October 14, 2019
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California governor signs bill to restrict dialysis profits

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California Governor Gavin Newsom signed legislation yesterday that will restrict the amount of money dialysis providers and drug rehabilitation centers can charge group health plans in the state. The approval of A.B. 290 caps nearly 2 years of debate, a past governor veto of a previous version of the bill, a failed ballot proposition and millions of dollars spent by dialysis providers to defeat the legislation.

The Dialysis is Life Support organization, which has been funded by DaVita Kidney Care and Fresenius Medical Care, said, “A.B. 290 will upend the lives of thousands of low-income, vulnerable dialysis patients by eliminating the charitable premium assistance provided by nonprofit organizations like the American Kidney Fund (AKF).”

“By signing AB 290, Governor Newsom failed to protect the most vulnerable dialysis patients,” Kelly Goss, California State Advocacy Manager for Dialysis Patient Citizens and a member of Dialysis is Life Support, said in a statement. “A.B. 290 will immediately harm more than 3,700 of the poorest and sickest dialysis patients in California. But it doesn’t stop there. Over the long-term, A.B. 290’s rate setting provisions will limit access to dialysis care for all dialysis patients in California.”

Before getting to the governor’s desk, bill sponsor Jim Wood, D-Santa Rosa, agreed to 52 amendments to the bill before it went to the full Senate for a vote.

Jim Wood

“Unquestionably, the amendments make the bill better,” Wood told Healio.com/Nephrology in the week prior to Newsom’s signature. “Some of the reasons for the extensive amendments was to provide patient protections and to do everything possible to address concerns that AKF would abandon patients here. I have ensured that patients currently being provided this assistance are not affected, even though that means allowing the facilities to receive the higher reimbursement rates. I am confident the protections are there if AKF is interested in continuing operations.”

In a statement released by LaVarne Burton, AKF president and CEO said, “Today is a very sad day for low-income kidney disease patients in California. By signing A.B. 290, Governor Newsom has thrown 3,700 low-income, mostly minority dialysis and transplant patients into an avoidable crisis of the legislature’s making. On the day this bill becomes law – Jan. 1, 2020 – the American Kidney Fund will be forced to stop providing financial assistance to these vulnerable patients who depend on it to access the health care they need to stay alive. A.B. 290 would require us to provide to insurers personal information on our grant recipients – people who are low-income and largely minority – just because they need charitable help to pay their bills. That is not only wrong, but it also unlawful under the federal regulations governing our program and others like it.”

A.B. 290 requires that third-party payers of health insurance premiums, like the AKF, reveal to commercial health plans the names of patients who get premium assistance, along with including the names of dialysis providers who provide financial assistance to each patient. The AKF has indicated it would leave the state if the bill passes.

“The legislature has forced a decision we never wanted to make: if signed by the governor, we must stop providing financial assistance to California dialysis and transplant patients,” Burton wrote in a statement prior to Newsom’s decision.

Dialysis providers Fresenius Medical Care and DaVita Inc., which have spent more than $100 million in the last 2 years trying to defeat the bill and similar legislation supported by the state’s health care worker unions, treat more than 70% of the 70,000 patients on dialysis in California. DaVita and Fresenius funded coalition groups to fight the legislation, which were successful in helping to defeat a state ballot measure last November aimed at capping profits at 15% over their cost for providing health services.

A.B. 290 has been supported by Health Access California, the California Labor Federation, California Association of Health Plans and the Association of California Life and Health Insurance Companies.

The AKF has been fighting the bill because operating its Health Insurance Premium Program (HIPP) is based on an agreement dating to 1997 with the Office of Inspector General to keep patient information related to provider donations confidential. HIPP uses funds donated by dialysis providers to pay health care premiums for patients.

However, Wood said the legislation allows the AKF to obtain an opinion from the OIG as to whether A.B. 290 would violate the agreement about patient privacy before the legislation takes effect.

“I think it’s unconscionable that the AKF is using a threat to pull out of California when the two legal opinions we obtained say nothing in A.B. 290 that would require them to leave California ... Their actions only confirm for me that they are not interested in actually providing true charitable care,” Wood told Healio.com/Nephrology.

Wood obtained an opinion from the state’s legislative counsel in June as to whether divulging patient names who benefited from premium assistance would violate the OIG agreement.

“It is our opinion ... the American Kidney Fund would remain in compliance with the arrangement approved in the (OIG) Advisory Opinion 97-1 issued by the Office of the Inspector General,” the opinion said.

In a statement, Fresenius Medical Care said it was: “deeply saddened by Governor Newsom's decision to sign AB 290. This is flawed legislation that will drastically impact California's most vulnerable dialysis patients who rely on charitable premium assistance to support the affordability of their insurance coverage. We stand ready to support these patients and continue to provide superior dialysis care both in-center and at home. 

"We hope that Assemblyman Wood and other proponents will work as hard as they did to pass this new law to ensure impacted patients can afford their increasing out-of-pocket costs and access to this life-sustaining care. This charitable support helps ensure vulnerable patients don't have to choose paying for their health care over housing and food. We are also concerned that this law will result in patients only being able to access their life-saving care at hospitals due to lack of insurance coverage, and we will support these patients' transitions to whatever extent possible. We offer our assistance to hospital systems and extend an open invitation to contract with them for trained dialysis staff, supply chain needs, and patient care transitions." – by Mark E. Neumann

References:

https://dialysislifesupport.com/thousands-of-californians-in-jeopardy-with-ab-290-signature-by-governor-newsom www.documentcloud.org/documents/6427702-06-28-19-Leg-Counsel-Memo-AB-290-2.html

www.kidneyfund.org/news/news-releases/ab-290-amends-fail-to-protect-patients.html

www.kidneyfund.org/news/news-releases/ab-290-signed-creates-crisis-for-California-kidney-patients.html

https://www.prnewswire.com/news-releases/fresenius-medical-care-north-america-responds-to-signing-of-ab-290-in-california-300937703.html