California revives bill to cap dialysis pay

The California Legislature has revived an insurer-backed bill to cap dialysis pay at Medicare rates if industry-backed third parties have helped a patient pay for the insurance to fund treatment and don't give certain disclosures.

The new momentum has picked up less than a year after then-Gov. Jerry Brown vetoed a similar measure amid intense opposition from the dialysis industry.

Late Tuesday, the Assembly Health Committee approved the proposal to prevent industry-sourced money from funding private insurance premiums for dialysis patients. Committee Chair Jim Wood, a Democrat, sponsored the bill and it was expected to pass. It heads next to the body's Appropriations Committee, signaling that this year's legislative session will mean more expensive lobbying for the dialysis industry.

Under Assembly Bill 290, not-for-profit patient groups and other third parties would be prohibited from nudging patients toward commercial insurance plans over Medicare or Medicaid. Medicare pays for end-stage renal disease treatment for people under 65. The groups would also have to disclose relationships with "financially interested parties" and report the enrollees who receive premium help.

If any of the new rules aren't followed, the dialysis clinic could only collect Medicare rates from its patient's insurance plan.

The bill would also tamp down on third-party payments for sober homes, part of widespread concerns about fraudulent substance use treatment facilities funding insurance plans for patients.

The revived attempt comes months after Brown vetoed a similar bill that had won approval in both bodies of the California Legislature and sent stocks tumbling for dialysis giants DaVita Healthcare Partners and Fresenius Medical Care.

In his veto message, Brown said the proposal was broad enough to allow insurers to discriminate against patients. This version was amended to clarify that a plan can't cancel or decline coverage—as is prohibited by federal law under the Affordable Care Act.

With Brown out of office, new Democratic Gov. Gavin Newsom would be the deciding factor should the Legislature pass the measure again.

The not-for-profit American Kidney Fund, which offers financial help to dialysis patients, including for private insurance plans if they choose, blasted the revived measure.

The fund's president and CEO, LaVarne Burton, said because the reporting requirements conflict with a federal advisory governing disclosure rules for the patients who get help, the American Kidney Fund would leave California should the measure pass. Currently, it helps with premiums for about 3,700 California dialysis patients.

Burton said more than half of its aid to California patients last year went to Medicare Part B, Medicare Advantage and Medigap premiums. She added that the proposal if passed would "quickly force (the American Kidney Fund) to stop helping California kidney patients" whether they were covered by Medicare or a private plan.

Both DaVita and Fresenius are among the fund's corporate sponsors, listed as giving between $25,000 and $49,999 in 2016. That year, the biggest corporate donors was Sanofi Renal, with more than $1 million. Other major givers include a range of pharmaceutical manufacturers and trade groups as well as renal groups.

A broad coalition that includes dialysis companies as well as the California Hospital Association, the California Medical Association and regional medical groups is also opposed, allied under the name Dialysis Is Life Support.

The bill's supporters include the California Association of Health Plans, Health Access California and the Association of California Life and Health Insurance Cos.

Charles Bacchi, president and CEO of the California Association of Health Plans, praised the bill as a way to "crack down on certain industries that are gaming the healthcare system for their own gain."

"These tactics drive up healthcare costs for everyone and put patients in jeopardy," Bacchi said. "This bill will protect patients and improve affordability."

The major labor group SEIU California is also backing the proposal. SEIU sponsored the state's 2018 ballot measure to cap dialysis payments, which spurred the most expensive ballot campaign to date as industry and the coalition now called Dialysis Is Life Support invested about $110 million to beat it back.