Largest Medicare Advantage Plans Pay Big Markups for Dialysis

By USC Schaeffer Center

“The dialysis industry is heavily consolidated and two large national chains are the dominant provider in most communities,” said Eugene Lin, a clinical fellow at the USC Schaeffer Center and an assistant professor of nephrology at the Keck School of Medicine of USC. “As a result, these chains can wield their market power by forcing insurers to pay high prices. We’ve seen evidence of this in the commercial market, and now we are seeing the same thing in Medicare Advantage.”

The study, by researchers at the USC Schaeffer Center for Health Policy & Economics, appears in the August 2022 issue of Health Affairs. The researchers found:

• Two large providers dominate the dialysis market and use their leverage to negotiate Medicare Advantage payments that are significantly higher than what traditional Medicare pays.
• High markups could increase patients’ out-of-pocket spending and impact the financial viability of these plans.
• Researchers expect to see an increase in dialysis patients covered by Medicare Advantage. Prior to a change of rules in 2021, most dialysis patients were enrolled under traditional Medicare.
• Policymakers should address market consolidation among dialysis providers.

To read more about the study’s findings, click here.