Employer Sponsored Health Plan Dialysis Costs More Than Medicare

Employer-sponsored health plan dialysis is more expensive than Medicare, meaning that pushing members from Medicare to private payer coverage may actually increase their healthcare spending on dialysis treatment, according to a research letter in JAMA Network Open.

“Lowering the prices paid by private insurers to Medicare rates and discouraging steering patients onto private plans could bring about substantial savings in spending on hemodialysis,” the researchers found.

The researchers used Health Care Cost Institute data, leveraging employer-sponsored health plan claims data for over 55 million Americans from 2012 to 2019. The data set includes claims data from payers like Blue Cross Blue Shield.

In the given timeframe, there were nearly 2 billion claims for hemodialysis. 

Private payers paid more than five times what Medicare paid for dialysis. The median cost for dialysis for an employer-sponsored health plan from 2012 to 2019 was $1,476. The mean cost was $1,287.

In contrast, the Medicare base rate during the same time period—without geographic adjustments and case-mix factors—was $240 or less. Even when accounting for geographic adjustments and case-mix, Medicare paid nearly 27 percent less than the $1,476 that employer-sponsored health plans paid per dialysis claim at around $1,081 per dialysis session.

While Medicare rates remained relatively steady during the seven-year study period, the median price for employer-sponsored health plans increased over time. The cost for private health plans grew by 22.7 percent, compared to a 0.3 percent increase for the Medicare base rate.

The spectrum of employer-sponsored health plan payment rates for dialysis is broad. In 2019, the 10 percent to 90 percent price range spanned from a little over $500 to close to well over $1,500. The standard deviation, or scattering of the data around the mean, was $584. The twenty-fifth percentile of data was around $737 and the seventy-fifth percentile was around $1,671.

A fraction of the claims (2.4 percent) exceeded $2,000 and 21,835 claims exceeded $3,000.

Employer-sponsored health plan claims reimbursements for dialysis varied based on state.  

West Virginia, a state which had the worst rate of chronic kidney disease in 2021 and which has consistently seen a higher rate of chronic kidney disease than the national rate since 2015, had the highest mean price for dialysis among employer-sponsored health plans at $1,791. At the other end of the spectrum, Arkansas’s mean private payer price for dialysis was the lowest at $950.

“The prices paid by commercial insurers for dialysis are substantially higher than Medicare’s reimbursements and have increased at a much faster rate during the past decade,” the researchers concluded. 

“This pattern suggests that recent proposals seeking to limit the price of dialysis for individuals with private insurance could bring about large spending reductions, whereas steering patients from Medicare to private insurance would likely increase spending, a recent concern of policy makers.”

Researchers have called for more shared risk between employer-sponsored health plans and Medicare, in order to avoid high costs as members transition from employer-sponsored coverage to Medicare.

Other payers have tried to use value-added kidney care agreements to control chronic disease management costs for chronic kidney disease or end stage renal disease. Payers have also tested using home healthcare to improve patient outcomes.