Supreme Court Decision Places End-Stage Renal Disease Patients at Risk

In a decision that may place people with end-stage renal disease (ESRD) at risk, the Supreme Court held this week that an employer-sponsored group health plan can restrict benefits for outpatient dialysis without violating Medicare’s Secondary Payer law.  

Congress extended Medicare coverage to people with ESRD, regardless of age, in 1972. The benefit now covers hundreds of thousands of beneficiaries, many of whom rely on costly dialysis treatments to stay alive. To protect these uniquely vulnerable patients, Medicare covers dialysis costs, but also requires that a patient’s group health plan continue as the primary payer for 30 months. To prevent these plans from reducing coverage for people with ESRD and shifting costs to Medicare sooner, the law also prohibits them from offering different benefits to people with ESRD and without ESRD.

In Marietta Memorial Hospital v. DaVita Inc., the employer-sponsored health plan offers very limited reimbursement rates for outpatient dialysis, treating all such providers as “out of network.” But because the plan provides the same dialysis rates for all of its participants, the Supreme Court concluded that it did not illegally “differentiate” benefits for people with ESRD.  In dissent, Justice Kagan, joined by Justice Sotomayor, stated that the decision represents a “massive and inexplicable workaround” to the Medicare Secondary Payer Act. She noted that outpatient dialysis is an “almost perfect proxy” for ESRD: 97% of people with ESRD – “and hardly anyone else” – undergo outpatient dialysis. Thus, targeting the use of dialysis is tantamount to targeting people with ESRD. Kagan also found support for her position in the text of the statute, and called on Congress to “fix a statute this Court has broken.”

As explained by Dialysis Patient Citizens, Medicare’s secondary payer rules affirmed the rights of privately-insured patients to continue with employer-sponsored plans for 30 months, preserved patient choice, and incentivized insurers to detect and treat chronic kidney disease. The Court’s decision allowing group health plans to shunt ESRD patients to Medicare presents  “immediate and profound risks” for kidney patients and their families. As more private health plans adopt similar inadequate dialysis reimbursement policies, the availability of dialysis nationwide may be reduced, and patients who may prefer to remain with private coverage for as long as possible – to cover family members, to access critical dental services, etc. – will not be able to do so.

The Center for Medicare Advocacy is concerned that the decision will exacerbate inequities in health care. We support patient advocates requesting that Congress amend the statute to protect Medicare beneficiaries with ESRD.