UnitedHealthcare Sues Dialysis Chain Over Billing

9942298_lPrivate health insurers can pay more than $4,000 for each dialysis treatment. Government health plans like Medicaid pay around $200.

That gaping price difference was the motivation for a scheme, orchestrated by a for-profit dialysis chain, that illegally pushed poor people in Florida and Ohio out of inexpensive government programs and into expensive private plans sold by UnitedHealthcare, according to a lawsuit the giant insurer filed in federal court on Friday. UnitedHealthcare says the arrangement needlessly exposed the patients to medical bills.

The suit accuses American Renal Associates, a public company that operates nearly 200 dialysis clinics across the country, of fraudulently billing millions of dollars since the beginning of the year. UnitedHealthcare is trying to recoup that money.

The insurer argues that the effort was aided by the American Kidney Fund, a nonprofit patient advocacy group, which paid the patients’ premiums for private insurance. The insurer said American Renal Associates “earmarked donations” to the kidney fund to pay for the coverage, violating anti-kickback laws in the process. The lawsuit also says that the company’s patients were not told that the kidney fund would stop paying their premiums if they received a kidney transplant.

The kidney fund, which is not listed as a defendant in the lawsuit, is overwhelmingly financed by dialysis companies.

American Renal Associates said on Friday that the lawsuit was without merit and that the company would vigorously defend itself. “At all times, we are dedicated to putting patients first, and we structure all of our relationships within that framework,” Michael R. Costa, vice president and general counsel, said in a statement.

The American Kidney Fund declined to comment on the specifics of the lawsuit, but said it was “deeply troubled” by the allegations of what it described as “improper use” of its program by a dialysis provider.

The company says it keeps contributions from providers separate from decisions about whether to offer assistance to patients, an arrangement that it said was “affirmed” by the federal government in 1997.

In a statement, its chief executive, LaVarne A. Burton, said that the group did not recommend particular facilities or insurers and that nearly two-thirds of the 79,000 patients receiving assistance from the fund were on Medicare. The assistance the fund provides, she said, “is a lifeline for people who depend on dialysis for their survival.”

The suit, filed in United States District Court for the Southern District of Florida, touches on an issue regulators have focused on in recent years: the role of third parties paying for insurance.

Federal and state regulators have expressed concern about payments made by outside groups that are closely tied to industry, where the goal appears to be less about helping patients than about generating profits.

This week, the top insurance regulator in Idaho said insurers could refuse payments from organizations like the American Kidney Fund. Minnesota made a similar decision in June.

“There are third parties out there just trying to help people,” said Dean L. Cameron, director of the Idaho Department of Insurance, citing religious organizations as an example. But the practice becomes problematic when the funding is tied to the doctor or the facility providing care, he said. “Those kinds of arrangements concern us.”

The dialysis industry has come under scrutiny from federal regulators in recent years for a variety of actions, including overbilling Medicare.

Many dialysis centers say they lose money because the government programs pay them so little. People who need dialysis and have end-stage renal disease are eligible for Medicare coverage, even if they are under 65. If they are poor, they may also qualify for Medicaid, which covers nearly all out-of-pocket costs. Patients may be enrolled simultaneously in both programs.

At the same time, UnitedHealthcare has a keen financial interest in keeping very ill patients, like those who need dialysis, out of its private plans. Under the federal health care law, insurers must cover everyone, no matter how sick they are.

Dialysis removes toxins from the blood when the kidneys do not work properly, and many patients need treatments three times a week for years.

According to the lawsuit, American Renal Associates devised a clever plot aimed at converting patients over to private plans.

The company identified poor patients in rural areas of Florida who did not have a nearby dialysis clinic in UnitedHealthcare’s network, the suit says. The centers then persuaded these patients to switch to UnitedHealthcare plans, using the American Kidney Fund’s program to pay their premiums.

Finally, the centers billed UnitedHealthcare out-of-network prices of about $4,000 per dialysis treatment, compared with just $200 under Florida’s Medicaid program, the suit said.

Because the UnitedHealthcare plans required greater out-of-pocket contributions than Medicaid’s coverage, the centers waived any part of the dialysis bill that was not paid by the insurer. UnitedHealthcare says patients remained responsible for bills from other doctors, which they would not have had to pay under Medicaid.

Kidney transplants, rather than dialysis, are seen as the best options for most patients with end-stage renal disease, but the American Kidney Fund does not pay for premiums after patients receive a kidney transplant. Patients were not informed of that.

Ms. Burton, the kidney fund chief executive, said the fund’s work was focused on people who need dialysis and not on transplant patients.

“Our greatest hope is that the people we are assisting will receive transplants, but the reality is that most people with kidney failure have to spend time on dialysis,” she said in the statement.

A fast-growing player in the dialysis industry, American Renal Associates enters into partnerships with kidney specialists to run its clinics. A New York private equity firm, Centerbridge Partners, owned the company before it went public in April.

In its public filings, the company acknowledges its dependence on treatments paid by private insurers. Those payments cover just 13 percent of the treatments the clinics provide, but account for 40 percent of the company’s operating revenue.

This reliance on privately insured patients is typical of the dialysis industry, said Eric R. Havian, who represented a whistle-blower in a 2014 case involving charges of kickbacks against DaVita HealthCare Partners, one of the industry’s biggest players.

Even if only a few people receive private insurance at a center, Mr. Havian said, “they may make enough profit on those two or three patients to wipe out all the losses they are incurring from the Medicaid patients, and make enormous profits on top of that.”

UnitedHealthcare said it had already paid about $2 million to American Renal Associates this year. It provided details about 27 patients in Florida and Ohio, but said there could be more.

Insurers say that charities with ties to providers are a concern when they pay premiums only for people with a specific health condition, because doing so often raises overall prices.

“What we’ve seen happening in the marketplace is some companies have been targeting people who use their services to enroll them in private coverage,” said Alissa Fox, a senior vice president with the Blue Cross Blue Shield Association, a trade group.

The American Kidney Fund’s premium-assistance program is one of the hallmarks of the group’s mission. The group says on its website that it assists one in five dialysis patients in the United States with health care expenses.

The fund has close ties to the dialysis industry: It acknowledges that dialysis companies pay for its premium-assistance program, and in 2015, 78 percent of its $264 million in revenue came from two companies, according to its financial disclosures. The kidney fund declined to name the companies. The organization’s chairwoman is a former executive at DaVita and Fresenius Medical Care, the nation’s two leading dialysis chains.

Those industry ties expose the profit motive that underpins the programs, according to Patrick Burns, executive director of Taxpayers Against Fraud, a whistle-blower advocacy group.

“There is a bottom line here, and the people who manage these programs are well aware of it, on both sides,” he said.

Source: http://www.nytimes.com/2016/07/02/business/unitedhealthcare-sues-dialysis-chain-over-billing.html?_r=1

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