DaVita HealthCare Partners Comments On Final CMS ESRD Rates And Guides 2014

(RTTNews) - DaVita HealthCare Partners Inc. (DVA) commented on the final Centers for Medicare and Medicaid Services or CMS Medicare ESRD rule for 2014 and announced initial 2014 operating income guidance.

LeAnne Zumwalt, Group Vice President said, "On the dialysis rule, the bad news is that CMS appears to have accepted the premise that the language in the American Taxpayer Relief Act of 2012 required it to make a partial rebasing of the bundle. This could unfairly result in cuts of nearly $30 per treatment over a three to four year period by looking only at pharmaceutical economics. This means that Medicare dialysis rates will be flat in 2014 and 2015 in an environment of increasing expenses."

"The good news is that Medicare rates will not be decreased next year, when most thought rates would be down. In addition, we get to work with Congress and CMS on trying to mitigate future cuts, and CMS has a number of appropriate reimbursement levers to pull to offset cuts a few years out if it chooses to do so, since Medicare reimbursement already fails to cover the full cost of caring for Medicare patients," LeAnne Zumwalt said.

The company said it expects 2014 enterprise operating income to be in a range of $1.675 billion to $1.850 billion.

The company expects 2014 operating income for its dialysis services and related ancillary business to be in the range of $1.425 billion to $1.540 billion. The primary reasons for a likely year-on-year decline in operating income are Medicare patient expense increases, commercial rate and mix pressures, and health care exchange dynamics.

The company expects 2014 operating income for HealthCare Partners or HCP to be in the range of $250 million to $310 million. The primary reason for a substantial expected year-on-year decline in HCP operating income in 2014 is the previously announced Medicare Advantage rate cuts, which the company will have limited ability to offset.

The company noted that it will discuss its outlook in more detail at its upcoming Capital Markets Day in New York City on Monday, December 9, 2013, at 9:30 a.m. Eastern Time.