[Oct. 13, 2019] SACRAMENTO, Calif. – Reform is coming to the dialysis and drug treatment industries in California after Gov. Gavin Newsom signed Assembly Bill 290 on Oct. 7, a law that will address runaway costs and rein in a profiteering scheme involving dialysis and addiction treatment providers.

“Healthcare providers should not be able to exploit vulnerable patients and run up costs associated with their care – all for the sake of boosting corporate profits,” said Dave Regan, president of SEIU-United Healthcare Workers West. “Charities that offer financial assistance to patients will be allowed to continue doing so after this law takes effect, and any threats by those charities to abandon their patients only highlight how much their mission is a sham.”

Currently, some drug rehabilitation facilities and a dialysis industry-funded charity, known as the American Kidney Fund, pay health plan premiums on behalf of their patients. In turn, those rehabilitation facilities and dialysis corporations submit highly inflated medical claims for reimbursement many times higher than the cost of care and far more than they would be paid by Medicare for the same treatment.

The American Kidney Fund received $247 million – or nearly 80 percent of its funding – from the dialysis industry’s two largest corporations last year, DaVita and Fresenius. The dialysis industry spent $2.5 million through the first half of this year to oppose the legislation.

Under AB 290, financially interested third parties may still offer premium assistance to patients, but it prevents health providers from submitting inflated claims for reimbursement, which ultimately increases healthcare costs for all Californians.

AB 290 will increase consumer protection and provide transparency to health plans about where the payments for treatment are coming from and remove the financial incentive of third-party healthcare providers to bill health plans for exorbitant and unnecessary medical claims.

The law, which will take effect Jan. 1, 2022, is supported by Health Access California, the California Labor Federation, SEIU California, California Association of Health Plans, and the Association of California Life and Health Insurance Companies.