Government warns dialysis centers against steering Medicare-eligible patients into health-law insurance plans

By STEPHANIE ARMOUR and ANNA WILDE MATHEWS

Aug. 18, 2016 10:02 p.m. ET

WASHINGTON—The Obama administration has launched a probe into whether health-care providers such as dialysis centers are steering patients eligible for Medicare and Medicaid benefits into insurance plans offered on the health law’s exchanges.

The Centers for Medicare and Medicaid Services on Thursday said it sent warning letters to all dialysis centers that participate in the federal Medicare program. The agency also said it is weighing financial penalties on providers who are found to have directed people eligible for Medicare into Affordable Care Act plans instead.

“We are concerned about reports that some organizations may be engaging in enrollment activities that put their profit margins ahead of their patients’ needs,” said CMS Acting Administrator Andy Slavitt in a news release.

The agency said it was examining “concerns that some health care providers and provider-affiliated organizations may be steering people” who are eligible for Medicare or Medicaid into ACA plans.

The concern, according to the CMS, is that health-care providers or organizations affiliated with them may be paying insurance premiums for patients who would otherwise qualify for Medicare and Medicaid. This would allow the patients to instead get coverage on the ACA exchanges from insurance companies that offer the providers higher reimbursement rates than are given under the federal health programs.

“There is a direct conflict of interest for providers to pay patients’ premiums with the sole intent of increasing their own reimbursement,” said Clare Krusing, a spokeswoman at America’s Health Insurance Plans, an industry trade group.

Concerns by some insurers over the potential practice have spurred legal action. In July,UnitedHealth Group Inc. sued kidney-care chain American Renal Associates HoldingsInc., accusing it of fraud. The lawsuit said American Renal Associates engaged in a “fraudulent and illegal scheme” to get larger payments from the insurer by persuading patients to sign up for UnitedHealth plans and connecting them with a charity, American Kidney Fund, that helped pay their premiums.

American Renal Associates has previously said the UnitedHealth suit is without merit, and it is fighting it. A spokeswoman for American Renal Associates, reached late Thursday, declined to comment on the CMS action.

The American Kidney Fund, a nonprofit focused on people with kidney disease, said it has operated a program that provides financial assistance to people who can’t afford premiums with the “highest integrity.”

CMS, which oversees the federal programs, is requesting public comment on the potential practice.

One major dialysis company, DaVita HealthCare Partners Inc., said it welcomed the inquiry. The company offers patients “objective, balanced information” about their insurance options and “ultimately, it is the patient who chooses which option best meets their needs and preferences.”

A spokesman for Fresenius Medical Care North America, part of a global health-care group, said it is reviewing the request for information and plans to submit comments.

CMS said it is also considering actions, including banning or limiting premium payments for ACA plans by health-care providers and changes to Medicare and Medicaid provider enrollment rules.

The agency said it is weighing civil monetary penalties on health-care providers if their actions cause Medicare-eligible patients to suffer penalties for signing up late to the federal program because they were steered into an ACA exchange plan.

The Obama administration said it is concerned that the payment arrangements also may be steering sicker patients onto ACA plans, skewing the population to consumers who are more expensive for insurers. Some insurers have withdrawn or curtailed participation on the exchanges, which is where consumers go to obtain coverage and qualify for subsidies, citing higher-than-expected costs of covering patients who are older or sicker than they expected.

Aetna Inc. added fuel to the political battle over the ACA when it announced Monday that it would withdraw in 2017 from 11 of the 15 state exchanges it had been participating in. Aetna Chief Executive Mark T. Bertolini earlier this month cited significant costs tied to enrollees whose premiums were paid by third parties potentially linked to health-care providers.