ARA to pay $32 million in settlement with UnitedHealthcare

Issue: September 2018

ARA has agreed to pay UnitedHealthcare Group $32 million to settle two legal actions filed by the health plan in Florida and Massachusetts over the dialysis provider’s business practices.

“We are pleased to have reached a resolution on this matter and we look forward to building a more cooperative relationship that enables us to collaborate on high quality care for dialysis patients,” the companies said in a joint statement. A binding settlement is expected by August 1.

In conjunction with the settlement, ARA and UnitedHealthcare will enter into a 3-year network agreement that will provide UnitedHealthcare plan participants with in-network access to all ARA’s dialysis clinics in 26 states and the District of Columbia at specific reimbursement rates for those services. The network agreement will include UnitedHealthcare’s health benefit products across the commercial-, Medicare Advantage- and Medicaid-managed care markets. The network agreement will also include certain value-based contracting features designed to improve quality and lower hospitalization costs for UnitedHealthcare plan participants who receive kidney care at ARA clinics, the companies said.

The settlement agreement releases all claims asserted against ARA and the other named defendants in the actions, which were filed in Florida in 2016 and in Massachusetts earlier this year without ARA admitting any liability or wrongdoing, the joint statement said. The agreement also releases all claims arising from actions brought in Florida or Massachusetts that were asserted against ARA or against the nephrologists or other health care providers who have entered into joint venture arrangements or medical directorships with ARA without any admission of liability or wrongdoing.

In the Florida case, UnitedHealthcare accused ARA of steering new patients on dialysis away from Medicare plans and into United’s commercial health plans so the dialysis provider could charge higher rates. In the Massachusetts case, filed in May, United accused ARA of luring nephrologists from its own health plan into ARA-administered joint venture agreements so that ARA could then charge United higher out-of-network fees for dialysis services.

According to ARA’s 8K Securities and Exchange Commission filing, it will pay the $32 million over five installments through August 2022. The company said in the filing that it now expects 2018 adjusted earnings before interest, taxes, depreciation, and amortization-noncontrolling interest to be in a range of $105 million to $111 million compared with its prior guidance range of $110 million to $116 million. The company’s second-quarter 2018 earnings conference call is scheduled for August 8.

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References:

http://ir.americanrenal.com/news-releases/2018/07-09-2018-211528698

http://ir.americanrenal.com/sec-filings