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Dialysis coverage disparities stoke passions at high court

It's not anti-Semitic; it's just a tax on yarmulkes! The Supreme Court appeared to see discrimination in how a hospital health care plan reimbursed the cost of dialysis.

WASHINGTON (CN) — An attorney faced a steep climb at the Supreme Court on Tuesday as he tried to defend the system put in place by an Ohio hospital’s health care plan for reimbursing employees with end-stage renal disease.

“If you say you can't differentiate between Orthodox Jews and everybody else, and then you have a tax on yarmulkes and kosher food, are you doing that differentiation or not?” Justice Elena Kagan asked John Kulewicz, who argued before the court this morning on behalf of the Marietta Memorial Hospital Employee Health Benefit Plan.

The Columbus, Ohio-based attorney maintained that the plan was following the Medicare Secondary Payer Act and the Employee Retirement Income Security Act — laws that bar group health plans from giving different benefits to members depending on whether they are in end-stage renal failure and from treating dialysis providers differently as compared with other medical providers.

“When Congress requires a specific benefit or parity between benefits, it does so directly. It did not do that here,” Kulewicz said.

The case came to the high court after Sixth Circuit found that the hospital plan and its insurer pushed members with serious kidney conditions to rely on Medicare by offering meager reimbursement for the costs of end-stage kidney failure treatment.

Because the hospital’s plan offered no dialysis providers in-network, DaVita notes that it was considered an out-of-network provider and a plan member to whom DaVita administered dialysis had to make higher copayments, coinsurance payments, and deductibles on their treatment.

DaVita was reimbursed at a lower rate than other in-network or out-of-network providers, which it says violates ERISA and MSPA. Its patient, who has been treated by DaVita since 2017, says that the hospital’s employee health care plan reimbursed at 87.5% of the Medicare reimbursement rate for dialysis sessions undertaken between 2017 and 2018. 

“It is only ESRD [end-stage renal disease] patients who are immediately eligible after three months, regardless of age, for Medicare,” Seth Waxman, a WilmerHale attorney representing DaVita and “Patient A," told the court at Tuesday oral arguments. 

Justice Sonia Sotomayor seemed to agree. 

“This process is forcing those non-Medicare people to jump into Medicare as soon as they can,” she told Kulewicz Tuesday.

Justice Clarence Thomas pressed the hospital’s attorney Tuesday on why the plan has not admitted to differentiation between the high-cost services that are used by a certain segment of the population with end-stage renal disease.

“I think that's the argument here: that you have a lot of people who are not in a good position to pay —who are being charged at an amount that they're high usage, therefore, and they can't pay the costs — and it seems as though your approach targets that group,” Thomas said. 

Kagan echoed this point, saying that the hospital seems to have found a language loophole with its argument that, just because it is illegal to differentiate against people on the basis of end-stage renal disease, doesn’t mean differentiating against people the basis of needing dialysis is illegal, too.

“You understand why people don't want to pay for these things. They're expensive. But isn't that exactly what Congress was trying to do? It's saying stop trying to get out of paying for the only treatment that is appropriate for a particular disease,” she told Kulewicz. “Now you say, ‘Well, we can do that. We just don't have to use the words end-stage renal disease.’”

Kulewicz pushed back, however, accusing DaVita of seeking to be paid at “undiscounted charges that would destroy any incentive to come into network, it would have obviously the catastrophic effect upon patients in the plans that we've discussed.”

“The approach that this plan takes is actually to minimize the actual out-of-pocket payment that the participants in any situation, whoever is receiving dialysis,” he said. 

Waxman also hammered home that the vast majority of patients who require dialysis are patients with end stage renal disease.

“Differential treatment of outpatient renal dialysis is most certainly differential treatment of individuals with ESRD. Congress determined that, and it determined that, because Congress understood in 1972 and in 1981 and thereafter that ESRD patients uniquely and utterly need outpatient dialysis for the rest of their lives,” Waxman said, pointing out that 99.5% of all of DeVita’s outpatient dialysis patients have ESRD. 

“There is simply no reasonable argument for singling out as outpatient dialysis is anything but differential treatment of individuals with ESRD,” Waxman continued.

Kagan also pressed Matthew Guarnieri, an assistant to the U.S. solicitor general who spoke to the court on behalf of the United States, as to why the federal government was siding with the hospital. 

“What confuses me about this case, Mr. Guarnieri, is why you're on this side of it,” she said. “I hate to say the obvious, but usually the government is concerned about the state of government finances. And aren't you clearly going to end up paying more, if the petitioner wins, then if the respondent wins?”

“We just don't think the statute in its current form prohibits the particular plan provisions that are under scrutiny here,” maintained Guarnieri, who participated in the arguments via conference call.

“A plan whose purpose as alleged here and effect is to move primary coverage of ESRD patients to Medicare is one that most certainly ‘takes into effect’ those patient's eligibility for Medicare. The reading urged by the petitioners and the solicitor general, by which the anti-discrimination provision bars only plans that single out ESRD patients by name and that … only applies to plans that reference Medicare eligibility expressly renders, both of these statutory protections, utterly toothless,” Waxman struck back.

Justice Stephen Breyer pressed Waxman for a point of comparison when he says renal dialysis and outpatient renal dialysis patients receive uniquely disadvantageous treatment. 

“Compared to heart attack patients?” Breyer posed hypothetically.

Waxman agreed.

“Then how do you avoid if not this case, in the mine-run of cases, people bringing nonstop cases where the judge has to look at heart attacks, inpatient diagnostic facilities, we could go on for about 10 months listing all these kinds of things?” Breyer asked.

An Ohio federal judge had originally dismissed DaVita's case, but the Sixth Circuit reversed in part, creating a split with the Ninth Circuit.

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