March 20, 2019
3 min read

California bill to restrict dialysis profits advances

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The California Assembly’s Health Committee voted March 19 to advance A.B. 290, a measure that would limit dialysis provider profits when insurance premiums are covered by third-party payers.

In a statement about the vote, American Kidney Fund president and CEO LaVarne A. Burton said, “This bill puts vulnerable patients in the middle of a longstanding financial feud between insurers, unions and providers. We hope California legislators understand the devastating consequences this legislation will have on thousands of low-income, predominantly minority Californians and reject the measure as it moves through the legislature.”

The bill was introduced on January 28 by State Assemblyman Jim Wood, D-Santa Rosa, chair of the health committee, less than 4 months after California Governor Edmund G. “Jerry” Brown Jr. vetoed similar legislation that would have allowed state health regulators to cap dialysis profits. California voters also turned down the proposal at the polls in November 2018.

“Runaway costs in health care affect everyone, and I’m committed to protecting patients, but I’m not interested in protecting dialysis companies from scamming the system for their own benefit.” Wood said in a press release.

A.B. 290 and previous legislation to restrict dialysis profits, along with a staff-to-patient ratio bill introduced in 2017, have been supported by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which has been trying to unionize dialysis workers in the state. Dialysis providers DaVita Inc. and Fresenius Medical Care North America, which spent more than $100 million on helping to defeat the legislation last year, provide most of the dialysis care in the state.

The AKF’s Health Insurance Premium Program (HIPP), which is funded by donations from dialysis providers, is one of the targets of Wood’s legislation. The program has been accused of agreeing to pay for higher insurance premiums in the past after dialysis providers reportedly “steered” patients on dialysis away from Medicare coverage and toward commercial health plans, where the providers could charge more for dialysis treatments. The AKF has since added safeguards to the HIPP program to determine if the commercial health plan provide more benefits to the patient compared to Medicare plans before agreeing to cover the premiums.

Wood’s bill would restrict payments to dialysis facilities if they help fund third-party payers to cover insurance premiums – similar to the way the HIPP program works.

“For a contracted financially interested provider that makes a third-party premium payment or has a financial relationship with the entity making the third-party premium payment, the amount of reimbursement for covered services that shall be paid to the financially interested provider on behalf of the enrollee shall be governed by the terms and conditions of the enrollee’s health care service plan contract or the Medicare rate, whichever is lower,” according to the bill.


The bill also disallows providers from billing patients to make up the difference. Also, third-party payers like the AKF are required under the bill to provide the name of the patient receiving financial assistance to the health care service plan or insurer. That would give the health plan the option to reject the request by the patient seeking medical coverage, the AKF has said. Third-party payers would also have to guarantee premium coverage for a full plan year unless the enrollee obtains other health coverage, or if the enrollee dies during the plan year. “If the entity provides coverage for an enrollee with end-stage renal disease,” the legislation notes, “the entity shall agree not to condition financial assistance on eligibility for, or receipt of, any surgery, transplant, procedure, drug, or device.”

If the third-party payer fails to disclose the name of patients who receive premium assistance, the health care service plan can recover 120% of the difference between a payment made to a provider and the payment to which the provider would have been entitled, including interest, according to the bill.

Likewise, to address the concerns about patients being pushed toward more expensive health plans, A.B. 290 says third-party payers “shall agree not to steer, direct, or advise the patient into or away from a specific coverage program option or health care service plan contract.” –by Mark E. Neumann