On June 21, 2022, the Supreme Court ruled Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc., No. 20-1641, ruling that a group health plan that uniformly provides limited outpatient dialysis benefits to all plan participants does not violate the Medicare Secondary Payer Act (MSPS).
DaVita Inc. provides lifesaving medical treatments for people with End Stage Kidney Disease (ESRD). The main treatment for people with ESRD is kidney dialysis, which is extremely expensive. Some of DaVita’s patients are enrolled in private group health plans. Many also have health insurance coverage through Medicare.
Medicare provides health insurance coverage for people with ESRD and covers, among other things, kidney dialysis treatments. For people with ESRD who have private health insurance that also covers ESRD treatments, including dialysis, the MSPS advises that the private health insurer should act as “first” payer for ESRD treatments. covered, and Medicare will act as a “secondary.” ” pays for services that private health insurance does not cover. To ensure that private health insurers do not pass the high costs associated with kidney dialysis treatments onto Medicare, the MSPS excludes a private health insurance plan from “differentiating[ing] in the advantages it procures between individuals having [ESRD] and other persons covered by this scheme on the basis of the existence of [ESRD], the need for kidney dialysis, or in any other way. The MSPS also prohibits a “tak[ing] taking into account whether an individual is entitled or eligible for “Medicare due to ESRD”.
Individuals enrolled in Marietta Memorial Hospital’s employer-sponsored group health plan (the “Plan”) sought treatment from DaVita for ESRD. After DaVita treated these patients, it submitted claims to the Plan for payment. The plan paid only a small portion of these claims based on the terms of its plan document applicable to all plan participants that claimed to limit reimbursement rates for kidney dialysis treatment. DaVita sued the plan and alleged that the plans’ reimbursement limits violated the SPSM.
After the United States District Court for the Southern District of Ohio denied DaVita’s claims, the United States Court of Appeals for the Sixth Circuit overruled. The United States Supreme Court granted certiorari to resolve a circuit split and ultimately struck down the Sixth Circuit.
The Court held that because the plan’s reimbursement limits for kidney dialysis applied uniformly to all plan members, the plan did not impermissibly distinguish between plan members with and without ESRD. She rejected the argument that the disparate impact of reimbursement limitations on people with ESRD constitutes impermissible differentiation. The Court therefore did not have the opportunity to consider whether the terms of the Plan distinguished its participants “on the basis of” certain participants suffering from ESRD, requiring kidney dialysis or in any other way. And because the scheme applied the same coverage limits to all of its participants, it did not impermissibly “take into account” an individual’s eligibility or entitlement to Medicare.
Justice Kavanaugh delivered the Court’s opinion. Judge Kagan filed a partly dissenting opinion, joined by Judge Sotomayor.