QUESTION: One of our group health plan participants has ESRD, and our TPA has cautioned us about a host of special requirements, including a rule that prohibits differentiation in benefits between individuals with ESRD and others enrolled in the plan. What is ESRD, and what would be considered impermissible differentiation in benefits?
ANSWER: ESRD refers to end-stage renal disease—a medical condition in which a person’s kidneys permanently stop functioning, and long-term dialysis or a kidney transplant is required to maintain life. Your TPA is correct—special Medicare Secondary Payer (MSP) rules apply to group health plan participants with ESRD. Group health plans cannot take into account an individual’s ESRD-based Medicare eligibility or entitlement for the first 30 months of eligibility or entitlement. Accordingly, Medicare generally must be the secondary payer for the first 30 months of an ESRD patient’s Medicare eligibility or entitlement (and will be primary thereafter). In addition, plans may not differentiate in the benefits provided to ESRD patients and other covered individuals based on the existence of ESRD, the need for renal dialysis, or in any other manner.
Here are some examples of actions that constitute an impermissible differentiation in benefits:
terminating ESRD patients’ coverage, when there is no basis for the termination unrelated to ESRD (such as a failure to pay plan premiums) that would result in termination for individuals who do not have ESRD;
imposing on ESRD patients, but not on others enrolled in the plan, benefit limitations such as less-comprehensive coverage, reductions in benefits, benefit exclusions, a higher deductible or co-insurance, or a longer waiting period;
charging higher premiums to ESRD patients;
paying providers and suppliers less for services furnished to ESRD patients than for the same services furnished to others;
failing to cover routine maintenance dialysis or kidney transplants, when the plan covers other dialysis services or other organ transplants; and
terminating coverage because the ESRD patient has become entitled to Medicare, except as permitted under COBRA (see our Checkpoint Question of the Week).
Nevertheless, plans are not prohibited from limiting the utilization of a covered service, so long as the limitation applies uniformly to all plan enrollees. For example, a plan that limits coverage of renal dialysis sessions to 30 per year for all enrollees would not be differentiating on the basis of ESRD.
The MSP rules are lengthy and complex, especially when ESRD is involved. Unlike the rules for age-based and disability-based Medicare entitlement, the ESRD-based Medicare prohibitions generally apply regardless of whether the individual has coverage by virtue of current employment status, and there is no exception for small employers. It is important to refer to the full text of statutes, regulations, and other agency guidance and to seek expert advice regarding MSP issues and other aspects of Medicare.
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 COBRA manual at Section XXX.B (“The Interactions Between COBRA and Medicare”) and EBIA’s Self-Insured Health Plans manual at Section XXV.C (“Coordination of Benefits With Medicare, TRICARE, and Medicaid”).
Contributing Editors: EBIA Staff.