DaVita Comments on Final CMS ESRD Rates, Provides Initial 2014 Income Guidance
November 27, 2013
DENVER— DaVita HealthCare Partners commented on the final Centers for Medicare & Medicaid Services (CMS) Medicare ESRD rule for 2014 and announced initial 2014 operating income guidance.
Final CMS Rule
“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,” LeAnne Zumwalt, group vice president said “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.”
Given the issuance of the final CMS rule, the company is now in a position to provide initial 2014 guidance and expects 2014 enterprise operating income to be in a range of $1.675 to $1.850 billion. The company expects 2014 operating income for our dialysis services and related ancillary business to be in the range of $1.425 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 (HCP) to be in the range of $250 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.
These projections and the underlying assumptions involve significant risks and uncertainties, including those described below and actual results may vary significantly from these current projections.
Capital Markets Day
The company will discuss its outlook in more detail at its upcoming Capital Markets Day in New York City on Monday, December 9, at 9:30 a.m. Eastern Time.
This meeting is being broadcast live by conference call and webcast. You can access the webcast at the DaVita HealthCare Partners investor relations web page. You can join this call on:
Monday, December 9, 2013
Starting at 9:30 a.m. EST
Dial in number: 800-399-4406
The event will be held at the New York Palace Hotel, 455 Madison Avenue, New York, NY 10022. If you plan to attend, please register with us by emailing your name and company affiliation to Kelly.Perez@davita.com.
If you are joining the presentation by conference call, please refer to the “DaVita HealthCare Partners Capital Markets Call” and provide the operator with your name and company affiliation. Investors who are unable to listen live will be able to access the presentation and an audio replay via our web site at www.davita.com/investors. There will be no telephone replay.