A new study published in Health Affairs urged government leaders to limit market consolidation among the largest dialysis providers as more and more seniors choose Medicare Advantage over fee-for-service (FFS) Medicare. Analyzing 2016 and 2017 outpatient Medicare claims data, the study authors found that MA organizations paid inflated costs for dialysis services compared to what FFS Medicare would have paid, especially to large national dialysis organizations — where the majority of patients receive treatment. Notably, MA plans’ median cost for in-network hemodialysis (the most common form of the therapy) was $301, which was markedly higher than the $232 median cost for out-of-network treatments. Findings were similar for peritoneal dialysis, the less common form of dialysis.
Overall, MA plans paid 131% of the FFS price for in-network hemodialysis at large chains, compared to 120% of the FFS price at regional chains, and they paid 112% of the price at independently owned facilities. These markups were also found for in-network peritoneal dialysis but were not observed for out-of-network services.
This trend could spark concern for payers as more MA options become available to end-stage renal disease patients, who were previously only able to keep MA coverage they had during the plan year of their diagnosis or enroll in a Chronic Condition Special Needs Plan (C-SNP) for ESRD. The 21st Century Cures Act of 2016 allowed post-diagnosis ESRD patients to freely enroll in MA as of January 2021, and early data signals an influx of new MA dialysis patients. National dialysis provider DaVita Inc. said 42% of its Medicare patients were enrolled in MA by the end of 2021, as cited by the Health Affairs study. With fewer than 4,500 members as of August 2022, per AIS’s Directory of Health Plans, the ESRD C-SNP market is currently small — and dominated by Elevance Health — but could be poised to grow as more seniors see MA as a viable option.
SOURCES: “Medicare Advantage Plans Pay Large Markups to Consolidated Dialysis Organizations,” Health Affairs. doi: 10.1377/hlthaff.2021.02009 HEALTH AFFAIRS 41, NO. 8 (2022): 1107–1116; DHP, AIS’s Directory of Health Plans.
This article was reprinted from AIS Health’s biweekly publication RADAR on Medicare Advantage.