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The Grady Controversy and ESRD Policy

By Mike King

The current controversy over closing Grady Memorial Hospital’s outpatient kidney dialysis clinic is indicative of more than just the struggling Atlanta hospital’s hard choices about what services it can afford to make available for the region’s poor and uninsured.


While much of the focus on the closing has centered on what to do about the illegal immigrants who depend on Grady’s dialysis unit, the pathology of the problem lies within flaws in the nation’s complicated and – at times nonsensical – policies for covering end-stage kidney disease.


To fully understand Grady’s dilemma, it helps to understand how we got here and why we’re stuck now.



Not long after Medicare was enacted, dialysis – then seen as a miracle of medical technology – became widely available. While the process of artificially filtering toxins from the bloodstream was a lifesaving process, it was also very expensive and labor intensive. Many patients need the treatment three or more times per week.


Still, with hundreds of thousands of patients standing to benefit from it, the demand to make the technology widely available to Americans – rich or poor, young or old – was impossible for Congress to ignore. That’s why the End Stage Renal Disease (ESRD) program was created in 1973 under the auspices of Medicare – the first major expansion of Medicare and one that now costs $23 billion yearly.


Commercial insurers were more than happy to be relieved of the cost of providing this technology to the patients they covered. They still pay the bills for patients in the early or temporary stages of kidney failure, but once physicians certify that the patient’s kidneys are permanently unable to function, they become Medicare beneficiaries. The problem is that process sometimes takes months, or years, and until that point uninsured patients – and immigrants in the country illegally who don’t qualify for Medicaid – are on their own in finding dialysis centers willing to treat them.


That’s the gap Grady was filling with its traditional role as the provider of last resort for the poor and uninsured. Grady established an outpatient dialysis program years ago when private dialysis centers were lining up instead to take patients covered by the Medicare ESRD program. The outpatient clinic is now costing Grady about $2 million in losses each year.


Some of those for-profit dialysis clinics will indeed take uninsured patients – in anticipation of most of them eventually qualifying for Medicare reimbursement – but illegal immigrants can’t enroll in the program. (It takes legal immigrants five years to qualify.) That explains why the Grady dialysis clinic closing hits illegal immigrants in need of dialysis so hard. The plain fact of the matter is that unless they can find a private clinic willing to treat them for whatever they can pay, their only other option – short of returning to uncertain care in their home countries — is to forgo dialysis treatment.


And here’s where it gets crazy:


When they give up treatment and their kidneys fail, they go into toxic shock and wind up – you guessed it – in the emergency room needing acute care and several days of inpatient dialysis to save their lives. Ironically, because of the emergency nature of the treatment, there is a special Medicaid program that reimburses hospitals for inpatient treatment of this kind for illegal immigrants.


Unfortunately this isn’t the only penny-wise, pound-foolish provision of the federal government’s ESRD program. Virtually everyone agrees that kidney transplantation is more cost-effective and provides a higher quality of life for patients with permanent renal failure who are in need of a renal procedure, the problem is in finding and matching donors with recipients. There are simply not enough donor kidneys to supply the demand.


To save money on those lucky enough to get donor kidneys, federal law limits how much Medicare will pay for the drugs needed to suppress organ rejection in transplant patients – drugs that can cost $1,000 to $3,000 a month that must be taken for life. To make matters worse, Medicare will only pay for the drugs for 36 months after the transplant.


If patients don’t have some other form of insurance – impossible in the private market since they are, by definition, afflicted with a life-threatening disease – or if they can’t afford the drugs on their own, the transplanted kidney will fail. When that happens they have to return to dialysis treatment. The anti-rejection drugs cost $12,000 to $36,000 per year for each patient. Dialysis runs the ESRD program about $71,000 per year per patient. That’s not wise public policy, that’s just dumb.


All this leaves Grady having to make some hard choices. Unfortunately that’s what happens when Washington wants to try to do the right thing, but can’t muster the courage to pay for it.


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