In January, Assemblyman Jim Wood (D-Santa Clara), who serves as Chairman of the Assembly Health Committee, brought Assembly Bill 290 to the table. AB 290 is legislation that would scale back the economic return that dialysis companies receive for donating to third benefactors. These third party benefactors then pay the private healthcare premiums for individuals in need of regular dialysis treatments.
Assemblyman Wood fortified his proposal by citing that “Runaway costs in health care affect everyone, and I’m committed to protecting patients, but I’m not interested in protecting dialysis companies from scamming the system for their benefit.”
Given the enormous costs of regular kidney dialysis treatments, patients have no option other than to rely on some form of healthcare to fund these life-saving transfusions. Private health care functions as a solution for some patients, while a good chunk of the other lower income patients qualifies for insurance through Medi-Cal.
Wood specifically points to the American Kidney Fund, which is responsible for keeping nearly 4,000 people alive in California alone. The “scam” begins when the AKF receives donations from companies that provide dialysis treatment like DaVita and Fresenius, which in 2016 donated around $265 million.
The economic magic happens once the AKF pays the patient’s insurance premiums and the dialysis companies net a 350 percent return from the private insurance companies’ reimbursement rates.
Recently, the Times of San Diego published an op-ed article from Francisco Enriquez — a dialysis patient — attacking AB 290. Enriquez claims that “If AB 290 passes, too many vulnerable dialysis patients will be left without access to dialysis care. I would be one of them.”
However, in 1972, the decision was already made to ensure that all vulnerable individuals afflicted by permanent kidney failure would receive the care they need. All patients diagnosed with end-stage renal disease are eligible for assistance through Medicare, regardless of age.
Outside of the dialysis industry, there are examples of other specialty healthcare providers, such as rehabilitation and substance abuse facilities, which have begun using a similar third-party scheme as a means of boosting profits.
AB 290 does not force the various forms of third-party coverage to vacate from the dialysis industry; it merely lowers the reimbursement rate. By reducing the reimbursement rate, individuals will be more inclined to partake in programs such as Medicare or Medi-Cal.
Assemblyman Wood posits that companies such as the AKF “steer patients away from Medicare or Medi-Cal by indirectly paying a patient’s premiums, for the company’s financial benefit, these companies are price gouging, and it’s a scam, It doesn’t improve care for patients and increases the cost of health care premiums for everyone.”
While the 350 percent return on charitable donations does increase the cost of private healthcare for everyone else, the profit allocated from the reimbursement rate does not necessarily have to be set to zero. The reimbursement rate could be scaled down to allow for a reasonable profit that covers the cost of operation for dialysis companies and will enable them to provide care without government assistance.