Prop 23:Kidney Dialysis Clinics


This measure will require operators of chronic dialysis clinics to have a minimum of one licensed physician at the clinic whenever patients are being treated, offer the same level of care to all patients regardless of how payment is being made, and make reports about dialysis-related infections to the state’s health department and the National Healthcare Safety Network (NHSN). There is disagreement about whether the presence of a doctor is always necessary or could exacerbate a doctor shortage, and over whether costs are manageable or prohibitively high. Furthermore, the League questions why voters should be deciding questions of recordkeeping and medical staffing. The uncertainty of the costs and benefits of the measure leads the League to take a neutral position.

League Analysis: 

Prop 8 relating to kidney dialysis was on the November 2018 ballot. It was a complex measure and not easy for most voters to understand without expertise in the content area and the dynamics between the chronic dialysis clinics (CDCs) and the labor union. The League reviewed Prop 8 and took no position because it was too detailed in an area not within League expertise (although the general program area would be healthcare). Furthermore, Prop 8 clearly reflected a battle between for-profit dialysis businesses, the labor union, and other organizations seeking more regulation of CDCs. There was also a question as to whether this was an appropriate issue to ask the electorate to make a decision on, much less an informed decision. The current Prop 23 is a simplified version of the earlier one.

Some of the provisions in Prop 23 are partially covered under current California licensing requirements. The California Department of Public Health (CDPH) is responsible for licensing CDCs to operate in California, using federal regulations as the basis for licensing. All chronic dialysis clinics must be licensed to receive Medicare and Medi-Cal payments. One of the current federal requirements is that a board-certified medical doctor must be affiliated with each CDC and be responsible for quality of care, staff training and clinic practices. The reports to the NHSN on kidney-related infections required by Prop 23 are already a requirement for Medicare and Medi-Cal payments.

The subtext of Proposition 23 is a complex one about payment and reimbursement rates for dialysis treatment. Who pays and how? Private insurers or Medicare or Medi-Cal? Proponents of more regulation raise concerns that CDCs receive higher payment from private insurers than from government entities (Medicare/Medi-Cal). This ballot measure requires equal care regardless of who pays.

Last year, legislation (AB 290) was passed to regulate payments from third-party payers. It addresses some of the concerns listed above.

Prop 23 imposes new regulatory responsibilities on CDPH and requires CDPH to adjust the annual licensing fee paid by CDCs to cover these costs. The annual cost to fulfill its new responsibilities is estimated not to exceed $1 million annually. California’s nonpartisan Legislative Analyst estimates that the measure would have no significant fiscal effect on state and local governments.

However, some opponents of the new Prop 23 requirements claim that CDCs will incur higher operating expenses and that there is a potential for rural communities to have trouble meeting all of the newer requirements and therefore, will charge higher rates. According to the Legislative Analyst, having a physician on site at all times “would increase each (clinic’s) costs by several hundred thousand dollars annually on average.”

There is concern that rural dialysis clinics and clinics in disadvantaged communities serving a high volume of Medi-Cal patients would be more likely to reduce services or close due to financial constraints.

Dialysis is a serious life-saving, life-sustaining treatment and should not be left to ballot box decision-making. The League supports quality healthcare, cost controls and equitable distribution of healthcare services. This measure looks simple and direct on its face, but looks can be deceiving. If passed, it can affect both thousands of vulnerable dialysis patients and clinic staff, who are caught between the clinics and the labor union. As with most multi-faceted issues, there is room for improvement on all sides. For this reason, the League takes a neutral position.