Dialysis providers seek to block CMS final rule on ‘steering’ dialysis patients

On Jan. 6, three dialysis providers and a patient organization filed a lawsuit seeking an emergency temporary restraining order against the Centers for Medicare & Medicaid Services' Interim Final Rule (IFR).

The plaintiffs of the suit, DaVita Inc., Fresenius Medical Care North America, U.S. Renal Care Inc., and Dialysis Patient Citizens allege that the CMS rule was issued in violation of federal law and threatens to cause significant and irreparable harm to dialysis patients.

“In a transparent effort to ensure its regulation takes effect before a new administration takes office, the Department of Health and Human Services on December 14, 2016, announced a sea-changing rule without any notice or comment—making it effective on an expedited basis on January 13, 2017—upending twenty years of HHS guidance governing the way in which End Stage Renal Disease patients obtain health insurance coverage necessary to obtain life-sustaining care,” read a filing from the suit.

Related: The U.S. Attorney’s Office in Boston has subpoenaed DaVita Inc., Fresenius Medical Care, and the American Kidney Fund (AKF) related to the Health Insurance Premium Program operated by the AKF. Read more

The final rule created new requirements for dialysis providers that make payments of premiums for individual market health plans directly, or through another entity. Starting Jan. 13, dialysis facilities will be required to make patients aware of potential coverage options and educate them about the benefits of each to improve transparency for consumers.

The lawsuit, a petition circulated by Dialysis Patients Citizens, and statements from the American Kidney Fund focus on the requirement that facilities must ensure that insurance plan issuers are informed of and have agreed to accept the third party payments.

“The Department’s about-face will dramatically disrupt those patients’ ability too obtain private insurance, interfering with and potentially compromising outright their access to life-sustaining medical treatment while remarkably imposing greater healthcare costs on many patients and their families,” according to he suit.

“At the same time—with no offsetting benefits to patients—the Rule will impose significant and unrecoverable costs on dialysis providers, and threaten the economic viability of many dialysis facilities, leading to facility closures that will damage providers and patients alike.”

American Kidney Fund CEO LaVarne A. Burton issued a statement of support for the lawsuit.

“We are already seeing insurers emboldened by the IFR and moving to refuse third-party premium assistance for other coverage plans such as COBRA. We expect that insurers will continue to invoke the IFR as providing authority to discriminate against ESRD patients seeking assistance for Medigap, COBRA and [Employer Group Health Plans].”

Background on the final rule

The rule was the culmination of a CMS request for information (RFI) in August about whether health care providers were counseling patients to bypass Medicaid and Medicare coverage and steer them to Affordable Care Act marketplace plans that are more lucrative to providers.

The agency said it had received many comments from social workers and other nephrology professionals that describe a variety of ways that dialysis facilities have attempted to influence patients’ coverage decisions or failed to disclose information that would have been in a patient’s best interest.

The agency said in the final rule that often, the marketplace plans are not in a dialysis patient’s best interest because they can cause interference with transplant readiness, exposure to additional costs, and possible disruption of coverage.

CMS does not require that insurers accept premium payments made by third parties except in certain circumstances, and many insurers have provisions in their contracts that voids coverage if payment is made by anyone other than the enrollee. The agency said many commenters told CMS that providers and third parties are attempting to disguise their payments to avoid detection by insurance companies.

“Under the rule, insurers can choose to reject financial assistance to patients that helps to offset the cost of premiums, forcing patients to pay the premiums entirely out of their own pocket or drop their coverage altogether, Dialysis Patient Citizens wrote in a response to the rule. The rule singles out ESRD patients, who are eligible for Medicare at any age but who can benefit from services offered in the individual insurance market that Medicare does not cover.”

CMS also estimated that the new rule will cost applicable dialysis facilities nearly $700 million in administrative costs to comply with the rule between 2017 and 2026.

“The regulation, should it become effective, and the continuing efforts by insurers – through their discussions with CMS and otherwise – to reject premium assistance for ESRD patients, may result in a material adverse effect on our business,” Fresenius Medical Care said in a press release. “Between 700 and 2,000 FMCNA ESRD patients who currently use premium assistance in connection with individual market plans on and off the exchanges may be impacted by the regulation and/or continuing insurer efforts to reject premium assistance.”