DENVER, Oct. 16, 2017 /PRNewswire/ -- DaVita Kidney
Care, a division of DaVita Inc. (NYSE: DVA), a leading provider of
kidney care services, today provides additional information on
charitable premium assistance, including its expectations about the
impact on these patients and DaVita in the unlikely event that
charitable assistance were no longer available.
Background and History
In assessing the likelihood of dialysis patients losing access
to charitable premium assistance, it is important to keep in mind
several factors:
- The ability to obtain and maintain optimal insurance coverage
is of tremendous importance to dialysis patients, given their
multiple comorbidities and associated high utilization of health
care services. For some patients Medicare is the best insurance,
while for others commercial coverage is much better than
Medicare.
- Paying for coverage is a significant financial burden for many
patients, as ESRD disproportionally affects the low-income
population. Charitable assistance plays an important role for these
patients by alleviating at least some of their financial
burden.
- Eligibility for charitable assistance is based on financial
need, independent of whether the patient chooses a commercial or
government plan. In fact, nearly 80% of patients receiving
charitable premium assistance have Medicare as primary
coverage.
- Charitable assistance has long been a part of the
government-designed dialysis ecosystem, with explicit recognition
not only of the benefit of such assistance to dialysis patients,
but also acceptance of provider funding for such assistance in an
advisory opinion from the Centers for Medicare and Medicaid
Services (CMS) Office of Inspector General (OIG).
- Commercial health insurers are not disadvantaged by the unique
rules of the ESRD ecosystem. They receive two unique, large
government subsidies, namely the ESRD Medicare entitlement for
patients under 65 and the 30-month limitation of the Medicare
Secondary Payer statute.
For these reasons, DaVita believes that charitable premium
assistance will continue to be available to dialysis patients.
Risk Mitigation
In the unlikely scenario that charitable assistance were no
longer available to any of its patients, DaVita estimates that the
total negative impact to its annual operating income – after
related cost offsets – would be in the range of $100 million to $250 million.
DaVita bases this estimate on the expectation that most
commercially insured patients would either retain their current
coverage or obtain another commercial plan. The specifics by
patient segment are as follows:
- In the individual market segment, which represents
approximately 1,800 DaVita patients with charitable assistance,
most recipients maintain coverage they paid for without assistance
before the onset of ESRD. DaVita believes that a majority of these
patients would have access to premium tax credits and be able to
continue to afford their premium even without charitable
assistance. As previously disclosed, DaVita estimates that the loss
of charitable assistance in this segment would reduce its annual
operating income by $45-90M, which is
included in the range provided above.
- The commercial group segment, which represents approximately
4,000 DaVita patients receiving charitable assistance, is comprised
of two sub-segments:
-
- Approximately 55% of patients in this segment are currently on
employer group plans. Patients in this segment paid for coverage on
their own prior to the onset of ESRD. These patients use charitable
assistance to alleviate the financial burden of paying the employee
portion of their coverage, estimated to be typically $200-300 per month. Patients in this segment,
and/or their spouses, remain employed, and DaVita believes most
would continue to maintain their current coverage even without
access to charitable assistance.
- The remaining 45% of patients in this segment are currently on
COBRA plans. For patients that could no longer afford the COBRA
premium without assistance, DaVita believes that many would qualify
for, and migrate to, individual plans with premium tax credits,
because the total cost to the patient of an alternative government
option would often be greater than the individual commercial
option. DaVita expects that a substantial portion of patients in
this segment would still maintain coverage on a commercial plan
even without charitable assistance.
- In the government segment, which represents approximately
19,000 patients, or nearly 80% of patients receiving charitable
support, DaVita believes that most patients would continue to
retain their primary Medicare coverage but would be at significant
risk of losing their secondary (Medigap) coverage. They would
likely be forced to spend down their savings to qualify for
Medicaid as their only option to obtain secondary coverage. While
this migration of government patients would have limited, if any,
negative impact on DaVita's operating income, it would result in
significant negative consequences for many thousands of
patients.
DaVita believes that elimination of charitable assistance
entirely is unlikely due to the tremendous negative impact on tens
of thousands of patients and the fact that it has been part of a
stable dialysis ecosystem for decades. In addition, DaVita believes
that the fact that most commercial patients would likely retain
commercial coverage even without charitable assistance reduces not
only the downside to its operating income but also the likelihood
of such a scenario materializing in the first place.
DaVita looks forward to responding to any further questions on
its forthcoming Q3 earnings call.
About DaVita Kidney
Care
DaVita Kidney
Care is a division of DaVita Inc., a Fortune 500® company,
that through its operating divisions provides a variety of health
care services to patient populations throughout the United States and abroad. A leading
provider of dialysis services in the
United States, DaVita Kidney
Care treats patients with chronic kidney failure and end
stage renal disease. DaVita Kidney
Care strives to improve patients' quality of life by
innovating clinical care, and by offering integrated treatment
plans, personalized care teams and convenient health-management
services. As of June 30, 2017,
DaVita Kidney Care operated or
provided administrative services at 2,445 outpatient dialysis
centers located in the United
States serving approximately 194,600 patients. The company
also operated 217 outpatient dialysis centers located in 11
countries outside the United
States. DaVita Kidney Care
supports numerous programs dedicated to creating positive,
sustainable change in communities around the world. The company's
leadership development initiatives and social responsibility
efforts have been recognized by Fortune, Modern Healthcare,
Newsweek and WorldBlu. For more information, please visit
DaVita.com.
Contact Information
Investors:
Jim Gustafson
310-536-2585
jim.gustafson@davita.com
Media:
Skip Thurman
303-876-6610
skip.thurman@davita.com
Forward Looking Statements
This release contains or
may contain statements that are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended. We intend these forward-looking statements to be covered
by the safe harbor provisions for such statements. All statements
that do not concern historical facts are forward-looking statements
and include, among other things, statements about our expectations,
beliefs, intentions and/or strategies for the future. These
forward-looking statements include statements regarding anticipated
government and commercial payment rates, the percentage of patients
who receive charitable premium assistance for various forms of
healthcare insurance coverage, the potential impact on the
continued use of such charitable premium assistance of various
pending proceedings and possible legislation or rule making, on our
operations, financial condition and prospects, the likelihood that
charitable assistance will be limited or eliminated and the
response of patients in such circumstances, including their ability
to retain and fund insurance, expectations for treatment growth
rates, revenue per treatment, operating income, cash flow, and
operating cash flow. These statements can sometimes be identified
by the use of forward looking words such as "may," "believe,"
"will," "should," "could," "would," "expect," "project,"
"estimate," "anticipate," "plan," "continue," "seek," "forecast,"
or "intend" or other similar words or expressions of the negative
thereof. These statements involve substantial known and unknown
risks and uncertainties that could cause our actual results to
differ materially from those described in the forward-looking
statements, including, but not limited to the risk factors set
forth in the Company's Annual Report on Form 10-K for the year
ended December 31, 2016, and
subsequent quarterly reports on Form 10-Q. These forward-looking
statements should be considered in light of these risks and
uncertainties. All forward-looking statements in this release are
based on information available to us on the date of this release.
We undertake no obligation to publicly update or revise any of
these forward-looking statements, whether as a result of changed
circumstances, new information, future events or otherwise.
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SOURCE DaVita Kidney Care