U.S. dialysis centers support a foundation that helps people with kidney disease pay for private health insurance. The companies say they donate money so patients can get the treatment they need.
But insurance companies and other healthcare groups say the dialysis industry has a more self-serving motive: profit.
Helping kidney failure patients obtain commercial insurance means the dialysis centers can get paid 4x more than they would if the patients were covered by the government-run Medicare insurance program, the agency that runs Medicare estimated when it examined the practice in 2016.
Now, the debate over the payments is coming to a head nationally and in California's legislature as opponents try to put an end to a practice they say raises insurance costs for everyone and hurts kidney patients as well.
A number of healthcare organizations including America's Health Insurance Plans, or AHIP, an industry group representing companies such as Anthem Inc., Cigna Corp. and Centene Corp., wrote to Health and Human Services Secretary Alex Azar on April 17 asking the Centers for Medicare and Medicaid Services, or CMS, to again try to pass rules discouraging the practice. A previous attempt by the agency was blocked by the courts in 2017.
Meanwhile, California state lawmakers are considering taking action. A bill aimed at deterring such donations passed the state Senate's health committee April 28.
High stakes for dialysis providers
To insurers and other opponents, the donations to help end-stage renal disease patients pay premiums is an attempt to game the system. Getting more patients to have higher-paying private insurance "generates significant profit for dialysis providers engaged in these schemes," wrote AHIP and the other groups, including the Service Employees International Union, the ERISA Industry Committee, the progressive advocacy group Families USA, and the National Association of Health Underwriters.
Indeed, the debate represents high stakes for major dialysis center chains like DaVita Inc., which operates or supports 2,510 outpatient dialysis centers in the U.S.
A JPMorgan North America Equity Research note to investors April 17 said DaVita derives nearly 60% of its earnings per share from subsidized patients, although the analysts acknowledged the company puts its exposure at 10% to 25%.
In its own letter to Azar on April 18, The Kidney Care Council, an industry group representing the dialysis centers, said insurers are the ones looking out for their profits.
Insurers do not want costly kidney failure patients to get help buying policies because the companies do not want to cover their treatment.
The attacks on the contributions are a "thinly veiled attempt to remove patients and employees with chronic conditions from private coverage and push them onto government programs," The Kidney Care Council wrote.
Medicare agency's attempt at rules
CMS, under the Obama administration, had expressed so much concern over the practice in December 2016 that it sidestepped normal procedures to create expedited rules, including a requirement that insurers be told when donations were being used to help pay for premiums.
Dialysis groups said that would enable insurers to not accept the donations, essentially allowing them to stop patients they did not want to cover from being able to afford insurance.
U.S. District Court Judge Amos Mazzant in the Eastern District of Texas on Jan. 27 agreed with dialysis centers that CMS violated procedures and granted an injunction blocking the rules from taking effect.
Now AHIP and other groups want CMS to try imposing the rules again while following procedures to avoid another legal challenge.
It is unknown whether CMS, under the Trump administration, will take action.
"CMS has been quiet on the issue so far but the pressure may force them to do something," Cowen Washington Research Group analyst Rick Weissenstein wrote in an April 18 policy note about the debate.
In trying to stem the practice, CMS said the loans could actually hurt patients, including making it more difficult to be approved for kidney transplants.
Transplant centers have to assess whether patients will have continuous healthcare coverage for follow up treatment. However, some of the donations "will not continue to provide financial assistance once a patient receives a successful kidney transplant," CMS said.
The American Kidney Fund, a nonprofit funded partially by dialysis centers, and the Kidney Care Council, meanwhile, deny any scheme to enrich providers.
The fund, in its letter to Azar on April 18, said it helped 74,000 people get treatments, including transplants, last year.
While Medicare is generally for older Americans, it covers people of all ages with end-stage renal disease if they meet several conditions like needing dialysis, being eligible for Social Security or being the child of a person who is eligible, according to Medicare.org. With each case, Medicare could cover part or all the costs of inpatient or outpatient dialysis, kidney transplants and other services like lab tests, according to the website.
However, the government insurance program does not cover prescription drugs or long-term care, and patients often need to buy private insurance or a Medicare supplement, or Medigap plan, for those costs.
And in 23 states, including California, kidney failure patients cannot get Medigap and are responsible for 20% of costs with no cost-sharing maximum.
Rather than discouraging people from going on Medicare, the fund said it tries to fill the gaps. More than 60% of the grants go to help people pay Medicare and Medigap premiums, the fund said.
Medicare, though, does not work for about 12% of its grant recipients, so the fund helps them buy commercial insurance, the group said.
Meanwhile, the California bill sponsored by Democratic state Sen. Connie Leyva would require anyone making the donations to certify the patients do not qualify for Medicare.
The Kidney Fund, however, wrote in an April 11 op-ed in the Capitol Weekly, a California political news site, that disqualifying people eligible for Medicare from getting the premium help would "cause profound harm to many California kidney patients."