11.13.15 | OregonLive

Oregon health insurers are battling with providers of expensive kidney disease treatment, and advocates say patients are getting caught in the middle.

Health insurers complain that dialysis clinics are slapping them with massive, unreasonable bills to treat their policyholders. Dialysis chains, meanwhile, claim the insurance companies are shifting those costs elsewhere – including Medicare – using unlawful policies that could cause problems for vulnerable patients.

The Oregon standoff is being watched closely elsewhere. Tonya Saffer, senior health policy director for the National Kidney Foundation in New York, calls it “an awful thing that puts patients in the middle of this provider-insurance company dispute.”

Two giant national dialysis chains, Fresenius Medical Care and DaVita Healthcare Partners, have the upper hand right now. Based on complaints they filed, Oregon Insurance Commissioner Laura Cali has launched a review of policies that appear to unfairly push members onto Medicare, citing the nondiscrimination provision of the Patient Protection and Affordable Care Act.

“We’re going to make sure that [insurance] carriers cannot behave in a way that’s discriminatory,” said Oregon Insurance Division spokesman Jake Sunderland. “We will take regulatory action if needed.”

In Oregon, as many as 6,000 people live with what’s known as end-stage kidney disease and have to undergo a grueling three–a-week dialysis regimen that removes toxins from blood over the course of roughly four hours.

The two dialysis giants dominate the market, both in Oregon and nationally. Last year, they reported a combined $1.7 billion in combined net income. In the U.S., a good chunk of those profits are generated from patients who have private insurance, because the chains charge private insurers high rates — as much as $88,275 a month per patient in Oregon.

Medicare, in contrast, pays about a tenth of that.

The government program sets its own rates, which are supposed to cover provider costs. Dialysis chains say care actually costs more than Medicare pays – so they make up the difference with inflated billings to private insurers.

Cost-shifting, as it’s known, is nothing new. But the stakes are higher in kidney disease, where the difference between what dialysis providers charge Medicare and private insurers is one of the biggest in health care.

Oregon insurers say the situation is worse here, where the two dialysis chains have even more market dominance than they do elsewhere. A review by The Oregonian/OregonLive in 2011 found the two chains controlled 92 percent of the Oregon market, as compared with about 72 percent nationally.

DaVita and Fresenius “won’t come to the table and negotiate with companies like ours in a fair and economically sustainable way,” said Dr. Richard Popiel, Chief Medical Officer for Cambia Health Solutions, the parent company to Regence BlueCross BlueShield.

Fresenius and DaVita officials did not answer questions about insurer concerns and their rates.

“This dispute is not about rates – it is about discriminatory behavior against patients with chronic diseases,” DaVita spokesman Skip Thurman wrote in an email.

To respond, some insurance companies, including Regence and Providence Health Plans, have adopted policies that observers say push members to enroll in Medicare as soon as they become eligible — after three months of dialysis. In all, four companies are offering policies that appear to treat kidney patients differently in ways that may be unlawful, state officials say.

Providence says its policy is legally sound. Similarly, Regence officials say they are not forcing anyone to enroll in Medicare, and say they are trying to protect all their members from unreasonable dialysis bills.

Some of the new policies, however, appear to expose dialysis patients to potentially huge out-of-pocket costs in their fourth month of treatment. Those costs may not be applied to their insurance policy’s out-of-pocket maximum.

People who work with insurance and dialysis patients list several other potential problems with pushing patients onto Medicare prematurely. Among them: some policies fail to warn members that by enrolling in Medicare, members who get lower premiums through Healthcare.gov will automatically lose those subsidies – meaning their insurance premiums could skyrocket.

Some of the insurers’ new policy language is “outrageous, in my opinion,” said Lisa Morrison, a longtime financial counselor and waitlist coordinator at Legacy Transplant Services in Portland. She says it’s part of a fragmented kidney care system that hurts patients’ health and well-being.

She calls the situation “Clash of the Titans II,” referring to state hearings in 2011 when officials in an Oregon insurance program blasted dialysis companies for huge costs and “exploited” patients.

“While the titans battle this out instead of negotiating rates like everyone else in healthcare,” Morrison said, “the patient, as usual, suffers.”

— Nick Budnick