DaVita Spared as Medicare Wipes Out 9.4% Dialysis Cut

DaVita HealthCare Partners Inc. (DVA), Fresenius Medical Care AG (FME) and other dialysis companies received a break from U.S. regulators, who are scrapping a proposed 9.4 percent cut in Medicare payments to the companies next year.

DaVita, the second-largest dialysis provider in the U.S., rose 13 percent in late trading after the Centers for Medicare and Medicaid Services finalized a rule today that keeps payments flat for 2014. Medicare proposed in July the 9.4 percent cut in pay for treating patients with end-stage renal disease.

Much of the original proposal was linked to a federal budget agreement that targeted overspending on anemia drugs such as Amgen Inc. (AMGN)’s Epogen. Medicare, the U.S. health plan for the elderly and disabled, estimates it will spend $8.8 billion on end-stage renal disease facilities in 2014, according to the rule.

DaVita rose 13 percent to $63.69 at 4:39 p.m. after closing at $56.54. Shares of Denver-based DaVita and Germany’s Fresenius had tumbled in July when the cuts were proposed.

About 414,000 people in the U.S. in 2010 were on dialysis, a procedure in which waste is periodically removed from the blood in patients with malfunctioning kidneys. Diabetes and high blood pressure are the most common reasons for kidney failure.

Peter Grauer, the chairman of Bloomberg LP, the parent company of Bloomberg News, has served on DaVita’s board since 1994.

Bad Homburg, Germany-based Fresenius is the world’s biggest provider of kidney dialysis.

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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