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California bill on dialysis profits awaits governor’s decision
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After nearly 2 years of debate, a governor veto, a failed ballot proposition and millions of dollars spent by dialysis providers and health care insurers, the stroke of a pen sometime in the next 2 weeks could hit the reset button on how dialysis is paid for in California.
If approved by Governor Gavin Newsom, Assembly Bill 290 will restrict what large for-profit dialysis providers and drug rehabilitation centers can charge group health plans for patient care in the state and require third-party payers, like the American Kidney Fund, to divulge to patients who is funding their health care insurance premiums.
Fresenius, DaVita fight legislation
The California Senate passed the bill by a 21-19 vote on Sept. 10, after members of the Appropriations Committee added 52 amendments to the bill on Aug. 30 as part of their approval. The amendments include extending the implementation date to 2022, setting up an arbitration panel to dispute charges for dialysis care and putting in some regulatory safeguards.
Newsom has until Oct. 13 to either approve or veto the bill, which was first introduced Jan. 28 by Assemblyman Jim Wood, D-Santa Rosa, with support in the Senate from Senator Connie Leyva, D-Chino. Leyva introduced a similar bill in 2018 that won both House and Senate approval but was vetoed by then Governor Edmund “Jerry” Brown Jr.
Dialysis providers Fresenius Medical Care and DaVita Inc., which have spent more than $100 million in the last 2 years trying to defeat efforts by state legislators and unions to pass legislation governing clinic profits, treat more than 70% of the 70,000 patients on dialysis in California (the Wood legislation exempts small, independent providers from the payment restrictions). 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 and helping to convince Brown to veto Leyva’s bill.
The Service Employees International Union California, which has supported the Wood legislation, helped fund efforts to place the ballot measure in California and was also campaigning to add similar measures in Arizona and Ohio. They were forced to end efforts in Ohio after a judge ruled they had not followed state procedures for licensing ballot workers and withdrew their efforts in Arizona. The union was hoping to organize dialysis clinic employees in those states.
A.B. 290 has also 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.
Dispute over AKF’s requirements
The AKF has been fighting the bill because operating its Health Insurance Premium Program (HIPP) is based on an agreement dating back to 1997 with the federal 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. “Provisions in AB 290 conflict with AKF’s federal governing regulations (HHS OIG 97-1) risking AKF’s program in California and risking the lives of the 3,700 patients for whom it provides charitable premium assistance,” the AKF said on the Dialysis is Life Support Coalition website.
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. “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 in responding to a series of questions about the bill.
Wood obtained an opinion from the state’s legislative counsel last 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.
“Unquestionably, the amendments make the bill better,” wrote Wood, who is a practicing dentist and has worked on other health care legislation in the state. “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. And I am confident that the protections are there if AKF is actually interested in continuing operations.”
Despite those options, “The bill still has the disclosure requirements that have been at the foundation of our objection to the bill since the beginning ... we are fundamentally opposed to the legislature requiring AKF to disclose the names of the people we help because it violates their right to receive charitable help from a nonprofit with dignity and privacy,” AKF CEO Lavarne Burton, has said in previous statements. – by Mark E. Neumann
References:
https://dialysislifesupport.com/ab-290-wood-passes-out-of-both-houses-of-the-state-legislature/
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