Dialysis from the sharp end of the needle

DaVita's SEC filings illustrate the cost of profit

By Bill Peckham

In Jennifer Nix's article for Salon, I love my socialist kidney, she writes that:

... contrary to the notion that private companies can more efficiently and cheaply insure healthcare, consider these facts: Total public and private spending on the ESRD population, according to the USRDS 2008 report, was $34 billion. So, if we revisit the percentages above, Medicare covers 75 percent of the ESRD population for $23 billion, while $11 billion is spent to cover the remaining 25 percent of ESRD patients, including the 10 percent covered by private insurance. In other words, private insurance pays $4.4 billion to cover 10 percent of ESRD patients, which suggests that it would cost private insurance $33 billion to cover 75 percent of the ESRD population -- $10 billion more than Medicare now pays. So, who's more cost-effective?

Nix's point is correct, it would cost the system more if private insurers had to cover people currently covered under Medicare. However, I think Nix is over stating the efficiency of commercial payers and commercial providers. It's even more lopsided.

Rather than include total medical spending for someone using dialysis, look at just the dialysis piece. In 2007, Medicare Part B spending for dialysis composite rate services and separately billable Part B drugs was about $8.6 billion total, including the 20% beneficiary copay amount (this apparently can be gleaned from the USRDS but I received this figure via email from MedPAC's principal policy analyst). $8,600,000,000 is the total revenue US dialysis providers received in return for taking care of Medicare primary beneficiaries.

With a little math the per beneficiary, per year cost/revenue can be determined. There were about 360,000 people on dialysis in 2007. Of the 360,000 about 75% were Medicare primary. So putting that together, in 2007 about 270,000 Medicare beneficiaries were on dialysis. Therefor, in 2007 the average dialysis provider revenue per Medicare beneficiary, per year was about $31,850 ($8.6B / 270,000). The difference between my number and Nix's is that Nix is using total medical costs which includes payments to dialysis providers but also physicians, hospitalizations, skilled nursing, etc.. Looking at just the dialysis piece is illustrative. The cost of profit in the provision of dialysis is clear.

I can't find any report of total dialysis provider revenue from commercially insured patients but we do have access to numbers from one of the two large dialysis organizations (LDOs), DaVita's 2008 10-K SEC filings which reports their revenue and provider mix.

DaVita reports they had $5.7B in revenue in 2007; of which 36% of was due to 13% of their patients - the ones with commercial insurance primary. DaVita also reports that in 2007 they had about 107,000 patients. Math to get this in terms of per patient:

36% of $5.7B = $2,052,000,000 revenue due to commercially insured patients
13% of 107,000 = 13,910 patients with commercial insurance
$2,052,000,000 / 13,910 = $147,520 per patient revenue when patient has commercial insurance

From the same 10-K SEC filing DaVita reports that Medicare and Medicare-assigned HMO plans covered 80% of their patients; these Medicare primary patients provided 58% of their 2007 revenue. More math:

58% of $5.7B = $3,306,000,000 revenue due to Medicare primary patients
80% of 107,000 = 85,600 patients with Medicare primary
$3,306,000,000 / 85,600 = $38,600 per patient revenue when Medicare is primary

Back to Nix's point. If all Medicare primary patients were generating as much income as DaVita's commercially insured patients then they would have generated $39,830,400,000 in revenue (or total cost) instead of $8,600,000,000. Even more interesting is comparing the DaVita Medicare patient revenue to the national average: $38,600 vs. $31,850. A 20% difference.

It's not clear from DaVita's SEC filings why their per patient, per year Medicare beneficiary revenue was 20% over the national average. This letter (PDF link) NephrOnline posted last December concerning CROWNweb included cost data collected for the National Renal Administrators Association by Avalera Health. Avalera Health reported that the data indicated higher epo usage at the LDOs but a 20% variation is a lot of epo. 

Nix asked "So, who's more cost-effective?". Using her numbers or mine I think the answer is clear.

Dialysis MSP extension not included in Senate Finance Committee health insurance reform bill

By Bill Peckham

I received an email this morning from Troy Zimmerman, the National Kidney Foundation's VP for Government Relations, who shared that extending the dialysis MSP was not used by the Finance Committee as an offset for Senator Lincoln's bone health amendment. I think this is good news.

The process is far from over. The House and the Senate will have to merge their bills into a single piece of legislation in a multi-step process; with each step there is the possibility of amending the legislation to include an MSP extension.  If this process seems complicated it's because it is.

Senate Finance Committee may or may not have extended dialysis MSP last week

By Bill Peckham

I have to admit that I am having trouble following legislative process as the health insurance reform bill moves through the Senate Finance Committee's amendment process. The Lincoln amendment was incorporated into the America's Healthy Future Act over a week ago on the 22nd. Modifications to the Chairman’s Mark ―America’s Healthy Futures Act of 2009 (published on the 22nd)(pdf Link) includes:

To Accept with Modification Lincoln Amendment #D2:
Add a new section to Title III, Subtitle B, Part I The provision reinstates reimbursement for dual energy x-ray absorptiometry (DXA) services to 70 percent of the 2006 payment rates for 2010 and 2011. It would also authorize the Institute of Medicine to study the effect of Medicare reimbursement reductions for DXA on beneficiary access to bone density tests.

It's a modified version of the proposed amendment and there is no mention of any "offset". I can't say if the cut to the dialysis program is now included in America’s Healthy Futures Act of 2009. Until the complete revised legislation is published I don't know if the MSP extension is included. I'll continue to seek clarification; sorry for my two out of date posts.

Dialysis & CKD Report 9/30

By Miriam Lippel Blum

Here are the CKD related blogs updated since my last report on 9/27.   If you have or know of a blog that should be on the list let Bill know. Comments in parentheses are my reactions or opinions.

• Dialysis from the sharp end of the needle Bill comments on Jennifer Nix's excellent article on Salon, I love my socialist kidney; Bill is against Senator Blanche Lincoln's proposed  amendments to the Senate Finance Committee's health insurance reform that would redirect resources away from treating kidney disease.  He suggests you find out if your Senator is on the Finance Committee and write to ask that they vote against Senator Lincoln's amendment(s). Bill reports that the Senate Finance Committee did not take up Senator Lincoln's amendments on Tuesday but will reconvene today (Wednesday), contact your Senator ASAP to vote against the amendments.
• Kamal Shah's Blog Kamal plays matchmaker and describes several eligible bachelors in his circle of friends, including himself. (Wishing you all luck in the love department soon.)
• Kaply, Inc. Tracy was in a very bad mood so she went back to bed.
• Toastiest doesn't sleep well on nocturnal dialysis but doesn't like the way conventional HD messes up his work schedule; hopes that there will be a public insurance option despite the votes against it in the Senate this week, plus is disappointed that Obama is not more forceful in regard to it.
• Birdman posts a music video "Never Alone"  by Barlow Girl.
• The Life of a 20-Something With Lupus was sick with stomach pains and exhaustion so she missed school and work.
• Becky Perry shares some website links including recipes, a crochet afghan pattern, and bible lessons; she adores the autumn weather.
• On the Road to a Cure has an article on six ways to ensure a better life with lupus, includes some medication and financial resource suggestions; Lupus Now magazine is looking for interviewees for their Spring 2010 issue.
• I Am. Are you? announces a charity event to be held at a karaoke bar; shares some of the great  stories they got from the "why you heart organ donors" campaign.
• Life on Dialysis is rethinking whom he will take on future treks as some of the current group are not respectful of the environment and communities they pass en route.
• The Ins and Outs of Dialysis is a new blog, written by John and Gayle, a retired couple who live in Sun City West, AZ. John is on home HD using the NxStage and Gayle is caretaker.  They share their experience with training, travel, and John's recent struggle with osteomyelitis in a toe.
• Bud's Ramblings Bud shares some random thoughts, my favorite was his observation that a husband would rather try to carry 10 plastic grocery bags in each hand than take 2 trips to bring in the groceries.
• Renal Fellow Network has some links to recipes from cultures that eat kidneys; describes the pros and cons of two different paradigms explaining proteinuria;  a study provides evidence that a bone scan is fairly sensitive for diagnosing calcium uremic arteriolopathy and could be used in lieu of a biopsy.
• Uremic Frost a video of Dr. Henry Krum speaking about renal denervation for refractory hypertension; a study indicates that an impairment in kidney function in the elderly leads to an acceleration in cognitive decline.
• Renal tsar's blog discusses the pluses and challenges of optimal dialysis; a new report shows that the prevalence of CKD In the UK continues to rise. 
• Diario de diálisis Crónicas (en Español)  Journal dialysis - Chronicles (Google translated from Spanish) reveals an internet hoax about a girl searching for a kidney. (Shame on whomever started this vile hoax, when there are so many people out there is real desperate need.)
• pkdmom2five had a kidney infection and an abscessed cyst, her new church community assists with bringing food, and accepts them wholeheartedly.
• Dialysis and Me Barry videoblogs about why he hates Mondays and comments on Social Security's financial problems, for-profit care companies, and Jennifer Nix's article, I love my socialist kidney; recommends a blog he came across (See Miriam's Websurfing Find below for details);  video of Lewis Black exhorting doctors to find a cure for cancer; a video of a hi-tech Japanese robot; a video of his dog; pictures of the current state of his Ravenwing army.
• My Wife Has Lupus - Support for individuals whose family or friends have lupus writes about how the lupus related death of Lucy (in the Skies with Diamonds) Vodden in England reminds him of the fragility of his own wife's health.
• Lemonade and Kidneys Ruth is tickled that the MadMen-yourself game has her current haircut pre-programmed.
• The Ballad of Billy The Kidney links and comments on an article that discusses the heavy burden of costs to the home HD dialyzors that aren't reimbursed, such as increased electrical bills.
• The inner game of PKD explores "What is your PKD disease keeping you from?
• Kidney Diet Tips has a post and photos from last week's Tour DaVita bike ride fund raising event.  Team Teddy Bear describes how the 2009 Hudson Valley Walk for PKD went. (Congratulations to all the participants!

MIRIAM'S WEBSURFING FIND: I must give credit where credit is due, Barry Kiker found this helpful website and blog and wrote about it in his blog, Dialysis and Me.  

Michael W. Newman's site is entitled What You Can Do to Conquer Your Credit and Debt Problems, also the title of his book, now in its second edition and available at his site and Amazon.com.  The book is full of helpful information and sample letters to use when dealing with debt collectors and credit card companies.  He gives  gives concrete applicable suggestions and explains the laws that can help you get out of trouble.  With the economy in the state that it's in many people are struggling with financial issues, especially people with CKD5 and other chronic illnesses.  Michael hopes to help with his website and book.

Along with his extensive business background, Michael is also on in-center hemodialysis.  He shares some of his experiences in his blog and forum which can be found on the site.  One of his recent forum posts has good ideas on how to protect yourself while at dialysis.

By Miriam Lippel Blum

Here are the CKD related blogs updated since my last report on 9/27.   If you have or know of a blog that should be on the list let Bill know. Comments in parentheses are my reactions or opinions.

• Dialysis from the sharp end of the needle Bill comments on Jennifer Nix's excellent article on Salon, I love my socialist kidney; Bill is against Senator Blanche Lincoln's proposed  amendments to the Senate Finance Committee's health insurance reform that would redirect resources away from treating kidney disease.  He suggests you find out if your Senator is on the Finance Committee and write to ask that they vote against Senator Lincoln's amendment(s). Bill reports that the Senate Finance Committee did not take up Senator Lincoln's amendments on Tuesday but will reconvene today (Wednesday), contact your Senator ASAP to vote against the amendments.
• Kamal Shah's Blog Kamal plays matchmaker and describes several eligible bachelors in his circle of friends, including himself. (Wishing you all luck in the love department soon.)
• Kaply, Inc. Tracy was in a very bad mood so she went back to bed.
• Toastiest doesn't sleep well on nocturnal dialysis but doesn't like the way conventional HD messes up his work schedule; hopes that there will be a public insurance option despite the votes against it in the Senate this week, plus is disappointed that Obama is not more forceful in regard to it.
• Birdman posts a music video "Never Alone"  by Barlow Girl.
• The Life of a 20-Something With Lupus was sick with stomach pains and exhaustion so she missed school and work.
• Becky Perry shares some website links including recipes, a crochet afghan pattern, and bible lessons; she adores the autumn weather.
• On the Road to a Cure has an article on six ways to ensure a better life with lupus, includes some medication and financial resource suggestions; Lupus Now magazine is looking for interviewees for their Spring 2010 issue.
• I Am. Are you? announces a charity event to be held at a karaoke bar; shares some of the great  stories they got from the "why you heart organ donors" campaign.
• Life on Dialysis is rethinking whom he will take on future treks as some of the current group are not respectful of the environment and communities they pass en route.
• The Ins and Outs of Dialysis is a new blog, written by John and Gayle, a retired couple who live in Sun City West, AZ. John is on home HD using the NxStage and Gayle is caretaker.  They share their experience with training, travel, and John's recent struggle with osteomyelitis in a toe.
• Bud's Ramblings Bud shares some random thoughts, my favorite was his observation that a husband would rather try to carry 10 plastic grocery bags in each hand than take 2 trips to bring in the groceries.
• Renal Fellow Network has some links to recipes from cultures that eat kidneys; describes the pros and cons of two different paradigms explaining proteinuria;  a study provides evidence that a bone scan is fairly sensitive for diagnosing calcium uremic arteriolopathy and could be used in lieu of a biopsy.
• Uremic Frost a video of Dr. Henry Krum speaking about renal denervation for refractory hypertension; a study indicates that an impairment in kidney function in the elderly leads to an acceleration in cognitive decline.
• Renal tsar's blog discusses the pluses and challenges of optimal dialysis; a new report shows that the prevalence of CKD In the UK continues to rise. 
• Diario de diálisis Crónicas (en Español)  Journal dialysis - Chronicles (Google translated from Spanish) reveals an internet hoax about a girl searching for a kidney. (Shame on whomever started this vile hoax, when there are so many people out there is real desperate need.)
• pkdmom2five had a kidney infection and an abscessed cyst, her new church community assists with bringing food, and accepts them wholeheartedly.
• Dialysis and Me Barry videoblogs about why he hates Mondays and comments on Social Security's financial problems, for-profit care companies, and Jennifer Nix's article, I love my socialist kidney; recommends a blog he came across (See Miriam's Websurfing Find below for details);  video of Lewis Black exhorting doctors to find a cure for cancer; a video of a hi-tech Japanese robot; a video of his dog; pictures of the current state of his Ravenwing army.
• My Wife Has Lupus - Support for individuals whose family or friends have lupus writes about how the lupus related death of Lucy (in the Skies with Diamonds) Vodden in England reminds him of the fragility of his own wife's health.
• Lemonade and Kidneys Ruth is tickled that the MadMen-yourself game has her current haircut pre-programmed.
• The Ballad of Billy The Kidney links and comments on an article that discusses the heavy burden of costs to the home HD dialyzors that aren't reimbursed, such as increased electrical bills.
• The inner game of PKD explores "What is your PKD disease keeping you from?
• Kidney Diet Tips has a post and photos from last week's Tour DaVita bike ride fund raising event.  Team Teddy Bear describes how the 2009 Hudson Valley Walk for PKD went. (Congratulations to all the participants!

MIRIAM'S WEBSURFING FIND: I must give credit where credit is due, Barry Kiker found this helpful website and blog and wrote about it in his blog, Dialysis and Me.  

Michael W. Newman's site is entitled What You Can Do to Conquer Your Credit and Debt Problems, also the title of his book, now in its second edition and available at his site and Amazon.com.  The book is full of helpful information and sample letters to use when dealing with debt collectors and credit card companies.  He gives  gives concrete applicable suggestions and explains the laws that can help you get out of trouble.  With the economy in the state that it's in many people are struggling with financial issues, especially people with CKD5 and other chronic illnesses.  Michael hopes to help with his website and book.

Along with his extensive business background, Michael is also on in-center hemodialysis.  He shares some of his experiences in his blog and forum which can be found on the site.  One of his recent forum posts has good ideas on how to protect yourself while at dialysis.

Senator Lincoln's amendment to cut Medicare's Dialysis Entitlement yet to be considered by Senate Finance Committee

By Bill Peckham

The Senate Finance Committee did not take up Senator Lincoln's amendments today (Tuesday), they are scheduled to reconvene tomorrow at 10AM in "Open Executive Session to Consider an Original Bill Providing for Health Care Reform". There is still time to contact your Senator if they serve on the Senate Finance Committee. Tell Congress to not extend MSP for people on dialysis.

I missed this article when it came out in August, Cuts in Government Spending Would Actually Boost Profits for this Unusual Stock. Apparently it is well understood on Wall Street that cutting the dialysis entitlement would boost provider profits:

During most budget cycles, a handful of powerful politicians regularly propose this type of budget cut. Specifically, they put forward that the government could save money by decreasing the dialysis benefit. In 2007, for instance, the House wanted to ax $500 million from dialysis funding -- a cut that could have meant billions in additional profits for dialysis providers.

It happened again the following year. President Bush's 2009 budget sought to extend the period during which insurance must pay for dialysis treatments (before Medicare takes over) from 30 months to 60 months for large employers. The move would have saved Medicare $1.1 billion over five years, but it would have meant many times that in additional revenue for dialysis providers.

Remember, all the treatments are exactly the same, but the fewer that Medicare pays for -- and the more that private insurers pay for -- the more profits dialysis providers will generate.

If health insurance reform does pass I think it will make sense to look at MSP in the context of the new system. Until then boosting provider profits in the absence of program reforms is not the direction we should be going.

Senator Lincoln's amendment would cut dialysis entitlement

By Bill Peckham

Senator Blanche Lincoln of Arkansas has put forward two amendments to the Senate Finance Committee's health insurance reform bill, America's Healthy Future Act , aka the Baucus bill. Lincoln's identically worded amendments would fund bone health by taking money out of Medicare's dialysis program. Senate Finance Committee Amendments #33 & #34  (PDF link):

Summary
Improving access to primary and preventive care by adding a modified version of the Medicare Fracture Prevention and Osteoporosis Testing Act (S. 769).

Offset
Extend Medicare Secondary Payer (MSP) for privately-insured dialysis patients to Medicare after 30 months by amount necessary to offset the increase in spending.

I'm sure the legislation to improve bone health is a good idea but I am against taking money out of Medicare's dialysis entitlement and this would by definition take money of of the dialysis program. That's what a an offset is and extending the dialysis MSP period would save Medicare money (about $1.2 billion over ten years).

However, if the savings are not being redirected to the benefit dialyzors, if savings from one part of the dialysis program are not being reinvested in treating kidney disease, than it would be a step in the wrong direction.  Senator Lincoln's amendment would redirect resources away from treating kidney disease, I am against her amendment(s).

The dialysis industrial complex has been very quite about this. They are very  much in favor of extending the MSP because it would increase revenues, dialysis is much more profitable when private insurance is paying. Kidney Care Partners has suggested extending MSP in the context of eliminating the 1% deduction applied to the soon to be yearly inflation adjustment to dialysis reimbursement (under MIPPA if inflation is 3%, dialysis reimbursement is increased by 2%). I don't doubt they'd like that: more private payer money and more Medicare reimbursement.

It isn't their dream legislation but KCP seems happy to see MSP go away for whatever reason and they see this as a step in the right direction. I don't think patients should be so quick to let it go. Check out this list of Senate Finance Committee members, if your Senator is on the Finance Committee write to ask that they vote against Senator Lincoln's amendment(s).

I'm going to send my Senator, Senator Cantwell a note: Don't extend MSP for people on dialysis and if you must, keep the money in the dialysis program to improve our dismal national outcomes.

The healthcare debate through the CKD lens

By Bill Peckham

Jennifer Nix has an article up on Salon, I love my socialist kidney. It's a wide ranging article that looks at today's health insurance reform debate through the lens of chronic kidney disease, both the author's and her father's.

I've spent a lot of time looking at healthcare politics through the same lens as the author (aside from my not having a family history), and I found myself nodding a lot while reading. Nix does a good job putting numbers in context without getting too far into the weeds. My inclination is, when in doubt, to bring in more data and I tend to digress when talking about this stuff. It's great to read it well organized and argued.

Nix did quote me in the article:

"Profit-driven dialysis is a problem," says Bill Peckham, a 19-year dialysis patient and a trustee of Seattle's nonprofit Northwest Kidney Centers, founded by Scribner. "With Medicare reimbursement not going up, the centers need to squeeze profits out of patient care, essentially through shorter hours of operation, using techs instead of nurses, shorter dialysis treatments so they can flip the chairs, and reusing artificial kidneys. They don't push patients to get optimal treatment, because it comes out of their profits. And patients feel sick all the time because they're not getting enough dialysis."

I think my dialysis world view is more nuanced then that quote implies - profits have entrenched adequate in the provision of dialysis. However, as important is the role profits have had in undermining public and political support for the dialysis entitlement.

My second quote, or more precisely the second sentiment attributed to me, is a distillation of my explanation for the US's high mortality rate as compared to any of our international peers:

Forbes reported in April that DaVita CEO Kent Thiry's average compensation over the past six years was $22 million, and the company reported $6 billion in revenues, according to Fortune, which ranks DaVita as 433rd on its Fortune 500 list. Their profits, Peckham believes, can be directly linked to poor patient outcomes. This is by no means the only factor, but everyone I interviewed -- even the employee of a for-profit dialysis center who asked not to be identified -- agreed that the drive for profits has contributed to Medicare ESRD's higher dialysis mortality rate; the differences among them were only in degree.

The "their" I'm referring to are the for profit companies operating throughout the US healthcare system, not DaVita per se, though they are central to the story of dialysis in the US today. Profit is the one feature that differentiates dialysis in the US from dialysis in countries where clinical outcomes are better.

When success is measured by profit, clinical outcomes suffer.

Dialysis & CKD Report 9/27

By Miriam Lippel Blum

Here are the CKD related blogs updated since my last report on 9/24.   If you have or know of a blog that should be on the list let Bill know. Comments in parentheses are my reactions or opinions.

• Dialysis from the sharp end of the needle has the blog report.
• Kamal Shah's Blog Kamal advises software programmers and managers not to bother with unit testing code.
• Kaply, Inc. Tracy's ankle gives way, she falls and hits her head but she's okay, albeit shook up. (We are glad you weren't hurt.)
• Becky Perry has her Friday list of things that make her happy; reviews the Transformation Study Bible, edited by Warren Wiersbe; highlights the first chapter of A Cowboy Christmas by Mary Connealy.
•  Life on dialysis ... and now life after my transplant! Holly is taking part in a 100 ft. abseil at a lighthouse as a fundraiser and to celebrate a whole year without dialysis (You Go, Girl!), her "Save Jess" campaign is going well.
• On the Road to a Cure Amanda Davenport (chef with lupus) continues her guest blogging about the latest Hell's Kitchen episode.
• I Am. Are you? shares another heroic donor story.
• Chronic Chick Talk has creative suggestions on choosing a theme for your wedding.
• Bud's Ramblings Bud is eating apples and planning for the family cookout.
• Renal Fellow Network welcomes a new contributor, Conall O'Seaghdha, to the blog, and announces other upcoming changes; Conall reports on a paper from Sydney, Australia that explains how, on the one hand, statins can increase proteinuria while still preserving renal function in the long run; a study concludes that single pediatric kidney transplants from donors younger than 5 years of age can be used with acceptable complications and long-term outcomes.
• Uremic Frost  has a link to the new KDIGO guidelines for bone mineral metabolism in CKD; a Japanese study study shows a new approach to protecting the kidney function during a coronary artery bypass (CABG) surgery; a satirical music video "The Government Can" sung by Tim Hawkins.
• Dialysis and Me feels the problem with organ donation is not enough media attention; a videoblog entry about how he deals with discarding the boxes and used supplies from PD; a video of his PD exit site cleaning routine; hits 1000 visitors on his blog counter. (Congratulations!)
• My Chronic Kidney Disease provides a link to another website on kidney related news.
• The inner game of PKD posts an article on how the perception of your future impacts you.
• My New (transplanted) Kidney Al is feeling great and has no complaints.
• Jenna Franks  Jenna's mom is accompanying her on her first trip to  Paris where she will be till December -- a post-transplant opportunity for growth and independence. The doctor told Jenna to wear an N-95 filter mask on the plane (close quarters with lots of people is how the flu is spread.) And they gave her 2 dose packages of Tamiflu, just in case. She will get the H1N1 flu vaccine when it becomes available in France. Her mom will make sure she knows where a clinic is nearby, and what to do if she gets sick or loses her meds, (A great example of how to plan for a trip when you have a transplant.  Have a fabulous time!)
  
• Berns on Nephrology Jeffrey Berns, MD, of UPenn School of Medicine, discusses new proposed rules for dialysis payment, including bundling for oral drugs related to ESRD care.