California legislators approve bill restricting provider profits, third-party payers

The California state Assembly approved legislation on Aug. 29 that will restrict dialysis provider profits and limit organizations like the American Kidney Fund from paying the premiums of patients receiving dialysis treatment in the state.

Senator Connie Leyva, D-Chino, originally introduced bill 1156 on Feb. 14 to limit third-party payers from covering insurance premiums for dialysis patients and for those entering drug rehabilitation. Since then, the bill has been amended four times and now includes a cap on profits for dialysis providers operating in the state. Under 1156, dialysis providers will be reimbursed at Medicare rates for patients who chose a commercial health plan and who chose to receive AKF assistance in paying their premiums.

Imposing limits on dialysis profits is also being addressed in a proposed initiative on the Nov. 6 election ballot in California that would cap dialysis center profits in the state.

The Senate bill 1156 now heads to the desk of Governor Jerry Brown, who has until Sept. 30 to sign it or veto it. If it becomes law, it could have a major impact on DaVita Kidney Care and Fresenius Kidney Care, which have about 70% of California's market share with just under 600 dialysis clinics and nearly 70,000 dialysis patients.

In a statement, the AK urged Brown to veto the bill. “We are deeply disappointed that the California legislature put insurer profits and union priorities ahead of the needs of patients and voted in favor of SB 1156,” the AKF wrote. “With this vote, California has gone in the opposite direction of other states that have recognized the importance of protecting patient access to charitable premium assistance for insurance coverage. Charitable premium assistance is what makes it possible for low-income patients to maintain the insurance coverage that meets their complex coverage needs for kidney failure treatment, comorbidity management and kidney transplantation.”

The bill creates separate rules for specified -party entities, including the AKF, who wish to help patients pay premiums for health care insurance. The entity must “provide that assistance in a specified manner and perform other related duties, including requiring the entity to disclose to the plan or the insurer the name of the enrollee or insured, as applicable, for each plan or policy on whose behalf a -party premium payment will be made,” the Senate bill language reads.

The dialysis provider community has donated funds to the AKF’s Health Insurance Premium Program since 1997 to help cover premiums for patients who could not afford them. dialysis providers cannot pay patients directly to cover their premiums, the AKF created the Health Insurance Premium Program, or HIPP, to serve as a link between patients and providers.

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But health plans have accused dialysis providers of “steering” dialysis patients away from Medicare and into commercial health plans so they can charge higher rates for dialysis care. The AKF has been accused of helping the dialysis providers and paying the higher premiums through HIPP without determining if the health plan is better than Medicare for the patient. Health care plans have pushed for the California legislation as well as trying to persuade HHS administrator Alex Azar to place restrictions on the AKF and other third-party payers on a national level. By Mark E. Neumann

Reference: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB1156

http://www.kidneyfund.org/news/news-releases/akf-urges-gov-brown-to-veto-sb-1156.html