DVA DaVita Inc

By Anna Wilde Mathews 

A judge blocked a federal rule that was expected to limit dialysis providers' ability to help patients pay for individual insurance plans, which was set to go into effect Friday.

U.S. District Judge Amos Mazzant, in Sherman, Texas, issued a temporary restraining order delaying the rule by two weeks, granting a request that was part of a suit filed by major dialysis providers and a patient group. The plaintiffs, which included DaVita Inc. and Fresenius Medical Care North America, a subsidiary of a German company, argued that the Department of Health and Human Services had improperly rushed out the rule and that it could hurt patients.

The order puts the fate of the rule into question, because the incoming Trump administration's stance on it isn't clear.

A spokesman for the Department of Health and Human Services said officials there were "disappointed the court temporarily stayed implementation of this important rule while scheduling further proceedings to consider the parties' positions." A spokesman for DaVita said the ruling was "good news for the thousands of patients who would be harmed by the implementation of the rule."

In granting the dialysis providers' request, the judge said that the plaintiffs had shown that the federal agency "likely violated the procedures" of a law governing the issuance of federal regulations. The order also said that the rule might hurt patients by causing them "to shift to public insurance options, and many patients would be better served by private insurance options."

The federal rule at issue would likely have affected a controversial setup in which a nonprofit, the American Kidney Fund, runs a program, using funding from dialysis providers, that helps pay premiums for kidney-failure patients. That setup is being investigated by the Boston U.S. attorney's office. In the past, the nonprofit has said it operates its program with the "highest integrity" and adheres to guidelines laid out by an advisory opinion from the Office of the Inspector General of the Department of Health and Human Services.

In the Health and Human Services rule, the agency said dialysis providers have a "strong financial incentive...to use premium payments to steer as many patients as possible to commercial plans" such as the individual coverage sold under the Affordable Care Act. The rule said the companies are paid more for their services when patients are insured that way, rather than through government programs such as Medicare and Medicaid.

The federal regulator said patients sometimes had problems when they enrolled in the individual insurance plans, facing potentially higher costs and disruption if an insurer decided to stop accepting their third-party premium support, and the rule needed to take effect quickly to avoid further harm to patients.

The rule would require dialysis providers to tell insurers when their patients are getting help from the providers, directly or indirectly, to pay premiums for individual insurance plans. The providers are also supposed to get assurances the insurer will accept those payments. The federal agency estimated that around 7,000 dialysis patients get premium help for individual health plans either directly or indirectly from dialysis companies.

Analysts have said insurers would likely often refuse the payments, with the result that some patients wouldn't be able to enroll in the individual plans. They have said that a loss of commercially insured patients could hurt earnings at dialysis companies.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

January 12, 2017 22:17 ET (03:17 GMT)

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