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Takeaway: Lawsuit covers familiar territory but expands understanding of DVA's tactics with respect to commercial reimbursement

Davita has been sued many times for many reasons. What makes the recent filing by the Blue Cross Blue Shield Plan of Florida worth a read is that it provides a first-hand account of the dialysis giant’s practices, long rumored and sometimes verified.

For the most part, Florida Blue’s complaint details activities with which we have all become familiar. Davita allegedly donated $120 million to the American Kidney Fund to provide premium support to the commercially insured and received about $450 million in operating income through benefit payments from non-government plans.

This practice has raised the ire of the California State legislature. It has given rise to a federal securities law class action lawsuit. While certainly a bad policy, especially as it relates to individual market policies sold on the ACA exchanges, the practice is arguably protected by federal interpretation of the law governing beneficiary inducement.

The Florida Blue complaint goes beyond a gripe about premium support to highlight other practices that are not sheltered by the OIG’s 1997 Advisory Opinion. That Advisory Opinion was based on representations by the large dialysis providers and the AKF that their contributions would not influence treatment decision or be made on a quid pro quo basis for services.

Florida Blue claims, and offers as evidence an undated AKF brochure, that payments to the AKF by the large dialysis providers were made in proportion to anticipated benefit in the form of premium assistance. The AKF’s “Honor System” requires that each dialysis provider make “equitable” contributions to the AKF fund, according to the brochure. At the AKF’s suggestion, a fair share contribution could reasonably be determined by considering the number of patients it refers to the AKF fund.

The filing goes on to reprint New York Times reporting from Dec. 2016 that claims the AKF was biased in favor of providing support to patients at the largest clinics. In 2017, according to the complaint, about 80% of the AKF’s donations came from FMS and DVA.

In short, Florida Blue believes that DVA violated the conditions under which they were permitted by the OIG Advisory Opinion to make contributions to the AKF to support a premium assistance program.

The complaint also solves the mystery as to why the AKF premium support program remained attractive to ESRD patients relative to the low cost-sharing requirements of Medicaid and Medicare. The answer appears to be that DVA waived or otherwise did not collect co-payments, deductibles and co-insurance due under the Florida Blue benefit design.

According to Florida Blue, such elimination of cost-sharing is not permitted under the Provider Agreement between the insurer and DVA.

Finally, the complaint indicates that DVA is now out of network, having cancelled its Provider Agreement with Florida Blue in the fall of 2018. Out-of-network status has a near term benefit to DVA – and perhaps the reason for the cancellation – and a commensurate loss of control over reimbursement for Florida Blue.

The oft used tool to discourage providers from going out-of-network is higher patient cost-sharing but given DVA’s proclivity for picking up the tab that will not be applicable here.

Call with questions.

Emily Evans
Managing Director – Health Policy


Thomas Tobin
Managing Director