CA Judge: No Proof Dialysis Providers Steer Patients to Payers

A judge blocked a California bill, AB 290, that would prevent dialysis providers from encouraging end-stage renal disease (ESRD) patients to select health plans that some say offer dialysis providers high reimbursement rates.

The bill, signed into law by Governor Gavin Newsom in October 2019, received significant pushback from the American Kidney Foundation (AKF). 

AKF runs the Health Insurance Premium Program (HIPP) that this bill targets. The organization argued that as a result of the legislation, it would have to withdraw HIPP from California. AKF asked for an injunction to prevent the withdrawal of premium support which would leave thousands of patients without access to care for ESRD.

“Over 3,700 ESRD patients in California rely on financial assistance from AKF to get dialysis,” Judge David Carter stated in agreement with AKF. “If HIPP is withdrawn, they face potentially life-threatening disruptions in treatment and displacement from transplant waiting lists.” 

Dialysis is a critical treatment for patients with ESRD and chronic kidney diseases. Patients that need dialysis have usually lost 85 percent or more of their kidney function, according to the National Kidney Foundation. Patients in this condition who cannot access a kidney transplant will stay on dialysis for the rest of their lives.

HIPP, which received HHS approval, aims to give low-income patients access to public and private payers to ensure continued dialysis.

The state of California, however, found HIPP to be less benevolent than its mission implies.

The state argued that the program receives 80 percent of its funding from large dialysis providers. By directing patients to private plans that cannot reject them based on pre-existing conditions, AKF arranges for the dialysis providers to be overcompensated. 

As a result of this behavior, the state said, providers receive more than their due, and the insurance risk pool is skewed which causes patient out-of-pocket costs for dialysis climb.

In response, the state passed AB 290 with preventive measures against all parties involved:

• Third-party payers, such as AKF, must inform patients of all available health plans.
• Neither dialysis providers nor third-party payers can direct patients toward one plan or another.
• AKF must disclose patients’ names to payers.
• The reimbursement rate must be capped at the Medicare rate when a patient’s dialysis provider helps fund their third-party payer.

If AB 290 goes into effect, AKF said it will be forced to withdraw its HIPP from California because the required adjustments would cause them to no longer be in compliance with HHS regulations.

The court found that the law violated the Constitution by regulating the freedom of speech. The court dissected AB 290’s language and found that it was too hypothetical in its argument. The state did not provide a single patient whose dialysis provider or third-party payer had steered them to a private health plan.

The injunction is only the latest in a long battle over third-party payer dialysis payment, specifically involving AKF.

A study conducted by UCLA with funding from HHS found that private payers sometimes reimbursed DaVita up to four times the Medicare reimbursement rate. Whereas public payers reimbursed the mammoth dialysis provider an average of $248 per dialysis session, private payers were paying $1,041.

Finding solutions to high treatment costs for the swelling population with chronic kidney disease has also been an ongoing conversation in recent years.

In 2019, the administration took up chronic disease management for kidney conditions with five alternative payment models. The models aim to promote coordinated care and focus on attaining positive patient outcomes. Since then, CMS has continued to prioritize kidney treatment, mobilizing the Kidney Community Emergency Response Program during Hurricane Dorian.

Private payers have followed suit. Humana, for example, recently committed to catch chronic kidney disease earlier and to surround patients suffering from kidney disease with a coordinated care team.

The injunction will last until the lawsuit against the state is resolved.