Dialysis services firms have come under pressure. This came after the reports that Federal Health Care officials have launched an investigation into several complaints. These complaints are that some providers might be steering patients to purchase Obamacare plans, in a bid to obtain higher sums for reimbursement fees.
Dialysis DaVita Healthcare shares fell by more than 4%, Fresenius Medical Care fell by nearly 4%, while the shares of American Renal Associates plunged as much as 18%, which is well below its IPO price of $22 as of April. ARA shares later managed to recover some losses before ending the day down by more than 10%.
Regulators from the Center for both Medicare and Medicaid Services requested for information through public opinion, after health insurers had expressed concerns regarding the issue. Anthem, Aetna, and United Healthcare group showed a trend of a higher dialysis rate on the Affordable Care Act plans they provide in the second quarter.
While CMS sent a warning letter to the Medicare-enrolled dialysis firms stating that the agency is considering making changes to enrollment provisions that will allow several charitable groups to purchase Obamacare plan premiums, and penalties for those guilty of abusing the system.
Ana Gupta, Leerink analyst said that the changes could help reduce the ARA earnings by about 10%, not including penalties. She also noted that the American Renal Associates reported higher yearly revenues in its second quarter because of the shift to ACA plans. This shift has resulted in reimbursement rates reaching two to three times the Medicare rate.
UnitedHealth has launched a lawsuit against American Renal Associates over the issue, claiming that the agency funneled money to charitable organizations get patients to change from government Healthcare plans to Obmacare coverage. The ARA has denied these allegations and declared that the suit has no merit. The company also declined to give any comments regarding the CMS probe.