Medicare’s tab for dialysis doubles in 10 years

Concerns that for-profit centers don’t provide adequate patient care


Life-saving treatments for advanced kidney failure come with a massive and growing price tag for federal health programs, along with concerns that patient care is taking a backseat to profits, an I-Team investigation found.

The I-Team reviewed federal Medicare data to identify area dialysis clinics with higher-than-expected mortality and hospitalization rates, and combed through state inspection reports that spell out hygeine and care issues at clinics that put patients at risk.

Dialysis is big business. Medicare’s cost to treat more than 600,000 people with kidney failure — including 24,311 Ohioans — reached nearly $30 billion in 2011 — up from $13.7 billion in 2001.

And it’s an industry dominated by for-profit dialysis companies, one of the largest of which recently paid $400 million to settle a lawsuit alleging it gave kickbacks to doctors in Ohio and elsewhere in exchange for referrals.

“I happen to think what’s wrong in dialysis is the financial incentives are badly misaligned,” said Gary Peterson, an activist living in Massachusetts who blogs about reform for people suffering kidney failure.

Experts say there are many reasons for the growing cost of dialysis care, including increasing prevalence of diabetes and high blood pressure, the leading causes of kidney failure. A decades-old federal law makes nearly everyone with kidney failure eligible for Medicare, regardless of age.

This includes Darenda Farrell of Trotwood, who three days a week takes a cab at 4:30 a.m. to a dialysis clinic in Harrison Twp. Half an hour later she is weighed, then nurses run a line into her arm to draw the blood out of her body, clean it with a dialysis machine, then pump it back in. The machine does the job of her kidneys, which quit working nine years ago in part because of damage from drugs she took for back pain.

“This is what I’ve got to do for the rest of my life, to breathe, to live,” said the 62-year-old great-grandmother.

Lack of competition

Of the 34 dialysis centers in this eight-county area, 23 are managed by Denver-based DaVita. Another eight are managed by Fresenius Medical Care, which is German-owned. Four of them have opened since 2013.

These two for-profit companies control more than 60 percent of clinics in the country.

“The lack of competition, whether it’s for-profit or nonprofit, is problematic,” said Diane Wish, president of the Ohio Renal Association and CEO of the northeast Ohio nonprofit chain Centers for Dialysis Care. “Competition makes it … so they need to make sure they are meeting patient needs, or else the patient will go somewhere else.”

She said for-profit dialysis chains can provide excellent service, but nonprofits have more freedom to focus on patient care.

“When you have to satisfy your stockholders first and foremost, you have to make sure your bottom line supports that,” she said.

But the cost of providing dialysis has outpaced Medicare reimbursement rates, so Medicare only covers about 80 percent of the cost. Private insurance and Medicaid cover the rest, though Ohio recently switched to relying more on managed care for Medicaid, making reimbursements spotty.

Wish said this makes providing top-notch care harder for profit-seeking chains and puts independent ones out out of business.

DaVita officials agreed that funding falls short.

“The current payment from (Medicaid and Medicare) is inadequate and fails to cover the cost of care in 35 percent of all dialysis facilities,” said company spokesman Vince Hancock in a statement.

“(Medicaid and Medicare) has the legal responsibility to protect patients with kidney failure who depend upon dialysis treatments to live by making sure that the total payment amount for dialysis services is adequate to cover the cost of providing the life-sustaining treatment,” he said. “Congress must act to address this dialysis funding crisis.”

Medicare is trying to control the growing cost of dialysis by paying a lump sum for patients suffering kidney failure, as opposed to paying piecemeal for treatment.

DaVita reported a net income of $633 million in 2013. Fresenius posted a net income of more than $1.1 billion.

“DaVita operates nearly 10 percent of its clinics at a loss at any given time,” Hancock said. “And we continue to operate many of these centers to minimize the potentially negative impact to patients who might otherwise have to travel great distances to dialyze because they have no other options.”

Cost: $88K per year

Patients, meanwhile, are relying on these clinics to keep them alive.

Dialysis patients tend to have a lot of health problems, such as high blood pressure, diabetes and issues stemming from treatment, such as infections. So hospitalizations and deaths are more common among their group than the general population.

This drives the cost of treating the average person with kidney failure to about $88,000 a year, according to Jackson Williams, director of government affairs for the patient advocacy group Dialysis Patient Citizens.

“What a patient really wants is high-quality days at home and not in a hospital,” he said.

The I-Team analyzed Medicare data on hospitalizations and mortality at dialysis centers. Of the 19 dialysis centers in Ohio that Medicare data say have a worse-than-expected patient mortality rate compared to facilities with similar patients, eight are managed by Fresenius and seven by DaVita. Of the 32 facilities with worse-than-expected hospitalization rates, 15 are managed by DaVita and 11 by Fresenius.

Two area facilities had a worse-than-expected mortality rate: DaVita Southwest Ohio Dialysis in Xenia and DaVita–Kettering Dialysis in Kettering.

The Xenia facility was inspected in May. The Kettering facility was last inspected in June 2012.

The Kettering facility also scored “worse than expected” in hospitalization rates, along with five other DaVita facilities in Dayton, Springfield, Urbana and Fairborn, and a Fresenius facility in Hamilton.

Companies respond

Fresenius officials said two factors go into mortality and hospitalization rankings: the size of a facility — a small clinic can be thrown off by one death — and regional differences in healthiness. They also said Fresenius includes in its reports people who die or go to the hospital after withdrawing from active dialysis therapy, which not all companies do.

“Across our organization, each year since 2006, we have helped patients live longer and spend less time in the hospital,” company spokesman Jon Stone said in a statement. “And in the case of each of our dialysis clinics, we are dedicated to continuously improving the quality of their dialysis care and health care experience.”

DaVita also noted that morbidity includes factors outside of its control, and that the patients in Kettering and Xenia use vein catheters for their treatment more than many other clinics, which contributes to higher infection and mortality rates.

“In those centers where we don’t meet our standards, we do a thorough root cause analysis of the operational and treatment environments,” Hancock said.

“Through a number of dedicated patient education programs, including a successful program created to transition patients away from catheters, the two centers (in Kettering and Xenia) have had consistent improvement in their outcomes, and we expect this to continue into 2015.”

But Peterson, the Massachusetts-based dialysis patient advocate, said last week in an interview that profit motives — combined with stagnant federal reimbursement rates — have led to the “over-utilization of cheap dialysis” at the expense of patient health.

He spelled out his concerns in a post last week to his website, RenalWeb, calling for a patient’s bill of rights.

“Patients are treated as less than equals. Virtually no nephrologists would accept for themselves the care that over 85 percent of their patients receive,” he wrote. “Making cutbacks from optimal levels of dialysis care allowed clinic owners’ incomes to increase despite stagnant reimbursements.”

Peterson said the biggest problem for dialysis patient care is that nephrologists — kidney doctors — enjoy a loophole in federal rules that prohibit other kinds of doctors from referring patients to clinics they own.

“Physician ownership led to a deterioration of medical ethics and care that has continued for decades,” he wrote. “The entire system of care was altered to support cheap, fast, unphysiological dialysis.”

Federal lawsuit

DaVita in October paid out $400 million to settle a federal whistleblower lawsuit stemming from how it recruited doctors to buy shares in its clinics in several states.

The lawsuit alleged that from 2005 to February 2014, DaVita sought out doctors with large populations of dialysis patients and offered them lucrative opportunities to buy shares of dialysis centers, then agree to send their patients there.

This included clinics in Columbus, where court documents allege the company acquired a group of dialysis centers worth $18 million, then sold a 40 percent share to a physicians group for $6 million. At another clinic in northwest Ohio, DaVita sold shares to a physician at half price.

Court records say the Ohio clinics billed Medicare at least $5.9 million in 2008 alone.

“This case involved a sophisticated scheme to compensate doctors illegally for referring patients to DaVita’s dialysis centers. Federal law protects patients by making buying and selling patient referrals illegal,” U.S. Attorney John Walsh said in a statement announcing the settlement.

“When a company pays doctors and/or their practice groups for patient referrals, the company’s focus is not on the patient, but on the profit to be extracted from providing services to the patient.”

“Patient care was never at issue, nor were billing or payment practices,” said DaVita spokesman Hancock, adding that “it is our belief there was no intentional wrongdoing.”

The federal case was spurred when a former DaVita employee named David Barbetta turned whistleblower.

Ohio costs

To settle the suit, DaVita agreed to pay the federal government $350 million, pay a $39 million civil forfeiture and pay out millions more to state Medicaid programs.

Ohio’s share of the national settlement was $597,226.

“It is illegal for healthcare providers to reward physicians for referring patients to them, so claims filed in association with those referrals are invalid,” said Ohio Attorney General Mike DeWine. “I am pleased that through this settlement Ohio has recovered funds that we believe DaVita improperly collected from Ohio Medicaid.”

Ohio Medicaid paid $57 million for kidney failure and dialysis treatment in 2013 and has been billed $45.3 million so far for services billed in 2014. That is just what Medicaid paid directly, not payments made by Medicaid managed care companies or paid in concert with Medicare.

Ohio Medicaid direct payments included $1.6 million in 2014 paid to dialysis centers in Montgomery County. The largest facility received $732,528.

Lisa Jordan worked for six months last year as clinical coordinator at the largest outpatient dialysis clinic in Montgomery County — a DaVita clinic on Turner Road in Harrison Twp. She was terminated in November after she said she didn’t get along with management.

She complained of cost-cutting measures leading to “workers being way overworked and patients being not taken care of the way they should be.”

“You don’t have the time to give them, the time you should be assessing them and doing what they need you to do,” she said.

“The hardest thing is most of them don’t go on the machine on their scheduled time. So if they’re not going on at their scheduled time they’re not coming off at their scheduled time. If the patients aren’t going on in time, the next patients aren’t getting on in time.”

That can add up to patients missing the equivalent of one treatment a month, she said.

“I just think that there has to be some kind of regulation of patient ratio.”

State rules mandate training and qualifications for dialysis staff and set standards for care, but do not specify a staff-to-patient ratio.

Inspection finds problems

With 44 dialysis machines, the Turner Road facility is more than twice the size of most centers in the region.

Dialysis patient Ed Foster, 54, of Dayton, said the center has had staffing issues. He said about six months ago he was being treated and saw that two men sitting next to him both had their blood pressure drop — a common, but dangerous, complication from dialysis — and only one nurse was present to help them.

He said inspections should be more frequent.

“It needs to be done at least twice a year,” he said.

The Ohio Department of Health is required to inspect dialysis centers once every three years. They do more frequent inspections based on patient complaints.

A complaint in May 2014 led to an inspection of the Turner Road facility that found some improper hygiene practices and staff not properly monitoring patients during dialysis.

A routine inspection followed in September that discovered more examples of staff not properly disinfecting supplies and not washing their hands between patients, which potentially affected all 240 patients at the facility.

Inspectors also reviewed 10 patient records and found that in half the cases staff wasn’t properly monitoring patient blood pressure, including two patients whose elevated blood pressure wasn’t addressed. In all 10 cases, staff didn’t assess the patients after providing dialysis.

DaVita officials submitted a plan of corrective action, agreeing to better staff training and monitoring of patients after the Sept. 11 inspection. State officials deemed the citations to be corrected after a Nov. 12 follow-up survey.

State doesn’t track deaths

Dispatch records show ambulances visited the Turner Road clinic 219 times in 2014, far more than any other facility in Montgomery County.

The day after the Sept. 11 inspection, the Harrison Twp. fire department rushed 83-year-old Herbert Lewis to Good Samaritan Hospital, where he died. His death was ruled a natural, attended death.

Four days later, on Sept. 16, paramedics again were dispatched to the center. This time, they found 57-year-old Robert Copeland dead.

“Nothing was found to be suspicious with Copeland’s death and he was found to have medical complications relating from his dialysis treatments,” according to a Montgomery County Sheriff’s Office report.

On Oct. 28, 69-year-old Robert Boozer was rushed to the Good Samaritan emergency room and later died of natural causes.

The state began another investigation of the facility last week after the I-Team submitted questions about the clinic.

ODH officials say facilities are not required to report to them when a patient dies, and the May complaint was the last they received about the facility.

State officials also don’t base their inspection schedule on Medicare death or hospitalization ratings at clinics, she said.

“ODH does look at all the data when completing the survey, but that information would not change the frequency or the process in which they are conducted,” Amato said.

The Turner Road DaVita facility had a higher-than-expected hospitalization rate in 2013, and an average patient death rate from 2010 to 2013, according to Medicare data.

Thomas Martin, 66, of Dayton has traveled to the Turner Road facility for dialysis three times a week for six years.

“The hardest part to me is just before they put me on they have to prick the scabs off from the needles going into you the last time,” he said.

“You’ve got a lot of people that care, but I do feel like it’s a big profit thing. If they treated us like we were people, instead of numbers, it would be better.”



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