According to a lawsuit, filed in federal court in Atlanta by a doctor and a nurse, one of the nation’s largest providers of kidney dialysis deliberately wasted medicine in order to secure hundreds of millions of dollars in extra payments from Medicare. The whistle-blower lawsuit says that the company, DaVita, used larger than necessary vials of medicine knowing that Medicare would pay for the unused portion of each vial if it were deemed unavoidable waste. As expected, DaVita, which treats nearly a third of the nation’s dialysis patients, has denied the accusations.

The accusations are the latest involving how financial incentives have driven overuse of pharmaceuticals in the dialysis business. At least, that surely seems to be the case. In January, Medicare began a payment system that pays for the overall treatment which means it doesn’t pay separately for the drugs used. Interestingly, many practices, including the size of some vials used, suddenly changed. This provided an instant case study of how financial incentives can influence treatment choices.

Medicare, which pays for most dialysis treatments, used to reimburse clinics separately for the drugs they used. Clinics could make a profit because Medicare would pay more than the clinics paid to buy the drugs. In January, to deter overuse of drugs, Medicare instituted a new system in which it pays a fixed amount per treatment, including most of the drugs used. It’s pretty simple – if the clinic can treat the patient for less than the amount paid by Medicare, it makes money. But if it can’t, then the clinic loses money. This so-called “bundled payment system” has instantly turned drugs from a source of profit to a cost to be avoided. As a result, it appears the dialysis clinics have responded to the new system, but not in a good way.

One of the men who filed the lawsuit, Daniel D. Barbir, was a nurse who served from 2000 to 2006 as director of a dialysis clinic in Cumming, Ga. The clinic was owned by Gambro, a major dialysis chain acquired by DaVita in 2005. Mr. Barbir resigned in 2006 after complaining about the clinic’s practices. Dr. Alon J. Vainer, a nephrologist who was a medical director at various Gambro and DaVita clinics in Georgia, is the other Plaintiff. Dr. Vainer’s positions were not renewed after it was learned that he had filed the lawsuit.

Source: The Atlanta Journal Constitution