The Atlanta Business Journal had a story Thursday about the law suit in Georgia by National Renal Alliance (NRA) against Blue Cross Blue Shield of Georgia (BCBSG). NRA announced on the Wednesday that they were suing because BCBSG had cut their payments by 88%.
This has to do with "out of network payments" a term used in insurance reimbursement to refer to medical services provided by anyone who does not have a contract with the insurer. In this case BCBSG and NRA could not come to terms on a contract. Without a contract for NRA to provide dialysis to BCBSG benificiaries NRA is out of network, so they can charge whatever they want and BCBSG can pay whatever they want. It turns into a negotiation by other means (means like a lawsuit).
BCBSG must have a contract with Davita or one of the other providers to provide dialysis to BSBCG policy holders. This allows BCBSG to pay a negotiated price for dialysis services: the contracted provider may say their rates are $3,000 per treatment and then offer BCBSG a 70% discount so they pay $900. The price will vary in every instance (between providers and at a provider between contracts) which is why providers typically do not release the price paid or the range of prices paid. As with any negotiated price the bigger you are the less you will have to pay. If BCBSG has many people on dialysis (odds are they do) they may be able to negotiate a pretty good rate when there is local competition between dialysis providers. NRA operates rural units so there won't be another unit nearby; BCBSG is offering about $350 a treatment (not clear if this is for meds too).
The aspect that has my interest is that the articles about the lawsuit are shedding some light on this shadowy area of reimbursement. A lot of the discussion about MSP last year revolved around how much private payers really were paying for dialysis during the 30 months they were primary. No one could say because what information there was, was word of mouth.
The Atlanta Business Journal article provides a new data point:
Medicare rates, which set the industry standard for reimbursements, range from $200 to $250 per treatment, Sanders said. Blue Cross has received charges from National Renal for dialysis treatments that range from $2,000 to $9,000 per treatment.
That is expensive dialysis, and a big range. The $200 - $250 must be treatment and medications. So it follows that the 2 to 9 thousand represents treatment and medications. With 13 treatments a month that's over 6 figures a month at the high end and it might be that the $2,000 is the aberration; $2,000 representing a rate when there is local competition. It's reported that the complaint filed with the court (available here(pdf)) gives NRA's undiscounted treatment rate. Renal BizBlog quotes Modern Healthcare [registraiton required] which reported that the 50-page court filing said that BCBSG's reimbursement rate was approximately $2,900 per treatment in 2006. Add the cost of routine medications and inflation to get to $9,000 per treatment.
Now we have on the public record what for-profit dialysis companies charge private insurers. Good to know. As for the lawsuit it's not clear to me how NRA can sue on the grounds they're claiming. I'm not a lawyer but I am aware of the concept of standing. Their suit is on behalf of the people who will now have to drive to another town for dialysis. NRA is saying that:
Patients often purchase expensive Preferred Provider Organization, "PPO," and Point of Service, "POS," health plans in exchange for the ability to choose their providers. Access to a convenient clinic, with caregivers they know and trust, is paramount to these patients receiving the life-sustaining care they need. In fact, choice of clinic is often the single biggest reason these patients purchased the PPO or POS benefit plan in the first place.
Maybe. I guess the courts will have to sort it out. Maybe the lawsuit will cause the pricing information of NRA's competitors to get entered into the public record. BCBSG could release what they've manged to negotiate elsewhere. That would be interesting.
Over a million dollars a year for dialysis. A million three to a million four. Add in hospitalizations and an insurer could be looking at 2 million dollars a year in charges. Someone could quickly burn through their lifetime insurance coverage. Their family's lifetime insurance coverage. I'd say the opponents of extending the MSP had a point. I'm critical of the aakp when they're wrong; I want to acknowledge when they were right.