By: Lisa Greenblott, CEO and President
2013 was a very interesting year indeed. We all witnessed the pounding waves of healthcare reform change as most of the regulations became clearer for the self-insured marketplace. Unfortunately, some of that clarity was lost in the noise from self-serving marketers preying on the market without fully understanding the rules. There are some services being provided today which purport to educate the market, and the end-user, on faddish, catastrophic reimbursement strategies that appear innovative but aren’t based on an informed, prudent understanding of the legal rules and risks, or the specific issues presented in some specialty markets. Unfortunately, they only create confusion about the value and need for more permanent, successful, long-term cost containment strategies, and put their clients at avoidable legal risk.
There is much opportunity for a self-insured employer group to be creative these days but it does take some thought. It requires appropriate research, the right kind of experts and resources, an understanding of individual plan needs, and a solid understanding of the most critical short and long-term financial risk factors associated with paying your own medical claims. It also requires control over plan design and claims data, which is not available to plans under traditional insurance. But most importantly, it doesn’t come without being involved and engaged in the implementation and renewal process and requires a truly proactive mindset and strategies that support this philosophy and way of thinking.
This all sounds very familiar, logical and pretty straight forward doesn’t it? Then why is it that many of us still don’t put this into practice?
Unfortunately, it can be a struggle to get the necessary stakeholders involved, not only the right experts but most importantly the employer group and the stop loss carrier. All these parties are needed in order to make the best informed decisions about containing costs. The fallout of this lack of collaboration is that too often reimbursement strategies and decisions are made in isolation, and more effective, less risky strategies or services are missed out on due to the pressures of putting “something” in place. This certainly continues to be true when it comes to one of the most important catastrophic claims issues today – dialysis cost containment.
Let’s ponder dialysis cost containment for a minute. Does it seem logical that one of the most expensive healthcare services delivered in the United States today, which has its own peculiar set of laws and regulations in addition to all the usual rules, and has one of the highest rates of inflation in the self-insured industry, would be simple to administer on your own, inexpensively and with minimal oversight, review or assistance? This just doesn’t seem sensible.
This is a high-risk specialty market, in which cost containment strategies need to be well-informed and carefully crafted. All cost containment services in this and any other market sector want market share, and some will offer appealingly simple-looking, appealingly cheap options, some of which might even work in other market sectors but don’t in dialysis. Some reimbursement strategies are just too short-sighted and short-term, and lower short-term costs may come with serious legal risks – which the plan will have to cover while the services provider may disclaim any responsibility or obligation to assist, or may even be nowhere to be found. The services provider has capitalized on its own short-term opportunities, but the real question is, at what cost to the plans? The bitterness of poor quality and service, the obligation to revisit claims and pay them at much higher rates (even at their face value), and for the unlucky the pain and cost of litigation, remains long after the sweetness of low price is forgotten! Why would you look and rely on the least costly solution or a service for something that is so critical to the health plan’s bottom line?
Some solutions out there actually propose strategies which violate the Medicare Secondary Payor Act, a law which applies very specifically and in complicated ways to self-insured plan dialysis reimbursement, and whose violation can lead to penalties including double damages awards to providers and plan disqualification. This appears to be continuing even despite federal agency guidance which clearly identifies these strategies as violations. This is very much a situation in which a simple-seeming strategy which looks too good to be true, really is.
Another short-term, cheap and faddish solutions is making benefit reimbursement determinations based on a Medicare allowable. Providers understandably hate this, and have raised it in at least two major class action lawsuits. Medicare-derivative reimbursement was raised as one of the “improper ONS [Out of Network Services] Benefit Reductions” challenged in the In re WellPoint, Inc. Out-of-Network “UCR” Rates Litigation class action in California; that challenge was dismissed on a technicality in 2012 (the plaintiffs couldn’t prove they had exhausted plan remedies) and the court didn’t reach the merits of the challenge. This issue was also raised and is still pending in a New Jersey class action, Franco v. Cigna, where the plaintiffs have asked the court to enjoin the use of Medicare rates.
It would not be surprising to find this issue being raised in other litigation and in plan appeals, and in fact we have seen it raised in quite a few plan appeals, and there are in fact good arguments that Medicare derivative reimbursement is not legally appropriate. CMS’s ESRD PPS (Prospective Payment System), which is used to determine Medicare reimbursements, takes multiple factors into consideration which are not published, to determine proper and appropriate reimbursement. A court might well consider using this kind of approach without analyzing or understanding the data sources would be arbitrary and therefore legally incorrect.
Since the provider community has already identified Medicare derivative reimbursement as a target issue it is only prudent to assume it will be raised and litigated when a motivated provider thinks they have a good case. This is exactly what happened with the so-called “Ingenix” litigation, where the provider community’s main challenge to use of the Ingenix database to determine reimbursement was in a few class actions, while individual providers – including dialysis providers – pursued the same issue in plan appeals and litigation against plans. Since this strategy proved effective against use of Ingenix, It would not be surprising if the provider community tried it with other reimbursement methodologies they don’t like and think are vulnerable.
There are obviously a number of reasons why most generalists within the cost containment world don’t have a solid solution to combat the high cost of dialysis. In addition to the legal complications, managing chronic kidney disease and the cost associated with treatment for late stages of the disease is not simple, and the dialysis sector itself is highly concentrated and dysfunctional. These real health complexities and market failures fuel the cost of dialysis services, and has led some of us to recognize that the existing paradigm for dialysis reimbursement doesn’t work anymore.
One way to try to deal with this breakdown of the existing paradigm is to try narrow strategies of direct provider contracting, and just trying to get a halfway decent rate. Unfortunately, a direct contracting approach to dialysis cost containment may be appropriate in isolated instances, but won’t work as a blanket strategy in this dysfunctional market, given the dominance of only two providers, which control not only outpatient services but also many drugs and supplies. While we know there is a lot of provider concentration in some markets, in the dialysis sector this affects markets nationwide, which quite frankly is unlike any other area in healthcare. Therefore, restricting or directing care to specific dialysis providers only increases their market domination, which is what lets them raise charges at will in the first place. Again, a short-term strategy which doesn’t take the realities of the sector into account only makes the problem worse in the longer term.
A better strategy is to recognize that chronic kidney disease can often be managed and dialysis delayed or even avoided. This strategy works better than simply contracting for rates because the fact is that once a member is on permanent dialysis they usually suffer many other costly medical conditions and events, especially due to their co-morbid conditions. If any health plan is experiencing a high incidence of dialysis, that population should be thoroughly analyzed and managed proactive instead of only deploying reactive claims cost containment solutions. We must look at correcting the problem by offering those members that suffer from this debilitating disease, targeted renal disease interventions that will delay or even place the disease in remission. Carve-outs and reactive reimbursement strategies are important but are really only half the equation to what continues to be a very complex and unique problem within healthcare.
Faddish reimbursement strategies like Medicare plus or Medicare derivatives may appear innovative, but they don’t necessarily prove to be smart solutions in the long run and only exacerbate the litigious provider environment. Other reactive short-term solutions like specialty networks or even direct contracting may give some short-term relief and some certainty, but unfortunately cannot address the real issues at all.
Overall, addressing the problem of chronic kidney disease and dialysis costs after claims become too costly for the health plan and care becomes too debilitating for the member doesn’t effectively address the linked problems of complex disease, dysfunctional markets, inflationary costs and complicated laws and regulations. There are proven solutions and strategies in the marketplace that successfully support reactive approaches, but the future strategies that are needed for our industry require us being involved, working collaboratively with stakeholders and providing proactive solutions and approaches to mitigate catastrophic claims associated with the high cost of renal disease. This is just smart business.