In a recent talk at a J.P. Morgan-sponsored health care conference, DaVita Inc. CEO Kent Thiry said his company and others decided “with great reluctance” to sue the federal government earlier this month in an effort to stop a final rule governing third-party payments for insurance premiums for dialysis patients.

DaVita, along with Fresenius Medical Care North America, U.S. Renal Care, and Dialysis Patient Citizens, filed suit on Jan. 9 against the Department of Health and Human Services seeking a temporary restraining order to stop the rule, which would have been effective on Jan. 13. The rule would have required providers to inform health plans if any insurance premiums for their dialysis patients was being funded by the providers, likely through the American Kidney Fund’s Health Insurance Premium Program.

The rule also created a new patient right standard that requires dialysis facilities that provide premium assistance directly or through a third party to provide information that explains how plans in the individual market will affect a patient’s access to and costs for the providers and suppliers, services, and prescription drugs that are currently within the individual’s care plan, as well as those likely to result from other documented health care needs.

U.S. District Judge Amos Mazzant granted a temporary restraining order on Jan. 12––one day before the final rule was to become effective––and held a meeting on Jan. 18 with attorneys representing the provider/patient group and HHS. He is expected to decide by Jan. 24 whether to issue a permanent injunction on the rule or allow CMS to release the final rule as it stands.

Providers argued that if the rule is finalized as planned, insurers would use information about third-party payer assistance to refuse coverage for dialysis patients.

HHS has said dialysis companies and other health care providers have steered patients away from Medicare and Medicaid health plans and into these private plans, offered through the Affordable Care Act health exchange programs, to boost profits.

“It was with great reluctance that we filed this lawsuit,” Thiry told the J.P. Morgan group.  “We believed the rule was done in a very rushed manner, put out in the waning moments of the [Obama] administration, and was not up to CMS’ usually high standards,” he said. “We wouldn’t be doing it…if the rule would not inflicted serious harm on thousands of folks” by eliminating the opportunity for them to afford a private health plan, he said.

DaVita says it is facing a $230 million loss in revenue this year from private payers after deciding to suspend donations through the AKF’s premium assistance program for all Medicaid eligible DaVita patients who had elected to choose private plans.

Patients have right to choose commercial plans

Thiry argued that, from the beginning, the Affordable Care Act was developed with the understanding that all patients—regardless of their eligibility for Medicare or Medicaid or their diagnosis of end-stage renal disease—had the right to choose a private plan through the ACA.

Early on, in fact, Thiry said ACA organizers had asked DaVita to place posters up in dialysis clinics encouraging patients to enroll in exchange plans. That changed, said Thiry, when insurers saw costs escalate because more patients with complex—and costly—conditions were signing up for plans compared to younger, healthier patients.

Premium assistance provided by dialysis companies through the AKF was explicitly approved by the federal government 20 years ago, noted Thiry, and giving patients the ability to afford alternative private health plans was “baked into the architecture” of the AKF program and “reaffirmed” at the time of the development of the ACA plan.

Thiry also defended his company’s methods of educating patients on health plan options. Dialysis providers have a “regulatory requirement to educate patients on their coverage alternatives and we do it distinctly well,” said Thiry. “We did it with the highest standard of objectivity.” The fact that only a small percent of DaVita patients opted for private plans shows that DaVita’s education process was balanced and objective, he said.

Insurers ‘got what they wanted’

Thiry said problems encountered by insurers who lost money in the ACA exchange plans understood the risks. “The payers lobbied heavily for the exchanges to have plans where they could negotiate private rates. That was explicitly what was wanted, that is exactly what they got,” he said. Ultimately the debate over premium assistance won’t end soon, he predicted, although “it is unlikely that premium assistance will go away in its entirely.”

You can hear a replay of Thiry’s presentation at the J.P Morgan conference through April 9.