American Renal Associates became the second dialysis provider to announce it would temporarily suspend support of premium assistance for Medicaid-eligible dialysis patients pursuing Affordable Care Act exchange plans.
ARA made the announcement during its Nov. 11 earnings call and joins DaVita Kidney Care, which announced Nov. 2 that it would temporarily suspend payments pending new policy guidance from the Centers for Medicare & Medicaid Services. Both companies have been supporting the American Kidney Fund to help qualified patients with premium assistance.
Dropping support of the premiums will cost American Renal about $17 million in annual patient care revenue, company executives said. DaVita anticipates $140 million in annual operating income losses. Both companies said that number could increase—$7 million for ARA and $90 million for DaVita—if the companies had to drop support for all ESRD patients enrolled in ACA plans.
Dialysis providers are awaiting a CMS review of claims by commercial health plans that health care providers have been “steering” Medicaid eligible patients into ACA plans so they can charge higher rates. ARA was sued by United Healthcare earlier this year on charges that it pushed Medicaid patients to sign up for UHC’s health plan in Florida so that ARA could charge much higher rates—as much as $4,000 per treatment. ARA has asked the courts to dismiss the case. The provider has also been hit by a shareholder lawsuit because of drops in the company stock price linked to the UHC lawsuit after the company went public on April 20. American Renal stock closed at $19.09 on Nov. 14, down from a high of $29.65 in June.
Citing support from numerous patient and provider groups, American Renal CEO Joseph Carlucci said the kidney community believes that “patients should have a choice and have access to financial support from bona fide charities when it comes to the ACA. And we understand the importance of a stable marketplace,” he said. To that end, Carlucci said the company has “made a number of improvements” to its patient education program on insurance options, including “more intense training” on the value of different plans.
Growth in net revenue linked to ACA patients
The company did see a 14% growth in net revenue in the third quarter compared to the previous year; much of that was fueled by more treatments (11.4% increase) derived from growth in the number of new patients in existing clinics and the construction of new centers. Acquisitions added 1.2% to Q3 treatment growth.
Revenue per treatment in Q3 was $378––3.4% above the same quarter last year. Company Chief Financial Officer Jon Wilcox said during the earnings call that increases in revenue per treatment was “driven by improvements in commercial mix, due primarily to growth of patients in ACA plans both on and off exchange. Our revenue per treatment increased $2.50, sequentially, over Q2 2016, due to better realization of rate for on-exchange ACA plans.”
Wilcox said American Renal had 535 patients under ACA plans as of Sept. 30, both via the exchange and off exchange plans. Of this group, 300 had Medicaid as their secondary coverage and had obtained premium assistance, requested through ARA, from the American Kidney Fund’s premium assistance fund. Of the remaining 235 patients enrolled in ACA plans, approximately 85% were receiving premium assistance. During its earnings call, DaVita said its decision affected approximately 2,000 patients.