Dialysis Triples Healthcare Spending for Members with Chronic Diseases

October 31, 2022 - Dialysis increased monthly spending for privately-covered members with chronic diseases by approximately 292 percent, according to a study published in JAMA Open Network.

The researchers drew their insights from a sample of nearly 12,400 private insurance enrollees over the course of 309,800 enrollee-months. The data from Health Care Cost Institute spanned 2012 to 2019 and was analyzed from late August 2021 to mid-August 2022. Enrollees had employer-sponsored insurance for a year after starting dialysis.

Most enrollees were in preferred provider organization health plans that were self-funded.

Eight out of ten enrollees who had a chronic disease that required dialysis treatment had mental healthcare coverage. Almost half of the enrollees had a pharmacy benefit (49 percent). Analyses of prescription drug spending were restricted to enrollees whose coverage included a pharmacy benefit.

“The total spending analysis should be thought of as a lower bound because increases in prescription drug spending for individuals without a pharmacy benefit reported in our data were ignored,” the researchers noted.

After starting dialysis, enrollees’ spending spiked from a mean of a little more than $5,000 per month to a mean of more than $19,650 per month.

Spending was higher in every breakdown category: outpatient dialysis care, nondialysis outpatient care, physician services, inpatient care, prescription drugs, and out-of-pocket healthcare spending.

The biggest difference was visible in monthly spending for outpatient dialysis care, which was nearly $9,900 higher before dialysis started than after starting the treatment. Nondialysis care and inpatient care also increased significantly, but much less than outpatient dialysis care at $1,847 higher and $1,218 higher, respectively.

“An abrupt increase in inpatient spending occurred in the month before initiating dialysis, potentially indicating that many patients in the sample may be beginning dialysis without preparatory care,” the researchers found.

Healthcare spending declined over time, but never returned to normal levels during the first year after starting dialysis. In the first month after starting the treatment, total healthcare spending was approximately $27,763 higher than the baseline.

Dialysis spending in particular had a more stable increase and slow decline, particularly for enrollees who received transplants and stopped dialysis. The first month of spending started at $10,913 and dropped to $9,417.

The researchers also compared the entire distribution of spending in the full year before dialysis and in the year after dialysis. In the year before dialysis, spending was less than $100,000 for most enrollees. When enrollees started dialysis and in the year that followed, however, most enrollees had between $100,000 and $300,000 in spending with a small share of enrollees experiencing extremely high costs exceeding $800,000.

Medicare beneficiaries had much lower costs than their employer-sponsored health plan counterparts. The mean spending for enrollees on Medicare in the year after starting dialysis was $80,509, compared to $238,126 for individuals with private healthcare coverage.

“The large costs borne by private insurers to cover enrollees with kidney failure underscore the importance of Medicare becoming a primary payer after 30 months,” the study indicated. “The differences in spending between enrollees receiving dialysis with private insurance and those with Medicare are especially important given growing concerns about the market power of large dialysis organizations and recent policy proposals.”

The level of spending increase post-dialysis initiation that the researchers discovered in this study was higher than previous studies indicated.

Separate research found that Medicare Advantage plans—which are generally considered private insurance—have paid 27 percent more for median in-network outpatient dialysis treatment when compared to fee-for-service Medicare spending.