They said it wouldn’t happen. After a Texas judge issued an injunction in 2016 preventing CMS from moving forward with regulation of third-party payments to ESRD providers, DVA management appears to have treated the matter as settled. However, that attitude ignores a central part of the judge’s decision: CMS’s pledge to issue regulations that address the concerns of the court.
Yesterday, CMS finally sent to the White House for review a rule that would regulate third-party payments for commercial premium assistance and other support of dialysis services. The proposed rule is being considered at the same time that Health and Human Services Office of the Inspector General has also sent to the White House a rule that would revise safe harbor regulations for beneficiary inducements and encourage coordinated care.
Third-party premium support by the American Kidney Fund to the major dialysis providers like DVA and FMS persists under an advisory opinion issued in 1997 that concluded those payments were not remuneration paid to the beneficiary and thus not an inducement.
Both rules are being issued after a landmark speech by Sec. Alex Azar in March before the National Kidney Foundation where he called for better coordinated and preventive care for people at risk or suffering from kidney disease
What CMS and the OIG eventually choose to do in final rulemaking will certainly have an impact. How much will depend on how and when a change is implemented. The consolidation of the industry leaves the government in a difficult position. Large-scale disruption of reimbursement could result in center closures which may be particularly acute in rural and ex-urban areas.
For that reason, we expect changes from the OIG and CMS will not prohibit the practice outright but require better disclosure, eliminate AKF bias in favor of one dialysis provider over another, as pointed out in the recent Florida Blue lawsuit, and other tweaks. The implications are still significant. An AKF program that is less accretive to DVA and FMS can have a meaningful impact, according to the company. They have reported that 10% of treatments that are commercially reimbursed represent 110-115% of profit.
The changes could also offer commercial payers a handy excuse to prohibit or significantly limit third-party premium support for dialysis services as ANTM has done in California.
The rule is being reviewed by OMB and is scheduled to be released in July.
In short, the commercial payment music is slowing to a stop. With the sale of DMG mostly baked in, it is hard to see how this ends well.
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Emily Evans
Managing Director – Health Policy
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