The math is straightforward: The best way for employers and insurers to avoid paying for dialysis is to invest in preventive care.
Many health policy dilemmas involve bearing higher costs to secure increased access or improved quality. We tolerate patent exclusivity in exchange for development of new drugs and nonprofit tax exemptions in exchange for hospitals’ charity care and “community benefit.”
Frequently the trade-offs don’t look like good deals and draw criticism, but seldom do critics fail to acknowledge what is gained or suggest wholesale abandonment. A notable exception has been the drumbeat of denunciations surrounding commercial insurance coverage of dialysis and the role of the American Kidney Fund in subsidizing it. That dialysis providers’ payer and labor adversaries do not acknowledge the complexity of the issue is perhaps to be expected, but 2 recent pieces from more highbrow sources should have recognized that the system is designed to incentivize preventive kidney care.
Critics’ narrative typically goes like this: Commercial insurance pays more for dialysis than Medicare, which covers most patients with end-stage kidney disease (ESKD). Federal law gives patients the right to keep their commercial coverage for 30 months before exercising their right to enroll in Medicare. In order to maintain the higher reimbursements, dialysis providers contribute to a charity, the American Kidney Fund, which pays patients’ insurance premiums—an arrangement approved by the HHS Inspector General. Because health insurance spreads risk, the dialysis providers reap more in reimbursements than they contribute for the premiums.
Lost in these accounts are 2 questions. First, why did Congress enact the 30-month requirement? (An interviewer for the Freakonomics podcast actually asked an expert this question—he responded with a wisecrack and the narrator moved on.) Second, why did the Inspector General accede to the practice?
Here's the answer to the first question. The entitlement of people with ESKD to enroll in Medicare regardless of age creates a perverse dynamic in the care of persons with chronic kidney disease (CKD). Once an insured’s CKD progresses to ESKD, the insurer may be able to offload that sick patient’s expenses onto taxpayers. This means the insurer lacks the financial incentive to try to preserve the patient’s kidney function as long as possible or to prepare the patient for the CKD-ESKD transition by having a fistula created, educating the patient about home dialysis, or obtaining a preemptive transplant. To combat “short-timer syndrome” on the part of insurers, Congress in 1981 put insurers on the hook for some dialysis costs. Over the years their skin in the game has been increased to 30 months.
We know what happens when a change in a coverage is triggered by deterioration in a patient’s health, exemplified at its worst by the nursing home bounce-back phenomenon that plagues people dually eligible for Medicare and Medicaid. Nursing home care is generally paid for by Medicaid at a low rate, but after the patient is hospitalized he or she returns for postacute care reimbursed by Medicare at a higher rate. The nursing home profits from the acute illness and the state is relieved from paying for long-term care during the postacute period, making both parties indifferent to delivering high-quality preventive care. The 30-month requirement spares ESKD patients from this purgatory, and nobody has proposed any alternative mechanism.
Why did HHS approve the role of providers and the Kidney Fund in paying premiums? The deterrent effect of the 30-month requirement is lost if the ESKD patient (who typically can no longer work full time after kidney failure) can’t afford health insurance. We learned during the great recession that access to COBRA without generous subsidies is useless, which is why, for this recent downturn, Congress enacted a 100% COBRA subsidy. Without the enrollments being maintained, ESKD patients would go straight to Medicare, arriving more quickly and less stable, thereby adding to federal expenditures.
Congress feared that costly ESKD patients or the providers who served them could become reviled and added an antidiscrimination provision to the 30-month requirement. In recent years, some health benefit consultants have persuaded a number of employers to flout this patient protection, while a prominent employer coalition has lobbied regulators to water it down. Two federal circuit courts of appeal have split on whether the protection can be enforced through private litigation. When President Biden’s appointees arrive at CMS, they will need to address this conflict.
We now face a critical juncture in the future of pre-ESKD kidney care. One road forward promises a veritable golden age, with several new kidney-preserving drugs coming to market, and a bevy of renal care management companies applying artificial intelligence to identify patients most at risk for kidney failure and intervening with intensive case management to prevent, delay, or mitigate it.
The alternative path is one where continued vilification of kidney care providers fuels further payer resistance and policy initiatives to nullify the 30-month requirement. In this scenario, employers fire the renal case managers, deny coverage of kidney-preserving drugs, and hand off an ESKD epidemic to the Medicare program.
The most compelling critique of dialysis providers is the same critique so often applied to hospitals and drug manufacturers—health care prices in the United States are too high. Economists, payers, and policy makers should continue to explore options to lower prices without singling out dialysis with superficial and hyperbolic rhetoric.
Most privately insured patients with CKD experience kidney failure between the ages of 50 and 65, and at least one insurer, CareMore, has shown that its intensive management of patients with CKD can delay onset of ESKD for 18 years. The math is straightforward: The best way for employers and insurers to avoid paying for dialysis is to invest in preventive care, just as Congress intended.