Medicare Advantage plans make inflated dialysis payments, study finds


Diving Brief:

  • The largest Medicare Advantage plans pay steep markups for kidney dialysis, especially to large dialysis providers, and these inflated amounts could increase patients’ out-of-pocket expenses for the treatment, according to a study published in the August edition of Health Affairs.
  • The 21st Century Cures Act could expose MA plans to a greater share of dialysis patients, creating a financial burden on the program that translates into reduced benefits for MA enrollees overall, researchers have warned. from the University of Southern California.
  • Reforms that increase market competition may be needed to address payment disparities, and policymakers should consider regulations that limit consolidation among dialysis providers, the study authors concluded.

Overview of the dive:

The 21st Century Cures Act of 2016 lifted regulations in 2021 that prohibited enrollment in Medicare Advantage after patients started dialysis treatment, leading to an increase in MA enrollment among patients on dialysis, according to the Health Affairs study.

Medicare Advantage plans are already popular with Medicare-eligible patients and now cover 45% of all Medicare members.

Dialysis is the primary treatment for patients with end-stage renal disease, who are generally eligible for Medicare regardless of age. In 2020, more than 80% of the 525,000 patients receiving dialysis treatment were enrolled in Medicare, according to the report, citing federal data.

According to the study, a large transfer of dialysis patients to Medicare Advantage could disrupt the market, as the consolidated dialysis industry would be able to negotiate higher payment for MA plans than for fee-for-service Medicare. In the dialysis market, large providers provide more than three-quarters of all dialysis treatments, according to the report.

The study found that PA plans from three major insurers representing nearly half of the Medicare Advantage market in 2016 to 2017 paid 27% more for median outpatient dialysis treatment than Medicare’s fee-for-service , with larger chains of dialysis centers generating higher margins. Almost all of the facilities of the two largest chains were networked, suggesting that the big dialysis chains are leveraging their market power in all-or-nothing deals with plans, the report said.

The results contrast with those in non-dialysis settings, where AD provider payments are similar to or lower than fee-for-service health insurance, the researchers said.

Increasing risk-adjusted payments from MA plans for patients with end-stage kidney disease could temporarily ease financial pressure on some plans but inflate the overall cost of care for Medicare, the study found.


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