DaVita Spared as Medicare Wipes Out 9.4% Dialysis Cut

DaVita HealthCare Partners Inc., Fresenius Medical Care AG and other dialysis companies received a break from U.S. regulators, who scrapped 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 12 percent in extended trading after the Centers for Medicare & Medicaid Services issued a final rule today that keeps payments unchanged for 2014. The agency said payment reductions remain a possibility over the following three to four years.

The original proposal was linked to a federal budget agreement that targeted overspending on anemia drugs such as Amgen Inc.’s Epogen. Medicare said it will look to spread a pay cut out after receiving “extensive public comment.” It didn’t say by how much payments would then be reduced.

DaVita rose 12 percent to $63.27 at 5:09 p.m. New York time after closing at $56.54. Shares of Denver-based DaVita and Bad Homburg, Germany-based Fresenius, the world’s biggest provider of kidney dialysis, had tumbled in July when the cuts were first proposed.

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. 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.

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

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