Since insurers began pulling out of the individual market in many states, CMS has vowed to crack down on practices that drive up costs.
CMS struck a blow Tuesday to end a practice by dialysis centers of underwriting premiums that kept patients out of Medicare or Medicaid by covering the cost of their premiums, which allowed them to collect thousands in payments from insurers on the federal exchange.
The practice, which both insurers and social workers told CMS is widespread, led to high costs for health plans who ended up covering an unexpected number of patients with end-stage renal disease (ESRD), a condition so costly—around $100,000 a year in Medicare—that patients with ESRD are extended coverage at any age.
However, with the arrival of the Affordable Care Act (ACA) and its ban on barring coverage for pre-existing conditions, some dialysis centers found they could reap higher payments from insurers taking part on the exchanges if they paid patients’ premiums, either directly or through a foundation, and then billed the private insurer at higher rates than Medicare will pay. A CMS fact sheet said a center could bill up to $200,000 more per patient per year.
Monday’s interim final rule, which takes effect in 30 days, does not ban third-party payments, but it demands full disclosure by ESRD facilities to both patients and insurers. Many payers already barred third-party payments if they found out about them, so the new rule ensures they will, and it likely will have the effect of ending the practice if Tuesday’s reaction is any sign.
A statement for the group “Dialysis Patient Citizens” (DPC), which said it represents 30,000 dialysis and “pre-dialysis” patients, protested the move through its spokesman, Hrant Jamgochian, who has represented other grassroots initiatives.
“The rule singles out ESRD patients, who are eligible for Medicare at any age but who can benefit from services offered in the individual insurance market that Medicare does not cover,” the statement said. Examples cited included diabetes supplies, nutrition assistance, and care from a psychiatrist who does not accept Medicare.
However, one of the group’s platinum sponsors is Davita, which serves more than 186,000 patients through 2300 dialysis centers in the United States. On October 31, 2016, Davita announced a policy change of suspending support for Medicaid-eligible applicants seeking premium assistance from the American Kidney Fund.
In that statement, the company said, “If CMS were to issue a broader ruling that made access to charitable premium assistance unavailable to all ESRD patients on ACA plans, the estimated financial impact would increase by up to $90 million, based on our estimate that a significant number of ESRD patients would lose their ACA coverage and end up completely uninsured, while others could continue the coverage with federal subsidies.”
In the past year, as major national insurers have pulled out of many states and left some markets with limited choices, CMS has vowed to take steps to stem losses in the individual market. Third-party payment of premiums has been cited as a huge cause for concern, with hospital foundations and other charities seeing a premium payment of a few thousand dollars as a minimum investment to ensure more substantial reimbursements for sick patients who would otherwise rely on Medicare or Medicaid. CMS issued a request for information on this issue in August 2016.
Among the problems particular to ESRD patients: those facing a transplant had to ensure continuous coverage, yet the parties paying their premium for individual policies during dialysis were unwilling to do so once this service ended. In CMS’ view, this laid bare the true purpose of their charitable offering—the patients’ needs were of no concern once the potential for reimbursement ended. According to the CMS fact sheet, social workers said some facilities aggressively steered all patients toward individual policies regardless of circumstances, including the potential for out-of-pocket costs that would not occur with Medicaid.
The rule issued Tuesday requires the following:
· Upfront disclosure for patients of coverage options, including individual market plans, Medicaid, Children's Health Insurance Program, and the Medicare ESRD Program.
· A summary of short-term and long-term costs of various health coverage options.
· Facilities must tell insurers of individual market plans when they make premium payments for clients.
· Facilities must gain assurance that the health plan will accept the premium payment for the entire plan year, or else they cannot make such payments.