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Private Insurers Pay Dialysis Providers Four Times Above Medicare

Analysis  |  By Jack O'Brien  
   May 15, 2019

Commercial health plans paid $1,041 per dialysis session compared to government programs that paid $248 per session, according to a new study.

A study by the University of California, Los Angeles (UCLA) released Tuesday afternoon found private health plans paid four times more than government programs for dialysis treatments.

On average, commercial insurers paid $1,041 per dialysis session compared to government programs that paid $248 per session, according to the UCLA study.

Medicare pays a fixed rate for dialysis care but private insurers must negotiate with dialysis providers for the prices to pay.

The study comes one week after RAND Corp. released similar research showing that private health plans paid hospitals more than 240% of what Medicare did in 2017.

Related: Private Insurers Paid Hospitals 241% of What Medicare Would Have

UCLA researchers analyzed seven years' worth of financial statements from DaVita Inc., specifically reviewing the Denver-based company's dialysis and related lab services segment which includes "outpatient hemodialysis, peritoneal dialysis and inpatient dialysis."

In Q1 2019, DaVita reported net segment revenues of $2.6 billion, up slightly year-over-year.

The number of people receiving dialysis treatment in the U.S. increased by 4.3% between 1996 and 2016, according to the study's abstract in JAMA, with DaVita and Fresenius Medical Care accounting for 75% of the U.S. dialysis market.

Neither DaVita or Fresenius responded to a request for comment by the time of publication.

Related: New DaVita CEO Announced as Thiry Transitions to Executive Chairman  

The researchers state that the study could "lead to policies that reduce the prices paid" for dialysis treatment, including by private insurers.

In November, California Proposition 8 a ballot intitiative that sought to impose limits on dialysis clinics' revenue and require refunds for patients, was defeated.

It's estimated that the legislation would have caused DaVita to lose $450 million per year if it had been approved by voters.

During Q1, DaVita opened 27 new dialysis centers, acquired two new centers, and closed three in the U.S, while acquiring two international dialysis centers.

Related: Net Income Falls $30M for DaVita During Difficult Q1  

The study does note that it has limitations, including that some private insurers pay "more or less" than the averages and that the results may not apply to other dialysis providers than DaVita.

Related: HHS Names KidneyX Redesign Phase 1 Winners  

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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