Dialysis Firms Get Help From Congress to Lift Charity Ban

(Bloomberg) -- Members of Congress are pushing to revise an Obama-era rule that barred some dialysis patients from getting aid from industry-backed charities, a change that could also make it easier for kidney care companies to steer those patients into insurance plans that pay the companies better.

Patients with end-stage kidney disease who need dialysis are typically covered under Medicare or Medicaid. Those U.S. government programs reimburse dialysis providers including Fresenius SE and DaVita Inc. at lower rates than private insurance does. Before a 2014 rule, companies would sometimes help patients apply to industry-funded charities that helped finance patients' insurance premiums to get them into better-reimbursing private plans under Obamacare.

While patients in the Obamacare plans can have lower out-of-pocket costs, the insurers ended up paying the dialysis facilities “tens or even hundreds of thousands of dollars more per patient,” according to an analysis by the U.S. last year.

In a letter sent to Health and Human Services Secretary Tom Price Wednesday, 184 members of Congress asked the Trump administration to revise a 2014 policy that let health insurers in Obamacare bar people from paying their insurance premiums using patient assistance programs. Revising the rule could make it easier for dialysis companies to steer patients to private plans, though the letter urges HHS to make sure patients aren't swayed by others' financial interests.

In 2013, Medicare and Medicaid covered about 376,000 end-stage renal disease patients who needed dialysis to assist their failing kidneys, at the cost of $11.7 billion, according to a government report.

Support in Congress

The letter was signed by members of Congress led by representatives Kevin Cramer, a North Dakota Republican, and Doris Matsui, a California Democrat. Cramer said in a news release that insurers in at least 41 states had adopted bans on the premium assistance.

The Obama-era policy has encouraged plans “to discriminate against Americans with rare diseases, chronic illnesses and other catastrophic conditions by rejecting them on the basis of the insurance-premium and cost-sharing assistance that they receive from nonprofit organizations,” the lawmakers said in the letter. “This practice essentially allows insurers to ‘steer' patients to the government or to other plans to avoid providing coverage.”

DaVita shares gained 1.6 percent to $66.26 in New York. Shares of Fresenius Medical Care AG, the German company's dialysis unit, rose 2.7 percent to 85.16 euros in Frankfurt.

Patient charities often also help with drug prescription co-pays and have come under increasing scrutiny over whether their assistance actually raises medical costs by helping for-profit companies get their products and services used and reimbursed by government programs and insurers.

Alleigh Marre, a spokeswoman for HHS, declined to comment. Health insurers have said the patient charity programs can create conflicts of interest and put sicker patients into the Obamacare market, raising insurance premiums for other patients, instead of using Medicare and Medicaid as a backstop.

Government Inquiry

The Centers for Medicare and Medicaid Services, which runs the government health programs, said in August it was looking into companies that were helping shift patients eligible for government health insurance programs into the better-paying private plans offered on Obamacare individual markets.

A representative for Fresenius didn't respond to requests for comment. A spokeswoman for DaVita declined to comment.

The charity ban and the lower resulting reimbursements has hurt DaVita financially. The Denver, Colorado-based company estimated in February that the number of dialysis patients covered in the Obamacare market this year “will be down significantly,” which DaVita's chief executive officer of kidney care, Javier Rodriguez, attributed in part to the premium assistance ban.

Last year, amid the U.S. inquiry into the practice of steering patients to private insurance, DaVita said it would halt its support for applications to the American Kidney Fund for financial help with Obamacare plans from patients already on Medicaid.

The American Kidney Fund gets much of its financial support from Davita and Fresenius, the New York Times reported last year.

Coverage Differences

End-stage renal disease patients are eligible for Medicare regardless of their age. Some choose individual market plans to maintain access to family coverage. Others live in states where they aren't eligible for supplemental Medicare coverage and decide they'd face lower out-of-pocket costs with an Obamacare plan, said Tamara Ruggiero, a spokeswoman for the American Kidney Fund, in a telephone interview.

“The current practice of many insurers across the country refusing to accept charitable premium assistance is discriminatory and it's limiting health-care coverage for some the poorest and most vulnerable patients,” Ruggiero said.

Peter Grauer, the chairman of Bloomberg LP, the parent company of Bloomberg News, is a member of DaVita's board.

--With assistance from Zachary Tracer

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net.

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Cecile Daurat