U.S. Supreme Court Agrees to Review MSP Dispute Over Health Plan’s Coverage of Dialysis Benefits

The U.S. Supreme Court has agreed to settle a dispute between two appellate courts regarding the Medicare Secondary Payer (MSP) rules and health plan coverage of dialysis. In the underlying case, a large dialysis provider sued an employer/plan administrator and its TPA, challenging the plan’s classification of all dialysis providers as “out-of-network,” resulting in a lower reimbursement rate for them than for other medical providers. Acknowledging that the plan provision applied equally to all covered individuals receiving dialysis, the provider nevertheless argued that the lower reimbursement rate had a disparate impact on individuals with ESRD, in violation of the MSP rules. A federal trial court dismissed the claim, but the Sixth Circuit revived it, holding that the MSP antidiscrimination provisions prohibit conduct beyond the express differential treatment of individuals with ESRD (see our Checkpoint article).

Two months later, in a similar case involving the same dialysis provider, the Ninth Circuit rejected the provider’s disparate impact argument, ruling that the MSP statute prohibits group health plans from providing different benefits to individuals with ESRD than to those who do not have ESRD, but it does not bar other differences that merely have a disproportionate effect on individuals with ESRD (see our Checkpoint article). The U.S. Supreme Court will consider the conflicting decisions of the Sixth and Ninth Circuits when it hears oral arguments, likely in Spring 2022.

EBIA Comment: This case will have significant implications for health plans trying to cap the costs of dialysis treatments. Health plan sponsors and their advisors should pay careful attention. For more information, see EBIA’s Group Health Plan Mandates manual at Sections XXIV.A (“What Are the Medicare Secondary Payer (MSP) Requirements and Who Must Comply?”), XXIV.C (“Overview of Medicare”), and XXIV.H (“MSP Requirements: ESRD-Based Medicare Eligibility or Entitlement”). See also EBIA’s Self-Insured Health Plans manual at Section XXV.C (“Coordination of Benefits With Medicare, TRICARE, and Medicaid”).

Contributing Editors: EBIA Staff.