Two Medicare Secondary Payor Act (MSP) decisions came out in the 9th Circuit Court cases last week: DaVita v. Amy’s Kitchen and DaVita v. Virginia Mason. While the two cases were before the court separately, the same panel of judges delivered the decisions at the same time. The very different outcomes point to a transformational shift in how health plans reduce the risk of dialysis claims costs in the future.
DaVita v. Amy’s Kitchen ruling is a clear win for Amy’s plan, and upheld the plan’s determinations using the Renalogic outpatient dialysis proprietary plan language. The court quoted the language at length and specifically cited it as compliant with the MSP. Amy’s Kitchen decision allows for both the dialysis carve and the Renalogic methodology to determine dialysis claims.
“Multiple of Medicare reimbursement strategies may work well against specific providers in a competitive geographical market , however, it is not the answer when repricing dialysis claims, said Lisa Moody, Renalogic Chief Executive Officer “We’ve been addressing risk differently for nearly 20 years. Our industry-leading products provide protection, and recent court rulings validate that. Our clients benefit from carefully executed plan language, which reduces risks and is best practice to protect against challenges and appeals. Plans that use multiple of Medicare repricing strategies only add to the already massive risk associated with dialysis cost claims.”
Under Amy’s Kitchen, the Renalogic language protects plans against MSP challenges in appeals and court. This ruling upheld the proprietary Renalogic system that uses public and private economic and statistical data to derive the Renalogic market based “Usual and Reasonable” reimbursement rates for dialysis claims. By implication, plans that rely on multiple of Medicare based reimbursements violate the MSP.
In DaVita v. Virginia Mason, the court ruled against a dialysis cost containment methodology which repriced based solely on multiple of Medicare. The ruling eliminated the requirement that Medicare must have made a “conditional payment” as a prerequisite to a provider suit for double damages. This opens the door to immediate provider litigation whenever a plan uses a similar methodology. Further, the ruling is retroactive, allowing to sue for MSP double damages claims for all claims paid under non-compliant language for the past three years. Providers can sue plans directly under this ruling, without needing member assignment or pursuing appeals. This ruling leaves health plan fiduciaries who rely on a multiple of Medicare and who take coordination of Medicare into account into their plan language exposed to imminent litigation. To protect against this risk, safe harbor alternatives, such as the Renalogic approach, would be a prudent step as a means to mitigate the risk given the upcoming benefits renewal season.
Find out how Renalogic can mitigate your risk with our legally validated approach: