Estimating Reimbursement per Treatment

Recently, the director of a free-standing, in-center hemodialysis program reached out to me in an effort to gain insight into what their reimbursement may look like if they were to add peritoneal dialysis services to their in-center program. During my time at Sceptre Management Solutions, I have had the pleasure of working with many new dialysis programs to assist program owners in growing their programs. In this edition of From the Field, we will review several factors that may play a key role in a dialysis program’s reimbursement per treatment.

One of the largest factors in a dialysis program’s reimbursement per treatment is their payer mix, or the ratio of commercial to government-based insurance coverage. Generally, dialysis programs that have more patients with commercial insurance coverage compared with patients with coverage through programs like Medicare, Medicaid, and the VA have a higher reimbursement per treatment. Commercial insurance plans often reimburse at a higher rate than government-based plans.

Several years ago, I worked with a small dialysis program that had around 25 patients. Most patients were covered by Medicare and Medicaid, three to four had commercial coverage, and one to two had only Medicaid or no insurance at all. This program’s cost per treatment was about the same as the reimbursement per treatment they received from the Medicare/Medicaid patients. The reimbursement per treatment on the commercial patients was significantly more than the cost per treatment and the additional revenue was used to subsidize the costs treating patients with Medicaid or no insurance coverage. Extra funds were pooled for making improvements or repairs to the dialysis facility.

One reason payer mix is such a large factor in a dialysis program’s reimbursement per treatment is that commercial payers generally reimburse at a higher rate than government-based insurance plans. Contracts, single case agreements, and out of network benefits determine how much an insurance company will reimburse for dialysis services. Each insurance company may offer many different insurance plans to their members and there can be different levels of reimbursement dependent on the plan. It is critical for a dialysis program to understand the reimbursement and requirements for reimbursement associated with each of their patient’s insurance policies. Some insurance companies require authorization in order to obtain reimbursement, others reimburse at a percentage of billed charges for out of network providers so long as the patient receiving treatment has out of network benefits, and others reimburse the equivalent of Medicare rates to non-contracted providers and a per-diem rate to contracted providers.

Most dialysis programs have a fair portion of patients whose primary insurer is Medicare. As such, it’s important to have an idea how much Medicare will reimburse per treatment. There are several factors that influence Medicare’s reimbursement for dialysis: facility location, patient age, height, weight, length of time on dialysis, as well as several other factors. CMS does publish a free claims price estimator on their website that can be used to determine the rate Medicare would reimburse for a particular patient.

As we know, Medicare reimburses 80% of the allowed reimbursement for dialysis treatments. In a dialysis program comprised predominantly of Medicare primary patients, it is critical to a facility’s bottom line that all patients have secondary coverage that will reimburse all or most of the Medicare assigned deductibles and coinsurances. At Sceptre Management Solutions, we work with dialysis programs across the country and Medicaid programs in many states. There are quite a few states in which Medicaid, when secondary to Medicare, will not reimburse or only reimburse very little of the Medicare assigned coinsurance and the dialysis program is required to write off the uncollected balance. This is a great protection to the dialysis patients whose medical bills may be substantially more than their income—but if a dialysis program is not aware that Medicaid will not reimburse the Medicare coinsurance, there could be devastating effects on a program’s bottom line.

Sarah Tolson is the director of operations for Sceptre Management Solutions, Inc., a company specializing in billing for outpatient ESRD facilities, nephrology practices, and vascular access. Your questions are welcome and she can be reached at [email protected], 801.775.8010, or via Sceptre’s website, www.sceptremanagement.com.