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DaVita retreats after fiscal cliff deal cuts dialysis payments

Dialysis service provider DaVita (DVA) is falling after the fiscal cliff deal passed by Congress reportedly included a provision that will reduce the payments that diaiysis providers will receive from the Centers for Medicare & Medicaid Services, or CMS. The legislation, which lowers payments to dialysis providers beginning in 2014, will reduce CMS' payments for dialysis by about 2.8% in that year, Citigroup analyst Gary Taylor estimated in a note to investors yesterday. A 2.8% cut would reduce DaVita's EPS by 73c in 2014, Talyor believes. Taylor had expected CMS' payments to drop 2% next year. Moreover, the legislation will prevent CMS from paying for oral advanced kidney disease treatments until at least 2016, Taylor added. Some investors had hoped that DaVita's profits from oral drugs would offset any reductions in payments, added the analyst, who maintained a Neutral rating on the stock. In mid-morning trading, DaVita dropped $2.12, or 1.92%, to $108.41.