Supreme Court rules against DaVita and in favor of health plan

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In a 7-2 decision, the Supreme Court sided with a health plan regarding its coverage of outpatient dialysis services.

Leading dialysis service provider DaVita had sued the Marietta Memorial Hospital Employee Health Benefits Plan, claiming its limited coverage violated the law.

The judges ruled against DaVita, in an opinion delivered on Tuesday. Justice Brett Kavanaugh delivered the Court’s opinion, joined by Chief Justice John Roberts and Justices Clarence Thomas, Stephen Breyer, Samuel Alito, Neil Gorsuch and Amy Coney Barrett. Judge Elena Kagan filed a dissenting opinion, in part, joined by Judge Sonia Sotomayor.

Judge Kavanaugh said the question is whether a group health plan that provides limited benefits for outpatient dialysis — but does so uniformly for all plan participants — violates Medicare’s secondary payer law.

“We agree with Petitioner Marietta and the United States as Amicus Curiae that the answer is no,” Kavanaugh wrote. “We therefore reverse the judgment of the United States Court of Appeals for the Sixth Circuit and remand the case for retrial consistent with that opinion.”

WHY IT’S IMPORTANT

DaVita is a major dialysis provider in the United States.

DaVita sued the Marietta Memorial Hospital Employee Health Benefit Plan in 2018, claiming its limited coverage for outpatient dialysis violated Medicare’s secondary payer law.

The law makes Medicare a secondary payer to existing insurance coverage for certain medical services, including dialysis.

To prevent plans from circumventing their obligation as primary payer for the treatment of end-stage renal disease, the law imposes two constraints, according to the decision: and they may not take into account whether an individual is entitled or eligible for health insurance.

DaVita claimed that the Marietta plan violated both of these constraints. The district court denied DaVita’s claims. The United States Court of Appeals split over its ruling and overturned the lower court’s decision, saying it had a disparate impact on people with end-stage kidney disease.

Judge Brett Kavanaugh, writing for the majority, said the coverage terms of Marietta plans for outpatient dialysis did not violate the law because those terms applied uniformly to everyone covered.

“Because the terms of the Marietta plan apply equally to people with and without end-stage kidney disease, the plan does not ‘differentiate the benefits it provides between individuals’ with and without end-stage kidney disease,” Kavanaugh wrote.

He continued, “DaVita argues that the law permits liability even where a plan limits benefits uniformly if the limitation on benefits has a disparate impact on people with end-stage kidney disease. But the text of the law does not can be interpreted as encompassing a theory of disparate impact. The legal provision simply coordinates payments between group health plans and Medicare; the law does not dictate any particular level of dialysis coverage.”

Judges Kagan and Sotomayor disagreed. In his minority opinion, Kagan wrote, “A reimbursement limit for outpatient dialysis is really a reimbursement limit for people with end-stage renal disease. And so a plan distinguishing dialysis for underprivileged coverage” differentiates[s] in the benefits it provides between people with end-stage renal disease and other people.'”

Indeed, she said, 97% of people diagnosed with end-stage kidney disease — all those who do not get a preemptive kidney transplant — undergo dialysis. Ninety-nine and a half percent of DaVita’s outpatient dialysis patients have or develop end-stage kidney disease, Kagan said.

“The majority argue that the plan here doesn’t ‘differentiate’ so much because it draws distinctions only between dialysis and other treatments – not between people with end-stage kidney disease and people who don’t. “This conclusion flies in the face of common sense and the law. One fact is key to understanding this case: ambulatory dialysis is an almost perfect predictor of end-stage renal disease.”

THE GREAT TREND

Medicare provides health insurance coverage to people age 65 or older or disabled. In 1972, Congress extended Medicare coverage to people with end-stage kidney disease, regardless of age or disability.

This benefit covers hundreds of thousands of Americans with end-stage kidney disease at a high cost to Medicare: about $50 billion a year, according to the Supreme Court ruling.

Medicare initially acted as first payer for many medical services, whether or not a Medicare beneficiary was also covered by another insurance plan, such as an employer-sponsored group health plan.

In 1980 and 1981, in part due to rising Medicare costs, Congress enacted and amended the Medicare Secondary Payer Act, the court said. This law, as amended, makes Medicare a “secondary” payer of an individual’s existing insurance plan for certain medical services, including dialysis, when that plan already covers the same services.

“Given the significant health care costs for people with end-stage kidney disease, Congress has recognized that a plan could attempt to circumvent the law’s first-payer obligation by denying or reducing health care coverage. a person with end-stage kidney disease, thereby forcing Medicare to bear more of those costs,” the ruling states. “To prevent such circumvention, the law imposed two specific constraints on group health plans.”

Twitter: @SusanJMorse
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