Are you Differentiating Benefits?

Medical claim professionals have probably heard someone in their organization say, “I checked the patient’s Medicare status and Medicare coverage is active so I think we should reduce the dialysis charges to usual and customary (U&C).” If you had this discussion with one of your co-workers, you need to understand what constitutes differentiating benefits and what the potential penalty is for doing it.

As a payer of dialysis claims, whether it is from the perspective of a TPA, Plan Sponsor or MGU/Carrier, there is a good chance someone has informed you that it’s a good idea to check a patient’s Medicare status before determining how dialysis claims should be adjudicated. When it comes to determining benefits at the first-dollar claim level, the document that matters is the Group Health Benefit Plan’s Summary Plan Description (“SPD”). When determining benefits and claim reimbursement at the MGU/stop-loss carrier level, the document that matters is the Stop-Loss Policy and, in some circumstances, the underlying SPD from the covered Group Health Benefit Plan, depending on the provisions and corresponding verbiage in the Stop-Loss Policy. The provisions, exclusions and definitions specified in those aforementioned documents outline the claim reimbursement methodology and are the key to accurately adjudicating all claims. If you are base your reimbursement methodology solely on the patient’s Medicare status, then you are differentiating benefits.

What is differentiating benefits and what does it have to do with paying dialysis claims?

Simply stated, if you are adjudicating/reimbursing dialysis claims differently based on whether or not the patient has Medicare secondary coverage, you are differentiating benefits. The reason this is an issue for dialysis claims is that Medicare eligibility for End Stage Renal Disease (ESRD) typically starts the first day of the forth month after dialysis begins. If the SPD calls for the charges to be limited to “U&C,” then it is imperative that the first three months of charges not be paid differently than the remainder of the months during the 30-month coordination period. Being too sensitive to the possibility that a dialysis provider may balance bill the patient could potentially leave you vulnerable to appeals from providers. The providers could focus on the inconsistent payments which will give them an angle to attack the legitimate claim reductions.

The fact remains that “taking into account” and “differentiating benefits” based on the patients Medicare status are specifically prohibited under federal regulations, 42 CFR § 411.161 and the Medicare Secondary Payer Act (“MSP”), 42 U.S.C § 1395y(b)(1)(C).

The MSP act, 42 U.S.C § 1395y(b)(1)(C), prohibits a group health plan from “Differentiating in the benefits” or “Taking into account” entitlement or eligibility for Medicare benefits due to ESRD during the 30-month coordination of benefits (“COB”) period.

Whereas 42 CFR § 411.161 defines “taking into account” to be when a Plan “imposes on persons who have ESRD, but not on others enrolled in the plan, benefit limitations such as less comprehensive health plan coverage, reduction in benefits, exclusions or benefits, a higher deductible or coinsurance.”

An example that we would consider to be “Differentiating Benefits” or “Taking into account” would be paying the first three months of dialysis with a PPO or wrap network discount and then paying a percentage of Medicare or the “U&C” for all claims that follow. The reason this is taking Medicare entitlement into account is that dialysis patients typically have a three month waiting period before they are eligible for Medicare coverage. By paying the first three months of claims differently than the rest of the claims, the group is differentiating benefits between those with Medicare and those without.

Another example of differentiating benefits would be paying dialysis claims with any network discount for a covered enrollee that chose not to apply for Medicare part B while paying U&C for a different enrollee that applied for and obtained Medicare part B coverage. The key is to be consistent with claim reimbursement methodology based on the SPD, not taking into account the Medicare entitlement. If a patient decides not to obtain secondary coverage from Medicare, they could very likely have balance bills, their decision impacts their liability.

The penalty for “Differentiating and Taking into account” is being labeled a “non-conforming plan.” The penalty for a non-conforming plan is addressed in 42 CFR § 411.130; in which, the IRS imposes a tax that is equal to 25% of the employer’s expenses incurred during the calendar year in which the plan is determined to be a non-confirming group health plan, this tax is on all expenses, not just dialysis.

In short, group health plans may not differentiate in the benefits provided to individuals with Medicare and individuals without Medicare during the individuals coordination of benefits period. Paying claims with the same methodology will prevent you from being trapped in the well intentioned exercise of checking the patient’s Medicare status before determining how to pay the claims.


Kidney Transplants & Medicare Secondary Payer

With the increased cost of Hemodialysis and Peritoneal dialysis for employer group health plans and patients suffering from renal failure, kidney transplant is normally a more cost effective and empowering way to address kidney failure. But, what type of scenario could actually cost payers more for transplant recipients? Let us look at the implications of the Medicare Secondary Payer regulations as they pertain to kidney transplant recipients.

Medicare Secondary Payer regulations for end-stage renal disease (“ESRD”) patients typically consists of a three month waiting period after the first date of dialysis, followed by a 30 month coordination period where the commercial insurance pays primary and Medicare Part B pays secondary. For employer group health plans, the end of the 30 month coordination period is a financial relief as their financial obligation has been minimized to 20% of the Medicare allowable rate after Medicare becomes the primary payer.

But what happens when an ESRD Medicare entitled patient has a kidney transplant? If the transplant is successful the patient will eventually lose their entitlement to Medicare due to ESRD at the completion of the 36th month after the transplant (1). If the transplant fails before the 36th month after the transplant, the patient will not lose their Medicare entitlement and the commercial payer will remain the secondary payer.

When a kidney transplant patient successfully reaches the 37th month after their transplant the patient loses their ESRD Medicare Entitlement. This causes the employer group health plan to become the primary payer once again. If the patient’s Kidney fails after that occurs there is an additional 30 month coordination period where Medicare is the secondary payer and the employer group health plan pays primary. Just like the first coordination period when they start dialysis except there is no three month waiting period for the Medicare in the second coordination.

So an important question is, how long do typical kidney transplants function properly and what percentage of these patients could potentially have two or more 30 month coordination periods.

There were 17,736 transplants performed in 2009 (2) and about 2/3 of them were performed with cadaver kidney and the other 1/3 were from live donors. The live donor kidneys have a higher survival rate than cadaver kidneys but over time the majority will eventually fail. At the five year point after the transplant, 82.8 % of the live donor kidneys were still functioning compared with 70.8% of the cadaver kidneys. At the ten year point the spread increases and 61.2% of the live donor kidneys were still functioning compared with 44.9% of the cadaver kidneys.

Based on 17,736 Kidney transplants in 2009, there were close to 1,170 failures in the first year after transplant (3). By the three year point there will be another 1,548 failures, totaling 2,718. These 15% of the patients won’t require their group health plans to pay primary for a second 30 month coordination period.

The employer groups and financial risk takers should concern themselves with the additional 1,721 failures between year three and year five as these are the patients that could require a second 30 month coordination period with the employer group paying primary and Medicare paying secondary. But all transplant failures after the 36th month could potentially require an additional 30 month coordination period. This is something that underwriters need to be aware of when they are reviewing groups with transplant recipients.

By the 10 year mark after the transplant more than half of all transplants will have failed. Excluding the failures before the 37th month, this means that 6165 or 35% of the patients that received a transplant 10 years ago will require dialysis again, which will trigger the additional 30 month coordination period.

While underwriters and stop loss forecasters can’t do anything to help the patients transplant succeed, they can do something to mitigate the possible expenses to the plan when they are quoting rates. A conditional laser on a former transplant recipient is a safe way to protect the risk takers.

The examples below demonstrate the different outcomes which can be reached when transplants fail before or after the 37th month after the transplant.

Example #1 No negative impact to commercial payers.
A Medicare entitled dialysis patient gets onto the transplant registry and is lucky enough to get a match in the 25th month of the 30 month ESRD coordination period. The patient receives the transplanted kidney and no longer requires dialysis. The 30 month coordination period is up and Medicare becomes the primary payer. Unfortunately, the patient’s kidney fails 30 months after transplant. The patient goes back on dialysis and Medicare continues to be the primary payer and the commercial insurance remains the secondary payer only responsible for the 20% balance after Medicare makes their payment.

Example #2 Doomsday scenario
A Medicare entitled dialysis patient gets onto the transplant registry and is lucky enough to get a match in the 25th month of the 30 month ESRD coordination period. The patient receives the transplanted kidney and no longer requires dialysis. The 30 month coordination period is up and Medicare becomes the primary payer. The patient’s kidney fails in the 38th month after the transplant. This is important because the first day of the 37th month after a transplant, the patient will lose their Medicare coverage. The loss of Medicare due to ESRD means that when the patient re-starts dialysis the patient will need to go through another 30 month ESRD coordination period with the commercial insurance paying primary.

When you factor in the estimated cost of a transplant in 2011 being $262,900 (4), it is important for risk takers to understand the potential cost of a failed kidney transplant. While that new kidney can keep the patient out of the dialysis chair, its untimely failure can end up costing groups another 30 months as the primary payer.

Claim payers do not need to deal with these complex and sometimes confusing situations on their own. EthiCare Advisors can help you navigate through these sometimes challenging situations.

Medicare Secondary payer rules are sometimes difficult to follow when you factor transplants in the mix. It is important to know what type of scenarios could end up costing your group health plan. With an average commercial price for dialysis at greater than $50,000 per month, this issue could literally cost risk takers millions. When you factor in the annual price increase from the dialysis providers, the grand total for the second coordination could be well above $2,000,000. EthiCare Advisors can also help you pay much less than $50,000 per month the providers are charging.



(1) CMS Medicare Secondary Payer
(2) USRDS 2011 Annual data Report
(3) OPTN/SRTR Data as of October 1, 2010
(4)Miilimans 2011 report on the cost of transplants

COBRA & ESRD: Timing is Everything

Coordination of benefits for ESRD patients can be confusing and COBRA continuation coverage can make it even more confusing. This article aims to inform you about COBRA for ESRD patients and the importance of timing in determining whether a patient can maintain their COBRA coverage when they become entitled to Medicare for ESRD.

First of all, what is COBRA?
COBRA is the Consolidated Omnibus Budget Reconciliation Act of 1985 (Public Law 99-272, Title X). This law requires employers with more than 20 employees to allow their employees to keep their group health insurance coverage for themselves and their dependents if they leave their job under certain conditions. The employee may be required to pay the entire premium and coverage can last for 18, 29 or 36 months depending on the situation.

What is ESRD?
End Stage Renal Disease (ESRD) is a diagnosis given to patients when their kidneys can no longer filter waste from the body. Without dialysis, the patient will die from accumulated waste in their blood. Patients with the ESRD diagnosis are eligible to apply for Medicare on the basis of their ESRD.

Why is timing so important for COBRA coverage and ESRD?
Timing is everything for ESRD patients that apply for COBRA because ESRD patients are entitled to Medicare coverage beginning the first day of the forth month after they begin dialysis, as long as they apply for Medicare part B. Patients trained in Home Dialysis are eligible for Medicare coverage on their first date of dialysis if they apply for Medicare Part B.

So what does this have to do with COBRA coverage?
The ruling in the landmark Supreme Court case GEISSAL v. MOORE MEDICAL CORP. (97-689) 114 F.3d 1458 clearly states that patients that are already on another insurance plan when they qualified for COBRA coverage can’t be denied the opportunity to obtain the COBRA coverage. On the other hand when patients on COBRA become entitled to other insurance the group health plan has the right to drop the patient from the plan.

This is important for dialysis patients because they qualify for Medicare on the first day of the 4th month after they start dialysis. So patients that stop working right after they begin dialysis may have a difficult time maintaining their COBRA coverage especially if they apply for Medicare part B.

The following scenarios are examples that would apply for ESRD patients that obtain COBRA coverage.

Example of a simple case where the patient loses COBRA coverage.
A patient starting dialysis in January decides that they can’t work anymore after their first date of dialysis. They apply for Medicare Part A and Part B due to ESRD and they resign from their job due to their health issues. The patient subsequently applies for and receives COBRA continuation coverage. On April 1st the patient’s Medicare coverage begins and the group health plan drops them from the plan.

Example of a simple case where the patient retains COBRA coverage.
A patient starting dialysis in January decides that they want to continue working. They apply for Medicare Part A and Part B due to ESRD. They receive their Medicare Part A and B coverage on April 1st. In May the patient decides that they can no longer continue to work while being treated for ESRD and they resign. The patient applies for COBRA continuation coverage and the Employer Group Health Plan has to accept the patient on the plan.

In short, if a patient already has secondary coverage when they apply for COBRA they can’t be denied the COBRA coverage, if they obtain other coverage after they are already on COBRA, the can have their coverage terminated by the plan.


Answers to 28 Commonly Asked Questions about End-Stage Renal Disease (ESRD) & Dialysis Treatments

What is End-Stage Renal Disease (ESRD)?
End-Stage Renal Disease (ESRD) is a diagnosis given to patients when their kidneys no longer function. Without dialysis or a kidney transplant the patient will die from accumulated waste in the blood.

How do people get End-Stage Renal (ESRD) Disease?
The main causes of End-Stage Renal Disease (ESRD) are diabetes and high blood pressure. These two diseases left untreated may eventually destroy the kidneys ability to effectively filter waste from the blood.

How is End-Stage Renal Disease (ESRD) diagnosed?
End-Stage Renal Disease (ESRD) is diagnosed when a patient’s glomerural filtration rate falls below 15 mil/min. This calculation looks at your blood creatinine, age, weight, race and gender.

What type of doctor will I see for my End Stage Renal Disease (ESRD) diagnosis?
Nephrologists treat patients with End-Stage Renal Disease (ESRD).

What is the treatment for End-Stage Renal Disease (ESRD)?
The treatments for End-Stage Renal Disease (ESRD) are dialysis and kidney transplant.

What can I expect during a dialysis treatment?
You can expect to be in the facility between three and four hours resting comfortably in a chair. You will be in a large room with limited privacy in most cases.

How often are the treatments needed?
Most patients receive their hemodialysis treatments three (3) times a week at a free standing dialysis center. The other options are daily home hemodialysis six days a week or peritoneal dialysis seven days a week. Patients are encouraged to explore and discuss all treatment options with their doctor.

Will End-Stage Renal Disease (ESRD) go away or are treatments for life?
End-Stage Renal Disease (ESRD) is permanent. Without a kidney transplant, the patient will require dialysis for the rest of their life. Acute renal failure on the other hand is not permanent and the kidney function eventually returns.

Where is treatment for End-Stage Renal Disease (ESRD) provided?
End-Stage Renal Disease (ESRD) services can be received at the hospital, free-standing dialysis clinic or at the patient’s home.

Who provides End-Stage Renal Disease (ESRD) treatment?
End-Stage Renal Disease (ESRD) treatments are provided by large dialysis chains and smaller local facilities. The providers of care at the dialysis facilities include Nephrologists, Nephrology nurses, Patient Care Technicians and Social Workers.

Can I choose where I go for End-Stage Renal Disease (ESRD) treatments?
Patients have the right to choose where they receive their dialysis treatments. In some communities, they have numerous provider options to choose from while other areas only have one choice.

Can I do dialysis at home?
Home dialysis is a great option for some patients, but it may not be right for everyone. Ask your doctor if home dialysis is a viable option for you.

What are the advantages to home dialysis?
Home dialysis keeps the patient out of the dialysis facility and in the comfort of their own home. This allows the patient to be treated at their convenience; they are not bound by the schedule of a facility. It also keeps the patients away from a large population of sick patients which can prevent sicknesses and possible infections. The treatment schedule of six or seven treatments for home dialysis is also better for the patient because it mimics the body’s kidneys and does not allow waste to build up like it does for patients treating 3 times a week in the facility.

What is the difference between hemodialysis and peritoneal dialysis?
Hemodialysis removes the blood from the body and filters it through a dialyszer before returning clean blood back to the body. Peritoneal dialysis uses dialysate in the peritoneum to remove waste by osmosis from the abdominal wall.

Can I travel and still get my dialysis treatments?
Yes, many facilities treat traveling or so-called transient patients. It’s important to find a facility and make arrangements prior to your travel.

How long does each dialysis treatment last?
Dialysis treatments vary by modality. In center hemodialysis treatments typically last between three and four hours and daily home hemodialysis treatments typically last 2 hours. Peritoneal dialysis takes longer as it is a more passive modality.

Is there anything I can do to prevent getting End-Stage Renal Disease (ESRD)?
Some of the best ways to prevent End-Stage Renal Disease (ESRD) are to remain active, eat healthy, avoid smoking and have regularly scheduled physicals that include routine blood work. Patients that develop diseases like Diabetes and High Blood Pressure early can delay the onset of End-Stage Renal Diseasse (ESRD) and sometimes prevent kidney damage altogether.

Does insurance cover End-Stage Renal Disease (ESRD) treatment?
Insurance will typically cover dialysis treatments as the primary payer for the first 33 months of service, but since not all plans are created equal it’s best to speak directly with your insurance carrier or health plan administrator to confirm your benefits. After paying primary for 33 months, a commercial insurance payer (either a fully insured insurance carrier or self-funded health plan sponsor) becomes the secondary payer and Medicare becomes the primary payer.

Do dialysis treatments require prior authorization?
Maybe, that would depend on the design of the insurance policy or health plan. Patients are encouraged to consult their insurance carrier or health plan administrator before beginning dialysis treatments.

Does insurance cover all the costs of End-Stage Renal Disease (ESRD) treatment?
All insurance plans are different and not all are created equal. The amount of the claim that is covered by the insurance company is dictated by the insurance policy or Summary Plan Description (SPD) or Plan Document. Most End-Stage Renal Disease (ESRD) patients are eligible for Medicare the fourth month after they begin dialysis and this coverage picks up any balances not covered by their primary insurance. Medicare is the secondary payer for dialysis patients for thirty (30) months and then Medicare becomes the primary payer and the commercial insurance becomes secondary.

How much does End-Stage Renal Disease (ESRD) treatments cost?
The range in cost for dialysis can vary greatly depending on numerous factors. The average cost for a Medicare patient is roughly $3,500 per month. The average cost to commercial insurance plans varies from patient to patient and facility to facility, some pay $3,500 and others pay over $100,000 for a month. Patients are encouraged to get pricing information from their dialysis providers before they begin treatment.

Are there programs for uninsured End-Stage Renal Disease (ESRD) patients?
Most dialysis centers have some sort of free care program depending on the patient’s income and expenses. There are also programs through the American Kidney Foundation and National Kidney Foundation that can assist patients with payment for their insurance premiums.

How does Medicare help End-Stage Renal Disease patients?
End-Stage Renal Disease (ESRD) is a unique disease because it entitles patients to Medicare coverage. This coverage can be primary if the patient has no current insurance coverage or it helps patients with balances that are not paid by their primary insurance.

Do I have to buy Medicare if I have End-Stage Renal Disease?
No you do not. Patients can defer their Medicare enrollment or they can enroll in only Medicare Part A and defer their enrollment into Part B.

How much does Medicare cost End-Stage Renal Disease patients?
Medicare Part A does not have a premium. Medicare Part B costs $96.40 or $110.50 for patients already enrolled and having their premium withheld from their social security benefit. For all others, the monthly premium is $115.40.

If I stop working and go on COBRA, will my health plan still pay for End-Stage Renal Disease treatments?
If you go on COBRA, someone will pay for your End-Stage Renal Disease (ESRD) services. The key issue for End-Stage Renal Disease (ESRD) patients that go on COBRA is when they obtain their COBRA coverage and when they become entitled to Medicare part B. Health plans have the right to drop coverage for COBRA covered members of the plan when the patient becomes eligible for any other insurance. Because End-Stage Renal Disease (ESRD) patients are entitled to Medicare after a three month waiting period they could be at risk for losing their COBRA coverage. The best way for patients to be sure they won’t lose their COBRA coverage is to wait until after they have Medicare for End-Stage Renal Disease (ESRD) before they stop working or they could simply defer enrollment for Medicare part B and they could keep their COBRA coverage.

What is the medical coding associated with End-Stage Renal Disease diagnose and treatment?
The ICD-9 Diagnosis code of 585.6 is the most telling sign. CPT codes associated with End-Stage Renal Disease (ESRD) are: 90935, 90999, 90945, Q4081, J1756 and J2501.

How can insurance claim professionals impact dialysis treatment costs?
Identifying patients before they begin their dialysis treatments is the first step to having an impact. The next step is to work with someone that can use this information to find a reasonably priced facility with a good fee schedule.

What’s a good discount on dialysis claims?
A good discount will vary based on the amount the provider charges for services. The final cost for a month of service is the most important issue.

Can I pay at the PPO rate for the first three months and then UCR for all other months of dialysis?
This is not permissible as it is differentiating benefits between Medicare and non Medicare beneficiaries.

What is differentiation of benefits between those with Medicare secondary coverage and those without Medicare secondary coverage?
Differentiation is paying claims one way before a patient has secondary coverage through Medicare and then paying differently when they have Medicare.

What is Medicare secondary coverage?
It is secondary coverage that patients can obtain to augment their commercial insurance coverage and it prevents providers from balance billing the patient for services that are not covered in full. This is a good value for patients as it prevents balance billing for services not covered by their primary insurance.

Can you always use UCR to pay for dialysis treatments?
If it is supported by the insurance policy, Summary Plan Description (SPD) or Plan Document you can pay for dialysis treatments using UCR.

Where do I get UCR data to properly adjudicate dialysis claims?
Only a select number of firms offer UCR data for adjudicating dialysis claims. When searching for a firm to provider dialysis UCR, please be sure to ask them: (1) about the experience of the individuals who prepared the UCR database; (2) ask them how long them have been in business; (3) ask them about legal challenges to the UCR data; (4) ask them about turnaround time for repricing claims; and, (5) ask them what are their rates for providing you with dialysis UCR. Armed with this information you should be able to select a dialysis UCR vendor.

What I can do to reduce an increased specific deductible (“laser”) on renewal?
One method is to look at the insurance policy, Summary Plan Description (SPD) or Plan Document to determine how the plan language can be strengthened so UCR can be used as an option for paying claims since UCR generally will provide the maximum savings.


When it comes to Dialysis Claims … There is a lot to question & a lot to fear

As an industry, we all know that about two-thirds of all dialysis patients are treated by one of two large, publicly traded companies. We also know that more than 75% of all dialysis patients are on Medicare due to the unique eligibility rules of this disease. Finally, we have all heard the dialysis providers tell us time and time again that their facilities lose money on each Medicare patient they serve and that is why their rates for non-Medicare patients are so high. Every time one of the large providers buys a smaller competitor, the running joke around EthiCare is that “they lose money on every patient, but they make it up in volume.” As you can tell, we don’t believe their cries of poverty when serving Medicare patients.

FACT: In February 2011 DaVita, Inc. agreed to acquire DSI Renal Inc. and their 8,000 patients for about $690 million or about $86,000 per patient.

FACT: In December 2004 DaVita Inc. agreed to acquire Gambro’s US clinics and their 43,200 patients for about $3.1 billion or about $71,000 per patient.

FACT: In January 2006 Fresenius AG (also known as “FMC”) agreed to acquire Renal Care Group, Inc. (also known as “RCG”) and their 30,400 patients for about $3.5 billion or about $115,000 per patient.

Because of the unpredictable nature of dialysis costs, there is a lot of fear in the insurance marketplace about plans that have patients receiving treatment. One patient could be billed less than $120,000 annually, while another could easily exceed $1,000,000 annually. There are many reasons why this happens, but underwriters fear the worst case scenario. Most PPO networks have failed at their attempt to contain the rising cost of treatment leaving many payers to consider their so-called “discounts” a joke. This opportunity has caused a rise “cost containment” companies to try to work with payers and “save money” for their clients on their dialysis charges. For a while many payers were happy to get a 15% discount off of billed charges but by the time the dialysis providers raised their rates the “savings” was gone. More and more “cost containment” companies were accepting small discounts on behalf of their clients because it was a successful outcome that they could charge for – even if the payer was now committed to pay more than they should have. As payers got wise, cost containment companies tried different things to control costs like arbitrary U&C, Medicare pricing done incorrectly, cumbersome (and in many cases illegal) plan document changes, etc. This led to legal action taken against payers and “cost containment” companies. Payers fear trusting the wrong organization and getting sued.

Since 2006, EthiCare Advisors has partnered with many claims payers that no longer accepted the status quo and choose to take control of the reimbursement process away from the providers and back to their own organizations. They were tired of dealing with unprofessional, unorganized companies that wouldn’t even put a contact name on their website or tried to disguise the fact that they were owned by a competing insurance company. They were also tired of only having one settlement option forced on them and having to pays fees up to 35% of savings. With so many “cost containment” companies providing bad settlement options, many payers are now fearful about the entire process which is returning control back to the providers.

FACT: EthiCare Advisors has been posting our service fees on our website since 2002.

FACT: EthiCare Advisors has never been involved in a court case stemming from a dialysis case.

FACT: EthiCare Advisors offers three strategies when settling dialysis claims: negotiated settlement with signed release, plan document pricing reductions, or network contracts.

EthiCare Advisors’ team of experienced settlement specialists, including a former dialysis industry insider, delivers proven solutions to limit these rising costs including: negotiated settlements with signed released, national passive network discount access, Medicare pricing, and Usual and Customary reduction recommendations. We offer settlement solutions to the payer and discuss the most appropriate settlement method for an individual patient. Our approach is one patient at a time, because each patient has different circumstances and each facility is different on how they choose to settle. Anyone offering a “one size fits all” option and anyone not willing to put all settlement options on the table, are a danger to the payer and the industry.

Our dialysis Usual and Customary reduction recommendations are based on a proven, defensible database rooted in the self-reported financial data provided by the dialysis industry. If the plan language does not support this type of reimbursement, we won’t recommend it. Or if the settlement method used prior to engaging EthiCare Advisors is wrong in our opinion, we will let you know.

FACT: EthiCare Advisors realized additional savings on 70% of in-network dialysis claims we reviewed from 2009-2010. We realized additional savings on 82% of the out-of-network dialysis claims we reviewed from 2009-2010. These are settlements with a signed release from the provider.

FACT: EthiCare Advisors saved an average of an additional 30% above the PPO on in-network dialysis claims from 2009-2010 complete with a signed release from the provider.

FACT: EthiCare Advisors has cleaned up many situations when other cost containment firms incorrectly calculated Medicare or UCR pricing. In addition, EthiCare Advisors has informed clients that their plan document did not support price reduction and settlement was their only option after they were served with legal notices from providers.

Our fee for dialysis claims settlement is: 10% of savings for usual and customary adjustment recommendations and Medicare pricing; 15% of savings for out-of-network claims; and 20% of realized savings for in-network claims. Peace of mind in dealing with an experienced, professional organization remains free.


Understanding why Dialysis Treatments are so Expensive

If you have recently seen any full commercial dialysis claims, you understand how incredibly expensive dialysis treatments have become. But why are dialysis treatments so expensive? The following article will try to shed some light on this question and in doing so will provide you with some useful information that could help protect your clients from being financially drained by the dialysis providers.

Dialysis is a procedure that helps keep kidney disease patients alive by removing waste from blood when the patient’s kidneys can no longer do so. Amendments to the Social Security Act passed by Congress and signed by then President Richard M. Nixon provided Medicare coverage for End Stage Renal Disease (ESRD) patients. This law is viewed as a lifesaver for kidney disease patients that otherwise would not have been able to pay for the life saving treatments. How did this law, which has helped so many kidney disease patients pay for their life saving treatments, become a contributing factor in the escalation of dialysis pricing for commercial payers?

ESRD is a unique illness that entitles patients to Medicare coverage based solely on their diagnosis of ESRD. It has been widely reported that Medicare is the primary payer for more than 80% of all patients receiving dialysis treatment in the United States. Medicare has only had a handful of price increases for dialysis providers over the years. The dialysis providers rely on the revenue that they generate from commercial payers (insurance carriers, self-funded healthcare plans, labor unions, government sponsored insurance pools and alike) to help grow their companies.

There are numerous factors involved with the escalation in pricing of commercial dialysis claims. The primary reason is Medicare Secondary Payer regulations which give dialysis providers a defined window of opportunity to bill commercial payers as the primary for dialysis treatments. The current coordination period is a three month waiting period after the first date of dialysis followed by 30 months with Medicare as a secondary payer. The providers are trying to generate as much revenue as possible in this defined 33 month period of time.

Medicare pricing is also a contributing factor in the escalation of commercial pricing. Medicare reimbursement for dialysis has gone through several methodologies. The different methodologies were implemented by Medicare to try to keep the costs of the ESRD program down and addressed different ways that the dialysis providers were artificially propping up their Medicare reimbursements.

The Composite Rate System, a reimbursement method used by Medicare where providers were paid a composite rate for the treatment which was adjusted by zip code and metropolitan statistical areas, did not change much between 1983 and 2005. Providers were also reimbursed for separately billable injectable drugs (Vitamin D, Iron, Antibiotics, and eventually Epogen) as well as other ancillary services. Drug reimbursement rates were set based on Average Wholesale Prices (AWP), but these AWP rates did not accurately portray the real cost to providers. Overall this system underpaid providers on the dialysis treatments and significantly overpaid them on the separately billable drugs and ancillary items. This type of incentive to over-utilize medications and ancillary items was clearly not in the best interest of the federally funded Medicare program or dialysis patients and lead to the replacement of the Composite Rate System by the Basic Case-Mix Adjusted Composite Rate system in November 2003.

The Medicare Prescription Drug Improvement and Modernization Act in November 2003 called for the creation of the Basic Case-Mix Adjusted Composite payment rate system. This system was a slight change to the previous methodology. Medicare began to pay providers less for separately billable drugs as they switched from AWP numbers, that were clearly higher than the costs to providers, to a methodology based on Average Sales Price (ASP) which was based on what providers were actually paying for the drugs, not the AWP. To offset this change in reimbursement for separately billable drugs the composite rates were increased by the drug add-on which added close to 15% on top of the existing dialysis treatment rates. Several other payment rate variables were also factored into the reimbursement rate at this time such as the patient’s age, height and weight.

The “Basic Case-Mix adjusted Composite rate system” was replaced by a single bundled rate known as the “Bundled ESRD PPS rate” for services beginning January 1, 2011. This new rate will fluctuate based on the location of the facility as well as patients’ characteristics such as their height, weight and age. The new bundled ESRD PPS rate for 2011 is a big change from past methodologies as providers will now have to worry about supplying formerly separately billable drugs under the new bundled rate.

In the past, when confronted with changes to the reimbursement methodologies, the dialysis providers have leaned heavily on their commercial patients to offset any decrease in reimbursement from Medicare and to expect anything different from the providers is not consistent with their past practices.

Another contributing factor in the escalation of pricing is the patient mix. Currently almost 4 out of 5 dialysis patients are Medicare primary patients which providers are being billed and paid at Medicare rates. If the providers want to increase their revenue per treatment, one of the standard metrics used by the investor community to analyze the future profitability for the provider, the provider will need to increase their commercial rate to an amount that will be able to prop up the flat Medicare reimbursement rates from 80% of their patients.

The next factor that is driving the cost of dialysis is the consolidation in the marketplace. Fresenius Medical Care, Inc. (FMC) and Davita, Inc. are the two biggest providers and they treat almost 70% of the dialysis patients in the country. These two providers are also publicly traded companies that are accountable to their investors. Investors are always looking for consistent gains in profits and dividends and, in order to provide these consistent gains, the providers are forced to raise the rates on the 20% of their population that is commercially paid because they cannot raise rates on the Medicare patients. Furthermore, industry consolidation has also made it difficult to maintain any type of choice or options in certain sections of the country when choosing a dialysis provider.

Mergers and acquisitions in many cases lead to the practice of using the fee schedule of the provider with the higher prices as the fee schedule for the new company.

Another contributing factor when there is a merger or acquisition is that it is not uncommon for the provider with the higher priced fee schedule to become the standard fee schedule for the entire new company.

The last factor involved with the expense of dialysis treatment is the pricing for separately billable drugs such as Epogen, Vitamin D and Iron. The providers are routinely marking up the drugs by more than 15 times the Average Sales Price to generate additional revenue, which in some cases can account for a larger component of the total price than the dialysis treatment.

There are multiple options available in the marketplace when trying to contain the cost of dialysis treatments including relying on PPO discounts, direct negotiated settlements with providers, and plan document limitations. Payers should thoroughly investigate each methodology with their clients and research the firm they choose to partner with. Due to the amount of money at stake, mistakes in adjudicating dialysis claims are quickly noticed by most providers and could have serious unintended consequences on the plan.

In summary, the dialysis patient mix is about 80% Medicare primary and 20% commercially paid. The dialysis provider market is dominated by two large, publicly traded organizations. Each of these providers has stated that the Medicare reimbursement rate is not sufficient for them to operate at a profit and must rely heavily on the commercial payers to subsidize the Medicare payers. Due to frequent consolidation in the marketplace, there are many areas of the country that lack substantial competition. There are cost containment options available and payers should research them all.


Do you have Dialysis Patients in Tennessee?

Do you have Dialysis Patients in Tennessee?

If dialysis claims are a problem for your company, then read on. Below are two recent cases that EthiCare Advisors, Inc. helped reduce the cost of dialysis treatments. Both case studies are with dialysis providers in Tennessee.


EthiCare Advisors received a referral for an out-of-network dialysis patient that had just begun treatment two weeks prior to the referral. The timing of the referral was crucial as the provider had not yet begun to book their revenue or receive payments. EthiCare Advisors was able to negotiate an ongoing fee schedule-based settlement with a provider sign-off that saved the plan sponsor more than 66% off of the billed charges. Over the next 12 months, EthiCare’s negotiated settlement is expected to save approximately $450,000.


Early intervention is not always possible and EthiCare Advisors can still save plans money after the patient has started treatment. On another recent case, we received a referral for an in-network patient in their fourth month of treatment with a 20% PPO discount. The provider signed off on an EthiCare Advisors ongoing fee schedule settlement that equates to a 79% discount off of billed charges. Over the next 12 months, EthiCare’s negotiated settlement is expected to save an additional $432,000 above their existing discount. If the payer continued paying with the paltry PPO discount they would have been paying $576,000 per year instead of paying $144,000 per year.

As the cost of dialysis treatments continue to rise, payers have no choice but to look at all options when considering what is best for the plan and for the patient. EthiCare Advisors is here to offer you choices in helping to make the right decision, including: Direct settlement with signed release; UCR pricing data; and access to more than 45 passive networks.

Don’t let the cost of dialysis threaten the viability of self-funding for your clients. Call EthiCare Advisors when you first learn about dialysis patients.

Low fees, superior service, great results. That’s EthiCare Advisors.

Cleaning up the Dialysis Mess

We received a dialysis claim from one of our clients recently that had a 15% discount network discount in place. The provider was one of the leading dialysis providers. Our client called us to let us know it was coming and asked us if we could help because the charges were over $80,000 for the month.

We went to the supply closet, got out our mop & bucket and went to work cleaning up the mess the network contract got the plan into with their 15% discount. All networks are not created equal, but why is it that many seem to have a standard 15% off billed charges for the top two dialysis providers? At what point did the networks give up the façade of trying to help plans contain dialysis costs and just throw in the towel by letting the dialysis providers get away with $80,000 in charges for one month? Where is the outrage by the networks?

It is no secret to anyone in the industry that dialysis costs have been a growing problem for payers over the past 7 years. Let’s see some real leadership on this issue by the “national” networks and start terminating some of these 15% discounts. While we at EthiCare get paid for cleaning up the mess of the 15% discounts, we would happily forgo this if it meant solving the dialysis problem. At the same time, if the networks choose to continue to ignore the problem, we suggest they get out of the way and let us continue to provide the solutions the payers want without their interference. Many payers are going around the network and straight to EthiCare now, so as the saying goes, lead, follow or get out of the way.

Realistically we do not expect to see any significant changes from the networks on this front. Many networks have made it crystal clear that they believe it is more important to add another provider to the network regardless of how their charges compare to reality, instead of qualifying the provider as one that would hold costs down and have a financially positive impact on the plan. At the same time, it our belief that the TPAs, MGUs, Carriers and plan sponsors can get things moving in the right direction by not putting up with $80,000 in dialysis charges. We believe the time has come to stop letting the networks dictate the reimbursement terms and start measures to correct the reimbursement imbalance. This may include scrutinizing network contracts prior to signing them, applying reasonable & customary as allowed in the plan document, negotiating direct contracts outside of the network, etc.

If you are ready to start taking action, EthiCare Advisors is here with mop and bucket in hand to help any payer in their quest to solve the dialysis conundrum.

Mitigating Rising Dialysis Costs

Kidney disease is a growing problem in the United States. One out of nine American adults or about 25 million people have Chronic Kidney Disease, the National Kidney Foundation reports. If you’re like most payers, your organization has seen both the number of dialysis patients and the treatment costs rise dramatically year after year after year with no apparent end in sight.

The dialysis marketplace is predominately controlled by two publicly traded companies operating treatment centers across America. Billed charges from these organizations can be as high as $50,000 per month. It seems like just a few years ago charges were in the $10,000 – $15,000 range. As the industry giants, they set the standard on pricing which is often mimicked by smaller treatment centers. Many people ask why costs are escalating so rapidly, but few have answers or can provide solutions.

EthiCare Advisors delivers a comprehensive program to help insurance carriers and managing general underwriters (MGUs) mitigate against rising dialysis costs. We look at the high cost of dialysis as one of the most unpredictable areas facing the self-funded plans and those that reinsure them. Billed charges are often marked up more than 500% higher than the industry’s own reported cost per treatment. Relying on paltry PPO network discounts to mitigate dialysis costs is like relying on Congress to cut your taxes. It isn’t going to happen.

EthiCare Advisors, Inc. has a proprietary, defensible and fair pricing database rooted in reported actual costs which arms its skilled, settlement team with the tools to go to battle against these giant dialysis corporations on your behalf. We provide our clients with directly negotiated settlements, national passive network access to more than 500,000 providers nationwide, reduction recommendations based on specific plan/policy U&C or UCR language, individual medical bill reviews/auditsand so much more.

Our fees for settlement services are among the lowest in the industry at 15% of savings for out-of-network claims and 20% of realized savings for in-network claims. This means payers will see a greater net savings. Our fees are about 40% lower than most other companies saving you even more money.

Get started saving more money today!

Signoffs – the answer or the problem?

A negotiated claims settlement with a sign-off by both payer and provider is viewed as the Holy Grail of cost containment, but is that a mistaken view?

Historical Perspective

There was a time in the not too distant past where PPOs were viewed as the ultimate in cost containment devices because of the reliability of a stated discount agreed to by both the PPO and the provider. Some of these discounts were generally viewed as substantial because providers were willing to forgo some revenue in exchange for access to a larger patient base with some degree of exclusivity. As PPOs continued to add providers to boast the biggest network, the negotiated discounts became less and less about cost containment and more a token gesture to obtain the in-network level of benefits. PPOs began allowing providers to add stop-loss provisions that limit the discount on claims over a certain dollar threshold. Payers began stacking networks or accessing silent networks while providers were raising rates two or three times in a calendar year negating any discount provided by the PPO. Many payers now consider many PPO discounts to be the opposite of cost containment because of their meaningless and arbitrary discounts that have no relation to a usual, reasonable and customary reimbursement rate.

Current Trends

Many cost containment firms were established over the last decade to assist payers obtain discounts whether the claim was in a PPO network or out-of-network. As long as the provider and payer agreed on a reimbursement rate and a sign-off was obtained, everyone was happy. The sign-offs tended to be on larger claims that were very “visible” to parties like the plan sponsor, MGU and carrier. Most cost containment firms were charging 25% of the savings with some pushing the envelope by charging up to 35%. Even PPOs jumped into the action and were willing to negotiate claims on providers that were not in their network. This action led to the question, “if you couldn’t get them in your network originally, why are you the best option to negotiate now?” Some also noticed the philosophical quandary of the PPO making money on negotiating out-of-network claims therefore having the incentive to leave some providers out of their network.

As providers continued to raise rates, some payers rethought their positions and decided to “audit” claims thereby not paying for non-billable services, even if was at a discounted rate. Other payers started looking at UCR versus the signed-off discount their cost containment vendor achieved and realized they were still overpaying. Since the application of UCR and audits was a growing trend, two “problems” developed. The first problem was the lack of consistency by cost containment firms and some firms being unable to properly deliver UCR or audit advice to the determent of the payers. The second problem was that some providers saw this trend as a coherent challenge to their dominant ability to raise rates and demand higher reimbursements at-will from the industry. They also put pressure on the PPOs to help defend them (and the PPO contracts), thereby further alienating some PPOs from the payers.

Future Outlook (in our opinion)

Many payers and forwarding thinking cost containment firms are looking at every high dollar claim and utilizing data to determine UCR against a signed-off settlement proposal while taking into account what are eligible charges. Firms that are unwilling to adapt and continue to rely on PPO discounts or accept signed-off agreements in a vacuum will become uncompetitive. Firms that are on the forefront and are willing to fight tooth and nail over every single dollar, to the potential detriment of their reputation to clients, may have to adjust their policies as well until the industry catches up to them.

The most successful TPAs, MGUs and Carriers will develop cost containment policies that are acceptable to all parties involved, including the plan sponsors. They will find cost containment vendors that they work well with and trust, while understanding that no one vendor is going to be their best choice in every situation. Payers need to have all options presented to them with the potential consequences, both good and bad, and be willing to make decisions based on facts, not on theory. Accepting a sign-off as settlement, without putting the reimbursement in context, only continues to allow the provider to control the process.