UnitedHealth Group Inc. UNH -0.24 % sued kidney-care chain American Renal Associates Holdings Inc., ARA -1.52 % accusing it of fraud as health-industry fights escalate over who is allowed to help consumers pay for Affordable Care Act coverage.
The lawsuit by the biggest U.S. health insurer, filed Friday in U.S. District Court in Florida’s Southern District, said American Renal Associates engaged in a “fraudulent and illegal scheme” to get larger payments from the insurer by convincing patients to sign up for UnitedHealth plans and connecting them with a charity that helped pay their premiums. The suit said the patients were eligible for coverage from Medicare and/or Medicaid, but the dialysis provider could receive far bigger reimbursements for treatments if patients had the UnitedHealth plans.
American Renal Associates, a Beverly, Mass.-based company that operates about 200 dialysis clinics and went public in April, said in a statement that the suit is “without merit,” and that it intends to “vigorously defend this legal action for American Renal and on behalf of all patients who choose and trust us with their care.” The company said it is “dedicated to putting patients first.”
The suit said American Renal Associates’ reimbursement from government programs was $ 300 or less per dialysis session, but it sought to bill UnitedHealth around $ 4,000 a session. “The lone motivating factor behind ARA’s patient conversion efforts is ARA’s desire to maximize its own profits,” the suit said.
The issue of third-party payment of health premiums has been a point of tension under the ACA, which requires insurers to sell plans to people regardless of their health conditions. Health-care providers have an incentive to ensure their patients are covered, which in turn can assure they are paid for their services. Insurers, for their part, say that premium assistance by health-care providers or affiliated charities often focuses on sick patients who need a lot of services, which increases insurers’ costs and pushes up premiums for all policyholders.
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Federal guidance on the issue has been murky. In 2013, the Department of Health and Human Services suggested insurers should reject premium payments that came from health-care providers because they could “skew the insurance risk pool.” But the regulator later said its warning about third-party premium payments didn’t apply to certain entities, including independent nonprofits focused on financial need that “do not consider enrollees’ health status.” An HHS spokesman declined to comment.
In the past few years, more insurers have begun turning back premium payments from some organizations.
The American Kidney Fund, the charity cited in UnitedHealth’s suit, said recently that six insurers in 34 states are now rejecting payments from the group. Fund officials said its program for paying dialysis patients’ premiums is completely funded by dialysis providers, and it has strict guidelines that keep it independent from the funders. The program is specifically for dialysis patients, an official with the nonprofit said.
In response to Friday’s suit, a spokeswoman for the American Kidney Fund said the fund isn’t a party to the complaint and had no comment on it.
In a statement, the American Kidney Fund’s chief executive, LaVarne Burton, said it helps “patients who are in financial need to pay for the coverage they have chosen,” including Medicare.
Some states have taken action: Louisiana, in 2014, passed a law that required insurers to accept premium payments from the American Kidney Fund, among other entities. In North Carolina, the state regulator in a letter this May called the American Kidney Fund premium payments “good public policy” and applauded a decision by Blue Cross and Blue Shield of North Carolina to accept them.
But last month, Minnesota said insurers didn’t have to accept premium payments from health-care providers and organizations that receive funding from them.
Idaho this week released similar guidelines, saying insurers don’t have to take payments from charities that get more than half their support from health-care providers. If health-care providers are “profiteering, it’s causing the [premium] rates for everyone else to be higher,” said Dean Cameron, the director of the Idaho Department of Insurance.
People getting dialysis for advanced kidney disease are generally eligible for Medicare even before they turn 65, while low-income people may also qualify for Medicaid.
In its suit, UnitedHealth said American Renal Associates convinced some patients in Florida to drop Medicaid coverage. Instead, UnitedHealth claims the dialysis provider got the patients to switch to UnitedHealth’s ACA plans, with premium aid from the American Kidney Fund, even though UnitedHealth had rules against accepting such third-party premium payments. The suit said UnitedHealth has seen a similar pattern connected to American Renal Associates in Ohio and potentially California. UnitedHealth lists 27 unnamed patients as examples, but says it believes more were involved in the alleged pattern.
“Many of these patients have been hit with medical expenses that would have been covered by their government-sponsored Medicare or Medicaid plan, and we are confident that the Court will put a halt to these illegal and fraudulent practices,” a UnitedHealth spokesman said in a statement.
In the suit, UnitedHealth is seeking unspecified damages and wants the court to stop American Renal Associates from continuing the practices alleged in the complaint.
Write to Anna Wilde Mathews at [email protected]