By Linda Chase, BA, RNC, CCM and Medical Risk Consultant for Symetra Life Insurance Co.
In 2006, Symetra Life Insurance Company reimbursed $15.2 million above the individual stop loss deductibles for claims related to chronic renal disease — this represents approximately 8 percent of all stop loss paid claims. Over the past few years we have seen average monthly charges for dialysis and related medications and supplies increase from $10,000 to $15,000 per month to as high as $56,000 per month.
With the possibility of the government extending Medicare secondary payer status from 30 to 60 months, now is the time to try and mitigate the ever increasing costs related to End Stage Renal Disease (ESRD), the final stage of chronic renal disease when dialysis or a transplant is needed to stay alive. Here we explore some of the current best available cost containment options — along with potential drawbacks.
Preferred Provider Discounts
The most widely used cost containment option is the use of Preferred Provider Organizations (PPO) and related provider discounts. By contracting through a preferred provider network, tertiary network, dialysis cost containment vendor, or individual negotiation directly with a dialysis center, dialysis claims are discounted by a certain percentage and occasionally a case rate is established. While Symetra has seen discounts as high as 90 percent, the average discount is approximately 27 percent. Unfortunately, over time, these PPO discounts have eroded as the fees charged by the dialysis centers continue to increase. For example, a 25 percent discount was appealing when dialysis fees averaged $15,000 month (just two or three years ago). Now, with fees running $32,000 per month, the prevailing discount is no longer so attractive.
Discounts of 40 percent off charges in excess of $50,000 per month still mean the plan is paying a monthly total of more than $30,000. Even at PPO discounted rates, these fees are exorbitant. In fact, Medicare, with an approximate allowable of $21,000 for hemodialysis and $7,800 for Epogen (an anti-anemia drug), typically reimburses less per year than private insurers do per month.
Combination Approach—Preferred Provider Discounts with Epogen Carve Out
Another, often more successful approach, is a combination of utilizing a PPO discount for the actual dialysis charges and working through your case management vendor. The case manager can assist the patient in obtaining Epogen through a mail order or preferred vendor pharmacy and have it administered in their home. This approach, often referred to as “Epogen carve out,” greatly impacts the cost-effectiveness of treatment.
For example, a 55-year-old female with ESRD was recently incurring $25,000 per month for dialysis with $14,000 going toward Epogen. The PPO discount was 25 percent. We referred the patient to a dialysis cost containment vendor and case manager, who worked together to obtain Epogen from a discount pharmacy and have it adminstered with the help of a home healthcare nurse at a monthly cost of $1,600. A “win-win” for all. Naturally, some patients may be unwilling or unable to perform injections at home, so it is important to remain flexible.
Application of Usual and Customary Plan Language/Exclusions to Dialysis Charges
A third and increasingly popular approach is the application of Usual and Customary (U&C) plan language to dialysis fees and limit benefits to U&C. There are, however, several downsides associated with this approach.
- It’s difficult to determine usual and customary charges for dialysis as they are arbitrarily based on what other area vendors are charging for the same service.
- Since dialysis vendors are often the sole service provider in many areas, they are able to set the customary rate.
- Patients who have not elected Medicare Part A and Part B may be balanced billed — causing extreme hardship for the patient and family. According to Medicare ruling, a provider can not balance bill a patient who has Medicare Part A and B.
- If a plan administrator chooses to utilize this approach, it is only recommended for patients who have actively enrolled in Medicare Part A and B. This should be verified with the claimant prior to applying U&C.
Incorporating Dialysis Verbiage Directly into Plan Language
Finally, incorporating plan language limiting dialysis charges as part of the health benefits plan document is another approach. One option is to limit dialysis charges to Medicare Composite allowable rates, which helps eliminate the arbitrary and often difficult task of determining U&C for dialysis charges. Providing dialysis verbiage under the covered expenses sections of the plan as well as the exclusion and definition area makes the limitations clear for both the participant and provider.
Of course, when applying any form of U&C to dialysis charges, the patient may be at risk for being balanced billed by the dialysis center if he or she has not elected Medicare Part A and B. In order to avoid being balanced billed, participants should be encouraged by plan administrators or their employers to enroll in Medicare Part A and Part B of the End Stage Renal Disease Programs.
Symetra's Managed Care team has developed a task force designed to research and explore all available dialysis cost containment options to help mitigate ESRD claims. We are in the process of researching and reviewing potential plan language with our ERISA attorneys. Please stay tuned for more information.
If you have any questions or would like assistance with containing your dialysis claims, please contact one of our medical risk consultant’s (MRCs)  — a team of registered nurse professionals. Our goal is to work together and deliver the best possible outcome for the management of catastrophic illnesses.
Linda Chase, BA, RNC, CCM, is a medical risk consultant (MRC) for Symetra Life Insurance Company. She has more than 25 years combined experience in the medical field and health insurance industry and holds degrees in Nursing and Business Administration. As an MRC at Symetra, Linda oversees the management of ongoing catastrophic medical circumstances, and works with underwriters in the risk assessment process for new and renewal business. She acts as a liaison between TPAs and our partner vendors’ managed-care programs.
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