Fresenius Medical Care has entered into a favourable settlement agreement with the US government to address its complaint regarding pending payments related to the Tricare programme.
In 2019, the German healthcare firm lodged a complaint against the US Department of Defense to recover outstanding payments owed to it under the programme. The payments were for services provided on or before 11 January 2023.
Tricare reimburses members of the military services, their dependents, and retirees for medical expenses related to dialysis and other medical care.
The legal dispute centred on unpublished administrative decisions made by Tricare administrators. These decisions aimed to lower the rate of reimbursement rate for dialysis services given to the beneficiaries by revising the codes used on invoices.
Administrators at Tricare had acknowledged the unpublished administrative action, but they had refused to modify or terminate it, Fresenius Medical Care said.
The company said that the dispute has been now settled, which brings an end to the legal proceedings.
The settlement agreement is expected to have a favourable effect on Fresenius Medical Care’s operational income as well as revenue.
Because of its operational nature, the negative impact associated with the matter has not been considered a special item in prior reporting periods, said the company.
As a result, Fresenius Medical Care has projected a net positive impact on operating income for Q4 2023 at around €175m.
The company had earlier estimated that its operating income, on a guidance basis, for fiscal year 2023 would see a low-single-digit percentage rate growth compared to the previous year, which stood at €1.54bn on a 2022 basis.
Due to the settlement agreement, the company has now increased its earnings outlook.
As of now, Fresenius Medical Care anticipates that its operating income will increase in fiscal year 2023 by 12-14% over the preceding year.
Fresenius Medical Care, which is part of the Fresenius Group, plans to use the agreed settlement money to lower its net financial debt. This is expected to deleverage the firm’s balance sheet, in accordance with its financial policy.
