Medicare Advantage Plan on ESRD

While payers and Medicare Advantage proponents applauded elements of the Medicare Advantage rule which will increase plans’ revenues by nearly one percent, many expressed concerns about the proposed rule’s approach to chronic disease management costs for patients with End-stage renal disease (ESRD).

The proposed rule mainly focuses on prescription drug pricing. It gives Part D plans the ability to negotiate pricing, promote less expensive generic through a new specialty tier, and allow patients to compare drug prices for the one that best fits their needs and wallet.

But aside from that, this proposed rule also addresses  the population of patients with the severe stage of chronic kidney disease called end-stage renal disease in which until now has been largely excluded from Medicare Advantage coverage.

End-stage renal disease is a serious condition that requires invasive and urgent chronic disease management. At this stage, the organs have completely shut down as explained by the  American Kidney Fund (AKF). The patient will, later on, need dialysis or a kidney transplant. There is no cure for ESRD, but people who have this may live long while on dialysis or after having the transplant.

Costs of chronic disease management at this stage are high. The average cost to cover Medicare beneficiaries with ESRD in 2016 was roughly over $67,000.

Currently, patients with ESRD have only been eligible to enroll in Medicare Advantage plans under certain exemptions and if they develop ESRD while on a Medicare Advantage plan they can keep their Medicare Advantage plan. However, the proposed rule seeks to increase patients’ options for chronic disease management and implements certain payment changes for Medicare Advantage plans with regard to ESRD.

CMS states in its 2021 Medicare Advantage and Part D Advance Notice Part II Fact Sheet that effective January 1, 2021, Medicare Advantage organizations will no longer be responsible for organ acquisition costs for kidney transplants for Medicare Advantage beneficiaries. Such costs will be excluded from Medicare Advantage benchmarks and covered under the fee-for-service program instead. However, some payers and Medicare Advantage proponents have expressed concerns that the payment to Medicare Advantage plans will not effectively cover the costs of treatment.

However, the President and CEO of America’s Health Insurance Plans (AHIP), issued a reserved statement on the matter.

“We are concerned that some proposals could undermine the critical funding that protects millions of Americans’ access to the benefits and care they need, including individuals with kidney disease who are newly eligible to enroll in Medicare Advantage,” Eyles explained. “We will continue to review the advance rate notice and the proposed rule, and we look forward to sharing important feedback with CMS during the comment period.”

 Also, the President and Chief Executive Officer of BM, Allyson Shwartz, said in a press release, “It is unclear whether the proposed regulation offers the changes needed to address issues previously identified by BMA in the treatment of MA coverage for End-Stage Renal Disease (ESRD) patients who are eligible for enrollment beginning in 2021,”.

The study she is referring to is conducted by Avalere on behalf of BMA in December 2019. The study looked at the current Medicare Advantage reimbursement rate for the small population of Medicare Advantage beneficiaries with ESRD. The researchers found that payments to Medicare Advantage plan for ESRD was based on a methodology that is distinct from the reimbursement model for the rest of the plans’ enrollees. The model draws on state-level data, as opposed to county-level data.

As a result, the current ESRD payment model fails to account for state-wide treatment cost variations with serious implications for this particular disease. Because of this, Medicare Advantage plans experience significant ESRD reimbursement rate fluctuations year over year. The study used 2018 fee-for-service claims data on Medicare beneficiaries with ESRD by metropolitan statistical area and set the data against 2018 state-level ESRD Medicare Advantage benchmarks.

Medicare spending on beneficiaries with ESRD proved higher then the Medicare Advantage benchmarks such that, particularly in urban regions with high Medicare Advantage penetration, Medicare Advantage plans were underpaid.

Neither BMA nor AHIP executives expressed confidence that the new proposal will resolve these payment model flaws, but both organizations are reviewing the rule to provide feedback.

Across the industry, there has been a major push to provide more options for patients with chronic kidney disease. There is even pressure coming from outside of the industry, with an executive order related to the issue in July 2019.

The condition has stirred up legal strife within the healthcare industry as some claim that certain organizations take advantage of patients’ reliance on dialysis.

BMA and AHIP have advocated for the role that Medicare Advantage can play in resolving some of the tensions for patients.

“ESRD patients have complex and costly needs and Medicare Advantage is well-suited to provide high-value care to this population, because of the coverage and care it offers to chronically ill beneficiaries,” the BMA brief explained. 

“However, as these findings suggest, Medicare Advantage plans in areas with the most ESRD patients would likely be underpaid in the current payment system. Without adequate payment, Medicare Advantage plans may be forced to raise consumer costs, reduce supplemental benefits, or limit service areas—not just for ESRD patients, but for all enrollees.”