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TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

As Americans continue to debate health care reform, we're going to take a look at a program funded by Medicare that some people consider the closest the U.S. has come to socialized medicine.

In 1972, during the Nixon administration, Congress changed the Social Security Act to give medical coverage to virtually anyone diagnosed with kidney failure, coverage that included dialysis, a medical procedure which had only recently been developed.

But this compassionate program has had some troubling health and financial outcomes, according to a new article based on a year-long investigation by my guest Robin Fields. She's a senior editor and former reporter for the investigative journalism group ProPublica.

Her article was published on the ProPublica website and in the new edition of The Atlantic magazine, which partnered with ProPublica on the project.

Robin Fields, welcome to FRESH AIR. Now, you say that this program of dialysis that we have now is considered by some to be the closest we've ever come to socialized medicine. In what way?

Ms. ROBIN FIELDS (Senior Editor, ProPublica): Well, actually, a doctor that was speaking to an editor of mine once referred to it as socialized medicine for an organ.

It gives comprehensive coverage, under Medicare, for all patients who suffer from the same condition, which is kidney failure, and it not only covers their dialysis and their transplants, it actually covers all of their medical costs under a sort of a fixed reimbursement system that goes through Medicare.

GROSS: Now, you write that a program, this dialysis program, once envisioned as a model for national health care, has evolved into a hulking monster. In what sense has it become a hulking monster?

Ms. FIELDS: Well, for one thing, it's hugely larger than anyone could ever have imagined. There are far more patients. There are far more complicated patients. And the expense of it is wildly beyond the expectations of the architects of the program.

GROSS: It's kind of amazing that this dialysis program became an entitlement during the Nixon administration because right now, Republicans are so opposed to health care reform. And, you know, Republican President Nixon signed this entitlement. Congress passed it in 1972. What were some of the reasons behind the passage of this entitlement?

Ms. FIELDS: I think that you hit on a really interesting point there, which is that the mindset of the country was very different. And the expectations were quite different, I think.

I think this kind of care was born in part just out of compassion. Here was a chronic illness, and there was a treatment for it, but most people were not getting it simply because of money. And I think that there was a moral imperative there to step in and do something in the sense that it wasn't right that in the wealthiest country on Earth that that was happening.

Immediately after the passage of the program, the country went into a fairly deep recession, and it's possible had it gotten somehow pushed off the agenda and delayed that they wouldn't have done it.

Also, the role of government and the role of government in health care really has become a subject of very heated debate in the years that have followed, whereas at that point in time, there was actually enormous consensus to do this and to do this particular program, although obviously it was perceived as a very small and localized program.

GROSS: One of the things this program was a reaction against is an actual life and death committee at a medical center that was, what, screening who was and who wasn't eligible for treatment with dialysis?

Ms. FIELDS: Yes, and was the subject of a hugely famous and very moving story in Life magazine back in 1962. It was simply the model of rationing.

GROSS: Which is so controversial now, and when President Obama was trying to pass health care reform, one of the arguments offered against it by some Republicans was that this is going to end with death committees.

So what was this life and death committee? How did it function, and why was it controversial in its time?

Ms. FIELDS: It was a committee made up of sort of regular people, not doctors. And they were anonymous. And they would weigh each case and each person, and they would consider not only their overall health and their ability to pay but also things like their social worth.

And that's always a hugely controversial concept, the worth of a human life. How can anyone hope to try to boil that down into a yes or no answer? And yet also the source of the controversy was that once they made their decisions, the people they didn't choose were basically going to die.

GROSS: So was somebody who was, you know, a middle-class professional more likely to get the treatment than somebody who was poor?

Ms. FIELDS: I think they also were factoring in things like: Did they have children? Were they active and important in their communities? What kind of professions did they have? They were trying to add up, in some kind of non-formula formula, the worth of a human being.

GROSS: And so this was considered, when the story was written about this in Life magazine, this committee was considered to be a morally bad thing?

Ms. FIELDS: I think it was supposed to be a morally devastating and difficult thing. They had no choice but to ration out these spots. It wasn't as though if the committee didn't exist, those choices wouldn't have been made. They would just have been made by doctors or by someone else. The tragedy was that they had to be made at all.

GROSS: So you say that the Medicare program that covers people in kidney failure, including dialysis, was never intended to cover such a large number of patients. Would you just compare what the projections were to what the actuality is now?

Ms. FIELDS: Sure. When the program started, the original estimates thought there could be perhaps 35,000 patients. And then as that became clear that it wasn't going to be true, they thought maybe 50,000 or maybe 90,000.

But what's really happened is that the patient community has continued to grow because of conditions like diabetes and obesity becoming so much more common in the larger health care system. And what we have right now is a situation where more than 100,000 people start dialysis every year.

GROSS: And the connection between diabetes and kidney failure is?

Ms. FIELDS: Well, I would say it's a more than 40 percent of the dialysis population has diabetes as an underlying condition. And that certainly wasn't true at the beginning because really, when they were choosing patients before the program, they didn't let people who had conditions like that get dialysis. They didn't know if the treatment would work for them.

Once they had the entitlement, and they had sort of a financial structure which allowed them to offer dialysis more broadly, people like that flowed into the program, as well as older patients, as well as patients with hypertension and other complicating conditions.

GROSS: So before we talk about why dialysis is so expensive and why it's so difficult for patients, would you just explain what dialysis is?

Ms. FIELDS: Dialysis is a form of chronic care given to people who have kidney failure where they're hooked up to a machine that effectively tries to do the kinds of things that your kidney would naturally do. It cleanses the blood of toxins and waste and excess fluid by taking it out of the body in a circuit, sending it through a specialized filter and returning it to the body cleansed.

And people generally get in-center, what's called in-center hemodialysis is the most common kind of dialysis. And that generally takes place in an outpatient clinic, and patients come in three times a week is a typical regimen, and the treatment averages three to four hours in length. And they sort of do it for as long as they continue to be alive. And it's a pretty grueling way of life.

GROSS: So when the program covering care for people in kidney failure, including dialysis, was created by Congress in 1972 and signed by President Nixon, most of the dialysis centers were in hospitals. Now the overwhelming majority, more than 80 percent of those dialysis centers, are private centers. They're run by large corporations. Can you explain how and why that transition happened from hospitals to corporate care?

Ms. FIELDS: I think it has very much to do with the payment policies of the program from the get go. The payment policies were set at the beginning in some ways to be quite generous and to draw providers in to create the desperately needed access that the program was based on.

And the people who flowed in to create that access were mostly for-profit providers. At first, it was kidney specialists, doctors who had practices, and what would happen is they would start a clinic as an adjunct to their practice, and often then they would be bought out by a chain of some kind.

And ultimately, as the payment policies evolved to somewhat suppress the price of each treatment, what you found happening was that that sort of favored providers who had economies of scale and could have purchasing power that lowered their costs. And what - the product of that has been a vast changeover in who provides the care.

Hospitals have sort of almost completely gotten out. They're really about eight percent of the providers out there. And what's left is a provider community almost, you know, 80 percent or more made up of for-profit providers, of which the biggest are two big for-profit chains.

GROSS: So the two big companies that run most of the dialysis centers are DaVida and Fresenius. Tell us something about those companies.

Ms. FIELDS: Well, both of them run more than 1,500 clinics apiece and have more than 120,000 patients apiece. The closest provider to them in size has less than 300 clinics. Both of them have made major acquisitions within the last five to six years, which significantly boosted their proportion of the market.

I think that both of them have also worked very hard to evolve into one-stop shopping for dialysis. They do all sorts of related businesses, and they have labs. They have pharmacies. They have vascular access clinics, which is something that dialysis patients use quite a lot.

And they've done a lot in terms of integrating the care that they offer, both sort of horizontally and vertically, to make themselves more able to sort of generate revenue, different revenue streams from the same patient community. And I think that they've been solidly successful over the last several years in doing that.

GROSS: Well, Fresenius, one of those two corporations, is actually the leading maker of dialysis machines and supplies. So they're making a profit on the technology, as well as on the patient care.

Ms. FIELDS: Actually, Fresenius started out as a manufacturer and became a big service provider in the United States by acquiring the clinics of the original dialysis chain, National Medical Care, back in the late '90s. So in a sense, manufacturing is where they began.

GROSS: My guest is Robin Fields. Her new article investigating the benefits, risks and costs of Medicare's lifesaving dialysis program is published in the new edition of The Atlantic and on the ProPublica website. We'll talk more after a break. This is FRESH AIR.

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GROSS: If you're just joining us, my guest is Robin Fields. She's a former reporter and now a senior editor at the investigative journalism group ProPublica, and her new article on dialysis about lifesaving care at great risk and cost has just been published in The Atlantic as a partnership between The Atlantic and ProPublica.

Your article not only covers how we got to this point of spending about 6 percent of all Medicare money on treating people with kidney failure, including dialysis treatment, you write about the conditions that you found and that investigators have found at the dialysis centers that provide the treatment.

Can you just give us a sense of some of the problems that you found?

Ms. FIELDS: What we found in examining inspection reports as broadly and deeply as we could was that many of the same patterns cropped up, and issues cropped up, time and time again: unsafe and unsanitary conditions, prescription and medical errors, issues of infection control and breaches in infection control, issues that dealt with the amount of staffing, the training of staff and the supervision of staff.

I would emphasize this isn't all clinics. Some clinics do a great job under very difficult circumstances. But what we found was, not only looking at inspections but in interviewing people broadly, was that some clinics are operating in a way that seems to ratchet up risks and that reflected some of the frustrations voiced by patients and doctors and other practitioners alike about one-size-fits-all care that didn't really give patients the best of the medicine that's available or the best of the treatment options that are available.

GROSS: Now, when you say unsanitary conditions, you describe clinics in which there's blood in the seams of the chair, blood splattered on the ceilings, blood on the floor. How does the blood end up there? What is it about the procedure that there would be blood on the ceiling?

Ms. FIELDS: Well, obviously, the very essence of dialysis is moving blood through the patients, from the patient to the machine and back into the patient. So there's constant access to the patient's bloodstream.

They start the treatment by, you know, inserting needles into the patient's access points. It is intrinsically a treatment that exposes patients to bleeding.

But those kinds of conditions are not viewed as acceptable by the inspection system and pose infection risks and other types of risk to patients if they are allowed to exist.

GROSS: Now you mentioned staffing cutbacks. I mean, what that boils down to at some of these centers is that care that used to be done by nurses is now being done by unlicensed, unlicensed - who?

Ms. FIELDS: Technicians, although eventually they have to get certified. It's true that staffing at dialysis clinics changed drastically. Those changes began in the '80s, with price reductions, and have become sort of the norm.

Some people view this as a natural progression in that some of the processes of dialysis have become simpler, the technology of the machines has become more advanced, and there's a sense that on the one hand, you might not need a skilled workforce, and on the other hand, with our nursing shortage, that a more skilled workforce might be unrealistic.

But at the same time, there is no doubt that the kinds of tasks that are done day-in, day-out at dialysis clinics are now done mostly by technicians who are supervised by nurses.

GROSS: So if most of the employees are techs, technicians, what do the regulations say about how many doctors and nurses have to be present at the facility where dialysis is being performed?

Ms. FIELDS: It is required for clinics to have a medical director who is a doctor, but they are typically not on-site at all times during treatment. Usually, doctors come through on rounds, and there must be at least one registered nurse while patients are being treated who is a treating nurse. Those are the requirements in terms of the licensed staff.

Technicians must be certified within 18 months of being hired through a recognized state or national program. But they can start with a high school degree and having passed an in-house course.

There are no staffing ratios that are employed federally. Some states have some requirements in this regard, but most states don't.

GROSS: Right now, an ongoing debate about health care reform and what should be reimbursed or shouldn't be reimbursed, what kind of incentives there should be for cost-cutting - so what are some of the big debates that have happened since 1972, when this kidney failure and dialysis program went into effect, about what Medicare should cover and what it shouldn't and what kind of qualifications, so to speak, patients should have in order to be covered?

Ms. FIELDS: I think that there's been a real resistance to creating any kind of conditions on patients getting into - being eligible for this program.

The basic diagnosis of kidney failure has sort of been it. And I think as a program created to end rationing, there's a great sensitivity on not creating conditions that might rule out patients who are of a certain age or had certain other types of complications.

Obviously, that's sort of almost a third rail for a program that was created to end those sorts of decisions.

In terms of what's covered and what's not covered in payment policy, from the start, the way that dialysis has been paid for is by the treatment. There's been a base rate for each treatment. Originally, it was about $138, and it's never been, unlike most of Medicare, tied to inflation, which has been a big complaint and issue among providers.

In the '80s, after initial sets of audits found that providers were - that certain providers especially were doing quite well off of the public program, there was a sort of a big debate that evolved over how much profit was seemly off of a public program and also how could you control how much of the money you were spending on a dialysis treatment went to care versus went into the pocket of the provider.

And this has been a source of tension for the program from the very beginning and, as you point out, runs through a lot of the conversations that are being had about health care.

GROSS: Robin Fields is a senior editor at the investigative journalism organization ProPublica. Her new investigation into the dialysis industry is a joint project of ProPublica and The Atlantic magazine. We'll talk more about dialysis and the Medicare program funding it in the second half of the show. I'm Terry Gross, and this is FRESH AIR.

(Soundbite of music)

GROSS: This is FRESH AIR. I'm Terry Gross, back with Robin Fields. She is a senior editor and former reporter for the investigative journalism organization ProPublica.

We're talking about her year-long investigation into the quality of care at dialysis centers. She also examines the Medicare program that funds dialysis for patients with kidney failure and oversees the dialysis clinics. She describes this Medicare program as the nation's most ambitious experiment in universal health care. It was passed by Congress in 1972 during the Nixon administration. Fields' article is published in the new edition of The Atlantic magazine and on the ProPublica website.

You write that the government created a perverse incentive by allowing dialysis clinics to bill Medicare separately for certain medications and then reimbursing the centers at a markup over what they paid the drug makers for those medications. And you write that dialysis actually became the loss leader. A lot of these clinics were really making their profits off of drugs, and then the question became did the patients really need those drugs or were the drugs being prescribed for profit-making reasons? What did you find?

Ms. FIELDS: Yes. There was a huge debate over this several years ago, and a great concern that drugs were being overused, in part because they were driving profits and there were studies done that found in some cases that for-profit operators tended to use larger doses and more injectable drugs than were used at nonprofit centers. So, yes, this became a huge concern in the sense that it was distorting the care. That by structuring the payment system this way you were compelling, almost, people to behave in certain ways for economic reasons that they wouldn't otherwise behave.

GROSS: So you write in your article that when compared to other countries, the costs are higher in the United States for dialysis and kidney care treatment. However, the outcomes are lower when compared to, or the outcomes are worse when compared to other countries. Is there an explanation for that?

Ms. FIELDS: There are several. Part of it is that I think that our patient population is different in certain ways than some of theirs. Our patients are more inclined to have things like diabetes, heart disease. So we may have a more difficult patient population. That could explain some of the differences.

But some of the differences clearly have to do with practices, including the kinds of practices that are a function of having a less integrated health care system and having patients come in with poor vascular access and poor overall health in crisis conditions. And then some people would certainly say that the general way that our clinics function is fundamentally different in certain ways than the way clinics function in other countries. Treatments tend to be a bit shorter. That's been linked to lower life expectancy and things like that.

GROSS: And what kind of profits are the two main corporations who run the dialysis centers making?

Ms. FIELDS: They've been consistently profitable. They make about $2 billion plus in operating profits per year. It's...

GROSS: Each makes two billion?

Ms. FIELDS: No, no, no, no. Collectively they make about $2 billion in operating profits a year. They would certainly say that much of their profit margin comes from the small percent of patients who are privately insured. It's pretty clear that the two big chains are doing better financially than other providers are and have significantly more latitude in terms of their margins than smaller providers, who, many of whom are really struggling.

GROSS: Are there arguments on both ends here, one saying so much of the government money is going to big profits for these corporations? And the other side are the argument going, if it wasn't for these big corporations who would be providing the care, because it's hard to manage that and not lose money, and they're able to do it because they're doing it in bulk?

Ms. FIELDS: I think you put that very, very accurately. I think there's always been an argument about how much profit is seemingly off of this area of care. And I don't know that there's an answer to that - a right answer, anyway. I mean, and even nonprofit providers have to be somewhat concerned with finances because they need to, you know, pay their workers and keep the lights on. So it isn't as if money comes entirely out of the equation when it comes to nonprofit providers. But you're quite right when you say that we rely utterly on for-profit providers at this point, and particularly, the big chains to provide the access of care that is at the center of the system.

GROSS: Are there two tiers of systems right now for dialysis; one for people who can't - who don't have their own insurance and who can't afford better care and another for people who have private insurance and can afford better care?

Ms. FIELDS: No. I think that that's not really how the system breaks up. I think that where there seem to be different tiers, if you will, of care is mostly between patients who are extremely active and empowered and involved in their care and more likely to try things that are considered quote/unquote "alternative therapies" such as home dialysis or peritoneal dialysis, where the patient takes on more independence and responsibility for their own care and those types of care versus in-center tend to be - tend to yield better outcomes, versus patients who sort of are more passive and go into the system of in-center care, or for various reasons are not suited for those types of alternative therapies.

GROSS: Robin Fields, thanks so much for talking with us.

Ms. FIELDS: Thanks for having me.

GROSS: Robin Fields is a senior editor and former reporter for the investigative journalism organization ProPublica. Her investigation into the cost and the quality of care at dialysis centers is a joint project of ProPublica and The Atlantic magazine.

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