Since it began, the federal government's program for keeping kidney patients alive through dialysis has confounded official efforts to predict its costs.
When Congress first approved using Medicare funds to help persons with so-called end stage renal disease--regardless of their age--the cost was estimated at $75 million the first year and $250 million after four years.
Instead, the program cost $172 million the first year and $500 million after five years. For fiscal 1982, the Health Care Financing Administration estimates the cost at $1.8 billion. Under Medicare's part B, which pays physicians, kidney patients represent only .25 percent of the beneficiaries but 9 percent of the federal outlays.
For more than four years, HCFA has been hunting a way to bring these ballooning costs under control. Its attention has focused on patients who had their blood purified at home--40 percent of the total in 1972, but only 17 percent in 1981. Now, if the Office of Management and Budget approves a rule change that the Health and Human Services Department has proposed, HCFA's effort to reverse this trend--to move dialysis out of hospitals and independent "free-standing" clinics and into patients' homes--may get under way.
Dialysis is much cheaper at home, with a median cost of $97 per treatment compared with $136 for hospitals and $108 for clinics. HCFA is proposing to institute a dual payment system, paying hospitals an average of $132 per treatment and clinics an average of $128. The hospitals and clinics could still collect those fees for supervising the care of patients who are dialyzed at home, where the cost presumably would be cheaper.
The rationale for the change is that it will encourage competition, forcing inefficient, high-cost operators out and rewarding those who operate efficiently.
According to one well-placed HHS official, who asked not to be identified, hospitals haven't complained about the proposed change yet, even though it means a significant reduction from what they now receive.
That is not the case, however, for the free-standing, independent clinics. Dr. Constantine (Gus) Hampers, chairman of the board of National Medical Care Inc., which operates 110 free-standing facilities, has blitzed the country with press releases announcing the "potential closing of a large number of artificial kidney centers," including six that NMC operates in the Washington and Baltimore areas.
NMC is by far the largest operator of free-standing clinics in the country, with income of more than $220 million in 1980. According to Hampers, the new rule and payment structure, if implemented, will force his company to close 51 clinics.
Hampers said that if the Reagan administration really wants to foster competition in the health care industry, it should implement a uniform payment structure, make it higher than the proposed fee, and institute strict controls on facilities that say they can't operate within the system. Such exceptions now cost about $150 million a year--most of it paid to non-profit hospitals.
If these proposals were followed, Hampers says, his clinics could go head-to-head with hospitals. "The way to save money," he said, "is to push the high-cost operators into a low-cost mode, not eliminate the low-cost operators."
According to the HHS official, Congress directed HCFA in the 1981 Omnibus Budget Reconciliation Act to try to encourage home dialysis and to institute a dual payment scheme. The official concedes that some clinics and some hospitals will be forced out of the dialysis business. Roughly 46 percent of the hospitals and 28 percent of the dialysis clinics now charge more than HCFA is proposing. "We can't guarantee that every facility that provides service now will be able to continue to do it," the official said. "This may be the time for National Medical Care to dump some of its inefficient facilities and blame it on us."
What is not at issue here, everyone agrees, is whether the 56,000 to 59,000 persons being treated will continue to receive care. The question for them is not whether, but where, they will be treated. Transferring patients out of clinics is going to cost "someone money," Hampers asserts.
"We made a lot of money because we're good at what we do," Hampers said. "The program is costing a lot of money because the hospitals are a disaster at what they do." If the rule change is adopted, Hampers said, it will mean not only that his company will close 51 dialysis centers but that "we're not going to invest any more money in new centers."