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Supreme Court sides with insurer in dialysis coverage case

Ruling will likely affect other group health plans’ coverage of dialysis

Justice Brett M. Kavanaugh wrote the majority opinion in the 7-2 case surrounding reimbursement rates for kidney dialysis.
Justice Brett M. Kavanaugh wrote the majority opinion in the 7-2 case surrounding reimbursement rates for kidney dialysis. (Erin Schaff/The New York Times file photo)

The Supreme Court ruled 7-2 Tuesday that a group health plan in Ohio didn’t violate federal law by offering limited coverage for outpatient dialysis in a case brought by DaVita, one of the largest dialysis providers in the United States. 

The court sided with Marietta Memorial Hospital’s employee health plan, with Justice Brett M. Kavanaugh writing in the majority opinion that while the plan pays lower reimbursement rates for dialysis than for other treatments, it does not discriminate against patients with end-stage renal disease because it offers the same level of coverage for all patients with kidney disease in keeping with federal law.

The plan only covers dialysis providers as “out of network” and reimburses them at a lower rate, leading DaVita to file a lawsuit in 2018. 

The decision reversed a 6th Circuit ruling that the plan violated the Medicare Secondary Payer Act, which allows Medicare to be the “secondary” payer to an individual’s private insurance for certain services, including dialysis for end-stage renal disease patients. DaVita argued the plan violated that statute.

Under the law, group health plans aren’t allowed to take Medicare coverage into consideration when designing their benefits, and they can’t offer different benefits to patients with more advanced stages of kidney failure. Congressional intent was to keep health plans from forcing kidney disease patients into Medicare. 

But DaVita argued the plan violated both parts of the statute by offering lower levels of coverage for dialysis and because it had a bigger impact on patients with end-stage renal disease.

Marietta argued that its plan applied coverage uniformly to individuals with and without end-stage renal disease and didn’t consider Medicare coverage when designing its plan. 

The court agreed — a win for insurers that will likely have a significant impact on group health plan coverage of dialysis services. 

“Neither the statute nor DaVita offers a basis for determining when coverage for outpatient dialysis could be considered inadequate,” the majority opinion read. “And neither the statute nor DaVita supplies an objective benchmark or comparator against which to measure a plan’s coverage for outpatient dialysis.” 

Siding with DaVita would create “judicial and administrative chaos” with courts trying to determine adequate reimbursement rates, the opinion read.

“Group health plans cover services for many different health issues at varied rates. Those rates may reflect negotiations with third parties, the needs of a particular plan’s beneficiaries, and other factors such as geography,” the opinion read. “Courts would be entirely at sea in trying to determine an appropriate benchmark or comparator for outpatient dialysis.”

The court also ruled that the plan did not take into account Medicare eligibility for end-stage renal disease patients by paying lower reimbursement rates. 

Under the law, a plan can’t end coverage, limit coverage or charge higher premiums for patients who have Medicare because of an end-stage renal disease diagnosis. 

“Because the plan provides the same outpatient dialysis benefits to all plan participants, whether or not a participant is entitled to or eligible for Medicare, the plan cannot be said to ‘take into account’ whether its participants are entitled to or eligible for Medicare,” Kavanaugh wrote. 

The Medicare Secondary Payer statute only “coordinates payments between group health plans and Medicare” and doesn’t dictate any particular level of coverage for dialysis by plans, the opinion states. 

“If Congress wanted to mandate that group health plans provide particular benefits, or to require that group health plans ensure parity between different kinds of benefits, Congress knew how to write such a law. It did not do so in this statute,” Kavanaugh wrote. 

Justices Elena Kagan and Sonia Sotomayor dissented in part, writing that the court crafted a “massive and inexplicable workaround” to the Medicare Secondary Payer Act. 

“One fact is key to understanding this case: Outpatient dialysis is an almost perfect proxy for end stage renal disease,” Kagan and Sotomayor wrote, noting that most people with end-stage renal disease undergo outpatient dialysis. 

“A reimbursement limit for outpatient dialysis is in reality a reimbursement limit for people with end stage renal disease. And so a plan singling out dialysis for disfavored coverage ‘differentiates in the benefits it provides between individuals having end stage renal disease and other individuals,’” they wrote.  

In a statement reacting to the decision, Javier Rodriguez, CEO for DaVita, said the company was “deeply disappointed by today’s Supreme Court decision to upend an important protection for Americans with chronic kidney failure.”

He said the Medicare Secondary Payer Act was created “to protect some of the most vulnerable patients in the health care system, who deserve unobstructed access to the coverage that best suits their individual health needs.”

“Today’s narrow interpretation of this statute limits its ability to achieve this purpose,” he said. “Dialysis patients deserve better, and we’ll continue to advocate for patient choice in care and coverage.”

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