The Supreme Court ruled that a health plan’s low reimbursement rate for dialysis services doesn’t violate Medicare, dealing a blow to dialysis giant DaVita.
The court ruled 7-2 on Monday in favor of an employer benefits plan run by Marietta Memorial Hospital surrounding out-of-network dialysis care. DaVita had argued that the plan violated federal law by not having an in-network option for dialysis and instead steered patients towards Medicare, which has lower reimbursement rates.
The case centers on the Medicare secondary payer statute, which refers to when Medicare doesn’t have primary responsibility for payments and another entity pays for services. DaVita sued Marietta in 2018 charging that the employer-sponsored health plan considers Medicare eligibility for people with end-stage renal disease, a violation of the statute.
The provider charged that the plan’s dialysis coverage also didn’t differentiate between people with and without end-stage renal disease, according to the opinion.
But in an opinion authored by Justice Brett Kavanaugh, the court ruled that the plan doesn’t differentiate its benefits for dialysis. Kavanaugh wrote that a plan would violate the law if it charged patients with end-stage renal disease higher deductibles or covered fewer services, but that is not the case here.
“The Marietta plan provides the same benefits, including the same outpatient dialysis benefits, to individuals with and without end-stage renal disease,” the opinion said. “Indeed, DaVita does not dispute that the plan’s terms apply uniformly to all plan participants.”
But DaVita argued that by not providing an in-network option for dialysis the plan is violating the statute.
Kavanaugh responded that federal law doesn’t specifically dictate what types of benefits should be in out-of-network coverage compared to in-network, the law only coordinates payments between group health plans and Medicare.
“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,” he wrote. “It did not do so in this statute.”
Kavanaugh also took aim at DaVita’s argument that Marietta considers whether a patient is eligible for Medicare when determining dialysis coverage, a violation of the law.
Since the plan provides the same outpatient dialysis benefits to every plan participant, even if they aren’t eligible for Medicare, then the plan “cannot be said to ‘take into account’ whether its participants are entitled to or eligible for Medicare,” the opinion said.
Justices Elena Kagan and Sonia Sotomayor issued a dissent to the majority opinion. The justices charged that a large majority of people with end-stage renal disease must rely on outpatient dialysis, even if the plan’s benefits apply to all people.
“A reimbursement limit for outpatient dialysis is in reality a reimbursement limit for people with end-stage renal disease,” the dissenting opinion said.
This in turn violates the law’s differentiation policy, the justices argued.
DaVita slammed the majority opinion, noting that the secondary payer statute was created to protect underserved patients.
"Today’s narrow interpretation of this statute limits its ability to achieve this purpose," DaVita CEO Javier Rodriguez said in a statement. "Dialysis patients deserve better, and we’ll continue to advocate for patient choice in care and coverage.”
DaVita has filed similar lawsuits against other health plans surrounding their coverage of dialysis. In 2019, it filed a lawsuit against a Virginia Mason Memorial Hospital health plan charging that it also violated the Medicare secondary payer statute. A federal court struck down that lawsuit in July 2019.