End-stage renal disease (ESRD) occurs when a person’s kidneys stop functioning. According to CMS, patients with ESRD will need either a regular course of long-term dialysis or a kidney transplant in order to stay alive. Both options come with a hefty price tag.
Diagnosis of ESRD can qualify a person for Medicare enrollment. However, until recently, Medicare beneficiaries with ESRD could not typically enroll in Medicare Advantage plans. Starting in 2021, this is changing.
The Growth of Medicare Advantage
Enrollment in Medicare Advantage increased by 30.6 percent between 2017 and 2020, according to CMS. In 2020, approximately 24.4 million beneficiaries enrolled in Medicare Advantage plans, accounting for more than one-third of the approximately 60 million people in Medicare. Supplemental benefit options and plan choices have also been expanding.
Now, Medicare Advantage plans will grow to include enrollment for people with ESRD. Starting January 1, 2021, CMS says that Medicare-eligible individuals with ESRD can enroll in Medicare Advantage plans. Additionally, Medicare Advantage beneficiaries will have fee-for-service coverage of kidney acquisition costs, and these costs will be excluded from Medicare Advantage benchmarks.
The Treatment and Cost of ESRD
According to the Kidney Project, from the University of California San Francisco, ESRD impacts almost 750,000 patients in the United States each year. Kidney transplantation offers five-year survival rate of 80 percent and is considered the best current treatment.
Both dialysis and kidney transplant treatments are very costly, however. Medicare spends an average of $90,000 per person for hemodialysis, the most common type of dialysis, or $28 billion annually, while transplant patient care costs $3.4 billion.
The Possible Impact of ESRD Enrollment
The Medicare rule change means that ESRD patients will have significantly more options for healthcare coverage. However, it may also impact Medicare Advantage spending.
Healthpayer Intelligence reports that some Medicare Advantage proponents are concerned that Medicare Advantage plans will experience underpayment for ESRD care. One study found that the ESRD reimbursement model uses state-level data and can result in significant ESRD reimbursement rate fluctuations from one year to the next.
According to AHIP, only 1 percent of Medicare beneficiaries have ESRD, but these beneficiaries account for 7 percent of Medicare spending. If a large number of beneficiaries with ESRD enroll in Medicare Advantage plans, this could cause an increase in premiums or a decrease in supplemental benefits. If all Medicare enrollees with ESRD joined Medicare Advantage, premiums might need to increase by $18 per member per month.