January 13, 2017; Reuters
In a victory for three major dialysis providers, a U.S. district judge has temporarily blocked a new federal rule from the U.S. Department of Health and Human Services that would have prevented dialysis patients from buying health insurance with charitable funds.
The new rule, which was announced on December 14th, would force dialysis providers to disclose to insurers any third-party assistance patients use to pay for end-stage kidney treatment. Amos Mazzant, a district judge in Texas, placed the rule on hold on January 13th after Fresenius Medical Care, DaVita Inc., and U.S. Renal Care Inc. filed a lawsuit to block the HHS rule. Mazzant has indicated that the lawsuit will probably be successful, and that the HHS has “likely violated the procedures” regarding the establishment of such a rule.
HHS has said that the new rule is “intended to ensure that insurance coverage decisions are not inappropriately influenced by the financial interests of dialysis facilities.” Supporters of the regulation say that patients are encouraged to use charitable funds to pay for premiums on the private insurance marketplaces created under the Affordable Care Act. These insurers pay dialysis providers more than Medicaid or Medicare, and, in some cases, offer less generous coverage to patients.
Fresenius, DaVita, and U.S. Renal Care, the largest dialysis providers in the United States, claimed that insurers would use information about patients’ use of charitable funds to refuse coverage to those patients. The motive behind the rule, the lawsuit claims, is the HHS’ desire to protect insurance companies from the high costs of insuring patients with end-stage renal disease.
HHS says that patients who receive charitable coverage of insurance premiums may be discouraged from seeking kidney transplants, the recommended treatment for most people with renal failure, because the charitable coverage will end when the transplant is completed. Most charities don’t pay for transplants or post-transplant care.
Most of the 500,000 dialysis patients living in the United States are eligible for Medicare, regardless of age, due to a 1972 rule that extends eligibility to persons with irreversible kidney failure. However, the extremely high cost of dialysis means that most patients are left with significant out-of-pocket costs. Thus, patients in need may receive charitable dollars through organizations like the American Kidney Fund, the largest charity of its kind.
However, the Department of Health and Human Services says that charities can inappropriately influence patient decisions—and alleged recent violations of a twenty-year-old deal between the Kidney Fund and HHS complicate matters.
In 1997, the Kidney Fund and several of the largest dialysis firms signed a unique deal with the HHS and the Office of the Inspector General, allowing the Kidney Fund to pay customer insurance premiums. The deal allows dialysis companies to donate to the Kidney Fund while treating patients whose insurers are paid by the fund without violating anti-kickback laws. The Kidney Fund agreed not to provide preferential treatment to patients of its donors, the two largest of which, Frenesius and DaVita, provide over 80 percent of its funding.
An investigation last month from the New York Times suggests that the Kidney Fund discourages applications from clinics that don’t donate to the charity. Some social workers said applications they submitted on behalf of patients were turned away explicitly because of their clinics’ lack of donations to the Kidney Fund, and the author of the NYT piece found that the Kidney Fund’s application guidelines had explicitly stated that non-donor clinics should not apply for patient aid. AKF have said that they have never turned away a patient who was financially qualified to receive a grant and that donations from dialysis providers are voluntary.
Fresenius and Davita both revealed on January 6th that they had received subpoenas from the Justice Department to provide information about their relationship to the Kidney Fund, although no formal investigation has yet been confirmed. Another large dialysis chain, American Renal Associates,