Bill to Control Costs in Dialysis, Drug Treatment Industries Advances

[July 3, 2019] SACRAMENTO, Calif. – The Senate Health Committee passed legislation today to control healthcare costs and protect patients’ access to financial assistance – including in the dialysis and addiction treatment industries.

“As the cost of healthcare continues to skyrocket in California, we need to do more to keep providers from gouging consumers,” said Assemblymember Jim Wood, the author of AB 290. “In too many cases, critically ill patients are seen as cash cows, not as people who desperately need life-saving treatment.”

AB 290, which will now be considered by the Senate Appropriations Committee, is supported by Health Access California, the California Labor Federation, SEIU California, California Association of Health Plans, and the Association of California Life and Health Insurance Companies. The California Legislature passed a similar bill in 2018 with bipartisan support.

Currently, some drug rehabilitation centers pay premiums for their own patients and then submit inflated and unnecessary medical claims demanding reimbursement many times higher than the cost of care. Similarly, the two largest dialysis corporations in the country – DaVita and Fresenius – bankroll the American Kidney Fund, and then convince their patients to enroll in commercial health plans rather than get their coverage through Medicare or Medi-Cal. The American Kidney Fund pays the health insurance premiums, and that allows DaVita and Fresenius to charge several times the cost of providing care, far more than they can charge Medicare or Medi-Cal patients.

Under AB 290, financially interested third-parties, like addiction treatment facilities and the American Kidney Fund, may still offer premium assistance to patients, but it prevents health providers from using third parties as a mechanism to charge exorbitant prices, which increases healthcare costs for all Californians.

In the dialysis industry, the private insurance scheme is highly profitable, enabling the companies over the course of a year to charge as much as $100,000 more than they would be paid by Medicare or Medi-Cal for the same treatment. DaVita alone reported that the practice generated between $495 million and $540 million in profit in 2017.

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