Governor Signs Bill to Stop Dialysis Clinics from Reaping Excessive Profits at the Expense of Health Care Consumers

Sunday, October 13, 2019

SACRAMENTO–Today Governor Gavin Newsom signed AB 290, a bill that will stop large dialysis clinics from reaping excessive profits at the expense of health care consumers.

“I am grateful to Governor Newsom for recognizing the critical importance of cost containment in health care,” said the bill’s author Assemblymember Jim Wood (D-Santa Rosa). “The Governor and I have a common goal of wanting to provide health care to every Californian, and containing health care costs, especially stopping egregious practices like these, are essential to reaching that goal.”

Specifically, large dialysis clinics owned by DaVita and Fresenius having been making tax-deductible donations to the American Kidney Fund (AKF), which in turn pays for commercial health care coverage for patients needing dialysis, which then results in significantly higher reimbursement to these dialysis clinics, more than four times what they would receive through Medicare.

AKF receives more than 80 percent of its revenues from just two corporations, DaVita and Fresenius. AKF began in 1995 as a $5 million organization, receiving only 10 percent of his revenue from DaVita and Fresenius. It was shortly after, in 1997, that AKF and the biggest dialysis clinics presented the government with a proposal that would allow the companies to indirectly pay insurance premiums for patients. Today, Fresenius and DaVita profits combined exceed $4 billion. AKF revenues exceed $300 million and pays its executive officer nearly $700,000 a year in salary and other compensation according to its Form 990 from 2018.

“We know that every patient with end-stage renal disease qualifies for Medicare, and those patients who are lower income are also covered under Medi-Cal which provides this care without cost to the patient,” said Wood. “So, on the surface you may wonder what is at issue here until you uncover the scam that for every tax-deductible dollar these companies donate to AKF, Fresenius and DaVita reap excessive profits while their patients see no difference in their dialysis care – so this is just a win for the dialysis corporations and a win for AKF, not the patients and not for health care consumers who need affordable coverage.”

This bill was amended in its final form to prevent current patients from unnecessary anxiety by allowing AKF to continue its practice for current patients and providing a two-year delay in implementation so that AKF can revise its methodology.

“AKF has stated that they intend to pull out of the California market entirely if AB 290 becomes law, despite the fact that the bill does nothing to impact the patients who AKF was formed to assist,” said Wood. “Now that the Legislature and the Governor have called their bluff, I hope that AKF will reconsider its threat to abandon patients at the behest of its corporate funders.”

“We can’t allow corporations to boost their profits at the expense of patients and increasing health care costs and I will continue to uncover these abusive practices in order to contain health care costs and bring health care to all Californians,” said Wood.

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