The reimbursement environment for renal dialysis services is unlike any other in American healthcare for two reasons. Firstly, End-Stage Renal Disease (“ESRD”) is the only Medical diagnosis that entitles a patient to Medicare — regardless of their age. Secondly, over the course of the past ten years, consolidation amongst dialysis providers has resulted in two large organizations treating approximately 72% of all U.S. dialysis patients. The confluence has created a cost environment that is exceptionally challenging for health Plans.

Because Medicare becomes the primary payer for ESRD patients after 33 months of treatment, approximately 75% of a dialysis facility’s census is comprised of Medicare patients. The provider community has stated that the Medicare payment rates are not sufficient to cover their average cost of providing a dialysis treatment. When you lose money on 75% of your volume, you have to make extraordinary profits on the remaining minority. Our clients are among this group. On average, our clients are charged 2550% of the Medicare allowable amount for the same services.

Small employer group health Plans that self-fund for benefits are particularly hard hit in this environment. Most have one or a few ESRD members, and as a result lack any bargaining leverage with these large provider organizations to manage ESRD costs. However, that one or a few cases can cripple the Plan — and even the larger operations of the employer — financially. We have encountered small employers that have had to face the difficult decision of whether to eliminate their benefits entirely or lay off a handful of employees to save costs after experiencing an ESRD case.