Controversy Swirls over End-Stage Renal Disease Premium Assistance

In early 2017, a federal Judge blocked a Centers for Medicare & Medicaid Services (CMS) interim final rule regarding premium assistance for end-stage renal disease (ESRD) patients. CMS did not technically bar ESRD patients from getting help with premiums. The agency was simply concerned with the inappropriate shifting of this vulnerable population from traditional Part A and Part B to Patient Protection and Affordable Care Act (PPACA) exchanges, therefore raising costs for these participating health plans.

Many dialysis center organizations nationwide have formed foundations to pay these premiums or funnel the premium payments directly to the health plans for patients who are on dialysis and cannot afford the high premiums. Typically, PPACA health plans pay ESRD providers about $200,000 per year to treat one ESRD patient, while traditional Medicare pays these providers between $50,000 and $100,000 per year. Premiums run about $4,000 to $5,000 per year, per patient. Therefore, the financial gain is significant.

CMS received comments from social workers resulting from its request for information (RFI) placed in the Federal Register last Aug. 23, 2016; the commenters noted that once ESRD beneficiaries received a kidney transplant, the dialysis centers stopped paying their premiums. Patients then have to scramble to secure replacement aftercare coverage.

The court stated that CMS did not address what happens to family members, since Medicare will only cover the ESRD patient. The court also noted that CMS did not offer an adequate notice and comment period. CMS will likely address these issues and reissue the rule in the next round.

What are the issues and problems determined by CMS regarding this premium assistance controversy? First, there are new disclosure requirements in the proposed rule promoting transparency and forcing dialysis facilities to disclose to patients and insurers details about the premium assistance programs. Second, there is a new pre-enrollment verification process for special enrollment periods that CMS believes has been abused by patients in the past, with the assistance of the ESRD providers. Third, there has been market instability related to high-cost individuals affecting the risk pool, according to CMS. The higher claim costs associated with sicker ESRD beneficiaries has resulted in higher premiums in the PPACA marketplace as well. 

Insurers are not allowed to sell insurance to individuals already enrolled in Medicare A and B or Medicaid, in accordance with section 1882 (d)(3)(i)(ii) of the Social Security Statute. Such an illegal act is punishable by up to five years imprisonment and civil monetary penalties. In August 2016, the CMS Center for Program Integrity sent a letter to all Medicare-enrolled dialysis facilities placing them on notice concerning this inappropriate practice of steering ESRD beneficiaries from traditional Medicare to the PPACA marketplace. CMS has stated that 90 percent of ESRD facilities have been making third-party payments, and the number of ESRD enrollees in marketplace plans doubled from 2014 to 2015. 

A significant problem is that transplant queues could be delayed since ESRD patients may not be able to demonstrate continuing coverage after they stop dialysis treatments and premium payments cease. The end result is that such patients lose their PPACA coverage. RFI comments received by CMS highlight that social workers have been compensated by dialysis facilities for steering patients to the marketplace and have been retaliated against for failing to cooperate in this endeavor. Another major problem is that Part B premiums go up 10 percent per year for delayed enrollment in Part B. A three-year delay could amount to about a $40-per-month premium increase for the rest of a beneficiary’s life. This is significant for low-income ESRD individuals. Finally, individuals steered to an PPACA plan who then have a kidney transplant and later enroll in Medicare Part B will find that their immunosuppressant drugs will not be covered. This would be catastrophic for any ESRD beneficiary.

What are the conclusions that CMS has drawn from this controversy, applicable to premium assistance? CMS is actually considering an absolute prohibition if disclosure proves inadequate to stop perceived abuses. The Medicare program is working with the federal and state law enforcement to investigate potential fraud and abuse in this premium assistance area. CMS will attempt to issue civil monetary penalties to dialysis providers when their actions result in late enrollment penalties for ESRD beneficiaries. 

Finally, CMS is concerned with interference with transplant readiness. ESRD patients with PPACA market coverage have struggled to demonstrate continuity of coverage since their third-party premium assistance ends when they no longer need dialysis treatment. This continuity is required for transplant readiness. CMS is concerned about additional financial exposure. Out-of-pocket costs likely are higher for dually eligible beneficiaries who could be enrolled in Medicare and Medicaid but are steered to the PPACA plans. CMS is concerned with mid-year coverage disruptions as well.

The current lack of transparency in these payment arrangements translates to patients having their coverage disrupted at any time if their plan discovers and rejects third-party premium payments. ESRD patients need to examine all ramifications associated with rejecting traditional Medicare and utilizing the PPACA marketplace plans.