American Renal Associates (ARA): CMS Lowers The Axe On 3rd Party Premium Assistance - Leerink
Get daily under-the-radar research with StreetInsider.com's Stealth Growth Insider Get your 2-Wk Free Trial here.
Leerink Partners analyst Ana Gupte, noted that CMS issued an RFI to the public and warning letter to dialysis providers regarding the practice of third party premium assistance on Exchanges. Specifically, the practice is aimed at shifting patients eligible for Medicaid or Medicare to Public Exchanges to arbitrage the 2-3x price differential for healthcare services.
The RFI was issued to the public asking for reports of such practice. The warning to dialysis providers potentially engaging in such practice is a response to the lawsuit brought forth by UNH (OP) against American Renal Associates (ARA [OP]), and subsequent commentary from other health plans such as ANTM (OP) and AET (OP) on similar concerns.
The health plans suggest these practices as being a significant component of the mounting adverse selection and losses they are experiencing in 2016 on Exchanges which have precipitated the HIX exits by UNH and AET, and diminishing profitability by ANTM.
CMS states that this practice (with the exception of Ryan White and Indian tribes) is already prevented. If the practice involves patients already receiving services paid by Medicaid and Medicare, it is punishable by civil monetary penalties or potentially even imprisonment. CMS says it is also considering further regulatory and operational policy to prohibit these practices.
The analyst notes that companies that could be affected include (negatively) American Renal Associates (NYSE: ARA) negatively and (positively) Aetna (NYSE: AET), Anthem (NYSE: ANTM), and United Healthcare (NYSE: UNH).
Shares of UnitedHealth Group closed at $142.17 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Jefferies Raises Price Target on VMware (VMW) to $91 Following Better Than Expected 3Q
- Neurocrine Biosciences (NBIX): Increasingly Bullish on Valbenazine - BMO
- Planet Fitness (PLNT): Special Dividend May Be On Its Way - Guggenheim
Create E-mail Alert Related CategoriesAnalyst Comments, Short Sales
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!