Largest Medicare Advantage Plans Pay Large Markups for Dialysis, Could Increase Out-of-Pocket Spending


A recent study found that the largest Medicare Advantage plans pay large markups to large dialysis organizations, and these inflated payments could increase out-of-pocket expenses for patients.

A study conducted at the University of Southern California and published in Health Affairs found that large dialysis chains charge Medicare Advantage (MA) plans 27% more for treatment compared with what they charge traditional, fee-for-service Medicare.

The researchers compared fee-for-service Medicare payments with MA outpatient dialysis spending, using UnitedHealth Group, Aetna, and Humana data. Claim lines with data elements signifying dialysis at outpatient facilities, a type of bill for outpatient dialysis, a Current Procedural Terminology (CPT) code for dialysis, and a revenue center code signifying hemodialysis or peritoneal dialysis were included in the study.

Claims from US territories, cases where type of dialysis couldn’t be identified, and those involving patients with acute kidney injury were excluded from the study. Claims for enrollees in private fee-for-service MA plans were also excluded.

MA dialysis treatment was defined as treatment and all services on the billing list that were billed by the same provider for the same patient on the same date. Patients’ out-of-pocket obligation on dialysis spending and non-prescription drug health care were also recorded.

Of the 39,718 patients in the study, there were 33,810 patients with MA who received all of their dialysis treatments in network. Most patients were aged 65 and older (78%), and more than half were male (55%). Treatments at large dialysis organizations were more likely to be in network (99%) than treatments at regional chains (64%), independent facilities (64%), hospital-based facilities (66%), and facilities with unknown ownership (74%).

The entire sample found that the median MA price for hemodialysis treatments was $296, 127% of the fee-for-service Medicare price. In-network hemodialysis treatments were a median MA price of $300, 129% of fee-for-service Medicare. Prevalent hemodialysis treatments had a median MA price of $301, 132% of fee-for-service Medicare.

MA plans also paid 4% more than fee-for-service Medicare for in-network incident hemodialysis treatment. However, fee-for-service Medicare paid 32.7% more for incident treatments than prevalent hemodialysis treatments and 84% of hemodialysis treatments saw MA reimburse more than what fee-for-service Medicare would have paid.

MA prices were lower in out-of-network providers. Median price of out-of-network hemodialysis treatments was $230, 96% of fee-for-service Medicare. Incident hemodialysis treatments were also lower in MA at $243, 82% percent of fee-for-service Medicare.

Large dialysis organizations provided only 12% of out-of-network treatments, with regional chains providing 44% out of network, independently owned facilities providing 27% out-of-network, and hospital facilities providing 7% out-of-network.

MA paid a higher markup to large dialysis organizations for in-network hemodialysis treatments, 131% of the fee-for-service Medicare price. This was higher compared with regional chains (120%), independently owned facilities (112%), and hospital-based facilities (98%) for the fee-for-service Medicare price. Out-of-network markups were not observed.

Patients who had a calendar year of outpatient dialysis and MA coverage had an average out-of-pocket spending that was similar to those who received in-network dialysis treatments ($3010) and those who received out-of-network treatment ($2979). However, out-of-pocket spending was higher for out-of-network dialysis treatments at the 90th percentile ($6978).

The researchers found that in non-prescription drug health care spending, patients receiving in-network dialysis treatments paid $4480 a year on average compared with $4930 for patients who always received out-of-network dialysis treatments.

There were some limitations to this study. The Health Care Cost Institute data may not include all dialysis encounters. The true counterfactual fee-for-service Medicare price could not be observed because heights and weights of patients was not recorded. Diagnosis codes in MA claims were relied on for comorbid conditions, which may have underreported those conditions. MA plans also do not always pay for the same bundle of dialysis services as fee-for-service Medicare. The study was also limited to 3 MA carriers. These results may not generalize to the post-21st Century Cures Act era, which could increase plans’ bargaining power.

The researchers concluded that the largest MA plans were paying large markups for dialysis, especially to large organizations. They also concluded that inflated dialysis payments could increase out-of-pocket spending for dialysis.


Lin E, Ly B, Duffy E, Trish E. Medicare advantage plans pay large markups to consolidated dialysis organizations. Health Aff. 2022;41(8):1107-1116. doi:10.1377/hlthaff.2021.02009

Related Videos
Kirsten Johansen, MD.
Jennifer Green, MD.
Related Content
© 2023 MJH Life Sciences
All rights reserved.