Battle erupts over Medicare coverage of dialysis

A cadre of large corporations is waging a lobbying campaign against changes to Medicare coverage of kidney dialysis they say would cost them billions.

Lawmakers are seeking to reduce Medicare spending on dialysis treatments by $1.2 billion over 10 years by adding a year to the amount of time that employers have to pay for the dialysis services received by their Medicare-eligible workers.

The companies, operating under the umbrella of the Corporate Health Care Coalition, object to being asked to foot the bill for Congress’s attempts to find savings in Medicare to help offset new spending on other priorities, such as preventing a scheduled 10 percent cut in Medicare fees for physicians.

They contend the cost to them would far exceed $1.2 billion because private health plans pay higher rates than Medicare to dialysis providers. According to the corporations, their additional costs would be more than $2 billion and would drive up insurance premiums for everyone on their rolls.

“These estimated Medicare ‘savings’ are really a pure cost shift from the federal government to employer group health plans, adding costs at a time when employer plans are already struggling with health costs,” Verizon’s vice president of federal government relations, Andrew Meckleburg, wrote on Sept. 17 to the chairmen and ranking members of the House Ways and Means and Senate Finance committees and their respective health subcommittees.

According to these companies, Medicare spends an average of about $67,000 to treat a dialysis patient for a year, compared to nearly $180,000 for employers’ health plans.

The 17-member employers’ coalition includes such mammoth corporations as Boeing, Caterpillar, Dow Chemical, Ford, General Electric and United Parcel Service.

Anyone diagnosed with end-stage renal disease (ESRD), also called chronic kidney failure, is entitled to Medicare coverage, regardless of age. Patients with ESRD require dialysis treatments several times a week. Congress created this benefit in 1972, and kidney failure is the only condition for which Medicare provides such coverage.

Because a large proportion of kidney failure patients are younger than 65 years old and because many of them are still in the workforce, these patients’ employer-sponsored health insurance plans are required to cover ESRD treatments for the first 30 months, after which Medicare kicks in under the Medicare Secondary Payor system. Employers with fewer than 100 workers enrolled in their health plans are exempt.

The legislation under consideration would add 12 additional months, making employers’ health plans responsible for 42 months of kidney failure treatments before Medicare would begin paying for them.

The House already passed an extension as part of its State Children’s Health Insurance Plan (SCHIP) and Medicare legislation. Although all of the Medicare provisions in the bill were stripped from it before it was sent to President Bush and vetoed, Congress will return to Medicare in the coming weeks, starting with the Finance Committee, and Medicare’s dialysis benefits are under the microscope.

The dialysis language that raised the hackles of these corporations was included in the House Ways and Means Committee’s markup of the bill and appears to be based on similar bills sponsored by Sen. Kent Conrad (D-N.D.), Rep. John Lewis (D-Ga.) and Rep. Dave Camp (R-Mich.), respectively. These bills have attracted hundreds of co-sponsors from both parties.

Extending the duration of employer coverage for dialysis has precedent. Most recently, Congress lengthened the period from 12 months to 30 as part of the Balanced Budget Act of 1997.

Opposing the large employers on this issue is the for-profit kidney dialysis center industry, which is dominated by the chains DaVita and Fresenius Medical Care. The industry is represented in Washington by an 11-member trade association, the Kidney Care Council.

“We support an extension of [Medicare Secondary Payor],” council President Rob Forman said.

Forman acknowledged that private insurers pay higher rates than Medicare’s but said this fact reflected underpayments by the government rather than overpayments by the private sector.

The Medicare Payment Advisory Commission, however, concluded this year that the program pays adequately for dialysis. The panel recommended, though, that Medicare institute annual payment adjustments for dialysis services, which is a major goal of the industry’s lobby. Unlike for physicians, hospitals and other Medicare providers, dialysis centers do not receive automatic fee updates.

Medicare pays for the treatments of more than 80 percent of the patients treated by his member companies, he added. Under the proposed legislation, “We’re looking at a small, fractional impact on overall premiums” for private insurance because of additional spending on dialysis, Forman said. According to Forman, the change would affect about 5,000 patients.

Moreover, he said, employers are required to cover virtually all other health benefits under Medicare Secondary Payor. The time limit on dialysis is the only exception. “The end-stage renal disease program … is the only area of Medicare that basically allows the private insurers to limit the coverage,” he said.