3 earnings call in response to a question from J.P. Morgan Securities analyst Gary Taylor.
But the groups argue DaVita is only defending its bottom line at the cost of the health system as a whole.
“An estimated 60% of DaVita Inc.’s pre-tax profit comes from patients with premiums funded by the American Kidney Fund, which is heavily subsidized by charity donations from DaVita (which qualifies as a charitable deduction),” the groups wrote.
AKF also fought back again against the group’s letter, arguing that insurance companies are simply trying to offload costly patients onto federal programs and that unions are only teaming up with insurers due to their efforts to unionize dialysis facilities in California and other states.
It also pushed back against claims that commercial insurance is not in the interest of patients, saying that only 25% of grants to patients are for employer-provided health plans, including COBRA.
“Although most of the patients we assist do choose Medicare as their primary coverage, Medicare is not the best coverage for everyone. Many kidney failure patients are younger than the typical Medicare beneficiary and have families; they want to stay on employer or COBRA plans because Medicare doesn't cover families,” AKF CEO LaVarne Burton wrote to Azar in a separate letter.