Last week, the Supreme Court made their decision in Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc., resulting in a 7-2 vote against the major dialysis provider.
The Case
DaVita Inc. sued Marietta Memorial Hospital’s employee health plan in 2018, claiming its limited coverage for outpatient dialysis violated the Medicare Secondary Payer Act (MSPA) – that it discriminated against patients with end-stage kidney disease by reimbursing them at lower rates in hopes they would switch to Medicare.
The statute in question, MSPA, imposes two constraints to prevent plans from circumventing their primary payer obligation for end-stage renal disease treatment:
1. Plans may not differentiate in the benefits they provide individuals having end-stage renal disease and other individuals needing renal dialysis
2. Plans may not take into account that an individual is entitled to, or eligible for, Medicare
The Decision
After being dismissed in district court and splitting the U.S. Court of Appeals due to its disparate impact on individuals with end-stage renal disease, the Supreme Court finally weighed in.
In a 7-2 vote, the court ruled that Marietta Memorial Hospital’s employee health plan did not violate federal law by limiting benefits for outpatient dialysis because it did so without regard to whether patients had end-stage renal disease.
This decision ensures that group health plans like Marietta’s can utilize cost-control designs under the MSPA so long as the plans offer the same terms of coverage for outpatient dialysis to all its participants.
Justice Brett Kavanaugh, writing for the majority, reasoned “the Plan does not ‘differentiate in the benefits it provides between individuals’ with and without end-stage renal disease.” While a dissent by Justice Elena Kagan argued that “Outpatient dialysis is an almost perfect proxy for end-stage renal disease” and that the ruling created a “massive and inexplicable workaround” to a prohibition aimed at preventing health plans from “foisting” the cost of dialysis onto Medicare.
Dialysis Cost: The Big Picture
Medicare provides health insurance coverage for those who are 65 and over or are disabled. The 1972 extension of Medicare coverage to individuals with end-stage renal disease, regardless of age or disability, covers hundreds of thousands of Americans and costs Medicare an estimated $50 billion annually.
The Health Care Administrators Association argued that under DaVita’s interpretation of MSPA, self-insured plans would have to sacrifice coverage of other medical services to pay for dialysis services at a rate as high as twenty-five times that of Medicare – a substantial cost increase that would financially benefit dialysis providers. They claimed that with only two dialysis providers controlling nearly 90% of all dialysis facilities, it’s becoming increasingly necessary that self-insured health plans can appropriately control dialysis cost.
Let’s Talk
Reach out to us with any questions about the case and evidence-based strategies to control dialysis expenses for your health plan!
