Veteran card players pride themselves on their ability to discern what’s known as “the tell,” a series of involuntary mannerisms that can betray a rival’s strategic deceptions and even suggest a possible next move.

On rare occasions a tell metastasizes into a red flag, a clear indication that something is terribly wrong.

An example of the first is buried deep in a transcript of DaVita Inc.’s annual “Analyst/Investor Day” presentation in New York City.

These meetings were once a love fest for Kent Thiry, the kidney care provider’s colorful chief executive officer, with every year a new opportunity to showcase DaVita’s rapidly expanding earnings per share to an audience of brokerage analysts and portfolio managers. In the fall of 2011 Berkshire Hathaway disclosed it had taken a stake in the company, eventually accumulating just under 38.6 million shares, or 20.2 percent of the company’s public float, perhaps the biggest endorsement a management team can receive.

Shareholders, as the chart below indicates, took a cue from Berkshire and began purchasing DaVita stock hand over fist in the autumn of 2011 at its post stock-split prices in the low $30 range.

Those meetings are a little less rosy now, however.

At the May meeting, an analyst asked Thiry how much revenue DaVita generates from dialysis patients whose private (more formally known as commercial) health care insurance premiums are paid by the American Kidney Fund’s Health Insurance Payment Program.

Thiry’s response may be studied by future generations of reporters and investors: “We’re not [and] have not and it would not be in your best interest for us to start providing all sorts of detail on that other chunk.”

The Southern Investigative Reporting Foundation, which is attracted to executive prevarication like a large health care corporation is to a dubious insurance billing gambit — and whose interests assuredly lie in exposing undisclosed risk — took Thiry’s non-answer as a challenge.

After all, a limelight-loving CEO suddenly getting cold feet when asked a basic question about revenue breakdown is a pretty clear “tell” that whatever the answer is, it can’t be too good.

The answer looks terrible for DaVita’s investors. The company’s finances, according to a Southern Investigative Reporting Foundation accounting analysis, appear to be massively levered to an opaque nonprofit, the American Kidney Fund, that may provide up to half of its operating profits. They should define HIPP as a “gravy train,” albeit one perhaps soon to be modified by the word “imperiled” as a combination of civil litigation and regulatory shift poses an existential threat to this cozy relationship.

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The definition of HIPP is unusually subjective, depending largely on whether you provide or receive dialysis, or insure those who undergo it.

To the former, the AKF and dialysis clinics — especially the larger chains — it’s an elegant solution to an end-stage renal disease conundrum of longstanding: With the one-two punch of its steep financial costs and the physical exhaustion emerging from treatment, working is often not an option, and many patients exhaust savings or go deeply into debt to maintain their private health care insurance policies. As a function of that, AKF’s HIPP pays its recipients monthly insurance premiums for the duration of their dialysis treatment.

For the latter, mostly insurance companies offering health care to the public, HIPP is a financial headache of a scale eclipsed only by its sheer evil brilliance.

They argue that in the AKF, dialysis providers created a low-risk gambit that exploits a narrow Department of Health and Human Services provision allowing third parties — that is, themselves — to donate hundreds of millions of dollars tax-free to the AKF. The fund then enrolls patients (primarily from its largest donors) who receive the same quality of dialysis care at the same providers alongside Medicare patients. But because a small segment of patients have HIPP, the dialysis providers — two of whom control almost three-fourths of the market — can bill insurers many times the roughly $250 per treatment that Medicare will pay.

Using DaVita’s Securities and Exchange Commission filings, the AKF’s Internal Revenue Service annual Form 990 filings and a little extrapolation, the Southern Investigative Reporting Foundation estimates that at a minimum, AKF’s support helps generate between 40 percent and 45 percent of the Kidney Care unit’s estimated earnings before interest and taxes, or at least $339.4 million through June 30, after a one-time $526.8 million legal settlement with the Veterans Affairs Department is backed out of its results. For 2016, it was more than $728.5 million.

(DaVita has two units: Kidney Care, providing patient dialysis and related lab services, and DaVita Medical Group, which owns physician practices. The Kidney Care unit’s earnings, given DaVita Medical Group’s consistent losses, are thus the company’s profits.)

What makes the AKF’s role so astounding is that those handsome profits come from a base of about 9,000 dialysis patients, barely more than 4 percent of DaVita’s 194,600 patients.

Last October, in response to insurer outrage over skyrocketing dialysis reimbursement levels on commercial policies purchased from the Affordable Care Act’s Health Insurance Marketplace, DaVita announced that it would no longer support patient applications for AKF premium assistance on those policies.

Where DaVita’s own figures weren’t available, conservative assumptions were made, like pegging the growth rate of dialysis patients — historically 3.8 percent — at 1.9 percent through June 30. Given that over 78 percent of the AKF’s $309.8 million in donations last year came from either DaVita or Fresenius Medical Care, the German medical conglomerate that is its primary competitor in dialysis services, the Southern Investigative Reporting Foundation estimated that at least 40 percent of the AKF’s HIPP grants went to DaVita patients.

(Both DaVita and the AKF declined to answer the Southern Investigative Reporting Foundation’s on the number of HIPP recipients receiving dialysis in its clinics, but based on interviews with executives at rival dialysis providers the 40 percent figure was deemed “very conservative.”)

DaVita, in its 2016 Capital Markets presentation, disclosed that privately insured patients are between 110 percent and 115 percent of the Kidney Care unit’s earnings before interest and taxes. To obtain the value of the AKF’s premium support to the company’s profitability, the quotient of the AKF’s commercially insured patients and the company’s commercially insured patients was multiplied by 113 percent.

Seen narrowly, given Thiry’s ownership of more than 2.54 million shares, refusing to discuss the question of AKF’s value to DaVita certainly served his “best interests.” Similarly, as an 18-year veteran of these presentations, he is surely aware that portfolio managers, trained to value a company based on a multiple of its future earnings per share, rarely pay 17 times earnings for a company whose profit growth is slowing and where 40 percent of the operating profit is dependent upon a charity and its circular donor scheme.

Another way to read Thiry’s reticence is as a function of the fact that the AKF relationship is — in the parlance of value investors — DaVita’s sole moat, or a sustainable economic advantage separating it from competitors.

DaVita is an unusual addition to Berkshire Hathaway’s portfolio because its moat isn’t a function of managerial acumen, such as GEICO’s efficiencies (which drive its lower-costs), or the pricing power resulting from global recognition of the Coca-Cola brand. The AKF relationship is a loophole, in the purest sense of the word, made fully legal as the result of a 1997 Department of Health and Human Services advisory opinion permitting donations to the AKF from the major dialysis providers.

Ted Wechsler, an investment manager at Berkshire Hathaway overseeing about $10 billion, didn’t discuss the AKF relationship when he elaborated on his thinking about owning DaVita to CNBC in March 2014.

Ironically, one of Berkshire’s leading lights was blunt with his contempt when offering an assessment of a much higher-profile insurance premium payment gambit at Valeant Pharmaceuticals International during a May 2016 Fox Business News interview.

Charlie Munger, Berkshire’s 93-year-old vice chairman, who has long been a student of what he calls the psychology of human misjudgment, said, “The main thing that Valeant did that was unbelievably clever was to pay the consumers part of the deductible for the drugs they were selling. . . . They paid the consumer share of the deductible and tried to pretend that it was a charitable contribution, when really it was the functional equivalent of bribing the other fellow’s purchasing agent.”

It’s not clear if Munger thinks the AKF is “unbelievably clever” also since he didn’t respond to a request for comment at publication time, but the carve out enabling donations to the AKF did two very important things: It appeared to seal off the fund and the so-called large dialysis organizations — then, as now, primarily DaVita and Fresenius — from prospective kickback allegations. It also enabled both companies to reap the fruits of their multiyear roll-up of competitors.

In a nutshell, insurance companies are required to offer dialysis coverage under network adequacy standards. This is no small matter given that the U.S. government annually spends an estimated $34 billion on dialysis suggesting that commercial insurers — often about 12 percent of the dialysis pool — may spend up to another $5 billion.

The consolidation of dialysis providers and the proliferation of commercial health insurance payors means that in most markets, a patient with end-stage renal disease in need of dialysis might only have DaVita and Fresenius to choose from, affording the company an unusually strong negotiating position.

So how favorable were the deals? The 2017 Medicare base payment for one dialysis treatment is $231.55, although a $250 “blended rate” that takes into account the Medicare Advantage program is likely closer to actual payment levels. For 2016, brokerage analysts estimated that DaVita’s received $1,050 per treatment from commercially insured patients. Even with 88 percent of their patients on Medicare or Medicaid, blended revenue of $346.98 (per treatment) through June 30 led to a 27.4 percent EBITDA margin.

Remarks from Thiry in January at the J.P. Morgan health care conference in San Francisco shed light on how some of these commercial contracts came to be so lucrative.

In a word: outlier contracts.

Seemingly unaware the microphone was still running, at about the 23 minutes 20 seconds point Thiry said that a few commercial insurers this year became aware that their dialysis contracts were so far above market that they chose “to do dramatic things” and “crash and burn” rather than quietly renegotiate. Fortunately, he said, “we’ve had those kinds of contracts for 17 years” and that there “are still a few” of these sharply above market contracts in place.

Having a few outlier contracts in force adds up, and quickly: Assuming three dialysis treatments a week for one patient, that $8oo daily differential between commercial and government reimbursement becomes $9,600 in a month and over a year, $115,200.

DaVita’s business imperative thus becomes simplicity itself: obtain as many commercially insured patients as possible, a plan congruent with its insistence that at current Medicare rates they lose money on 88 percent of their patients.

Enter the AKF.

As gambits go, the AKF relationship is tactically a stroke of genius: the donations to the foundation are tax-free and given an estimated break-even threshold of $250 per dialysis treatment, DaVita’s ability to collect over $1,000 per session generates a heroic return on its capital.

The connection between the HIPP program remaining in effect exactly as it is and the happiness of DaVita shareholders is essentially the union of two sets — should HIPP be curtailed, or a hard cap of two or three times the Medicare rate be placed on commercial insurance payments, its investors could see earnings per share cut in half.

What’s remarkable about this daisy chain is that the AKF only has one condition to satisfy. In the 1997 opinion, the HHS stipulated that the AKF had to make the HIPP program available to qualified patients with end-stage renal disease, and as part of the evaluation process, were forbidden from using the level of support given the foundation by the patient’s dialysis provider as a criteria.

A growing chorus of voices, however, are alleging that the AKF has not lived up to this obligation.

A New York Times investigation last December described social workers at independent and smaller dialysis organizations as having difficulty in obtaining AKF grants for their dialysis patients. In several instances, according to the Times, social workers said that their patients weren’t eligible for HIPP because of their clinic’s inability to donate.

Additionally, a St. Louis Post-Dispatch story last October cited internal DaVita emails in which dialysis clinic-based social workers appear to have been prompted to steer dialysis patients to commercial insurance policies, away from Medicare and Medicaid.

The relationship between DaVita and the AKF prompted the U.S. Attorney for the District of Massachusetts to issue a subpoena to the company in January.

Dr. Teri Browne, a professor at the University of South Carolina’s College of Social Work, told the Southern Investigative Reporting Foundation that as a 10-year veteran of clinic-based nephrology social work for Fresenius and Gambro Healthcare (a company DaVita purchased in 2004), that DaVita patients were encouraged to leave government insurance for commercial plans solely to improve dialysis revenues. In her view, she felt that this was distorting the mission of the social workers to deliver the best information for the dialysis patient.

(Last September, in response to a Centers for Medicare & Medicaid Services request for Information from end-stage renal disease stakeholders on whether patients were being inappropriately steered to Marketplace plans, Browne filed this statement alleging that this practice was occurring on a regular basis, especially at large dialysis organizations.)

Referring to the current debate over whether DaVita is using donations to the AKF to boost its revenues, Dr. Browne said that as she interpreted it, “The 1997 [HHS] ruling was originally written to help people with the supplemental charges in Medicare and Medicaid plans.” She noted, “Based on what I from interviewing dialysis patients, and what my email listserv [of nephrology social workers] is discussing daily, steering patients away from Medicare is now a closely tracked part of their business.”

And “no one is saying that the AKF or its policies are all bad,” she said, “but [the fund] is [incentivized] to expand clinic-centered dialysis. The large dialysis organizations, who give the fund most of its money, are the obvious beneficiaries.”

Asked what the biggest concern she has with the state of dialysis today, Browne argued that dialysis patients switching to private plans from Medicare/Medicaid are often put at major financial risk should they get a transplant. (The AKF’s premium assistance doesn’t cover transplants.)

“Higher premiums and co-pays are the patient’s obligation if they get a transplant,” said Dr. Browne, who added “patients can harm their listing eligibility for transplants by switching.”

Both the AKF and DaVita have strongly denied, to the Southern Investigative Reporting Foundation and other press organizations, any linkage whatsoever between donations and HIPP enrollment. The AKF said it has taken a series of steps to clarify its policies rejecting any quid pro quo, and it submitted this statement to the CMS last September in defense of its practices.

DaVita’s Thiry, in a Sept. 17 question-and-answer session at a R.W. Baird conference, defended premium assistance as functioning exactly as intended, with everything “totally above board,” while acknowledging “[HIPP is] precipitating quite a political football.”

Thiry also used the R.W. Baird conference as an opportunity to defend the broader concept of switching to commercial insurance, describing the coverage offered dialysis patients as being “vastly superior” to Medicare/Medicaid. (There is no data to suggest that private payers have any better clinical outcomes with dialysis than those on Medicare or Medicaid.)

DialysisPPO, a Malvern, Pennsylvania, dialysis consultancy that offers insurance plan and third-party administrators guidance in reducing dialysis costs, published a November 2016 white paper that argued a line broadly supportive of dialysis provider practices:

“When you lose money on 75% of your volume, you have to make extraordinary profits on the remaining minority. On average, our clients are charged 2,100% of the Medicare allowable amount for the same services. The average monthly charges for each [end stage renal disease] patient is $67,000 across our client-base. It is not unusual for monthly dialysis charges to exceed $85,000.”

Sarah Summer, associate general counsel and director of state policy for Blue Shield of California, took the opposite tack in this interview, claiming that “inappropriate third party payments” via AKF HIPP grants were part of “fraud gaming abuse” imperiling the health of insurers in the ACA Marketplace. Her arguments were amplified in Blue Shield’s Request for Information filing last September. Elaborating on the massive costs the San Francisco-based insurer alleges are shifted upon them, its statement described dialysis providers as using the AKF for “payment arbitrage” to capture up to $170,000 in payments per patient.

Blue Shield of California also stated that the burden of HIPP costs make it nearly impossible to remain economically vital: “Assuming a one percent operating margin for Blue Shield, it takes 3,800 members enrolled for 12 months to make up for a single dialysis patient enrolled by the American Kidney Fund.”

Notwithstanding the very real complexity of treating kidney failure, the fact of the matter is that DaVita made over $1.8 billion last year and its filings show that it hasn’t seen a sub-25 percent operating margin in ages. Those profits, common sense would suggest, come from its ability to push prices ever northward. The New England Journal of Medicine’s Catalyst blog, in an article in June, referenced a 2012 study from a trio of healthcare economists who, in analyzing the effect of competition on the quality of dialysis care for the National Bureau of Economic Research, found that’s pretty much what’s going on.

According to these economists, “average spending for DaVita and Fresenius patients rose about 50% from 2005 to 2009, to about $120,000 annually. Spending for dialysis patients in Medicare rose about 20% during that time, but reached only about $60,000 a year.”

More importantly, statistically speaking it doesn’t seem to matter who pays for treatments since U.S.-based dialysis patients face odds that are measurably slimmer than their peers across the globe. According to the University of California San Francisco’s Schools of Pharmacy and Medicine’s Kidney Project, as many as 25 percent of U.S. dialysis patients die in the first year of treatment, and only 35 percent survive as long as five years. The figures are even more stark when compared to a five year mortality rate of three percent for transplant patients.

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The commercial insurers are not sitting on their hands and have taken to the courts to begin the work of pressing their interests, which mostly center around filling in DaVita’s moat.

The first shots were fired in a lawsuit filed last July when UnitedHealthcare of Florida sued DaVita competitor American Renal Associates.

Given that UnitedHealthcare’s primary line of legal attack is to frame the relationship between American Renal Associates and the AKF’s HIPP as a dubious “pay to play scheme” designed only to drive dialysis provider profits and not improve lives, the possible implications for DaVita and its interests are clear.

UnitedHealthcare alleges that the AKF’s administration of HIPP left little to the imagination about how little the fund adhered to the intent of the 1997 Department of Health and Human Services ruling, pointing to its “HIPP Honor System” whereby in the event dialysis providers were unable to “make fair and equitable contributions [to the AKF], we respectfully request that your organization not refer patients to the HIPP program.”

Through last autumn, UnitedHealthcare alleges in an exhibit attached to a filing made in June, this policy allegedly connecting HIPP grants to dialysis provider contributions was posted on the AKFs website.

Aetna is taking a different approach to addressing its costs from the AKF’s HIPP grants, at least for now. In April, it sued DaVita in Pennsylvania’s Montgomery County Court of Common Pleas to enforce what it claims are provisions in its contract with the company that allow it to examine data related to AKF HIPP grants awarded to Aetna members.

DaVita, naturally, disagreed that the contract has that provision and claimed that Aetna hadn’t followed the proper dispute resolution procedures. On the second-quarter conference call in May, Javier Rodriguez, the DaVita executive who runs its Kidney Care unit, told analysts that Aetna’s request was denied.

This isn’t the full picture of where things stand between Aetna and DaVita, though.

A Montgomery County judge rejected the emergency component of Aetna’s request but the balance of its litigation was left to proceed, a state of affairs Rodriguez termed “working with Aetna.”

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Spokeswomen for both the AKF and DaVita declined to make executives available for phone interviews but provided written replies to emailed questions. DaVita was provided with the model used to determine the connection between AKF HIPP grants and its profitability, as well as the clip of Thiry talking at the J.P. Morgan conference. While dismissive of the Southern Investigative Reporting Foundation’s questions as biased, a spokeswoman declined requests to elaborate on what, if anything, was incorrect.

Corrections: The original version of this story carried an incorrect number for DaVita’s U.S. patients. According to the company’s third-quarter 10-Q, it is 194,600 not 214,700. Additionally, a reference to a published report that provided an inaccurate estimate of the combined Fresenius and DaVita market share was deleted.