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Private Medicare Advantage plans open themselves to fee gouging by dialysis centers

UnitedHealthcare Sues Dialysis Chain Over Billing

By Reed Abelson and Katie Thomas
The New York Times, July 1, 2016

Private health insurers can pay more than $4,000 for each dialysis treatment. Government health plans like Medicaid pay around $200.

That gaping price difference was the motivation for a scheme, orchestrated by a for-profit dialysis chain, that illegally pushed poor people in Florida and Ohio out of inexpensive government programs and into expensive private plans sold by UnitedHealthcare, according to a lawsuit the giant insurer filed in federal court on Friday. UnitedHealthcare says the arrangement needlessly exposed the patients to medical bills.

The suit accuses American Renal Associates, a public company that operates nearly 200 dialysis clinics across the country, of fraudulently billing millions of dollars since the beginning of the year. UnitedHealthcare is trying to recoup that money.

The insurer argues that the effort was aided by the American Kidney Fund, a nonprofit patient advocacy group, which paid the patients’ premiums for private insurance. The insurer said American Renal Associates “earmarked donations” to the kidney fund to pay for the coverage, violating anti-kickback laws in the process.

The kidney fund, which is not listed as a defendant in the lawsuit, is overwhelmingly financed by dialysis companies.

People who need dialysis and have end-stage renal disease are eligible for Medicare coverage, even if they are under 65. If they are poor, they may also qualify for Medicaid.

At the same time, UnitedHealthcare has a keen financial interest in keeping very ill patients, like those who need dialysis, out of its private plans. Under the federal health care law, insurers must cover everyone, no matter how sick they are.

According to the lawsuit, American Renal Associates devised a clever plot aimed at converting patients over to private plans.

The company identified poor patients in rural areas of Florida who did not have a nearby dialysis clinic in UnitedHealthcare’s network, the suit says. The centers then persuaded these patients to switch to UnitedHealthcare plans, using the American Kidney Fund’s program to pay their premiums.

Finally, the centers billed UnitedHealthcare out-of-network prices of about $4,000 per dialysis treatment, compared with just $200 under Florida’s Medicaid program, the suit said.

Because the UnitedHealthcare plans required greater out-of-pocket contributions than Medicaid’s coverage, the centers waived any part of the dialysis bill that was not paid by the insurer.

http://www.nytimes.com/2016/07/02/business/unitedhealthcare-sues-dialysis-chain-over-billing.html

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Comment:

By Don McCanne, M.D.

In this scheme a dialysis chain was able to increase Medicare payments twenty fold for dialysis treatments, thus cheating the taxpayers who fund Medicare. The scheme was made possible because Congress continues to push us toward privatization of Medicare by overpaying the private Medicare Advantage plans designed to displace our traditional Medicare program.

Its important to understand how this this scheme works because it epitomizes the irrationality of insisting the we use private insurers in our health care financing instead of a single payer Medicare program. Whereas the traditional Medicare program covers all physicians and hospitals, except the few who opt out of the program, the private insurers, such as those providing Medicare Advantage plans, use limited provider networks in order to contract for more favorable rates.

In this case, UnitedHealthcare was not able to contract with dialysis providers in some regions thus they were forced to pay out-of-network prices instead of what would have been contracted prices. American Renal Associates thus jumped at the opportunity to transfer their traditional Medicare patients, for whom they were receiving $200 a treatment, into the private UnitedHealthcare plan, wherein they could demand an out-of-network payment of $4000.

If instead we had a Medicare for all program, payments might have been slightly more than $200 if the dialysis centers were at risk of closing down due to inadequate revenues, but clearly they would not have approached anywhere near $4000. One of the most important features of a single payer national health program is that payments are fair, both for the providers and for the taxpayers funding the program.

The villains here? The dialysis chain gaming the system, the private insurers using schemes such as limited networks to leverage the system in their favor, and our legislators who are forcing on us their ideology favoring market solutions for health care financing when the government is best suited to ensure an efficient and equitable system of health care financing for all. Perhaps it is us who carry the greatest blame by not insisting that our elected representatives fix this system. Both major political parties have excluded single payer from their platforms, and we do nothing about it, except whine.