Dialysis Providers Fall After Disclosing Patient-Care Subpoenas

  • U.S. attorney probes support for people on private insurance
  • Fresenius Medical, American Renal, DaVita stocks all drop

Dialysis providers Fresenius Medical Care AG, American Renal Associates Holdings Inc. and DaVita Inc. all fell after saying they were subpoenaed in the U.S. over premium-assistance programs that support dialysis patients on private insurance plans that can be more lucrative for providers.

The U.S. Attorney for the District of Massachusetts is investigating connections to the American Kidney Fund, which manages a patient-assistance program for the private plans, Bad Homburg, Germany-based Fresenius said Monday. American Renal also said its subpoena is in connection with the American Kidney Fund, while DaVita said it’s been subpoenaed regarding “charitable premium assistance.”

Fresenius Medical Care fell as much as 7.3 percent, the most since June 24, and was down 6.4 percent to 75.44 euros at 4:51 p.m. Monday in Frankfurt. The shares had gained 5 percent in the 12 months before Monday, including reinvested dividends, compared with a 17 percent increase in the benchmark DAX Index.

American Renal’s shares plunged as much as 8.5 percent, the biggest intraday drop since Nov. 21, and traded down 2.1 percent to $22.57 at 10:48 a.m. in New York. DaVita was down 1.7 percent to $64.65.

New Restrictions

Dialysis patients and providers including Fresenius and DaVita have sued to challenge new regulations that tighten rules governing patient aid for private plans, due to take effect Jan. 13.

American Renal stands to lose the most profit due to the new restrictions, and Fresenius will be affected the least, according to a Bloomberg Intelligence analysis. All three companies said they’re cooperating with the investigation.

Between 700 and 2,000 Fresenius patients with end-stage renal disease in the U.S. currently use the plans. By subsidizing premiums, which patients would otherwise have to pay themselves, the patient aid steers people into more expensive private coverage, the Center for Medicare and Medicaid Services argued. Private insurance pays dialysis providers like Fresenius $100,000 to $200,000 more per patient each year than would Medicare and Medicaid, which have worked to reduce costs in recent years, according to CMS.

Separately, DaVita on Monday said it signed a six-year supply agreement with Amgen Inc. for anemia drugs used to treat dialysis patients. The deal replaces a 2011 pact that was due to expire next year.

Peter Grauer, the chairman of Bloomberg LP, the parent company of Bloomberg News, is a member of DaVita’s board.

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