Shifting Dialysis Away From Employer-Based Coverage Cost Medicare $3 Billion, Study Finds

Treatment for patients who begin dialysis while on the health plan of their employer but then switch to Medicare before the end of the coordination period—so-called premature switches— cost Medicare an additional $3 billion over 11 years, according to a study published Thursday.

The study, published in JAMA Network Open, did not explore why patients switched from the employer-based group health plan (EGHP) to Medicare. Although patients with end-stage renal disease (ESRD) may begin dialysis while employed, unemployment is common. One 2018 study found that employment among adults starting dialysis ranged from 23% to 24%.

Those with ESRD are eligible for Medicare, but for the first 30 months, Medicare is considered a secondary payer if the patient is part of an EGHP. A switch from the EGHP to Medicare is considered premature if it happens before the 30-month period ends.

This study probed the frequency of premature switches, the characteristics of patients switching early, and the impact on Medicare spending.

The US Renal Data System, a CMS registry, was used to identify all adults (62 years or younger) who had coverage from their employer when their dialysis for ESRD began between January 1, 2007, and December 31, 2014. Patients were observed through the coordination period or death, with follow-up through October 2017. The extra months of Medicare use were totaled as a result of premature switches.

As a proxy for illness severity, patients were stratified into 4 hospitalization probability quartiles. The multivariable logistic regression analysis included adults who started dialysis with fee-for-service Medicare as the primary payer, looking at whether a patient was hospitalized in a 12-month period.

The study included 113,693 adults (mean [SD] age, 50 [10] years; 69,357 [61%] men) who began dialysis under employer coverage and were followed for a mean of 789 (309) days (maximum of 1007 days). Most patients (63%) were White, 31% were Black, 13% were Hispanic, and 2% were Asian, Native Americans, or other patients in the database.

Patients who switched from employer coverage to Medicare before the coordination period ended (37,696, or 33%) contributed to 711,528 additional months of Medicare (mean [SD], 19 [12] additional months per patient who switched early).

Patients with a higher hospitalization risk within 12 months were more likely to switch from their EGHP to Medicare before the end of the coordination period. In the highest quartile of illness severity, patients were 71% more likely to switch (HR, 1.71; 95% CI, 1.65-1.76); in the third quartile, 49% (HR, 1.49; 95% CI, 1.45-1.53).

For adjusted measurements, patients who left their EGHP cost Medicare $81,000 (95% CI, $79,971-$82,029) more than patients who switched at the end of the coordination period and $81,667 (95% CI, $80,611-$82,722) more than patients who switched late or never.

Altogether, the premature switches cost Medicare an additional $3.05 billion (95% CI, $3.01-$3.09 billion) from 2017 to 2017.

While the author, Eugene Lin, MD,MS, Division of Nephrology, Department of Medicine, University of Southern California, noted that some switches are unavoidable as patients stop working and lose coverage, there may be little incentive under the current system for change.

When a patient shifts from an employer plan to Medicare, their $80,000 in costs goes with them, and that may discourage EGHPs from spending on interventions upstream to prevent ESKD, he noted.

“More measured policies that share the risk of dialysis between EGHPs and Medicare, such as having Medicare pay EGHPs a capitated rate for premature switchers (similar in principle to Medicare Advantage), could incentivize EGHP investments aimed at preventing ESKD without increasing patients’ out-of-pocket spending,” he wrote.

If some capitation were put in place, the EGHPs would have some financial risk as they manage these complex patients. "Since EGHPs would need to manage these complex patients, they presumably would still have an incentive to prevent the onset of ESKD," Lin explained in an email to The American Journal of Managed Care^®.

Reference

Lin E. The cost of transferring dialysis care from the employer-based market to Medicare. JAMA Netw Open. Published online March 18, 2021. doi:10.1001/jamanetworkopen.2021.2113