SHERMAN, Texas (CN) – A federal judge in Texas granted an injunction to stop a federal rule that would allow insurers to refuse coverage for dialysis patients who receive charitable help for their premiums.
Lead plaintiff Dialysis Patient Citizens originally sued the U.S. Department of Health and Human Services, its former secretary Sylvia Mathews Burwell, the Centers for Medicare and Medicaid Services and its acting administrator, Andy Slavitt, in Sherman, Texas, federal court on Jan. 6. U.S. Renal Care Inc., Davita Inc. and Fresenius Medical Care Holdings Inc. joined DPC as co-plaintiffs.
HHS had announced the new rule concerning coverage third-party payments for end-stage renal disease, or ESRD, on Dec. 14, and it was set to take effect Jan. 13.
ESRD is the final stage of chronic kidney disease. ESRD patients must have either a kidney transplant or regular dialysis treatments to survive. Dialysis treatment is expensive and most patients cannot afford treatment without insurance, the ruling notes.
In their lawsuit, the patient advocates sought an injunction because they claimed HHS violated the Administrative Procedures Act and Medicare Act by passing the rule without notice and comment. They also claimed the rule’s financial disclosure requirements were arbitrary, capricious, and contrary to law.
The advocates argued the rule could cause dialysis patients who rely on charitable assistance to lose their health insurance if that assistance is taken away.
“This regulation appears to give insurers carte blanche to discriminate against people with complex medical needs in ways that could force them off the coverage that provides access to lifesaving care,” Hrant Jamgochian, chief executive of DPC, said in a statement. “With this rule, CMS is telling dialysis patients that the patient protections afforded to everyone else do not apply to them.”
Jamgochian emphasized that the advocates were not opposing the first part of the rule, which requires dialysis companies to give patients detailed information about their health insurance options.
“However, the second part of the rule ignores the wishes of patients who want to keep their private insurance by empowering insurers to prevent them from receiving charitable premium support,” he said.
DPC says that while dialysis patients are eligible for Medicare, they can benefit from services offered in plans sold on the exchanges under the Affordable Care Act.
For instance, dialysis patients often need care coordination services that are not covered in Medicare, and private plans may offer patients access to preferred doctors and health facilities that do not participate in Medicare. The advocates also claim that ESRD patients with private coverage are three times as likely to obtain a transplant as those on Medicare.
U.S. District Judge Amos Mazzant looked at the impact of the new rule in his decision issued Wednesday.
“The rule would require dialysis providers to disclose to patients that they are contributing to charities such as [American Kidney Fund, or AKF]. The rule would also require dialysis providers to notify insurers which premiums will be paid for by charitable organizations,” the ruling states. “The dialysis providers would then have to ‘obtain assurance’ from insurers that they will accept charitable premium assistance payments, and if such assurances are not provided, the dialysis providers would need to take ‘reasonable steps’ to ensure such payments are not made. In effect, the rule would allow insurers to refuse to insure ESRD patients who receive charitable premium assistance.”
HHS argued that having a notice and comment period for the rule would have been “contrary to public interest” because emergency rulemaking was needed to prevent harm to dialysis patients. The agency claimed that delaying the rule might hinder patients’ eligibility for a kidney transplant and they might face a disruption of health coverage.
However, Judge Mazzant didn’t buy it.
“Defendants have not provided a single example of a patient denied a kidney transplant because of charitable assistance. Speculation that some patients will not have foresight to arrange for alternative coverage does not provide good cause to bypass notice and comment,” he wrote. “The rule effectively provides insurers the means to stop paying for dialysis treatment once the insurer discovers the patient received charitable premium assistance.”
Mazzant added, “The court is not persuaded that HHS had good cause to bypass notice and comment. When pressed at oral argument for why HHS could not go through the procedures required by the APA, defendants were unable to identify any emergency that justified publishing a rule without notice and comment.”
Mazzant also found the rule is arbitrary and capricious because HHS did not consider critical aspects of the issue.
“HHS failed to consider that the rule would leave thousands of Medicare-ineligible ESRD patients without health insurance, which is clearly an important aspect of the problem,” the judge wrote. “HHS has long accepted the practice of charitable premium assistance, and the rule neither addresses that HHS is changing its position nor provides a reasoned explanation for why the rule violates [Office of Inspector General) guidance.”
Mazzant ruled that both dialysis providers and patients would likely suffer irreparable injury because of the rule.
“DaVita, Inc. has shown that up to six of its Texas facilities would likely close if ESRD patients were forced off of private insurance plans, which reimburse at a much higher rate than Medicare. Additionally, compliance costs cannot be recovered later from the government if the rule is invalidated on the merits,” he wrote. “Here, HHS estimates such costs at more than $29 million annually.”
The judge added, “Not all ESRD patients qualify for Medicare, and Medicare does not cover family members. Further, many health care providers do not accept Medicare. Therefore, some ESRD patients and their families could lose access to their health care providers or even lose insurance coverage altogether.”
Mazzant concluded that the advocates satisfied each of the four requirements for a preliminary injunction to enjoin the rule’s implementation on a nationwide basis, and he granted such relief.
“Preserving the status quo ensures ESRD patients have the choice to select private or public insurance options based on their health care needs and financial means,” he wrote.
HHS referred Courthouse News to the Justice Department, which declined to comment on the court’s ruling.