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California legislators approve bill restricting provider profits, third-party payers
The California State Assembly approved legislation 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 S.B. 1156 on Feb. 14 to limit third-party payers from covering insurance premiums for patients on dialysis 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 S.B. 1156, dialysis providers will be reimbursed at Medicare rates for patients who chose a commercial health plan and who chose to receive American Kidney Fund 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 at 115% of direct patient care costs. A similar proposal headed for the polls in Ohio was recently invalidated by the Supreme Court there after the Ohio Renal Association questioned the registration process used by supervisors who were managing the petition drive.
As of press time, the bill was headed to the desk of Gov. Jerry Brown, to sign 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 about 600 dialysis clinics and nearly 70,000 patients on dialysis.
In a statement, the AKF 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 S.B. 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 third-party entities, including the AKF, who want 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 third-party premium payment will be made,” the Senate bill reads.
The dialysis provider community has donated funds to the AKF’s Health Insurance Premium Program (HIPP) since 1997 to help cover premiums for patients who could not afford them. As dialysis providers cannot pay patients directly to cover their premiums, the AKF created the HIPP to serve as a link between patients and providers.
However, health plan officials have accused dialysis providers of “steering” patients on dialysis away from Medicare and into commercial health plans so they can charge higher rates for dialysis care. The AKF has been accused of helping dialysis providers and paying 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