Shared Financial Risk of Dialysis May Lead to Medicare Cost Saving

One-third of adults who began dialysis with an employer-based group health plan (EGHP) switched to Medicare before the coordination period finished, resulting in $3 billion additional Medicare costs over ten years, according to a study published in JAMA Network Open that calls for shared financial risk of dialysis care.

Many people with end-stage kidney disease (ESKD) keep their EGHP when they start dialysis. Members with EGHPs can also obtain Medicare as a secondary payer, but the EGHP remains the primary payer for a 30-month coordination period.

However, if patients drop their EGHPs due to unemployment or dissatisfaction with the plan, Medicare becomes the primary payer, thereby freeing EGHPs of financial obligations to the member.

In the cohort study, researchers analyzed US Renal Data System (USRDS) data for 113,693 adults ages 62 years or younger who started dialysis with an EGHP between 2007 and 2014. Patients were observed through the 30-month coordination period or death with the latest follow-up being October 2017. Analyses were conducted from June 2020 to January 2021.

The researchers found that overall, 33 percent of the 37,696 participants switched from employer-sponsored health plans to Medicare prematurely, contributing to 711,528 additional months of Medicare coverage. This resulted in an additional $81,000 of Medicare costs per participant who prematurely switched plans compared to those patients who switched at the coordination period.

Overall, that equates to an additional $3.05 billion in Medicare costs from 2007 to 2017.

The study findings also revealed that patients at higher risk for hospitalization were more likely to switch from their EGHP to Medicare before the coordination period ended; the third quartile of illness severity was 49 percent more likely to switch prematurely compared to the quartile of patients least likely to be hospitalized within a year.

The authors noted that the study was limited because the researchers did not know specifically why members switched to Medicare, nor the employment status of the participants.

Additionally, they explained that while premature switches hike up Medicare spending, it is possible that many of these adjustments are unavoidable because of unemployment at the start of dialysis.

Therefore, a policy that forbids early switching could result in hefty out-of-pocket costs for unemployed members who require COBRA coverage, the study authors explained.

“However, frequent premature switches to Medicare likely discourage EGHPs from funding cost-saving interventions that prevent ESKD in chronic kidney disease because switching to Medicare prematurely offloads more than $80,000 of financial risk per patient,” the authors wrote.

The researchers called for policy interventions that would lead to shared financial risk among Medicare and EGHPs. For instance, they suggested that Medicare pay EGHPs a capitated rate for premature switchers to incentivize EGHPs to prevent ESKD, all while keeping patients’ out-of-pocket costs low. This capitated payment model is similar in principle to Medicare Advantage.

“Congress created Medicare Advantage (MA) in 2003 to provide America’s seniors a convenient, coordinated option for their health coverage and to drive greater value and accountability in the Medicare program,” an Alliance of Community Health Plans (ACHP) fact sheet from January 2021 noted.

“Today, the evidence is clear: MA is working, providing exceptional coverage and care for nearly 23 million seniors,” the ACHP authors continued. “MA incentivizes health plans, providers, and health systems to closely coordinate care to improve health outcomes and reduce costs. In areas where MA is prevalent, doctors employ those innovations learned with MA when caring for patients in traditional Medicare – creating efficiencies and providing higher quality care.”