In an earnings call Wednesday, DaVita Kidney Care executives explained their decision announced earlier in the week to suspend support for Medicaid patients seeking premium assistance tied to an Affordable Care Act plan.

DaVita said the decision to issue the policy change was driven by the Nov. 1 kickoff of Open Enrollment for insurance exchanges. “Based on statements made by CMS concerning the future availability of charitable premium assistance for patients enrolled in Medicaid, we took this step to avoid any disruption to our patients by supporting an alternative that may not be available to them,” company officials said.

Cost to DaVita’s bottom line

Shares of DaVita stock jumped more than 6% on Monday after the company announced the policy change, even though DaVita said it expected to see a reduction in its annualized operating income of up to $140 million before any offsets.

“If CMS were to issue a broader ruling that made access to charitable premium assistance unavailable to all ESRD patients on ACA Plans, the estimated financial impact would increase by up to $90 million, based on our estimate that a significant number of ESRD patients would lose their ACA coverage and end up completely uninsured, while others could continue the coverage with federal subsidies,” the company said.

The change will affect approximately 2,000 patients, or about 1% of DaVita’s total patient population, who have pre-existing minimum essential Medicaid coverage and obtained additional coverage through ACA plans. Approximately 3,000 additional DaVita patients are enrolled in an ACA plan and not in Medicaid.  Most of these patients came to DaVita with individual market coverage or other commercial coverage already in place, and many are not eligible for any other type of coverage, the company said.

The policy change comes after a Oct. 23 news report in the St. Louis Post-Dispatch that said emails obtained from a company employee suggested DaVita had monitored those patients who had turned down joining ACA plans after going through the company’s education program on insurance options.  DaVita said it uses a “disciplined, compliant process to provide this education to its patients” and a very small percentage have decided to enroll in ACA plans. “In pursuing this additional coverage, they were seeking – and often obtained – access to services beyond dialysis, including access to specialty physicians, more comprehensive drug coverage, increased chance of qualifying for transplantation, and coverage for out-of-state services,” Davita CEO Javier Rodriguez said in a statement.

The St. Louis Post-Dispatch article “confused our efforts to educate patients on health care coverage options—we are required by CMS to provide comprehensive education—with the so-called ‘steering’ of patients from government plans to insurance on the exchange.

“We do not steer.”

Defending HIPP

The American Kidney Fund has had to defend its Health Insurance Premium Program, which provides premium assistance to needy dialysis patients enrolled in health care plans. Dialysis providers fund the program, and insurers are complaining that third-party payers like the AKF allow patients to enroll in more costly ACA plans, under pressure from the dialysis providers, when the patients could be served under Medicare or Medicaid. The AKF recently adopted new safeguards that include requiring a patient to justify requests for premium assistance for an ACA plan versus Medicare or Medicaid before being approved for premium assistance.

The dialysis industry, along with other health care providers, has come under scrutiny by CMS over allegations that it has steered some Medicaid and Medicare patients into ACA plans so that the providers could charge higher premiums for services. The ACA Marketplace exchanges have had trouble keeping health care plans in the program because of a disproportionate number of older, sicker beneficiaries–many who would qualify for Medicare or Medicaid–choosing a Marketplace plan, leading to higher coverage costs for the insurers. CMS put out a request for information to the health care community in September, including to dialysis providers, about instances of patients being directed to join the ACA plans.

In a statement about providers being accused of steering patients to ACA plans, Robert Sepucha, Senior Vice President of Corporate Affairs for Fresenius Medical Care North America, said the company will continue to support the AKF’s premium assistance program, but does not engage in influencing patients’ decision to move to ACA health plans.

“We do not engage in inappropriate steering of patients into marketplace plans,” said Sepucha. “As Medicare certified dialysis providers, we are required under the federal conditions for coverage that we provide assistance to our patients in understanding their health insurance options. As a result, our financial coordinators and social workers educate patients about their health insurance options. But the ultimate decision to select coverage is solely in the hands of the patient, and we have safeguards in place to make sure of that.”