Asm Jim Wood introduces AB 290 to prevent dialysis companies from scamming the health care system

Monday, January 28, 2019

SACRAMENTO—Today Assemblymember Jim Wood (D-Santa Rosa), chair of the Assembly Health Committee, introduced AB 290, legislation that would prevent dialysis companies from increasing their already excessive corporate profits through a scheme to bankroll patients’ health care premiums.

“We fought this battle last year with SB 1156 and I’m back to take up the fight and am all-in to protect dialysis patients and do what is right,” said Wood. “Runaway costs in health care affect everyone, and I’m committed to protecting patients but I’m not interested in protecting dialysis companies from scamming the system for their own benefit.”

Patients rely on their health care coverage to cover the cost of kidney dialysis. Sometimes patients have private insurance and sometimes they qualify for Medi-Cal based on their income. Almost all patients diagnosed with end-stage renal disease are eligible for Medicare, regardless of their age – that decision was made almost 50 years ago, in 1972, to ensure that these vulnerable patients get the care they need to live.

“When unscrupulous dialysis companies, through a third party, steer patients away from Medicare or Medi-Cal by indirectly paying a patient’s premiums, for the company’s own financial benefit, these companies are price gouging and it’s a scam,” said Wood. “It doesn’t improve care for patients and increases the cost of health care premiums for everyone.”

This scam reveals itself when companies that provide dialysis treatment, like DaVita and Fresenius, donate $265 million, as they did in 2016, to the nonprofit American Kidney Fund (AKF). In turn, AKF, which gets approximately 80 percent of its funding from these two companies, steers kidney dialysis patients into private health insurance by paying for the patients’ monthly premiums.

Superficially, this does not appear to be a problem. What’s wrong with AKF paying for a patient’s private coverage even though they qualify for coverage under Medicare or, in some circumstances, Medi-Cal?

The answer is simple. For every $1 these dialysis businesses donate to AKF, which in turn pays for a patient’s health care premium, the dialysis companies reap a 350-percent return through increased reimbursement rates. This practice has been a key factor in the $4 billion profits these dialysis companies experienced in 2017.

This bill still allows dialysis companies to donate to organizations like AKF if they want to help provide premium assistance to patients, but it will not allow them to leverage those donations into higher reimbursement rates than they might otherwise receive through Medicare.

In addition to the dialysis industry, other specialty health care providers such as substance use disorder treatment facilities have started using the same scheme to pay patients’ premiums in order to boost their own profits.

“I’m tired of for-profit companies milking the health care system,” said Wood. “Patients need quality care at an affordable cost. Opponents will try to make this issue complicated – it’s just not. Profiteering at the expense of patients and the public is immoral and it should be seen only for what it is – a self-serving scam.”