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California Assembly Passes Bill Cracking Down on Dialysis Reimbursement

Yuval Rosenberg
How Health Care Spending Soared by $1 Trillion in 10 Years

The California State Assembly on Wednesday passed a landmark bill cracking down on the prices and payment practices of dialysis centers, delivering a win to insurers who backed the bill and potentially threatening the profits of large dialysis chains like DaVita and Fresenius.

The bill places limits on third-party groups like the American Kidney Fund, a not-for-profit organization that subsidizes premiums for dialysis patients with commercial insurance. The bill also caps some commercial dialysis payments at lower Medicare rates.

DaVita and Fresenius are large contributors to the American Kidney Fund, and insurers and labor groups including the Service Employees International Union of California have argued that the charity’s payments are used to game the system and direct patients to insurers that provide higher reimbursement rates — and more profit — for the dialysis companies.

The American Kidney Fund has said that the bill “would cause profound harm” to many dialysis patients. It called the legislation “nothing more than a thinly-veiled attempt by large health insurance companies to kick kidney patients off their insurance plans.”

The state assembly’s vote means the bill now will likely head to the desk of Gov. Jerry Brown, who has until the end of next month to act on it.

Why it matters: “This is a giant win for the SEIU, health insurers and employers and a huge blow to dialysis companies and the American Kidney Fund,” writes Axios’ Caitlin Owens, adding that “there will be a fierce lobbying blitz” by the dialysis companies to get Brown to kill the bill. If the legislation does get signed into law, Modern Healthcare’s Susannah Luthi writes, it could have a major impact on DaVita and Fresenius, which have about 70% of California's market share of just under 600 dialysis clinics and nearly 70,000 dialysis patients.”

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