“Providers and patient groups in this area have been consistent in pushing for a fix in light of the ruling,” a Republican Senate aide granted anonymity to speak about the advocacy told POLITICO. The lobbying began around December when the Biden administration filed a brief in support of the group health plan, the aide said, but “ramped up a ton” after the June 21 decision.
DaVita has flexed its political muscles to close what it calls a “loophole” created by the opinion — which said that current law, while prohibiting plans from offering different benefits to beneficiaries with end-stage renal disease, is not explicit about requiring plans to cover dialysis services.
Three weeks after DaVita’s Supreme Court loss, Kathleen Waters, the company’s chief legal officer, and Kelly Philson, one of its top lobbyists, drafted proposed legislative language that would make additions to the Medicare statute at issue in the case, according to the metadata within a Word document obtained by POLITICO. The proposal would create coverage parity for dialysis services “as compared to other covered medical services” provided by the plan. There is no outward indication the text is from DaVita.
While pushing for changes, advocates sought to assure lawmakers that they weren’t trying to expand coverage, according to a summary document also obtained by POLITICO. While the broad phrasing could be “gamed by a plan” to create a “‘skinny’ plan that does not cover benefits for any chronic conditions,” the summary reads, it “highlights our intent not to create a mandate.”
On July 29, a bipartisan group of 17 House members introduced a bill that largely mirrored the proposal, and Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) followed with a Senate companion on Aug. 3. Instead of creating parity between dialysis treatments and other services generally, it would prohibit a group health plan from putting “limits, restrictions, or conditions” on dialysis benefits compared to services needed to treat other chronic conditions the plan covers.
“After the Supreme Court decision in June created a loophole, members of Congress who are concerned about the potential harmful impact to their constituents in this vulnerable patient population started working to restore the protections under the Medicare Secondary Payer Act,” a DaVita spokesperson said in an emailed statement in response to an inquiry from POLITICO about the company’s involvement in the proposal and its lobbying and campaign activity.
In addition to spending roughly $4 million a year on its lobbying efforts, DaVita has a prolific political action committee.
Each of the 17 co-sponsors of the House bill has received campaign money from DaVita’s PAC since January 2021, totaling $67,000, according to OpenSecrets, which tracks political spending. Five co-sponsors also received contributions to their leadership PACs, Federal Election Commission records show.
Industries often contribute to lawmakers who work on their issues, so it’s not unusual that DaVita has given thousands of dollars to most of those members — almost all of whom sit on committees with jurisdiction over health policy — over the last several election cycles.
But in May, Rep. Yvette Clarke (D-N.Y.), the bill’s lead sponsor and vice chair of the House Energy and Commerce Committee, received $14,500 in contributions from 10 DaVita executives and employees — a departure from the relatively modest checks her campaign has typically received from its PAC over the years.
The donations include $2,500 from Waters — the lawyer who drafted the legislative proposal — and $2,000 from its CEO, Javier Rodriguez, according to FEC data. Records show none of them, or any DaVita employees, had contributed to her previously. The company did not comment on the contributions.
The issue has “particular importance” to the congresswoman because of the prevalence of kidney failure among her constituents, Clarke’s office said in a statement.
“Throughout the legislative process, we always seek input from stakeholders — patient groups, providers, advocates and our constituents. We welcome suggestions from these stakeholders to make sure we get the best information to make good public policy decisions,” the statement said.
Cassidy and Menendez have not received any campaign contributions from DaVita’s PAC since the beginning of last year, but it contributed $10,000 and $5,000, respectively, to their leadership PACs.
“Since kidney disease disproportionately impacts minority communities, and the Supreme Court’s ruling could negatively impact access to care, I led the introduction of this commonsense bill to ensure health plans don’t discriminate against kidney disease patients as part of my longstanding commitment to reducing inequity in our health care system,” Menendez said in an emailed statement.
A Menendez spokesperson said that the office has not been in contact with DaVita or any of its lobbyists “on this bill or any other issues recently” but noted it had received feedback from patient groups.
Cassidy’s office declined to comment.
In a statement, DaVita said, “Our teammates have been civically engaged for decades and will continue to advocate in the future on behalf of this patient population. This includes support for members of Congress, both Democrats and Republicans, who have prioritized better kidney care policy for patients.”
While the Supreme Court decision was a blow to dialysis companies like DaVita and a source of anxiety for patients worried that plans would drop in-network coverage, it provided a roadmap for tweaking the law.
“If Congress wanted to mandate that group health plans provide particular benefits, or to require that group health plans ensure parity between different kinds of benefits, Congress knew how to write such a law,” wrote Justice Brett Kavanaugh in the court’s decision. “It did not do so in this statute.
Medicare, known for providing insurance to older Americans, also extends coverage to people with end-stage renal disease, regardless of age.
If a person with advanced kidney failure receives health insurance through their employer, Medicare acts as a “secondary payer” and temporarily picks up a portion of the tab. After that, Medicare becomes primary and the group health plan secondary.
Medicare spends $51 billion on beneficiaries with end-stage renal disease, according to the United States Renal Data System annual report. People with advanced kidney failure need a kidney transplant or regular and costly dialysis treatments, to survive.
The Medicare Secondary Payer Act prohibits private plans from considering this eligibility when crafting their benefit programs. The law says a group health plan cannot terminate coverage, charge higher premiums, and “may not differentiate in the benefits it provides … on the basis of the existence of end-stage renal disease, the need for renal dialysis, or in any other manner.”
DaVita claimed in its lawsuit that, by putting dialysis care out of network — and forcing the patient to pay more for these services — the plan impermissibly gave patients with end-stage renal disease worse coverage than other beneficiaries and knowingly pushed individuals onto Medicare, which reimburses at a much lower rate.
Kavanaugh disagreed, saying that the plan offered the same level of coverage for dialysis services, regardless of the patient’s degree of kidney disease progression.
But dialysis is “an almost perfect proxy for end-stage renal disease,” wrote Justice Elena Kagan in the dissenting opinion, because almost all patients with kidney failure receive the treatment. The decision, she added, created a “massive and inexplicable workaround” for employer-based plans. The recently introduced legislation aims to reinforce the “may not differentiate” part of the law.
Cameron Lynch, the senior vice president of government relations for another dialysis giant, Fresenius Medical Care, noted the court’s decision and the dissent both “referenced the need for legislative action to solve this issue.”
“While the vast majority of those in the health industry are interested in the well-being of patients, we are pleased to see Congress introduce this important legislation to protect people newly diagnosed with kidney failure from potentially discriminatory behavior,” Lynch said in an emailed statement. The company didn’t answer questions about its lobbying on the bill.
Dialysis companies, providers and groups representing patients argue that the decision paved the way for more plans to restrict dialysis coverage to cut down on costs. For patients, that could mean having to pay for both their employer-sponsored coverage — for things like vision and dental — and Medicare for their kidney care or shift to Medicare entirely and forego supplemental benefits.
Payers, meanwhile, counter that the legislative effort is a cash grab by the industry that wants to ensure they’re reimbursed by the higher in-network rates that private plans offer.
By creating parity between kidney failure and all other chronic conditions, employers argue, it effectively forces nearly comprehensive coverage and — because DaVita and Fresenius dominate 80 percent of the dialysis market — they have the leverage to raise prices.
The bill “would mandate that employer health plans pay kidney dialysis monopolies whatever amounts those companies demand,” said a lobbyist who advocates for group health plans granted anonymity to speak freely about the legislation. “Ultimately, this will mean higher health care costs for everyone who gets health insurance through an employer.”
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