SCOTUS on dialysis and DaVita

 The Supreme Court delivered a number of decisions recently, and the news coverage has rightly focused on the decisions that will increase guns and decrease abortions.  

But another decision has implications for how dialysis is financed for patients with kidney failure. It's going to take some time for all the adjustments that will now start to be made to determine what this means for the financing of kidney care.

Briefly, all kidney failure patients are eligible for Medicare coverage for dialysis, but private insurers covered the first 30 months (and pay much more than Medicare rates).  The case concerns a health insurance program that sought not to pay those rates, and in the case of MARIETTA MEMORIAL HOSPITAL EMPLOYEE HEALTH BENEFIT PLAN ET AL. v. DAVITA INC. ET AL.  the Supreme Court ruled in favor of the health plan.

Here's the story from Reuters:

U.S. Supreme Court rules against DaVita over dialysis coverage  By Nate Raymon

"June 21 (Reuters) - The U.S. Supreme Court on Tuesday rejected dialysis provider DaVita Inc's (DVA.N) claims that an Ohio hospital's employee health plan discriminates against patients with end-stage kidney disease by reimbursing them at low rates in hopes they would switch to Medicare.

"In a 7-2 decision authored by conservative Justice Brett Kavanaugh, the court ruled that Marietta Memorial Hospital's employee health plan did not violate federal law by limiting benefits for outpatient dialysis because it did so without regard to whether patients had end-stage renal disease. A lower court had ruled in favor of Denver-based DaVita.Following the ruling, shares of DaVita, one of the nation's two largest dialysis providers, closed 15% lower. Shares of German rival Fresenius Medical Care (FMEG.DE) dropped 9%."

********

Here's a blog from the law firm that won the case, Vorys, Sater, Seymour and Pease LLP :

6/21/22 Vorys Wins 7-2 at U.S. Supreme Court in Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc 

"On June 21, 2022, the U.S. Supreme Court released its decision in Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc. siding with petitioners (our side) and our client Marietta Memorial Hospital, its employee group health plan and health plan third-party administrator, for which Vorys argued the case.  The Court found that the group health plan does not impermissibly “‘differentiate in the benefits it provides’ to individuals with end-stage renal disease or ‘take into account’ whether an individual is entitled to or eligible for Medicare.”  The Supreme Court decision overturned a split decision by the U. S. Court of Appeals for the Sixth Circuit.

...

"The case began on December 19, 2018, when DaVita, a commercial dialysis provider, sued Marietta Memorial Hospital, a small community hospital located in Marietta, Ohio; the Hospital’s medical plan, the Marietta Memorial Hospital Employee Health Benefit Plan; and the Hospital’s third-party administrator, Medical Benefits Mutual Life Insurance Company, in the United States District Court for the Southern District of Ohio.  DaVita, a large, for-profit dialysis provider, alleged violations of the Medicare Secondary Payer Act (MSPA) and Employee Retirement Income Security Act (ERISA).  The Defendants, represented by Vorys, filed a motion to dismiss, which the District Court granted. 

"DaVita appealed to the United States Court of Appeals for the Sixth Circuit, which disagreed with the District Court decision.  Marietta appealed the district court decision to the U.S. Supreme Court. 

"On November 5, 2021, the U.S. Supreme Court granted a writ of certiorari, agreeing to hear the case.   In recognition of the importance of the case, the office of the Solicitor General of the United States filed an amicus brief, joined in the oral argument and urged the U.S. Supreme Court to rule in favor of the Marietta Memorial Hospital, its group health plan and the third-party administrator.  Oral arguments took place on March 1, 2022."

Transplant wait lists and patient finances

 Here's a disturbing commentary on how the regulation of transplant centers interacts with patient finances and the decision of who to put on transplant wait lists. The authors suggest extending to all organs the financial coverage that Medicare currently gives to kidney transplants.

Viewpoint March 31, 2022

Medical Need, Financial Resources, and Transplant Accessibility by Sharad I. Wadhwani, MD, MPH1; Jennifer C. Lai, MD, MBA1; Laura M. Gottlieb, MD, MPH  JAMA. Published online March 31, 2022. doi:10.1001/jama.2022.5283

"In the US, the need for lifesaving organ transplants exceeds the availability of transplantable organs, and in 2021, approximately 12 000 patients died or developed complications that precluded a transplant while awaiting an organ.1 Transplant centers are thus forced to ration these scarce resources. The first step for patients to receive an organ is for them to be placed on a national waiting list, ranked according to objective clinical criteria intended to reflect medical necessity. However, the listing system permits transplant centers to factor in patient financial resources in making this initial wait listing decision, which equates to withholding lifesaving medical therapy from those deemed to have insufficient financial resources. This approach contributes to inequities in transplant accessibility and outcomes.

...

"The OPTN policy specifically prohibits allocation to be based on race and ethnicity or socioeconomic status. Wait listing decisions (a prerequisite to allocation) are instead made based on a transplant candidacy evaluation, a process undertaken to assess transplant suitability. This includes an assessment of the patient’s insurance and financial security for expenses associated with the transplant surgery and lifelong posttransplant immunosuppression and enables transplant centers to circumvent the final rule mandate prohibiting allocation based on socioeconomic status. For instance, expenses for immunosuppression medications can exceed several thousand dollars a month; even insured patients can incur out-of-pocket, noncovered expenses that may exceed $1000 a month, including parking costs, missed work, and medication co-payments.2

"In theory, financial evaluations are included in listing determinations because low-socioeconomic status (measured by neighborhood socioeconomic deprivation and public insurance) has been associated with wait list mortality and posttransplant outcomes, and these outcomes are closely monitored for the approximately 250 US transplant centers.3 If transplant outcomes deviate from national benchmarks, the center risks losing accreditation and center of excellence designations, thus jeopardizing the ability of the center to offer transplants to other patients in need. The financial implications for a transplant center with poor outcomes are substantial: the average billed charges during the 30 days prior through the 180 days after a transplant range from an estimated $440 000 for a kidney transplant to an estimated $1.7 million for a heart transplant.4 Considering that in 2018, each US transplant program performed a median of 250 kidney transplants in adults, the financial implications of losing accreditation may motivate transplant centers to select transplant candidates most likely to survive until and after receiving a transplant. The system appears designed to disadvantage patients with inadequate financial resources thereby excluding them from the transplant waiting list."

...

"One strategy for improving insurance coverage could be to expand Medicare coverage to every individual requiring a transplant. Patients with end-stage kidney disease of all ages qualify for Medicare insurance in the US, and this coverage extends for the life of the transplant, thereby ensuring that patients continue to receive organ-preserving immunosuppression. A similar bill could extend Medicare coverage to any organ transplant recipient, starting when entered on the waiting list and continuing for the life of the transplant. This could help alleviate the potential risks that transplant centers may perceive around care adherence but would not comprehensively address all financial barriers to care. To ensure patients have adequate resources for long-term graft survival and patient health, changes to insurers’ incentives will need to be accompanied by other national, state, and local strategies to strengthen financial stability for families experiencing medical hardship.

"Solid organ transplantation is one of the greatest medical achievements of the 20th century and has transformed many terminal illnesses to treatable conditions. Yet almost 70 years after the first successful transplant surgery, this procedure remains out of reach for too many. As the nation continues to grapple with racism and classism, medicine must continue to identify and reform policies and procedures that contribute to health inequities. Withholding a transplant from those with inadequate insurance, limited financial resources, or both, is a tragic example of ongoing injustice."

The complex economics of dialysis and insurance, in Freakonomics

 Freakonomics peeks under the rocks to see what crawls out:

Is Dialysis a Test Case of Medicare for All? (Ep. 457)  by Stephen J. Dubner

"But as he dug into their business, he discovered what looked like a suspicious relationship between the two dialysis chains and a charity called the American Kidney Fund, whose mission is to provide financial support to needy patients.

CHANOS: So, the American Kidney Fund will help various patients pay for private policies. 

Private insurance policies, that is, instead of Medicare.

CHANOS: The patient is strongly urged because of quality of care, convenience, whatever the case might be, that they will be treated better as a commercial-policy patient rather than a government-policy patient and that the American Kidney Fund could help them pay those premiums.

On its surface, that does not sound like a terrible thing for a kidney charity to do. But Chanos looked at it from the perspective of the dialysis industry.

CHANOS: If the dialysis companies could push people that would normally be eligible for Medicare into commercial policies, private policies, they could charge those companies often two to four times what the going Medicare reimbursement rate was.

And Chanos believed that pushing people onto commercial insurance is exactly what the American Kidney Fund was doing. It’s helpful here to follow the money.

CHANOS: It will come as probably no shock that the two largest donors to the American Kidney Fund are the two largest dialysis companies, Fresenius and DaVita. 

In 2018, DaVita and Fresenius reportedly donated a combined $247 million to the American Kidney Fund — or about 80 percent of the charity’s revenues.

CHANOS: So, they are basically putting money into the charity. The charity is turning around and using that money to help pay premiums to enroll patients in commercial insurance. And then, the commercial insurers are charged a huge premium to what the dialysis companies are charging the government. 

It’s estimated that for every dollar that DaVita or Fresenius send to the American Kidney Fund, they receive $3.50 in return from private-insurance payments.

CHANOS: And that’s the problem. 

One especially interesting part of this arrangement is who’s losing money: the insurance companies! It’s not often you hear about insurance companies on the losing end — and maybe you don’t have much sympathy.

CHANOS: “Well, it’s the private sector, right? So, why should we care if the insurers make less profits?” Well, the fact of the matter is it’s raising premiums for everybody in the exchanges.

That is, the insurance exchanges, the marketplaces created by the Affordable Care Act, also known as Obamacare.

CHANOS: And the head of California Blue Cross Blue Shield was on the record saying that the dialysis in California was driving up private policy rates dramatically"

Remembering the 116th Congress (it fixed Medicare coverage of immunosuppressive drugs for transplant patients)

 This won't be the most memorable thing about the Congress that adjourned in 2020, but it's something positive: up through the end of 2020, inexplicably, Medicare covered only 3 years of immunosuppressive drugs for kidney transplant recipients. This meant that a few hundred patients a year who had no other medical insurance would lose their drugs, and their kidneys, after which Medicare (having refused to pay for the drugs that would have kept the transplanted kidneys working), cheerfully resumes paying for dialysis, which is vastly more expensive (and far less good for the patients).  It looks like Medicare is now going to be the insurer of last resort for such patients, and so they will be both healthier and less expensive.

H.R.5534 - Comprehensive Immunosuppressive Drug Coverage for Kidney Transplant Patients Act of 2020   116th Congress (2019-2020)

"To amend title XVIII of the Social Security Act to provide for extended months of Medicare coverage of immunosuppressive drugs for kidney transplant patients, and for other purposes."

**********

Here's an earlier post, about the previous situation:

Tuesday, September 15, 2009

Penny wise and pound foolish on kidneys and antirejection drugs

Payments for kidney disease in the U.S.

Medpage Today has the story:

Kidney Disease Payment System Draws Medicare Scrutiny
'We do not think the state of kidney disease care is acceptable'

"Medicare needs to change the way it pays for kidney disease treatment in order to get better results, Adam Boehler, director of the Center for Medicare & Medicaid Innovation, said here.

"We do not think the state of kidney care is acceptable," Boehler said Wednesday at the annual meeting of the Healthcare Information and Management Systems Society. "Right now, we're at a place where 10% of patients in Medicare [with kidney disease] are seen at home, while you have Hong Kong, with a 70% rate. That's not OK. The level of transplants is not OK."

"What happens is that end-stage renal disease (ESRD) is siphoned out and [effort is] focused there, instead of viewing the whole spectrum, instead of thinking about chronic kidney disease before ranging from diagnosing it in the first place, to integration of later-stage chronic kidney disease, to ESRD," he said. "Because what you really want is the prevention of ESRD from developing," he said. "If it develops, you want [it] to be transplant wherever possible; if not, [treatment at] home wherever possible, and it should be a last resort that people go to a dialysis center."

...

"Boehler said he wasn't trying to demonize dialysis centers. "It's our fault; we set the incentives," he said, referring to Medicare. "You need to change those incentives. If we want people to do what's best for patients, if we want them to lower costs and improve quality for patients, they need to make money for doing that -- we'll look specialty by specialty to set it up like that."

"Medicare spends about $120 billion a year on kidney care, Boehler noted. "The first thing you may think about in ESRD is dialysis centers ... but that is not the majority of spend. The majority of spend is in other places -- hospitals, complications arising from them, et cetera. That doesn't mean we have to cut the spend there; it means you have to change around the way people make money." Right now, he said, for the dialysis centers, "if somebody gets a transplant, that's a lost customer."

Competition, Market Design, and Medicare Part D

The Congressional Budget Office (CBO) has a new report about Competition and the Cost of Medicare's Prescription Drug Program:

 "Medicare Part D was designed to foster competition between plan sponsors to constrain drug spending. In assessing the impact of competition, CBO found that a larger number of plan sponsors in a region was associated with lower bids, on average, for the group of plans analyzed. … However, between 2007 and 2010, the average total number of plan sponsors per region fell by 4 (from 22 to 18), because more sponsors exited the market or merged with other sponsors than entered the market; that decrease in competition is associated with higher bids and higher government spending. … As Part D is currently structured, two features of the program could be changed to encourage plan sponsors to submit lower bids for their plans. First, in the component of Part D that serves low-income beneficiaries, the government usually pays the full amount of a plan's bid up to a threshold, regardless of whether other plans bid lower. Second, low-income beneficiaries enrolled in plans whose bid rises above the threshold are automatically reassigned in equal proportions to plans with bids below the threshold (unless a beneficiary has actively signed up for a particular plan). Both of those features encourage plans to set their bids close to (though below) the threshold. … The rules of the program could be altered, however, in ways that would continue to protect low-income beneficiaries but would also lower bids and government spending. For example, the government could adopt a reassignment mechanism that preferentially assigned low-income beneficiaries to the plans with premiums furthest below the benchmark; that approach would provide a stronger incentive to plans to submit low bids and would reduce the government’s spending even if plans did not alter their bids."

The full report is here:
Competition and the Cost of Medicare’s Prescription Drug Program
http://cbo.gov/sites/default/files/cbofiles/attachments/45552-PartD.pdf 

and an accompanying technical working paper on competition here:

Examining the Number of Competitors and the Cost of Medicare Part D
by Andrew Stocking, James Baumgardner, Melinda Buntin, and Anna Cook

Medicare's 3 year limit on post-transplant immunosuppressive drugs

A lot has been written about this, here's yet another story that puts a personal edge on a systematic problem and a big waste of taxpayer dollars through a false economy: Medicare disserves younger kidney-transplant patients by DR. JANANI RANGASWAMI, FOR THE INQUIRER

Federal budgets and immunosuppressive drugs for transplant patients

One of the funny things about Medicare is that it pays for dialysis, and for kidney transplants so that patients won't need dialysis, but it only pays for three years of immunosuppressive drugs post-transplant. That's foolish on a number of dimensions.

Here's a proposal for new legislation to fix that:

SENATORS INTRODUCE BIPARTISAN LEGISLATION TO HELP ORGAN TRANSPLANT PATIENTS 

"U.S. Senators Dick Durbin (D-IL) and Thad Cochran (R-MS) introduced bipartisan legislation to improve the quality of life for people with kidney disease. The Comprehensive Immunosuppressive Drug Coverage for Kidney Transplant Patients Act would assist thousands of Americans under the age of 65 who are being cut off from Medicare after 36 months by extending coverage of immunosuppressive drugs for kidney
transplant recipients"
...
"The effects of the disparity in coverage are evidenced in the hypothetical case of a young woman. For example, a 26 year old woman living with ESRD would have lifelong dialysis covered by Medicare at $77,500/year. Medicare would cover the cost of a transplant at $110,000/transplant. The immunosuppressive drugs she would need to ensure the organ is not rejected by her body are only covered for 36 months and the drugs are far less costly than dialysis at $10,000 to $20,000/year. Without immunosuppressive drugs to keep kidney transplants from being rejected, many patients find themselves right back where they started: in need of a kidney. This circular cycle of care is costing taxpayers a lot of money and putting thousands of lives at risk."

Cramton on the Medicare auction

Market design can be frustrating: Peter reports from the front line.
Medicare auction gets failing grade at Congressional hearing

Penny wise and pound foolish: now in the NEJM

It's truer than ever that in the United States we have a foolish Medicare policy of only paying for three years of anti-rejection drugs following a kidney transplant, even though Medicare covers the larger costs of dialysis and/or re-transplantation.

And now it's peer reviewed: the New England Journal of Medicine picks up the story in its February 1 2012 issue: "Penny Wise, Pound Foolish? Coverage Limits on Immunosuppression after Kidney Transplantation" by Gill and Tonelli.

"As a treatment for end-stage renal disease (ESRD), kidney transplantation is superior to dialysis for improving patient survival rates and quality of life. Its long-term success, however, requires ongoing treatment with immunosuppressive drugs. Ironically, although many of the pivotal discoveries related to immunosuppression have been made in the United States, U.S. kidney-transplant recipients do not benefit from a coherent funding policy for these drugs, and thousands of such patients are therefore at risk for allograft failure and premature death. Ensuring lifetime access to these medications for all Americans with kidney transplants would save lives as well as reduce the total cost of treating patients with ESRD.
...
"Premature transplant failure is the fifth leading cause of initiation of dialysis in the United States. Unfortunately, approximately 25% of patients whose transplants fail die within 2 years after returning to dialysis. This outcome is worse than the 2-year mortality among patients with a functioning transplant from a deceased donor (6%) and still worse than that among age-matched dialysis patients who have never received a transplant (20%).
A second transplant is the best treatment option for a patient whose transplant has failed, but the opportunities for repeat transplantation are much more limited than those for initial transplantation. Candidates for repeat transplantation account for about 20% of patients on the waiting list but (because of sensitization from their failed allograft) receive only 12% of the deceased-donor kidneys transplanted annually in the United States."

Here's my earlier blog post on the subject:

Tuesday, September 15, 2009

Penny wise and pound foolish on kidneys and antirejection drugs

HT: Scott Kominers