Dialysis Entitlement - who's "Primary"
by billp830, Sat Apr 28, 2007 at 11:35:35 AM EDT
Matt Stoller's post April 25th post "Budget Bribery and Medical Costs" includes the statement, "Anyway, Medicare pays for dialysis, which is a good thing." Yes the US dialysis entitlement, the ESRD (End Stage Renal Disease) program in Medicare-speak, is a good thing but it is incorrect to say "Medicare pays for dialysis".
Medicare is the "Primary" insurer for people who already have Medicare - due to age - who then need dialysis. However, half the people who start dialysis each year (about 40,000 of the 80,000 people total who start) are under 63 years of age. For these people, who are not otherwise eligible for Medicare, other insurance is "Primary" for 33 months after starting dialysis (a thirty month clock starts after three months).
Other insurance can be Employer Group Health Plans, Medicaid or other state plans but for someone who is under the age threshold their dialysis is not funded by Medicare until well into the third year of treatment. Under the Bill HR 1191, the waiting period would be extended to 42 months. This extension would save Medicare money - 1 to 2 billion over ten years - but it would increase dialysis provider revenues by much more than the savings seen by Medicare.
Medicare would save money because they would have 12 more months of not paying for someone's care but the providers would see revenue increase by more than the Medicare savings because they charge non-Medicare payers much more than what Medicare pays.
Medicare pays a set rate for three dialysis treatments a week (a dose restriction deserving of another post). This set rate, the Composite Rate (CR), is case mixed to an extent based on age, gender, BMI and there is a geographic wage adjustment currently being phased in so the CR varies by location and among dialyzors (those who dialyze) in the same location. That said Medicare's CR for one hemodialysis treatment is about $150 (+/-$30).
As with all allowed charges Medicare pays 80% of this CR. The 20% is picked up by secondary insurance - in my case the "Secondary" is the carpenters union but it could be Medicaid or a Medicare supplemental plan. Private payers who are "Primary" are charged and generally pay much more. I recently collaborated with a Dialysis Cost Containment firm and it was explained to me that insurers are seeing bills from large corporate dialysis providers 10x the Medicare CR.
Here then is the source of dialysis industry profits - those few diayzors who have private insurance. The provision of dialysis in the US depends disproportionately on these revenues from private payers. Medicare is not paying its own way (as required by law) in providing dialysis to Medicare beneficiaries.
If it was true that "Medicare pays for dialysis" Medicare would have to pay much more per treatment to maintain the current, questionable level of care. If every person in the US who is on dialysis had Medicare as their primary insurer, the Medicare CR would have to increase substantially ... 30 to 50% is an off the top of my head guess, for dialysis care to just stay even (assuming care is directly tied to the revenue it generates).
This quirk of US health care funding needs to be explored. If care is pooled - the care you receive, once you are in the system, is the same without regard to insurance, as it is in the provision of dialysis - then care is based on the average payment, the average revenue generated per procedure. Many of the health care fixes that I've looked into would have the effect of decreasing top end payers while adding to the roles of payers who reimburse below the current average reimbursement rate - i.e. MedicarePlus. This strategy would decrease the level of care experienced by those of us who need care or an increase in the per procedure rate paid.