Legislation Aims to Protect Access to Private Insurance for Patients with Kidney Failure

Supreme Court shake-up

Since 1973, most patients with kidney failure have been guaranteed Medicare coverage for dialysis care or transplant regardless of age through an amendment to the Social Security Act that created the Medicare End-Stage Renal Disease (ESRD) benefit (4). Congress updated the Medicare Secondary Payer Act (MSPA) in 1980 to protect access to private insurance coverage for patients with kidney failure for up to 30 months after qualifying for Medicare coverage for ESRD (5). The law was enacted in 1981.

During the 30-month period, patients can choose to keep private or commercial insurance as their primary insurance, and Medicare provides secondary insurance. The legislation specifies that insurers cannot differentiate between patients with and without kidney failure by offering them different coverage, and they cannot consider patients’ access to Medicare coverage. After those 30 months, the two payers swap, and Medicare becomes the primary insurer, and commercial insurance becomes the secondary payer, noted Daniel Weiner, MD, MS, FASN, associate professor at Tufts University School of Medicine in Boston, MA, and a councilor-at-large on the ASN Council.

But in 2022, the Supreme Court ruled 7 to 2 in favor of the Marietta Memorial Hospital Employee Health Benefit Plan. The dialysis company, DaVita Inc., had sued Marietta, arguing that its plan violated the 1981 MSPA by limiting coverage for outpatient dialysis. The plan offered only lower, out-of-network rates for dialysis care. The Supreme Court ruled that the plan did not differentiate because all individuals, regardless of whether they had kidney failure or not, were offered only out-of-network rates for outpatient dialysis.

The dissenting opinion, written by Justice Elena Kagan with Justice Sonia Sotomayor, noted that the need for “outpatient dialysis is almost a perfect proxy for end stage renal disease. Virtually everyone with end stage renal disease—and hardly anyone else—undergoes outpatient dialysis,” they wrote (2). “As the majority recognizes, the MSPA's renal disease provisions were designed to prevent plans from foisting the cost of dialysis onto Medicare…. Yet the Court now tells plans they can do just that, so long as they target dialysis, rather than the patients who rely on it, for disfavored coverage,” Kagan and Sotomayor noted.

Financial fallout?

The decision may prove costly for patients, dialysis facilities, and Medicare, as limitations on private coverage would force many patients to shift to Medicare early.

“The Supreme Court decision, which allows these plans to limit dialysis coverage, could result in [patients with kidney failure] losing critical benefits and being shifted prematurely to Medicare,” said LaVarne Burton, MA, president and chief executive officer of the American Kidney Fund, Rockville, MD, a nonprofit group that advocates for patients with kidney diseases. “Medicare coverage alone for dialysis patients is insufficient for most patients.”

Burton explained that Medicare only covers 80% of outpatient procedures like dialysis. She said that patients pay 20% of the costs with no annual out-of-pocket maximum, which results in an average of $10,000 per year in out-of-pocket expenses. She also noted that 17 states do not require insurers to offer private health insurance through Medigap plans (Medicare Supplement Insurance) to beneficiaries of Medicare ESRD who are younger than 65 years to help defray these costs.

“Our strong concern is that the impact will be felt deeply, particularly among patients of color who are disproportionately affected by kidney failure,” Burton said. “Our worry is that access to life-saving care will be jeopardized and that patients with kidney failure will be targeted by employer-group health plans and lose access to high-quality kidney care.”

Watnick noted that other health systems offering employee health coverage are looking at providing more limited dialysis coverage as a cost-saving measure. Weiner said patients may not feel the full impact of the ruling until this year or next as commercial health insurance companies factor in the court decision to their plans. He noted that insurers have a strong financial incentive to limit dialysis coverage. “It is just a matter of time before this takes hold,” he said.

The savings for private insurers could lead to additional costs for Medicare, costing Medicare about $100,000 per year (6). Dialysis companies are also likely to feel the pinch. Medicare does not cover the total cost of dialysis. For example, Weiner noted that Medicare currently pays dialysis facilities in Massachusetts $185 per hemodialysis treatment, but dialyzing a patient costs approximately $100 more than that. Medicaid reimbursements are even lower. As a result, he explained that dialysis facilities often rely on higher reimbursements from private insurers to help offset these losses. Dialysis facilities in which few patients have private insurance or Medicare with Medigap secondary insurance will lose money.

“If there is no opportunity to cross-subsidize with private insurance, you are going to get increasing numbers of facility closures or [reduction in services],” Weiner said. For example, he noted that facilities may eliminate night shifts, which may make it more difficult for individuals on dialysis to continue working.

Dialysis companies may also pull out of the most vulnerable communities with lower rates of private insurance, Watnick said. Smaller dialysis facilities and those serving rural communities, large numbers of Medicaid patients, or other populations with limited access to care will likely be hardest hit. “If a dialysis facility is going to remain there for the community, [it has] to at least break even or make a small profit,” she said.

Despite concerns about cost-shifting from private insurers to Medicare, a 2022 version of the Restore Act backed by dialysis companies was scored poorly by the Congressional Budget Office (CBO), which determined that the bill would cost the government instead of saving it money. Many policy experts disagreed with the assessment or found it puzzling, Watnick said. Weiner agreed and expressed that the CBO assessment likely doomed the 2022 iteration of the bill. The CBO will evaluate the 2023 version of the bill, and its score may change.

The 2023 version simplifies the language. The bill specifies that it restores MSPA protections for patients with ESRD by ensuring that insurers do not discriminate against them or adversely classify dialysis compared with other services. It also prohibits health insurance plans from shifting primary responsibility for ESRD care costs to Medicare. It clarifies that singling out dialysis care for disfavored treatment compared with other health services is considered an inappropriate differentiation.

“It seems reasonable to me because this is a population that already has a lot of vulnerabilities, already has a lot of financial stress,” Weiner said. “If an individual wants to keep the commercial insurance they have, they should be allowed to do so without making it so onerous and burdensome [that] they are essentially forced to move to public insurance.”

Protecting patients, families

Keeping their commercial plans as long as possible may benefit patients with kidney failure. Watnick explained that patients face the highest risk of death during the first 6 months of starting dialysis, and many die within the first 2½ years of starting dialysis. “The transition to kidney replacement therapy is so upending; anything you can do to smooth the transition is beneficial,” she said.

Weiner noted that many patients may have to take medical leave or struggle to keep their jobs as they adjust to the demands of dialysis. Patients forced to transition from their private insurance before they are ready say it feels like “having the rug pulled out from under them,” Watnick said. “It's not just you that loses your health insurance, but also your family,” she said. Patients may also experience gaps in dental, vision, or hearing services for themselves and their families if they lose their private insurance.

Losing their private health insurance during this vulnerable time could create more upheaval. Patients may lose access to physicians or dialysis facilities with which they have a relationship. “The patient-physician relationship is a sacred one, especially for people with end stage kidney disease,” Watnick said. She explained that patients with kidney failure see their physicians weekly or monthly, and they often become a crucial part of their support system.

Once patients become established on dialysis, it can be easier to transition to Medicare, Watnick added. She explained that they will likely have a relationship with a social worker at their facility who can walk them through their options. Having more time can also help them plan to transition their families to alternate insurance plans.

Keeping their employee-sponsored insurance may also ease the path to qualifying for a kidney transplant and help patients get on the transplant list more quickly, Watnick said. The evaluation process includes visits with multiple specialists, and employer-based insurance often has low copays. Additionally, patients must demonstrate they have dental insurance, and, without employer-sponsored dental insurance, they may not meet transplant qualification requirements. Medicaid coverage for dental care is rare, she noted, and this can be a barrier to transplant for those with Medicaid instead of private insurance. “Once you [undergo a transplant], you are able to go back to work,” she said. “You may be able to access the same plan or a different [commercial insurance plan] if you get a new job. It's a new lease on life.”

Burton said the Restore Act would reinstate protections for access to private insurance that patients with ESRD had for 40 years before the 2022 Supreme Court decision. “The Restore Act is a much-needed solution that would help protect patient access to their individual or employer-sponsored health care coverage and [physicians] for as long as possible and enable patients with kidney failure to better plan for the transition from private insurance to Medicare,” she said.