Con: ESRD Medicare—a Life Saver for Many; A Problem for Some
When Medicare coverage for End-Stage Renal Disease (ESRD) became a reality in 1973, it was indeed life-saving. Initially Medicare always paid primary. While the original intent behind Medicare paying primary for ESRD had merit in the 1970’s, Congress became aware in the 1980s that it was important to shift costs from Medicare to the appropriate private sources of payment when available. Congress amended the Social Security Act under OBRA 1981 to include the Medicare Secondary Payer (MSP) rule, which effectively enacted protections for the Medicare Trust Funds by ensuring that Medicare does not pay for items and services that other plans should be primarily responsible for paying. This allowed a shift in ESRD costs to the private sector while protecting ESRD patients from possible barriers to employment due to the high cost of dialysis and transplant.
The coordination of benefits (COB) period related to Medicare and ESRD was extended incrementally from 12 months in 1981 to 30 months in 1997 and over the years it came to apply not only to those with Medicare due to ESRD who had group health plans, but those with ESRD who also had Medicare due to age or disability. Medicare remains the primary payer when a beneficiary has an individual plan, a retiree plan that was already paying secondary to Medicare before ESRD, and TRICARE.
The MSP rule applies to certain situations when Medicare should not be the beneficiary’s primary health insurance coverage. Medicare statute and regulations require that all entities bill Medicare for items or services for Medicare beneficiaries to determine whether Medicare is the primary payer for those items or services. They must ask Medicare beneficiaries to complete the Medicare Secondary Payer Questionnaire.1 Medicare pays secondary under MSP rules for:
Those 65 or older as long as they are covered by a group health plan through their own or their spouse’s current employment with an employer that has 20 or more employees
Those with disabilities as long as they are covered by a group health plan through their own or a spouse’s current employment with an employer that has 100 or more employees
Those with no-fault or liability coverage for injuries incurred in a car accident
Those who receive a legal settlement or award for medical malpractice claim
Those who receive workers’ compensation benefits for a workplace accident2
MSP revisions delineated a timeline for “responsibility” of reimbursement. Changes that may have impacted the ESRD COB over the years are:
Pre-emptive transplant is now strongly advocated. Initially with Medicare coverage for ESRD, pre-emptive transplant was rarely an option. For most patients transplanted before dialysis, Medicare becomes effective the first month of transplant and ends 36 months after transplant.
Many pre-emptive transplant patients have an EGHP either through their own or a spouse’s employment (on or off the Marketplace). That EGHP covers the transplant evaluation process and often, that of a potential donor. If the patient has Medicare as a secondary payer, it would likely pay nothing if the EGHP pays more than 100% of Medicare’s allowed charge.
People with pre-emptive transplants may have individual plans that are not subject to the ESRD COB. Those plans may not pay all of Medicare’s out-of-pocket costs as a secondary payer.
Medicare does not coordinate with individual Marketplace plans. Patients with these plans could have high out-of-pocket costs if they don’t qualify for subsidies.
The cost of insurance and healthcare has risen through the years. The Consumer Price Index (CPI), which is a measure that examines the weighted average of prices in certain categories, is calculated by taking price changes for each item in the predetermined “basket” and averaging them:
In September 1981 when MSP took effect, the CPI for medical care was 85.100; in September 2018, the CPI for medical care was 485.8,3 an increase of 500%.
The Kaiser Family Foundation Survey of Employer Sponsored Health Benefits shows that in 1999 premiums were $2,196 for a single person and he/she contributed $318. In 2018 a single person’s premium was $6,896 and he/she contributed $1,186.4
Due to higher premiums and deductibles for Employer Group Health Plans (EGHPs) that fall to the employee (and family) as well as the Modified Adjusted Gross Income, that may raise the monthly Medicare Part B premium that patients pay, patients with transplants often find Medicare COB rules covering anti-rejection medications to be intrusive and not appropriate for their budget or mindset.
As you can see, there are a lot of rules relating to Medicare coverage:
For Medicare Part B to ever cover anti-rejection medications, the person must have Medicare Part A in effect the month of the transplant. If enrollment doesn’t take place that month, Medicare Part A can be retroactive as long as enrollment occurs within 12 months of the kidney transplant procedure.
Medicare Part B coverage for immunosuppressants was extended starting in 2001 to those with transplants as long as they have Part B.5
For transplant recipients with Medicare due to ESRD only, Medicare Part A and B coverage ends after 36 months. For those with Medicare due to age, Medicare Part A and B coverage continues indefinitely as long as they pay the Medicare premium.
If Social Security (SSA) deems someone with a transplant to be disabled, Medicare can also continue. Medicare may also be extended if a patient uses SSA Work Incentives. If a person stops receiving Social Security benefits, the Medicare eligible individual will need to pay the Medicare Part B premium if there’s no SSA check from which to deduct the premium.
Often the patient with Medicare due to only ESRD relates that s/he feels penalized because of the Medicare COB related to ESRD. Additionally, for the 6 months Medicare is primary, an EGHP won’t pay secondary until the EGHP deductible is met. Therefore, the patient has the following costs:
Yearly deductibles and copays
When a pre-emptive transplant patient receives the news that Medicare will become their primary payer in 30 months, a haze forms and then come the questions:
“But why? I have good insurance and I’m paying a lot for the insurance and NOW I have to pay for MEDICARE premiums too?”
“Are you saying that Medicare is only going to be primary for 6 months?”
“I don’t want to have Medicare.”
“Why am I being penalized?”
“My doctor won’t accept Medicare.”
In the early days of ESRD Medicare coverage, there was just health insurance and Medicare. Today, insurance is more complicated. Previously, there were no pharmacy benefit managers (PBM). Now there are not only pharmacy benefit managers, but specialty pharmacies that patients are required to use for high dollar medications such as anti-rejection medications. Unfortunately, the PBMs and specialty pharmacies provide medications for many chronic illnesses, not only transplant. Therefore, finding someone with a thorough understanding of ESRD at each specialty pharmacy that understands the COB can be impossible and can lead to delayed access to anti-rejection medications.
There are likely no easy answers, however, extending the ESRD COB to 36 months from 30 months, would allow those who obtained a pre-emptive transplant to apply for Medicare Part A only to cover the month of transplant. This would protect their right to obtain anti-rejection meds under Medicare Part B any time they are eligible for Part B again. Since applying for Medicare Part A is free for most eligible patients, a patient may be more open to applying for Medicare Part A. With each individual having a different insurance situation, there is not a perfect solution, but extending the ESRD COB would:
Keep patients from having to pay extra premiums if they have an adequate EGHP and do not want Medicare Part B.
Allow an aged or disabled transplant patient with EGHP coverage who chose to enroll only in Medicare Part A to apply for Medicare Part B under a “special enrollment period” (SEP) if their EGHP coverage ends. COBRA is often too costly and not a “real” option. NOTE: The SEP would only be available after ESRD Medicare ends 36 months post-transplant for those who had Medicare due to ESRD only.
Decrease cost to Medicare and the Medicare ESRD Trust Fund.
The Affordable Care Act (ACA) is scheduled to “close” the Medicare Part D donut hole by 2020, which means people with Medicare Part D will pay 25% of drug costs in the donut hole.6 That change may make having Medicare Part A at the time of transplant less relevant. The future of the ACA and closure of the Medicare Part D donut hole is uncertain. Even if anti-rejection drugs cost 25% under Part D, that’s still 5% more than 20% with Part B. These drugs would cost even less if the patient has a Medigap plan or Medicaid.
Perhaps there is merit in balancing cost burden where possible. A change in the ESRD COB may decrease the percentage of the Medicare budget now paid on behalf of ESRD patients. In the end, people with ESRD may need access to Medicare multiple times over their lifespans due to age or disability or even transplant rejection and return to dialysis. At the same time, we need to be proactive and advocate to prevent dialysis and transplant patients from facing employment discrimination if the ESRD COB is changed.
Centers for Medicare & Medicaid Services. Your Billing Responsibilities. (accessed 10/29/2018 at https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/ProviderServices/Your-Billing-Responsibilities.html).↩
Centers for Medicare & Medicaid Services. Medicare Secondary Payer Manual, Chapter 1 – Background and Overview.(accessed 10/29/2018 at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/msp105c01.pdf).↩
Kaiser Family Foundation. Premiums and Worker Contributions Among Workers Covered by Employer-Sponsored Coverage, 1999-2018. (accessed 10/29/2018 at https://www.kff.org/interactive/premiums-and-worker-contributions-among-workers-covered-by-employer-sponsored-coverage-1999-2018/).↩
Social Security Administration. Program Operations Manual System. (accessed 10/29/2018 at https://secure.ssa.gov/apps10/poms.nsf/lnx/0600801248).↩