Russell Desmond received a letter a few weeks ago from the American Kidney Fund (AKF) that he said felt like “a smack on the face.”

The organization informed Desmond, who has kidney failure and needs dialysis three times a week, that it will no longer help him pay for his private health insurance plan – to the tune of about $800 a month.

“I am depressed about the whole situation,” said the 58-year-old Sacramento resident. “I have no clue what I’m going to do.”

Desmond has Medicare, but it doesn’t cover the entire cost of his care. So. with assistance from AKF. he pays for a private plan to cover the difference.

Now. the fund, which helps about 3.700 Californians pay their premiums and out-of- pocket costs, is threatening to pull out of California because of a new state law that is expected to cut into the dialysis industry’s profits – leaving patients like Desmond scrambling.

The letter portrayed the fund as helpless. “We are heartbroken at this outcome,” it read. “Ending assistance in California is the last thing we want to do”

But supporters of the new law are calling the threat a scare tactic. State Assembly- man Jim Wood (D- Healds- burg). the author of AB-290, said there is nothing in the measure that prohibits the fund from continuing to provide financial assistance to patients.

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“AKF has simply made a conscious decision, without merit, to leave the state despite the many accommodations I made by amending the bill in the Senate to ensure that it can continue to operate in Califor­nia,” Wood said in a written statement.

What’s behind this dispute, critics of AKF say, is the tight relationship between the fund and the companies that provide dialysis, which filters the blood of people whose kidneys are no longer doing the job.

People on dialysis usually qualify for Medicare, the fed­eral health insurance program for people 65 and older, and those with kidney failure and certain disabilities. If they’re low income, they may also qualify for Medicaid, which is called Medi-Cal in California.

But dialysis companies can get higher reimbursements from private insurers than from public coverage. And one way to keep dialysis pa­tients on private insurance is by giving them financial assis­tance from AKF, which helps nearly 75,000 low-income dialysis patients across the country.

The fund gets most of its money from DaVita and Fre­senius Medical Care, the two largest dialysis companies in the country. The fund does not disclose its donors, but an in­dependent audit of its finances conducted by the accounting firm CliftonLarsenAllen, LLP, reveals that 82% of its funding in 2018 – nearly $250 million – came from two companies.

Insurance plans, consumer advocacy groups and unions have accused AKF of help­ing dialysis providers steer patients into private insur­ance plans in exchange for donations from the dialysis industry. Wood said his bill is intended to discourage that practice.

AKF’s CEO LaVarne Bur­ton denied the accusations and said her group plays no role in patients’ coverage choices.

Starting in 2022, the new law will limit the private-in­surance reimbursement rate that dialysis companies re­ceive for patients who get as­sistance from groups such as AKF to the rate that Medicare pays. The rate change won’t apply to patients who are cur­rently receiving assistance as long as they keep the same health plans. The bill will also address a similar dynamic in drug treatment programs.

To determine which pa­tients receive financial aid, the law will require third-party groups to disclose patients’ names to health insurers start­ing July 1, 2020.

These disclosure require­ments are spurring AKF’s de­cision to leave, Burton said. She argues that they conflict with federal rules and violate patient privacy.

“AKF has no choice but to leave or seek legal relief,” Burton said.

In mid-October, the fund started sending letters to its financial aid recipients in California warning of its de­parture. And November 1, it joined two dialysis patients in filing suit against the state, asking a U.S. District Court to rule the law unconstitutional.

Gov. Gavin Newsom cau­tioned against such actions when he signed the bill, and urged “both opponents and supporters to put patients first.”

Ana B. Ibarra, Special to California Black Media

Posts by Ana B. Ibarra, Special to California Black Media