“God Help You. You're on Dialysis.”

Every year, more than 100,000 Americans start dialysis. One in four of them will die within 12 months—a fatality rate that is one of the worst in the industrialized world. Oh, and dialysis arguably costs more here than anywhere else. Although taxpayers cover most of the bill, the government has kept confidential clinic data that could help patients make better decisions. How did our first foray into near-universal coverage, begun four decades ago with such great hope, turn out this way? And what lessons does it hold for the future of health-care reform?
Rise of an Entitlement

Dialysis entered the American consciousness in the early 1960s as the country’s signature example of medical rationing. In those days, kidney disease killed about 100,000 people a year. Chronic dialysis was possible, thanks to two inventions: the artificial-kidney machine developed by the Dutch doctor Willem Kolff during World War II and a vascular-access device designed by Belding Scribner, a pioneering Seattle physician who opened the first outpatient dialysis center in the United States. But treatments were expensive, and most private insurers would not pay for them. At Scribner’s medical center, the Life or Death Committee parceled out the few slots, weighing not only the health of patients and their income, but also their perceived social worth.

News reports about the committee’s work sparked one of the earliest national debates over the right to care and put pressure on the government to step in. A turning point came when Shep Glazer, vice president of the largest patient group, made an emotional appeal to the House Ways and Means Committee, as he underwent dialysis on the hearing-room floor. “If your kidneys failed tomorrow, wouldn’t you want the opportunity to live?” asked the 43-year-old father of two. “Wouldn’t you want to see your children grow up?”

The measure establishing taxpayer funding for treatment of end-stage renal disease, signed into law by President Nixon, was expansive, and its lopsided, bipartisan approval reflected the times. Many lawmakers—even conservatives—thought the United States would adopt a European-style national health-care system. Also, the program that took effect in July 1973 was expected to have about 35,000 patients and cost about $1 billion in its 10th year.

Those estimates came to seem almost laughable. The number of dialysis patients surpassed 35,000 by 1977 and has gone up from there. The growth reflected not only lower-than-expected transplant rates and the spread of diabetes, but also positive trends, like better cardiac care. With Americans living long enough for their kidneys to fail and no disqualifying conditions for the program, even the oldest and sickest patients increasingly were prescribed dialysis. Upwards of 100,000 now start treatment each year. “It’s been a perfect example of that line, ‘Build it and they will come,’” said Dr. Jay Wish, director of dialysis services for University Hospitals Case Medical Center in Cleveland.

Because the kidney program absorbed that unforeseen wave—and thus, prolonged so many lives—some call it one of the great success stories of modern medicine. Still, the annual bill for the program quickly outpaced early projections, surging past $1 billion within six years. Per-patient expenditures were expected to drop as technology advanced. Instead they have risen steadily, as drug and hospitalization costs grew for the program’s increasingly frail clientele.

Medicare has struggled to enforce quality standards for dialysis while meeting its prime directive of providing universal access. As the medical community’s understanding of kidney disease grew, the government set biochemical targets for improving care. Clinics got better at hitting them, but overall rates of death and hospitalization have seen little change. And Medicare’s record of making sure that clinics meet health and safety standards has been spotty. Clinics are supposed to be inspected once every three years on average, but as of late 2009, almost one in 10 hadn’t had a top-to-bottom check in at least five years, as shown by data from the Centers for Medicare and Medicaid Services (known as CMS). Nursing homes, by contrast, must be inspected once every 15 months, and in 2006, CMS reported that 99.9 percent had been.

Even when inspectors find that clinics are not meeting government standards, the consequences are seldom meaningful. CMS can demand that facilities submit correction plans, but it cannot fine violators as it can nursing homes. The agency almost never imposes its toughest sanction—termination from Medicare—because clinic closures could hinder access to care. From 2000 to 2008, the agency barred just 16 dialysis facilities; federal regulations set no limits on how many violations are too many. “It’s a judgment call,” said Jan Tarantino, deputy director of CMS’s survey-and-certification group.

When Memphis University Dialysis Center was terminated from Medicare in June 2007, the step had been at least four years in the making. During that time, the clinic was flagged for dangerous conditions, inadequate care, higher-than-expected mortality rates, and subpar clinical results. CMS threatened to yank the unit’s certification in March 2006 and again the following year. Both times, however, even though inspectors continued to find problems, the agency allowed the clinic to stay open.

In April 2007, nine days after CMS sent the center a letter confirming that it was back in compliance, 66-year-old James “Tug” McMurry came in for treatment. When he had slow blood flow after being given his regular dose of blood thinner, staffers administered doses of a clot-dissolving medicine, according to a CMS survey. Later, a nurse told inspectors that a doctor had given a verbal order to administer the drug, but the doctor denied it, writing “This order was not given by me” on a form.

McMurry called one of his sisters, Betty Tindall, on his way home that day. “He said, ‘They don’t know what they’re doing up there,’” Tindall recalled. A couple of hours later, McMurry’s neighbor heard him bang on the shared wall between their apartments. “Help! Help!” he yelled. Paramedics found him slumped in a chair, vomiting. Tests at the hospital showed McMurry had suffered a devastating brain hemorrhage. By the time family members made it to his bedside, he was in an irreversible coma.

In an inspection three weeks later, regulators cited Memphis University Dialysis for failing to provide “safe dialysis services” and violating rules on the proper administration of drugs. They found multiple errors involving blood thinners, including one that resulted in the hospitalization of another patient. This time, CMS revoked the dialysis unit’s Medicare certification, prompting it to close. “It took people dying before they did anything,” said Bobby Martin, an attorney for McMurry’s brother and sister-in-law, who reached a confidential settlement with DaVita Incorporated, the clinic’s owner, in August 2009. (A DaVita official declined to comment on the case, citing patient privacy.) CMS officials disputed the idea that they had acted too slowly. “Please understand that this is not an easy decision,” said Jessica Jenkins, a spokeswoman for the regional office that handled the matter. “We’re not in the business of putting facilities out of business.”

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