Strange financial logic of Medicare kidney coverage

The math never made any sense to Crystal Perkins.

Medicare paid more than $100,000 for her kidney transplant and for three years covered the bulk of the $2,400-a-month drug that kept her body from rejecting the organ.

But then her Medicare coverage expired. For a few years she managed to keep up her medications, paying out of pocket or begging at pharmaceutical companies and hospitals. But eventually she started skipping doses, and by 2009, the kidney was failing and had to be removed.

And it was then that Medicare kicked back in, paying for dialysis - at almost four times the cost of the drugs, according to government estimates - and eventually for another transplant.

Administered by the federal government, Medicare primarily provides health-care coverage for the disabled and those over 65, but for four decades it also has covered the care of those in what is classified as end-stage renal failure.

Perkins now awaits a second kidney for transplant at Johns Hopkins Hospital in Baltimore. The 40-year-old mother of three from Camden is not entirely sure how she will pay for the drugs this time around, but plans to go ahead with the procedure anyway.

"The first time I thought I could stretch out the medicine I had, but it didn't work out," Perkins said. "I worry about it, but I think I can find ways to get around it. My kids will be older and moving out, that's a big expense. I'm also hoping the law will change."

Perkins' dilemma is not unique and comes almost two decades into a campaign by patients, doctors, and public-health advocates to change a government health program they say allows low-income patients to lose their transplanted kidneys needlessly - the medical equivalent of buying a car and then refusing to pay for an oil change.

A bill introduced last year and stalled in Congress would extend coverage of the post-transplant drugs indefinitely. But after years of failed efforts, the policy has almost taken on a mythical status in the annals of curious government policy.

"There's no logic to it," said Uwe Reinhardt, a health economist at Princeton University. "You see this in our health-care system. People budget something and then they give them a budget number from the White House or some committee and they fit in what they can. They leave something like this out and hope somebody in the private sector will take care of it and fill the gap."

Medicare coverage of kidney ailments stems from a situation in the mid-1960s when dialysis, which filters waste from the blood, was a relatively new technology, so expensive that hospitals created panels to decide who would get the care and who would not, said Troy Zimmerman, vice president of government affairs for the National Kidney Foundation, an advocacy group based in Philadelphia.

While coverage was extended in 1993 to cover the immunosuppression drugs that keep the recipient's immune system from attacking the transplanted organ, the coverage lasted only for three years.

"The anticipation was they only needed short-term coverage because they'd be back at work and get health insurance," Zimmerman said.

Perkins, whose kidneys stopped functioning after the birth of her second child, did go back to work after the transplant, taking a job as a hairdresser at a Camden salon.

But the job did not include health insurance, and when she tried to get coverage, she said, she either was quoted premiums she could not afford or was told the coverage would not kick in for a year.

"I cried and cried so many days, calling different places," she said. "I couldn't afford my medicine. How was I going to afford insurance?"

The number of people who have lost transplanted kidneys as a result of the Medicare policy is difficult to gauge, Zimmerman said.

A host of factors could be involved, and those patients who do start rationing medication are unlikely to tell their doctors, he explained. In addition, the relatively small number of people affected means little analysis has been done.

"About 150,000 people are living with a kidney transplant right now. It's a blip on the Medicare screen," Zimmerman said.

Whether it costs more to provide the post-transplant drugs indefinitely or provide dialysis to the relatively small minority of people without health insurance or Medicaid is a matter of debate.

According to the U.S. Renal Data System, Medicare spends on average $77,500 a year on a dialysis patient compared with $19,100 for post-transplant care. But many transplant patients have or find health insurance - the percentage of all uninsured patients in 2011 was 15.7 percent, according to the Census Bureau.

In 2009 the Congressional Budget Office said extending drug coverage indefinitely would add $100 million to the $23 billion cost of the renal failure program, according to the New York Times.

But Rep. Michael C. Burgess (R., Texas), who is sponsoring the bill, said the government ended up spending more allowing people to lose their kidneys than it was on the drugs.

"We have all these esoteric arguments," he said. "But here you can make the case you're spending a lot more money if you don't cover the immunosuppression drugs. . . . You've got rehospitalization, the dialysis you would have to reinstitute, never mind the inhumane aspect of having someone going through the terror of a diagnosis of acute renal failure."

The U.S. Department of Health and Human Services did not respond to a phone call for comment.

This is not the first time a bill has been introduced to change the law, but Burgess was optimistic about his chances this time around.

"The budgetary concerns are real. Everything that scores as a cost is going to pose its own special problem," he said. "But we have 123 sponsors on this. It just makes sense."

Another possibility is that the government-subsidized insurance plans to be created under President Obama's Affordable Care Act would pick up those patients who find themselves without drug coverage.

But the specifics of those programs are still being worked out, Zimmerman said. "We're concerned some of the lower-tier plans wouldn't cover these drugs."

For now, Perkins is left to wait and see.

Her situation went from bad to worse in 2009. At the same time her kidney was failing, her husband, a driver for a medical transport company whom Perkins had met on her regular visits to the hospital, was shot in a shoulder while moonlighting as a cabdriver.

Neither could work. They fell behind on their bills and their mortgage payments and never caught back up. By 2011, their East Camden house was in foreclosure and they had to move to a rental in the city's Parkside neighborhood.

There Perkins spends 10 hours each day connected to a dialysis machine. Her health is too unstable to work, and she is trying to raise funds to cover her share of the transplant surgery - roughly $50,000 - through bowling nights and cookouts.

Her oldest child, now 23, is getting tested to see if he can donate his kidney. But Perkins says she is not sure whether she'd accept.

"I'm skeptical. He's still young, and I'm not sure he won't have some of the same issues I've had with my kidneys when he's older," she said.