Congress Considers Cost Shifting Measure for Dialysis Services

October 31, 2007

The House of Representatives passed the Children’s Health Insurance Legislation in August 2007 with a provision that extends the time during which private insurance will be the primary payer for dialysis services provided to people who suffer from end stage renal disease.

Under present law, Medicare becomes the primary payer after a patient has been on dialysis for a period of thirty months. The August legislation would have extended the time period during which Medicare is the secondary payer by an additional twelve months to forty-two months.  A proposal to extend this time period to forty-eight months could be included in an end of the year Senate Finance Committee bill.

Congressional estimates are that a twelve month extension will result in savings to the Medicare program of $1.2 billion over a ten year period from the date of enactment; an eighteen month extension will generate significant additional savings.  Because private payers pay for dialysis services at a higher rate than Medicare, lobbying groups that oppose the legislation estimate that the additional cost to private employers of a twelve month extension will be approximately $2 billion over the ten year post-enactment period. Presently, private employers pay $180,000 to provide dialysis services per year, as compared to $67,000 a year paid by Medicare to provide the same services. 

As a result, several groups of large employers have banded together in an effort to defeat this proposed legislation. The final fate of this potential extension is worth watching; if enacted, these rule changes will likely prompt health insurers to increase the already expensive health insurance premiums for employers.  Lobbying within Congress will be intense as dialysis providers (who favor the extension) battle with private employers (who oppose the legislation).