Bill Takes Aim, Again, at California’s Kidney Dialysis Industry

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A California lawmaker has resurrected a bill targeting the profits of the state’s kidney dialysis industry, arguing it will ensure patients who qualify for Medicare or Medi-Cal don’t get pushed into private insurance plans.

Assemblyman Jim Wood (D-Santa Rosa), introduced AB 290 this week, saying it would prevent dialysis companies from unfairly boosting their reimbursement rates by steering patients who qualify for Medicare or Medi-Cal toward private health insurance coverage instead. Wood accuses dialysis companies of indirectly subsidizing private insurance premiums for these patients via donations to the nonprofit American Kidney Fund (AKF).

The clinics get much higher reimbursement through private insurance than through Medicare and Medi-Cal, even though the care they provide to patients is the same, he said.

“I believe these companies are gouging the system,” he said in a phone interview. “Health care costs go up for everybody when insurance companies have to make these payments that are in excess of what they could be paying. That’s unfair to everybody.”

Approximately 139,000 patients with kidney disease sought help from dialysis clinics in the state in 2016, reports show, with the number of these patients has been rising. Kidney disease is especially prevalent among African Americans. According to the National Kidney Foundation, African Americans suffer kidney failure at three times the rate of whites, largely because of higher type 2 diabetes and high blood pressure rates among this population. Both diseases are a leading cause of kidney failure.

Almost all patients with end-stage renal disease are eligible for Medicare, Wood said.

AB 290 would still allow companies to make donations to AKF, but would prevent dialysis clinics from charging private insurance companies more than the Medicare reimbursement rate, the assemblyman said. The bill is basically the same as SB 1156, which Gov. Jerry Brown vetoed in 2018 citing concerns it could cause some patients to lose private insurance coverage. Woods said he will be working with the legislature and new administration this year to address this and any other concerns that arise.

“We’re still at the beginning of the process,” he said. “This bill will go through the year and we’ll have a lot of discussions.”

Voters rejected another, similar effort to cap dialysis company revenue, Proposition 8, last November. The Service Employees International Union United Workers West (SEIU-UHW) backed the proposition. However, the union declined to comment on AB 290, referring questions to Wood’s office.

Opponents of Proposition 8, who spent more than $115 million on their campaign, said the measure would have forced many clinics to close their doors. They also accused SEIU-UHW of trying to put pressure on dialysis companies as part of a fight to unionize clinic workers.

Wood said union politics had nothing to do with his decision to propose AB 290, and that he’s motivated by a desire to prevent dialysis companies from profiting unfairly at the expense of people’s health care premiums. He dismissed concerns about clinics closing, saying dialysis companies are highly profitable and should be able to withstand the impact on their bottom line, which he anticipated would be relatively small.

The AKF and dialysis company DaVita did not respond directly to a request for comment on the bill. However, a spokesperson for the Dialysis is Life Support coalition, which also opposed Proposition 8, forwarded a statement. The coalition is made up of dialysis providers, doctors and patients opposed to AB 290, spokesperson Kathy Fairbanks said. DaVita is also part of the coalition.

Dialysis is Life Support disagreed with the proposal to use Medicare as the benchmark rate for dialysis providers. The organization said the proposed bill would harm patients. The coalition is working to introduce an alternative bill, the statement said.

“The implication that Medicare reimbursement should be the standard of payment is simply inappropriate and would have a devastating impact on access to care for individuals with renal failure,” the organization said. “AB 290 is not the answer and will only jeopardize access to care for thousands of patients who need dialysis to stay alive.”

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