Congressional Research Service Issues Legal Sidebar White Paper on Supreme Court Allowing Health Plans to Limit Dialysis Benefits
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This past term, the
Background
Medicare is a federal health care program that provides benefits to persons age 65 and older and other qualified beneficiaries, including eligible individuals with ESRD. ESRD is a medical condition involving permanent cessation of kidney function. Patients with ESRD must receive routine dialysis treatment or a kidney transplant to survive. Health care costs for ESRD patients are high. Recent reports estimate that Medicare annually spends approximately
Typically, Medicare is the default "primary payer" for an eligible beneficiary's covered medical expenses, even when a beneficiary has an additional form of health insurance. Under the MSP statute, however, there are conditions in which payment responsibility shifts to another insurance plan or program and Medicare becomes a back-up, secondary payer, thereby reducing Medicare expenditures. Under the MSP statute, Medicare is a secondary payer to employment-based health plans during a 30-month coordination period. However, federal law does not prevent Medicare-eligible individuals from terminating their employment-sponsored coverage, enrolling in Medicare, and receiving benefits through the program rather than through their employer (although Medicare coverage may not begin immediately).
Most relevant to the DaVita case, the MSP statute includes two provisions aimed at preventing employers from transferring ESRD-related treatment costs to the Medicare program:
1. First, health plans that provide ESRD benefits cannot "differentiate" in the benefits provided between individuals with and without ESRD on the basis of the existence of ESRD, the need for renal dialysis, or in any other manner.
2. Second, a health plan cannot "take into account" that an individual is entitled to or eligible for Medicare benefits due to ESRD during the coordination period.
Implementing regulations specify that a health plan cannot, for instance, impose longer waiting periods for benefits or set higher premiums only for individuals with ESRD.
DaVita Decision
In DaVita, a dialysis provider filed suit against an employment-based group health plan and others, alleging that the plan's out-of-network coverage classification for dialysis benefits and "artificially low" provider reimbursement rates for outpatient dialysis services violated the MSP statute's antidifferentiation and take-into-account requirements. The provider asserted, among other things, that the plan's policies forced ESRD patients to shoulder high out-of-pocket costs and incentivized them to drop their employment-based coverage and enroll in Medicare before the end of the coordination period.
The district court dismissed the provider's claims under the MSP statute, but the
In a 7-2 decision by Justice
Justice
Considerations for
The Court's decision in DaVita appears to benefit employer-based health plans. As the Court confirmed, these plans may provide limited ESRD-related benefits without running afoul of the MSP statute, so long as the same level of these benefits is offered to all insured individuals. The case has prompted debate over whether employer health plans will now seek to limit further ESRD-related benefits to employees, potentially leading employees with this condition to end their employment-based coverage to receive benefits through the Medicare program. Such an option may not be desirable for all ESRD patients.
Among other factors a patient might consider, Medicare typically requires enrollees to pay 20% coinsurance for Part B ESRD and other benefits (although cost sharing may be lower if a beneficiary participates in a Medicare Advantage managed care plan), potentially making dialysis and other treatments costly for beneficiaries. ESRD patients may also seek to remain enrolled in their employer plans if they have dependents that receive coverage through the plans, as these dependents may not receive Medicare coverage based on a family member having ESRD.
The Court's decision in DaVita only addressed the requirements of the MSP statute. Other federal requirements may continue to affect the provision of ESRD-related benefits in private employer-sponsored group health plans. For instance, federal law prevents group health plans from basing coverage eligibility rules on certain health-related factors, such as a medical condition. In addition, a health plan may not require an individual to pay a higher premium or contribution than another "similarly situated" participant, based on these health-related factors. Additionally, small group plans (i.e., typically businesses with 50 or fewer employees) must provide a core package of "essential health benefits" (EHB) to participants. The EHB package varies by state, but most states require dialysis benefits to be included.
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The white paper is posted at: https://crsreports.congress.gov/product/pdf/LSB/LSB10819
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