Denver-based DaVita said Monday that the 2014 rates give the industry more time to lobby Congress to change the policy. The cut—nearly $30 per treatment—will come as dialysis providers are looking at increasing expenses, DaVita said in a news release.
“CMS has a number of appropriate reimbursement levers to pull to offset cuts a few years out if it chooses to do so,” Group Vice President LeAnne Zumwalt said in the release.
Kidney Care Partners, a coalition of patients, physicians, nurses, providers and manufacturers, likewise blasted the policy. "Phasing in this cut does not solve the problem," Chairman Ron Kuerbitz said. "Instead, it only delays the inevitable harm that will come as a result of failing to cover the cost of care. Simply put, this model is unsustainable."
While analysts said the final rule is a relief to providers such as DaVita, Frank Morgan at RBC Capital Markets sounded a note of caution. In a note to clients, Morgan said even though the bundled rate will remain the same, it will soon include the addition of oral drugs. Moreover, he said, the industry will be watching the development of the CMS' renal disease ACO program and will have limited consolidation opportunities to grow revenues.
DaVita's shares were trading about 8% higher Monday, while competitor Fresenius was up about 7%. The two companies are the largest operators of outpatient dialysis clinics.
The short-term clarity of the payment decision allowed DaVita to provide earnings guidance for 2014, projecting operating income in the range of $1.68 billion to $1.85 billion. The majority of that—$1.4 billion to $1.5 billion—is expected to come from dialysis and related services, and is above what it had forecast for this year.
In spite of the reimbursement challenges in dialysis, DaVita's guidance was most conservative when it came to its new physician-practice division, HealthCare Partners, forecasting only $250 million to $310 million in operating income from its multispecialty medical groups—a decrease of about 33% from its 2013 guidance.
The company attributed the projected decline to “Medicare patient expenses increases, commercial rate and mix pressures, and healthcare exchange dynamics.”
Follow Beth Kutscher on Twitter: @MHbkutscher