Citing “differences between providers’ and suppliers’ financial interests and patients’ interests” that “may result in providers and suppliers taking actions that put patients’ lives and wellbeing at risk,” CMS is imposing stringent new requirements on Medicare-certified dialysis facilities that seek to make payments of premiums for individual market health plans.

By way of background, earlier this year CMS received anecdotal reports that some dialysis providers were paying Medicare- or Medicaid-eligible patients’ private insurance premiums to take advantage of higher private payer reimbursement rates. According to a CMS fact sheet, individual market reimbursement for dialysis treatment can be four times higher than Medicare and Medicaid rates – a difference of $100,000 to $200,000 or more per patient per year, which “easily dwarfs the several thousand dollar cost of providing premium assistance.” CMS published a request for information on August 23, 2016 to receive more information on the prevalence of such arrangements, which CMS believed could increase health system costs and be financially disadvantageous for beneficiaries.

In an interim final rule with comment period published December 14, 2016, CMS states that commenters indicated widespread facility involvement in end-stage renal disease (ESRD) patients’ coverage decisions. While the agency acknowledged receiving letters from patients satisfied with such premium arrangements, CMS cited other commenters who documented that providers and suppliers were “influencing enrollment decisions in ways that put the financial interest of the supplier above the needs of patients.” Commenters argued that such arrangements can harm patients by negatively impacting their determination of readiness for a kidney transplant; potentially exposing patients to additional costs for health care services; and putting them at significant risk of a mid-year disruption in health care coverage.

In light of these concerns, which CMS contends “go to essential patient safety and care in life-threatening circumstances,” the agency is establishing new Conditions for Coverage standards that apply to any dialysis facility that makes payments of premiums for individual market health plans, whether directly, through a parent organization (e.g., a dialysis corporation), or through another entity (including by providing contributions to entities that make such payments). Dialysis facilities that do not make premium payments and do not make financial contributions to other entities that make such payments are not subject to the new requirements.

Under the rule, applicable facilities will be required to notify patients annually of all available health coverage options, including but not limited to Medicare, Medicaid, CHIP and individual market plans. Facilities must provide specific information regarding how plans in the individual market will affect the patient’s access to and costs for providers and suppliers, services, and prescription drugs within the individual’s ESRD plan of care as well as those likely to result from other documented health care needs. Such facilities also must provide information about all available premium assistance, including any associated risks and limitations (e.g., whether payments are contingent on continued use of dialysis services or use of a particular facility). Finally, the notification must include data regarding the facility’s contributions to individual market health plans, including the reimbursement for services rendered that the facility receives as a result of subsidizing such enrollment.

In addition, “to ensure that patients’ coverage is not disrupted mid-year,” CMS is establishing a controversial standard that requires facilities that make such premium payments to ensure that issuers are informed of and have agreed to accept the third party payments. If an issuer does not agree to accept the payments for the duration of the plan year, the facility may not make payments of premiums and shall take reasonable steps to ensure that such payments are not made by any third parties to which the facility contributes.

The interim final rule is effective January 13, 2017 (CMS is waiving issuing a proposed rule in light of “the risk of patient harm”). CMS will accept comments on the rule until January 11, 2017.