The Dialysis Dilemma: Navigating the Rough Waters of Medicare Advantage Plans

In the ever-evolving landscape of health care, dialysis programs face a formidable challenge that is quietly undermining the sustainability of their services. The crux of the issue lies with the burgeoning influence of Medicare Advantage (MA) plans, which, while offering an alternative to traditional Medicare, are posing significant operational and financial hurdles for dialysis programs. This column delves into the multifaceted challenges these plans present, shedding light on the precarious position in which many dialysis programs find themselves. 

At the heart of the matter is the mechanism of Medicare bad debts and the Prospective Payment System (PPS), foundational elements in the funding of dialysis care. Traditional Medicare has created a reimbursement framework for dialysis programs that closely monitors the average cost of providing a dialysis treatment and allows for reimbursement that is intended to be close to the average cost. Medicare assigns 20% of the allowable reimbursement to the patient as a coinsurance. Over the years, dialysis facility social workers have become experts in helping patients obtain secondary insurance coverage that will cover the 20% of patient medical expenses not covered by Medicare. Whether due to a patient’s inability to pay or due to the reimbursement policies of a patient’s secondary insurance, there are instances where dialysis programs are unable to collect the coinsurance and deductible amounts assigned by Medicare. This leaves the facility in a position where it costs more to provide treatment than it can collect. Decades ago, the Centers for Medicare & Medicaid Services (CMS) created a pathway for dialysis programs to recoup a portion of these uncollectable Medicare-assigned coinsurances and deductibles. 

However, the transition of patients to MA plans disrupts this process, as there is no pathway for reimbursement of those coinsurances and deductibles not covered by the MA plan. The result is essentially reducing the program’s operational funds to 80% of their costs. This reduction is particularly crippling in the context of the PPS, which has not kept pace with the escalating costs of labor, supplies, and medications—a situation amplified by the pandemic. The growing penetration of MA plans not only exacerbates these financial deficits but also portends a grim future for many, especially small rural facilities that have historically survived on the thin margins of bad debt reimbursements. 

The operational burden on facilities is further intensified by the MA plans’ deviation from established CMS billing rules. In some markets, MA plans require authorizations for dialysis services, which is not necessarily problematic, but many MA plans require reauthorization every 90 days, and calling the utilization department and speaking with a representative is the only way to obtain the necessary authorization. Arbitrary rejections of claims, citing noncompliance with MA plans’ unique billing standards, leave providers in a quagmire of lengthy appeals processes, delaying payments essential for the continuity of care. This systemic delay tactic strains the financial viability of providers and underscores the need for regulatory oversight to ensure that MA plans adhere to a standardized set of billing rules, particularly for services as critical as dialysis. 

In the broader context of health equity, the situation is stark. The aggressive push by insurance companies to enroll patients with end-stage renal disease (ESRD) in MA plans has wrested control from providers. This shift not only jeopardizes the quality of care but also the very existence of dialysis programs, particularly those serving vulnerable populations in rural areas.  

As we stand at this critical juncture, it is imperative for CMS to intervene and ensure that MA plans do not deviate from the core mission of providing comprehensive and accessible care to all patients, regardless of their insurance. The survival of dialysis programs—and by extension, the well-being of countless patients—hinges on the establishment of a more equitable, transparent, and sustainable framework that bridges the gap between the ideals of health care provision and the realities of insurance-driven market dynamics. 

You can share your program’s and your patients’ experience with MA plans with CMS to inform coming changes to the MA landscape. CMS has released a request for information specific to the challenges surrounding MA plans. Share your story with CMS before the end of the comment period on May 29, 2024, here.