SCOTUS Sides with Group Health Plan in Dialysis Reimbursement Case

The Supreme Court has sided with Marietta Memorial Hospital Employee Health Benefit Plan and rejected a claim that the payer’s low dialysis reimbursement rates federal law.

In 2018, DaVita, one of the two major dialysis providers in the country, sued the employer-sponsored group health plan, alleging that the plan discriminated against individuals with end-stage renal disease and went against the Medicare Secondary Payer statute.

In addition, DaVita claimed that the plan treated the dialysis providers as out-of-network and reimbursed them at the lowest possible rate.

Congress established the statute to prevent private payers from shifting their members to Medicare to avoid the high cost of dialysis. The statute states that plans must not differentiate in the benefits it provides to individuals with and without end-stage renal disease. In addition, plans may not consider if an individual is entitled to or eligible for Medicare due to end-stage renal disease.

DaVita had argued that the statute authorized liability when a plan limited benefits in such a way that the limitations had a disparate impact on individuals with end-stage renal disease.

However, Justice Brett Kavanaugh ruled that the Marietta Plan did not violate either statute because it offered the same coverage to all patients receiving outpatient dialysis, whether they had end-stage renal disease or not. Additionally, the payer provided the same benefits for all members regardless of whether they were eligible for Medicare, according to the ruling.

“DaVita’s position would ultimately require group health plans to maintain some (undefined) minimum level of benefits for outpatient dialysis,” the opinion stated. “But this statutory provision simply coordinates payments between group health plans and Medicare. As the Government itself acknowledges, the statute does not dictate any particular level of dialysis coverage by a group health plan.”

The US Court of Appeals for the Sixth Circuit had sided with DaVita in the case, agreeing that discriminating against patients who receive outpatient dialysis was the same as discriminating against patients with end-stage renal disease since 99.5 percent of patients that receive dialysis have the disease.

But the Supreme Court’s decision reversed the appeals court’s judgment.

In January 2020, a judge blocked a California bill that would have prevented dialysis providers from directing patients to choose health plans that offer high reimbursement rates for dialysis.

In contrast to the Marietta Plan case, a study from UCLA found that private payers reimbursed DaVita up to four times the Medicare reimbursement rate.

Additionally, research published in JAMA Network Open found that dialysis covered by Medicare cost less than one-sixth of the price of employer-sponsored health plan dialysis.