Senator Leyva Introduces Legislation Protecting Consumers from Risky Health Care Schemes in Dialysis and Addiction Center Industry

SB 1156 Creates Safeguards, Prioritizes Needs of Patients

Friday, March 23, 2018

SACRAMENTO – Seeking to put an end to insurance schemes carried out by profit driven businesses targeted at vulnerable individuals suffering from kidney disease and addiction, Senator Connie M. Leyva (D-Chino) today announced legislation to rein in predatory behavior that is driving up healthcare costs for Californians and potentially putting their health and lives in danger.

Since the passage of the Affordable Care Act (ACA), patients cannot be denied health coverage based on a pre-existing condition. This profound advancement for consumers has also provided an opportunity for dishonest providers to take advantage of sick people by enrolling them in commercial coverage to maximize high reimbursement rates for services. Oftentimes, this coverage is not in the best interest of the patient, results in higher out-of-pocket costs or disruption in care and is being imposed upon consumers even though these patients are eligible for public coverage like Medicare or Medi-Cal.

These businesses have especially taken advantage of vulnerable individuals suffering from kidney disease and addiction. In some cases, dialysis clinics have dissuaded patients from seeking kidney transplants—often the recommended course of treatment— and the entity that some dialysis companies use to pay patients’ premiums has a history of cutting off premium payments after a transplant. In the case of some addiction centers, drug treatment center providers seemingly aim to have patients relapse in the hopes of continued insurer payouts. They often only pay premiums while the individual is in their facility, letting coverage lapse and outpatient care becomes unaffordable when the individual leaves their facility.

These providers pay premiums in several ways, including directly to health insurance plans, through a provider-funded nonprofit organization, or by giving patients pre-paid debit cards to pay their premiums. “SB 1156 protects patients by creating safeguards so that they are not caught up in schemes where they may lose their health insurance,” Senator Leyva said. “This important bill also protects authentic third party payment mechanisms that prioritize the needs of patients. Providers have a right to make a profit, but certainly not when those profit motives can compromise the health and well-being of patients and raise premiums for other Californians.”

Under SB 1156, third-party payers would have to:

  • Certify that patients are not eligible for Medicare, Medi-Cal, or Covered California subsidies and would have to disclose to regulators of their intention to pay a patient’s premiums in advance;
  • Ensure continuity of care for consumers by requiring third party payers to pay premiums for the full plan year, even if the patient stops treatments that benefit the provider;
  • Prove they meet these requirements. Failure by the third-party payer to meet these requirements means the financially interested provider is only entitled to a predetermined payment rate for any services provided to that patient.

Supported by SEIU California State Council and Blue Shield of California, SB 1156 will be considered by the Senate Health Committee at their April 18th hearing.