On Saturday, the New York Times ran a story about an issue that has been (mostly) quietly simmering with little attention from the popular press: third-party payment of insurance premiums. The hook for this story is a new lawsuit brought by UnitedHealthcare against a dialysis chain:
The suit accuses American Renal Associates, a public company that operates nearly 200 dialysis clinics across the country, of fraudulently billing millions of dollars since the beginning of the year. UnitedHealthcare is trying to recoup that money.
The insurer argues that the effort was aided by the American Kidney Fund, a nonprofit patient advocacy group, which paid the patients’ premiums for private insurance. The insurer said American Renal Associates “earmarked donations” to the kidney fund to pay for the coverage, violating anti-kickback laws in the process. The lawsuit also says that the company’s patients were not told that the kidney fund would stop paying their premiums if they received a kidney transplant.
The story highlights real and noteworthy issues about the conflicts that can emerge when charitable organizations are funded by industry; dialysis companies (who provide most of AKF’s revenue) certainly stand to gain from seeing more privately insured patients instead of Medicare/Medicaid enrollees. I don’t know enough to comment on the anti-kickback allegation; for their part, the American Kidney Fund asserts that enrollee choices about plans and providers are independent from their financial assistance.
And it brings up real risk pool issues that can arise when high-cost patients are directed from Medicare—where they have eligibility as ESRD patients regardless of age—into exchange plans. CMS finalized rules in March permitting insurers to decline third-party payments (with certain exceptions, like the Ryan-White program). This creates a collective action problem: if one insurer in a market refuses third-party payments, the other insurers feel compelled to do the same, lest they be the only one accepting these payments—and all of the “bad risks.”
All of those are real issues. But I think the Times story missed the most compelling counterargument: the cost of Medicare coverage for ESRD enrollees. The Kaiser Family Foundation estimates that these individuals face annual out-of-pocket costs of $6,918 in 2010, on average (that’s $7,622 in today’s dollars). People forget that traditional Medicare doesn’t have an out-of-pocket maximum like the $6,550 cap for private insurance under the Affordable Care Act. Medicare Advantage plans have a cap, but ESRD patients generally aren’t eligible for MA plans, unless they were already enrolled prior to developing their disease. Medigap plans are another way to shield against catastrophic costs—but in many states, Medigap plans can refuse to enroll ESRD beneficiaries.
Moving these folks into private plans that help pad dialysis companies’ bottom lines might not be the ideal policy solution. But leaving some of Medicare’s most vulnerable patients exposed to these kinds of out-of-pocket burdens doesn’t seem ideal, either.