Dialysis Litigation Continues After Supreme Court Ruling

A federal trial court has decided the latest installment of a case in which a large dialysis provider sued a group health plan and its TPA for classifying all dialysis providers as “out-of-network,” resulting in a lower reimbursement rate for them than for providers of other medical services. The case recently made its way to the U.S. Supreme Court, which ruled that a group health plan does not violate the Medicare Secondary Payer (MSP) rules by limiting coverage for outpatient dialysis, even though the treatment is used almost exclusively for patients with end-stage renal disease (ESRD) (see our Checkpoint article). The case was sent back to the trial court for further proceedings.

The trial court has now dismissed the provider’s claim that the out-of-network categorization violated the MSP rules, citing the Supreme Court’s conclusion that the plan’s terms did not “differentiate in the benefits it provides to individuals with [ESRD] or take into account whether an individual is entitled to or eligible for Medicare.” However, the court has allowed two separate claims to continue to trial. First, the provider alleged that the plan discriminates against participants with ESRD—in violation of HIPAA’s health status nondiscrimination rules—by eliminating network coverage for dialysis and exposing the participants to higher costs. The court has allowed that claim to proceed, stating that the Supreme Court’s MSP ruling does not foreclose a claim based on an unrelated anti-discrimination statute. The court also declined to dismiss the provider’s claim for benefits under ERISA § 502, to the extent it was based on the plan’s alleged HIPAA violation and corresponding ERISA breach.

EBIA Comment: Although the Supreme Court may have given the green light for plans to reduce coverage for outpatient dialysis without fear of violating the MSP rules, plan sponsors and administrators should be mindful that dialysis providers may have other legal avenues, including HIPAA and ERISA, by which to challenge such limitations. It will be interesting to follow this case as it moves toward resolution. For more information, see EBIA’s HIPAA Portability, Privacy & Security manual at Section XI.C (“Health Status and Genetic Information Nondiscrimination Rules: Nondiscrimination Rules for Eligibility and Benefits”), EBIA’s Group Health Plan Mandates manual at Section XXIV.H (“MSP Requirements: ESRD-Based Medicare Eligibility or Entitlement”), and EBIA’s ERISA Compliance manual at Section XXXVI (“ERISA Litigation”).

Contributing Editors: EBIA Staff.