Scams and Shams in the Dialysis Industry
There are close to half a million people in the USA on dialysis today. The majority visit a nearby kidney center 2-3 times a week for dialysis. And this procedure is not cheap. Thankfully, due to federal law, every individual of any age who needs dialysis can enroll in Medicare. Or for those who are lucky, they may have a job that provides private healthcare insurance. For those who have no job but still want to have private insurance instead of Medicare, they can apply for financial help from the charity American Kidney Fund (AKF).
What Does Medicare Cover for Dialysis Patients?
Medicare covers 80% of the cost of dialysis but the patient is still left with a 20% fee that can vary from $25-$40 per session. The Government pays roughly $250 for each dialysis treatment and the patient is left to pay the remaining $20-$40. However, when a person with insurance goes for dialysis, the private insurance is billed 4 times that amount- close to $1,100 per session and the patient is left with a 20% copayment (which is 4 times the Medicare amount).
So what does this mean?
Since the private insurers bill 4 times the amount that Medicare pays, they can make even more money if they have more insured dialysis patients. And one of the ways to increase the number of privately insured patients is to decrease the number of patients on Medicare- Read on.
What services does Medicare cover for dialysis patients?
- All in- and outpatient dialysis treatments
- Outpatient clinic visits to the kidney doctor
- Home dialysis training
- Home dialysis supplies and equipment
- Select home support services
- Most Intravenous drugs used in hospital and at home during dialysis
- Laboratory tests
- As long as the doctor orders it, the ambulance services are covered from your home and to the dialysis center.
What does Medicare not cover for dialysis patients?
- If there are any aides or assistants for home dialysis
- Loss of pay or wages during home dialysis training
- If accommodation is required during treatment
- Red blood cell transfusions for home dialysis
- Drugs taken by mouth are not covered
The Insurers Agenda
While Medicare coverage is not as comprehensive as private insurance for dialysis patients, it generally covers all the essential treatments and supplies. However, the insurance companies continue to push their services on all dialysis patients stating that they offer comprehensive coverage that also includes most home supplies and treatment. The ultimate aim of the insurers is to convert Medicare patients into insured patients and since they charge insured patients 4 times what Medicare reimburses, their profits are also significantly increased.
Who Controls the Dialysis Market?
In the US, nearly 80% of the dialysis market is controlled by two for-profit companies; Fresenius Medical Care and DaVita. The latest estimates indicate that DaVita runs over 2,500 dialysis centers in the US and controls 37% of the market. Fresenius is not far behind in the numbers. Both these companies are fully aware that dialysis is a life-saving treatment and patients have no choice, save for a transplant. By tapping into the dialysis market, they can also increase their profits. In the USA, the number of individuals who need dialysis has been growing at a rate of 4.3%, meaning there are nearly 20,000-30,000 new patients each year with renal failure who need dialysis.
So what is the ISSUE? The First Problem
Over the past 2 decades, the for-profit dialysis companies have been reported to lower their costs by minimizing the services they offer in order to increase profits- and at the end of the day, it is the renal failure patient who suffers. Even though privately insured dialysis patients only make up 10% of the volume, they account for nearly one-third of the revenue.
The first to recognize this problem was the Dept of Health In California, and this is where the unethical practices of DaVita and Fresenius have come to light.
To counter the profit-making dialysis companies, in 2018, California voted on Proposition 8, which limited the revenues of these companies and forced them to improve their services. To oppose this proposition, both Fresenius and DaVita paid close to $99 million to lobbyists but they failed in their mission as the public realized what they were doing.
Earlier a Bill that was initially vetoed was later passed in California to crack down on for-profit companies. The bipartisan Bill ensured that Medicare rates would be capped if these companies did not follow specific rules. The overall aim of this Bill was to contain the costs of dialysis, which had gotten out of hand because of the unscrupulous companies raising prices without regard for kidney patients.
This type of profiteering at the expense of sick patients is not only limited to the US. Dialysis unions in many other nations including Europe, Asia, and South America have launched a global alliance to protect the worker’s rights.
To see what was going on in the world of dialysis insurance, researchers analyzed the annual financial statements from 2010-2017 of DaVita which were available online. What was clear is that 86% of the company’s revenue came from dialysis-related services. Another important fact was that DaVita billed private insurers $1,041 per treatment, whereas Medicare paid out $248 for the same treatment. An astonishing $700 in profit per session.
Enter American Kidney Fund
The American Kidney Fund (AKF) is a publicly supported non-profit organization that was founded nearly 50 years ago. The overall goal of the AKF is to provide kidney education, health awareness, and prevention. The organization also provides financial assistance and transportation to at least 20% of patients on dialysis. The AKF also grants assistance to nearly 100,000 low-income dialysis patients in the Nation and more importantly provides free kidney health screenings in most cities.
Over the past 2 decades, AKF has also been providing grants to help patients obtain private health insurance to cover for treatments not covered by Medicare like nutritional products, home aids, and transportation to the dialysis center.
Conflict of Interest
And where does the AKF get its funding from? Data now reveal that nearly 80% of the AKF are provided by DaVita and Fresenius- the two for-profit dialysis insurers. So what is the big deal? Well, AKF strongly and repeatedly encourages all Medicare patients to buy private insurance by providing funds to them. Remember, Medicare only pays $250 per session but private insurers bill for $1,100 per session- 4 times that amount. There is a major conflict of interest here; the two insurers Davita and Fresenius provide millions of dollars to AKF – a non-profit organization- to encourage or force patients to purchase insurance – so at the end of the day, AKF benefits by getting millions of dollars in donation from the two insurers and they in turn benefit by getting more privately insured patients whom they bill for four times the amount Medicare pays.
How can private insurance plans help dialysis patients?
The insurers claim that dialysis patients do benefit by enrolling with them in the following ways:
- They offer more comprehensive services compared to Medicare
- The insurers can coordinate services that are not always covered in Medicare
- Dialysis patients can access many types of doctors that do not participate in Medicare
- Further, private insurance covers the entire family but Medicare only covers the dialysis individual
- Privately insured patients are more likely to get a kidney transplant compared to patients on medicare
- Patients under 65 with renal diseases cannot buy Medigap coverage and thus are responsible for 20% of the healthcare costs
Is Medicare bad for Dialysis patients?
The insurers have touted many reasons why dialysis patients can benefit from private insurance but in reality, Medicare offers coverage of all the essential treatments and services that a patient needs. No patient on Medicare is denied a transplant if he or she meets the eligibility criteria and the patient is free to see any physician they want. Thousands of doctors in every city participate in Medicare programs and there is no shortage of healthcare workers that a dialysis patient may want to see. Plus the most important thing is that under Medicare, the dialysis patients only pay $20-$40 per session as part of the 20% copayment. But under private insurance, this bill is four times the amount, which over a year amounts to a significant sum of money.
Do dialysis patients benefit from this private insurance?
Many dialysis patients may think that AKF is helping them but in reality, the organization is only helping itself and the insurers. While dialysis patients may think they have a bargain, in reality, they are stuck with even bigger bills. When under Medicare coverage, they only pay $20-$40 per dialysis session, but with private insurance, this bill jumps to 4 times that amount- which comes out of their pocket.
While the insurers claim that patients get broader medical coverage compared to Medicare, this is false. Medicare covers most of the needs that a dialysis patient has except for home oral medications and home care- but if the doctor writes a prescription that these items are necessary, then they will be covered under Medicare at no extra cost.
So what is the Govt Doing?
The government has become fully aware of this scam between AKF and the two insurers- DaVita and Fresenius. The federal government has now enacted a bill that will prevent organizations from recruiting dialysis patients so that they can start reimbursing at a higher rate. Besides, private insurers will now have to clearly state how much money they donate to non-profit agencies like the AKF. The Government has also ensured that under the Affordable Care Act, all dialysis patients will be provided with the essential services at no extra cost.
In America, sometimes it is a hazard to have private insurance because it gives insurance companies and healthcare workers a carte blanche to do whatever they want and then bill patients for exorbitant sums of money. Any patient on dialysis should think twice before purchasing private insurance with Fresenius and DaVita, especially if the money is provided by AKF. None of these organizations have the welfare of the patient in mind- all they care about is how to pad their bank account.
- Kidney Dialysis Is a Booming Business—Is It Also a Rigged One?
- Column: Dialysis firms’ profits are obscene. What will happen if California tries to cap them?https://www.latimes.com/business/hiltzik/la-fi-hiltzik-dialysis-20180720-story.html
- BIG FOR-PROFIT DIALYSIS COMPANIES WORSEN PATIENT CARE. https://www.futurity.org/for-profit-dialysis-chains-2204832-2/
- California bill to end excessive dialysis profits becomes law. https://www.medtechdive.com/news/california-bill-to-end-excessive-dialysis-profits-becomes-law/565025/
- The Dialysis Industry is Failing America. https://www.ciceroinstitute.org/post/dialysis