CHICAGO, IL (June 22, 2022) –On June 21, 2022, the U.S. Supreme Court published its decision in Marietta Memorial Hospital, et al. v. DaVita, et al. In this decision, the Supreme Court ruled that self-funded health plans have the authority under the Medicare Secondary Payor Act (MSPA) to carve out dialysis benefits and set rates for such benefits at appropriate levels for plans and their members. In reaching its decision, the Supreme Court relied on the reasoning in the Amy’s Kitchen case, cementing Renalogic’s ImpactProtect cost containment program as the market-leading, most legally sound methodology for dialysis cost containment.
The kidney dialysis market is dominated by two large, multi-national companies: DaVita and Fresenius. Because of their dominance and lack of viable competition, dialysis rates billed to commercial health plans have ballooned by roughly 400% since 2008.
Marietta was one of five federal cases launched by DaVita in late 2018 – early 2019 against commercial health plans and other organizations. In this lawsuit, DaVita argued that a commercial health plan does not have the legal authority to carve out dialysis benefits and pay dialysis claims differently from other types of claims under the MSPA. In contrast, Marietta Hospital and the US Department of Justice argued that the MSPA was designed to coordinate benefits between insurance plans and Medicare for individuals covered by both, and not to provide preferential status to dialysis claims or individuals needing dialysis.
Marietta Hospital won in the trial court, while the Sixth Circuit Court of Appeals reversed the trial court’s decision, holding for DaVita. The Supreme Court agreed to hear the case to settle the issue because of its importance and because the Ninth Circuit Court of Appeals reached an opposite decision than that of the Sixth Circuit in the landmark Amy’s Kitchen case. In Amy’s Kitchen, the Ninth Circuit categorically supported health plans’ authority to carve out dialysis benefits and approved Renalogic’s claims repricing methodology, ImpactProtect.
The Supreme Court’s Marietta Ruling
In Marietta, the Supreme Court ruled in Marietta Hospital’s favor, reversing the Sixth Circuit’s decision. The Supreme Court firmly established that health plans have the authority under the MSPA to carve out dialysis benefits and recalibrate the cost of dialysis claims to levels more appropriate for plans and their members. In reaching its decision, the Court looked to the Amy’s Kitchen case for guidance and support, clearly establishing Renalogic and its ImpactProtect cost containment program as the leader in the market with the most legally sound methodology.