California Proposition 8, Limits on Dialysis Clinics' Revenue and Required Refunds Initiative (2018)

California Proposition 8, the Limits on Dialysis Clinics' Revenue and Required Refunds Initiative, is on the ballot in California as an initiated state statute on November 6, 2018.

Overview

What would Proposition 8 require of dialysis clinics?

Proposition 8 would require dialysis clinics to issue refunds to patients or patients' payers, such as insurers, for revenue above 115 percent of the costs of (a) direct patient care, such as wages and benefits of non-managerial clinic staff who furnish direct care to patients, pharmaceuticals, medical supplies, and (b) healthcare improvements, such as staff training and patient education and counseling. Revenue earned above the 115 percent cap would need to be refunded to patients or the patients' payers each year. Clinics that do not issue required refunds within 210 days after the end of the fiscal year would be fined an amount equal to 5 percent of their total required refunds, but not to exceed $100,000. The measure would also prohibit dialysis clinics from discriminating or refusing services based on a patient's payer, including the patient himself or herself, a private insurer, Medi-Cal, Medicaid, or Medicare. The initiative would require chronic dialysis clinics to report to the state government information required to enforce the measure, including the costs associated with operating a chronic dialysis clinic, treatment revenue, and the amount of each payer’s refund. The state department of public health would enforce the initiative.

What do the campaigns believe would be the effects of limiting revenue and requiring refunds?

The ballot initiative itself would not require dialysis clinics to invest in equipment, staffing, and patient care. According to Sean Wherley, a spokesperson for the SEIU-UHW West, the requirement to refund profits above the limit would incentivize clinics to spend revenue on healthcare improvements because the revenue spent on direct patient care services and healthcare improvements would not be limited.[2] The concepts of direct patient care services and healthcare improvements would be defined as follows:

  • direct patient care services costs: salaries, wages, and benefits of non-managerial clinic workers who furnish direct care to dialysis patients; staff training and development; pharmaceuticals and medical supplies; costs associated with renting and maintaining facilities, utilities, lab testing; and depreciation of facilities and equipment.
  • healthcare improvement costs: additional health information technologies; training non-managerial workers engaged in direct patient care; and patient education and counseling.

Who is behind the campaigns?

The committees in support or opposition of Proposition 8 had raised a combined $117.89 million. Opponents had outraised supporters five-to-one.
Californians for Kidney Dialysis Patient Protection is leading the campaign in support of the initiative. The SEIU-UHW West organized the campaign committee. Supporters call the initiative the Fair Pricing for Dialysis Act. Californians for Kidney Dialysis Patient Protection had raised $18.46 million, with the SEIU-UHW West donating 95 percent of the total funds.
The California Dialysis Council, a statewide association of dialysis clinics, organized the campaign committee Patients and Caregivers to Protect Dialysis Patients. The committee had raised $99.43 million, with 62 percent from the dialysis business DaVita, 29 percent from the dialysis business Fresenius Medical Care North America, and 7 percent from the dialysis business U.S. Renal Care.

Ballot Title

The official ballot title is as follows:

“Authorizes State Regulation of Kidney Dialysis Clinics. Limits Charges for Patient Care. Initiative Statute.”

Text of the measure

Ballot summary

The official ballot summary is as follows:

  • Limits the charges to 115 percent of the costs for direct patient care and quality improvement costs, including training, patient education, and technology support.
  • Requires rebates and penalties if charges exceed the limit.
  • Requires annual reporting to the state regarding clinic costs, patient charges, and revenue.
  • Prohibits clinics from refusing to treat patients based on the source of payment for care.