Payment for Dialysis Services in the Individual Market | Chronic Kidney Disease | JAMA Internal Medicine | JAMA Network
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Table 1.  Average Monthly Spending for Patients Without and With ESKD by Market Segment, 2016
Average Monthly Spending for Patients Without and With ESKD by Market Segment, 2016
Table 2.  Prevalence and Spending Effect of Shifting Nonaged Medicare Beneficiaries With ESKD to the Individual Market, 2016
Prevalence and Spending Effect of Shifting Nonaged Medicare Beneficiaries With ESKD to the Individual Market, 2016
1.
Hoffman  A, Sloan  CE, Maciejewski  ML, Wang  V.  Medicare enrollment among patients with end-stage kidney disease receiving dialysis in outpatient facilities between 2005 and 2016.   JAMA. 2020;323(13):1314-1316. doi:10.1001/jama.2020.0704PubMedGoogle ScholarCrossref
2.
Jost  T. CMS acts on premium payments by dialysis facilities, special enrollment period eligibility. Accessed February 10, 2021. https://www.healthaffairs.org/do/10.1377/hblog20161213.057930/full/
3.
Childers  CP, Dworsky  JQ, Kominski  G, Maggard-Gibbons  M.  A comparison of payments to a for-profit dialysis firm from government and commercial insurers.   JAMA Intern Med. 2019;179(8):1136-1138. doi:10.1001/jamainternmed.2019.0431PubMedGoogle ScholarCrossref
4.
Centers for Medicare & Medicaid Services; US Department of Health and Human Services.  Medicare Program; conditions for coverage for end-stage renal disease facilities-third party payment.   Fed Regist. 2016;81(240):90211-90228.PubMedGoogle Scholar
5.
Andrews  M. Judge upends effort to limit charity funding for kidney patients’ insurance. Accessed February 10, 2021. https://khn.org/news/judge-upends-effort-to-limit-charity-funding-for-kidney-patients-insurance/
6.
Associated Press. Judge blocks California law on dialysis clinics. Accessed February 10, 2021. https://www.latimes.com/world-nation/story/2019-12-30/judge-blocks-california-law-on-dialysis-clinics
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    Research Letter
    Health Care Policy and Law
    March 22, 2021

    Payment for Dialysis Services in the Individual Market

    Author Affiliations
    • 1University of Southern California Schaeffer Center for Health Policy and Economics, Los Angeles
    • 2USC-Brookings Schaeffer Initiative for Health Policy, Washington, DC
    • 3USC School of Pharmacy, Los Angeles, California
    • 4Brookings Institution, Washington, DC
    • 5USC Keck School of Medicine, Los Angeles, California
    • 6USC Price School of Public Policy, Los Angeles, California
    JAMA Intern Med. 2021;181(5):698-699. doi:10.1001/jamainternmed.2020.7372

    Although 80% of US patients who receive dialysis for end-stage kidney disease (ESKD) have Medicare as their primary payer, recent evidence suggests an increasing share with other coverage.1 Some policy makers allege that dialysis facilities encourage individual market enrollment by subsidizing individual market premiums through contributions to patient assistance foundations.2 This strategy could increase profits for facilities because commercial plans pay more for dialysis than Medicare,3 but could also increase individual market spending if patients receiving dialysis have above-average spending.

    To our knowledge, little is known about the prevalence and spending of patients with ESKD in the individual market. Prior commercial market studies were limited to financial records of 1 chain, combined employer and individual plans, and only examined dialysis spending.3 To address these gaps, we used claims data for individual market plans and analyzed dialysis and nondialysis spending.

    Methods

    Using 2016 US Affordable Care Act–compliant individual market claims data held by a health care analytics firm, we estimated the prevalence of patients with ESKD and average monthly spending on dialysis services and all services. The data encompass 50 million member months, comprising 28% of 2016 Affordable Care Act–compliant enrollment. We computed average monthly spending by dividing the total allowed amounts, including cost-sharing, by member months. The University of Southern California institutional review board determined that the study met the criteria for coded private information or biological specimens and thus was exempt from informed consent requirements.

    We defined patients with ESKD as those who were assigned an ESKD hierarchical condition category code who received at least 1 outpatient dialysis service in 2016. Hierarchical condition category codes are derived from diagnosis codes and used to risk-adjust health plan payments.

    We used these estimates to calculate the expected increase in individual market spending if some nonaged Medicare enrollees with ESKD instead had individual market coverage. To compare individual market dialysis spending with Medicare, we used claims from a 100% sample of traditional Medicare patients with ESKD. The eAppendix in the Supplement provides additional detail.

    Results

    Patients with ESKD comprised 0.10% of individual market member months (51 002 of 50 million) but 3.3% of spending ($734 million of $21 billion). Their average monthly spending on all services was $14 399, 33 times the spending by enrollees without ESKD ($435) (Table 1).

    Individual market enrollees with ESKD received 1 or more outpatient dialysis services in 85% of enrolled months. For months with at least 1 dialysis service, the average monthly outpatient dialysis spending was $10 149, or 302% of the corresponding estimate for Medicare ($3364). Shifting 10% of nonaged Medicare enrollees with ESKD who were receiving dialysis into the individual market would increase individual market ESKD prevalence to 0.24% and overall average spending by 4.1% (Table 2).

    Discussion

    Individual market plans paid approximately 3 times what Medicare paid for dialysis services, underscoring the incentive for facilities to encourage individual market enrollment. Steering Medicare beneficiaries into the individual market would raise premiums, which would increase spending by enrollees without federal premium subsidies. Additionally, higher federal spending on premium subsidies would likely exceed the offsetting Medicare savings.

    Policy makers have options to discourage steering. Although a federal judge blocked a 2016 federal rule that directly limited third-party assistance, citing procedural problems,4 the rule could be reissued or Congress could enact similar restrictions.5 Similarly, California enacted legislation in 2019 that capped dialysis reimbursement at Medicare rates for patients who were receiving third-party assistance. An ongoing lawsuit alleges that California’s law violates federal law, but even if it succeeds, Congress could implement similar restrictions nationally.6

    A limitation of our study is that we estimated the average spending for all patients with ESKD in the individual market and Medicare, who might not represent patients who are targeted by the steering efforts of facilities. Additionally, our individual market data might not represent the entire market.

    We also could not examine how transitions to the individual market might affect patient cost-sharing and networks. Those effects depend on whether the patient had Medicare Advantage or Medicare supplemental coverage, the specific individual market plan selected, and whether patients receive other cost-sharing assistance.

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    Article Information

    Accepted for Publication: October 16, 2020.

    Published Online: March 22, 2021. doi:10.1001/jamainternmed.2020.7372

    Corresponding Author: Erin Trish, PhD, USC Schaeffer Center for Health Policy and Economics, USC School of Pharmacy, 635 Downey Way, VPD 412D, Los Angeles, CA 90089-3333 (etrish@healthpolicy.usc.edu).

    Author Contributions: Dr Trish had full access to all of the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.

    Concept and design: Trish, Fiedler, Adler, Lin.

    Acquisition, analysis, or interpretation of data: All authors.

    Drafting of the manuscript: Trish, Fiedler, Lin.

    Critical revision of the manuscript for important intellectual content: All authors.

    Statistical analysis: Trish, Fiedler, Ning, Gascue, Lin.

    Obtained funding: Trish, Fiedler, Adler.

    Administrative, technical, or material support: Fiedler, Adler.

    Supervision: Trish, Fiedler, Gascue, Adler, Lin.

    Conflict of Interest Disclosures: Dr Trish reported research funding from USC-Schaeffer Brookings Initiative for Health Policy during the conduct of the study and grants from Arnold Ventures and Commonwealth Fund and personal fees from Blue Cross Blue Shield Association, Premera, Multiplan, and Cedars-Sinai Health System outside the submitted work. Dr Lin reported grants from the National Institute of Diabetes and Digestive and Kidney Diseases (grant K08DK118213) during the conduct of the study as well as personal fees from Acumen, LLC and support from the University Kidney Research Organization outside the submitted work. No other disclosures were reported. Drs Trish and Fiedler and Mr Adler receive support from Arnold Ventures. Drs Trish and Fiedler receive support from the Commonwealth Fund. Dr Fiedler receives support from the Robert Wood Johnson Foundation.

    Funding/Support: This work was supported in part by the USC-Brookings Schaeffer Initiative for Health Policy (Drs Trish, Fiedler, and Ning, Ms Gascue, and Mr Adler). This work was also supported in part by the National Institutes of Health through the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK).

    Role of the Funder/Sponsor: The funding organizations had no role in the design and conduct of the study; collection, management, analysis, and interpretation of the data; preparation, review, or approval of the manuscript; and decision to submit the manuscript for publication.

    Disclaimer: The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health nor any other funders. Some of the data reported here have been supplied by the United States Renal Data System. The interpretation and reporting of these data are the responsibility of the author(s) and in no way should be seen as an official policy or interpretation of the US government.

    References
    1.
    Hoffman  A, Sloan  CE, Maciejewski  ML, Wang  V.  Medicare enrollment among patients with end-stage kidney disease receiving dialysis in outpatient facilities between 2005 and 2016.   JAMA. 2020;323(13):1314-1316. doi:10.1001/jama.2020.0704PubMedGoogle ScholarCrossref
    2.
    Jost  T. CMS acts on premium payments by dialysis facilities, special enrollment period eligibility. Accessed February 10, 2021. https://www.healthaffairs.org/do/10.1377/hblog20161213.057930/full/
    3.
    Childers  CP, Dworsky  JQ, Kominski  G, Maggard-Gibbons  M.  A comparison of payments to a for-profit dialysis firm from government and commercial insurers.   JAMA Intern Med. 2019;179(8):1136-1138. doi:10.1001/jamainternmed.2019.0431PubMedGoogle ScholarCrossref
    4.
    Centers for Medicare & Medicaid Services; US Department of Health and Human Services.  Medicare Program; conditions for coverage for end-stage renal disease facilities-third party payment.   Fed Regist. 2016;81(240):90211-90228.PubMedGoogle Scholar
    5.
    Andrews  M. Judge upends effort to limit charity funding for kidney patients’ insurance. Accessed February 10, 2021. https://khn.org/news/judge-upends-effort-to-limit-charity-funding-for-kidney-patients-insurance/
    6.
    Associated Press. Judge blocks California law on dialysis clinics. Accessed February 10, 2021. https://www.latimes.com/world-nation/story/2019-12-30/judge-blocks-california-law-on-dialysis-clinics
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