Shares of dialysis providers DaVita Inc. and Fresenius Medical Care AG & Co. rose in heavy Monday trade after California Gov. Jerry Brown vetoed a bill late Sunday that would have significantly affected their revenue.
The bill, SB 1156, would have restricted the financial assistance that dialysis companies offer patients. The assistance, however, maximizes how much companies are reimbursed for their dialysis services and has the effect of raising health insurance premiums, according to the bill’s sponsor.
Brown said in a memo to the California senate that the legislation “goes too far as it would permit health plans and insurers to refuse premium assistance payments and to choose which patients they will cover.”
“I encourage all stakeholders to continue to work together to find a more narrowly tailored solution that ensures patients’ access to coverage,” he wrote.
Individuals with kidney disease need regular dialysis to remove waste from the body and keep blood pressure under control, functions that are normally handled by healthy kidneys.
The legislation in question had the support of the Service Employees International Union and health insurer Blue Shield of California and was opposed by dialysis providers, as well as the non-profit American Kidney Fund, which runs the need-based programs. DaVita said in a statement that the bill, had it gone through, would have let health plans “discriminate against low-income dialysis patients who rely on charitable assistance to pay their insurance premiums.”
Though the latest development marked a win for dialysis providers, the battle may well rage on.
California voters will vote on a ballot measure, Proposition 8, next month that would limit how much revenue dialysis providers can earn from commercially insured individuals.
The SEIU and the bill’s other supporters also plan to reintroduce the bill, SB 1156, next year under a new governor, according to Height Capital Markets analyst Andrea Harris.
DaVita DVA, +3.36% shares rose 3.4% in Monday trade and FreseniusFME, +2.56% shares rose 3.3%.
DaVita stock has lifted 6.6% over the last three months and Fresenius stock has risen 5.8%, compared with a 7.6% rise in the S&P 500 SPX, +0.36% and a 9.8% rise in the Dow Jones Industrial Average DJIA, +0.73%
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