Growing Pressure on Renal Patients to Pay Out-of-Pocket

By Rick Collins

At a conference I attended recently, a social worker lamented how much grief is placed on dialysis patients due to the large bills they receive from renal providers. She openly wondered why providers feel they need to bill patients since they already are paid “a lot” by Medicare and commercial insurance companies.

When I first entered the renal field 22 years ago, it was common for nephrologists and dialysis facilities to make only token efforts to collect from patients. The nephrology practices I encountered made little or no attempt to collect the deductible, or coinsurances assigned to patients by Medicare or commercial payers. They were willing to forgo patient payments because they did not want patients with such a serious chronic illness to worry about paying exorbitant amounts out of their own pockets for treatment. As long as nephrologists were making enough from government and commercial payers to pay their bills, they generally did not pursue payments from patients.

Dialysis units normally made some effort to collect patient deductibles and coinsurances from Medicare patients in order to satisfy the Medicare Bad Debt regulations at that time. Some commercial payer contracts also required that the facility bill their patients for patient liabilities. However, if a patient expressed concern about having to pay a large deductible or coinsurance, dialysis units were quick to tell the patient not to worry about paying those amounts. The focus was on preventing and relieving stress or anxiety caused by patients receiving monthly bills for large amounts.

Dialysis units worked hard to help Medicare patients find secondary insurance to cover the annual deductible and monthly coinsurance. If the patient could not obtain a secondary policy, dialysis providers tried to recover some of the unpaid coinsurance by claiming bad debt on their Medicare cost reports. While that helped some units offset part of those unpaid Medicare coinsurances, many dialysis units received little to nothing. Nevertheless, dialysis units were willing to forgo those payments rather than risk upsetting a dialysis patient to the point that they would rather withdraw from treatment and die because they could not afford to pay. This was also true for the vast majority of nephrologists I met.

So what happened that causes today’s providers to more aggressively pursue payments from patients? While there is no simple answer, lower reimbursement, government regulations, and public ownership of renal companies appear to be some of the key factors.

Lower reimbursement. For all but the largest dialysis chains, Medicare’s allowed amount essentially pays for what it costs to provide treatment. However, Medicare only pays 80% of its Allowed Amount and the patient is responsible for the difference. Most patients are able to obtain secondary coverage to pay for the 20% coinsurance, but those unable to obtain secondary coverage wind up with large monthly bills. For example, if the Allowed Amount is $230 for a hemodialysis treatment, Medicare pays $184 and the patient is assessed a coinsurance of $46. At 13 treatments per month, the patient receives a bill from the dialysis unit for $598 which over the course of a year totals $7176. If a facility has five Medicare patients without secondary coverage, that equals $35,880; with 10 patients it is $71,760.

In the past, unpaid Medicare coinsurances were offset somewhat by the reimbursement provided by commercial payers that normally paid more than the Medicare Allowed Amount. Since the inception of the Affordable Care Act, reimbursement from commercial payers has plummeted. This has placed great pressure on dialysis units to lessen the blow of these reductions by trying to collect at least some money from patients.

In addition to paying less reimbursement to providers, commercial payers have dramatically increased patient deductibles and coinsurance. Large deductibles result in renal providers not receiving commercial payments for some patients until months have passed.  Providers are instructed to seek payment from their patients for annual deductibles or coinsurance amounts in the thousands.

Medicaid adds to providers’ reimbursement concerns. In some states, the amount allowed for services are less, sometimes much less, than the cost of providing treatment. In addition, many states offer Medicaid policies with monthly deductible or “spend-down” clauses. Instead of the full Medicaid allowed amount being paid for healthcare services, Medicaid assigns an amount that must be exceeded before Medicaid will pay. For example, if a patient is assigned a spend-down of $1,000 per month while their monthly Medicare coinsurance for dialysis is $600, there will be a number of months in which the dialysis provider will be paid little to nothing. The state tells the dialysis provider to look to the patient for unpaid balances. Obtaining large payments from patients whose income is low enough to qualify for a Medicaid policy is difficult at best.

Commercial payers also offer secondary insurance policies that pay less than the full amount of the Medicare co-insurance. Patients are often unaware of this until they receive a bill for the unpaid portion of the co-insurance.

In the January-February issue of Nephrology Times, we will look at the impact that changes in government regulations and public ownership have had on increasing pressure on renal providers to collect from patients.

Rick Collins is the director of business development for Sceptre Management Solutions, LLC., a company specializing in billing for outpatient ESRD facilities, nephrology practices, and vascular access. Your questions and comments are welcome and he can be reached at rcollins@sceptremanagement.com or 801.775.8010.