Amicus Curiae Brief — Marietta Memorial Hospital Employee Health Benefit Plan, et al., Petitioners v. DaVita Inc., et al.

No. 20-1641

In the Supreme Court of the United States

MARIETTA MEMORIAL HOSPITAL

EMPLOYEE HEALTH BENEFIT PLAN, ET AL.,

Petitioners,

v.

DAVITA INC., ET AL.,

Respondents.

On Writ of Certiorari to the United States Court

of Appeals for the Sixth Circuit

BRIEF OF KIDNEY CARE PARTNERS

AS AMICUS CURIAE

IN SUPPORT OF RESPONDENTS

PAUL W. HUGHES

Counsel of Record

CHARLES SEIDELL

McDermott Will & Emery LLP

500 North Capitol Street NW

Washington, DC 20001

(202) 756-8000

phughes@mwe.com

Counsel for Amicus Curiae

i

TABLE OF CONTENTS

Table of Authorities.................................................... ii

Interests of Amicus Curiae .........................................1

Summary of Argument................................................1

Argument .....................................................................3

A. Congress struck a delicate publicprivate cost-distribution scheme in the

MSPA. ...............................................................5

B. Petitioners’ health plan was designed

specifically to defeat Congress’s

preferred allocation of costs. .......................... 10

1. The unambiguous intent and clear

consequence of Petitioners’ plan

design is to force insureds to rely on

Medicare during the coordination

period. ........................................................ 10

2. Petitioners’ defiance of Congress’s

cost-allocation scheme carries grave

risks. .......................................................... 12

Conclusion ................................................................. 17

ii

TABLE OF AUTHORITIES

Cases

Bio-Medical Applications of Tenn., Inc. v.

Cent. States Health and Welfare Fund,

656 F.3d 277 (6th Cir. 2011) .................................. 8

Davita, Inc. v. Amy’s Kitchen, Inc.,

No. 19-15963 (9th Cir. 2019) ............................... 11

United Seniors Ass’n v. Philip Morris USA,

500 F.3d 19 (1st Cir. 2007) .................................... 7

Statutes, rules and regulations

42 U.S.C. § 1395y(b) ............................................ 4, 7, 9

42 C.F.R. § 411.108(a) ................................................. 9

42 C.F.R. § 411.161 ..................................................... 9

Pub. L. No. 92-603 (1972)........................................ 4, 6

Pub. L. No. 96-499 (1980)........................................ 4, 7

Pub. L. No. 97-35 (1981).............................................. 7

Legislative materials

H.R. Rep. 96-1167 (1980) ............................................ 7

H.R. Rep. No. 105-149 (1997).................................... 13

S. Rep. 97-139 (1981)..................................... 7, 8, 9, 13

MedPAC, Report to the Congress: Medicare

Payment Policy (Mar., 2021) ................................ 14

Other authorities

Shana Alexander, They Decide Who Lives, Who

Dies, 53 Life 102 (1962); .................................. 6, 13

Christopher R. Blagg, The Early History of

Dialysis for Chronic Renal Failure in the

United States: A View from Seattle ....................... 5

iii

Other authorities—continued

John Christiansen, The Hidden Perils of

Dialysis Claims, Leader’s Edge, (Oct. 29,

2019) ..................................................................... 11

Allen R. Nissenson & Richard A. Rettig,

Medicare’s End-Stage Renal Disease

Program: Current Status and Future

Prospects ................................................................. 4

H.G. Lawson, Kidney Machines Save

“Doomed” Patients Lives but Raise Ethical

Issue, Wall St. J. (Aug. 22, 1963)..................... 6, 13

Richard D. Lyons, Program to Aid Kidney

Victims Faces Millions in Excess Costs, N.Y.

Times (Jan. 11, 1973) ............................................. 6

Medicare & Medicaid Servs., Medicare Benefit

Policy Manual, Ch. 11 (Mar. 1, 2019) ............... 5, 6

Richard A. Rettig, Origins of the Medicare

Kidney Disease Entitlement: The Social

Security Amendments of 1982, in Biomedical

Politics (Kathi E. Hannah ed., 1991) .................... 4

Adam A. Shpigel et al., A Comparison of

Payments to a For-Profit Dialysis Firm

from Government and Commercial

Insurers, 179 JAMA Internal Med. 1136,

1137 (2019) ........................................................... 14

U.S. Renal Data System, ESRD in the

United States 291 (2018)........................................ 3

U.S. Renal Data System, Report:

Epidemiology of Kidney Disease in the

United States, Vol. 2, Ch. 1 (2020) ...................... 12

INTERESTS OF AMICUS CURIAE1

Kidney Care Partners is a non-profit coalition of

more than 30 organizations, comprising patients, dialysis professionals, physicians, nurses, researchers,

therapeutic innovators, transplant coordinators, and

manufacturers. They are dedicated to working together to improve the quality of care for individuals

living with kidney disease.

This case presents an issue of great importance for

Kidney Care Partners and its members, as well as the

patients who depend on them for dialysis treatments

each year. Health insurance plans like the Marietta

Memorial Hospital Employee Health Benefit Plan at

issue here force patients off of private insurance and

onto Medicare. This results in reduced quality of patient care, increased patient expenses, and reduced

access to lifesaving treatment. Such a scheme runs directly contrary to Kidney Care Partners’ goals of improving the coordination of care, further understanding chronic kidney disease, and lowering the barriers

that block patients from accessing and choosing treatments.

SUMMARY OF ARGUMENT

Hundreds of thousands of Americans with End

Stage Renal Disease are alive right now due to the

widespread availability of dialysis—a change that occurred only within the last fifty years. The dialysis

payment system is structured around a careful

Pursuant to Supreme Court Rule 37.6, amicus curiae states

that no counsel for any party authored this brief in whole or in

part and that no entity or person, aside from amicus curiae, its

members, or its counsel, made any monetary contribution intended to fund the preparation or submission of this brief. Pursuant to Supreme Court Rule 37.3, counsel of record for all parties have consented to this filing.

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balance struck by Congress between public and private insurers. Plans like Petitioners’ threaten to upset

this balance, running directly contrary to Congress’s

clear intent and statutory design.

A. When dialysis first emerged as a treatment for

End Stage Renal Disease, its lifesaving promise was

limited due to the complexity and expense of the procedure. Recognizing the transformative potential of

dialysis, Congress chose to expand Medicare to cover

nearly all End Stage Renal Disease patients. This expansion quickly proved extremely expensive, in part

because private insurers began to design plans to

force patients onto Medicare instead of covering dialysis like they would pay for treatment for nearly any

other chronic disease. In addition to shifting costs to

the government, these practices deprived patients of

the many benefits that accrued from the choice to retain private coverage. To preclude this behavior, Congress enacted the Medicare Secondary Payer Act,

which struck a careful balance. Private insurance covers treatment costs for a fixed period, after which

Medicare becomes the primary payer. To prevent private insurers from gaming the system, Congress enacted broad antidiscrimination provisions barring discrimination on the basis of End Stage Renal Disease.

B. 1. Plans like Petitioners’ accomplish—and, in

fact, are designed to accomplish—exactly what Congress sought to prohibit. They limit coverage for necessary treatment, thereby foreclosing patient choice

and exposing patients to significant financial risk.

These measures are especially effective in forcing patients off of private plans and onto Medicare because

End Stage Renal Disease disproportionally affects already-vulnerable populations. In this way, such outlier plans exacerbate existing healthcare inequities.

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2. In addition to flouting the will of Congress,

plans like Petitioners’ create enormous systemic risk.

To begin, they risk destabilizing the Medicare system

by significantly increasing Medicare costs, despite

Congress’s attempt to control costs through the Medicare Secondary Payer Act. But without Medicare, few

Americans would be able to access dialysis, which

would be catastrophic. Additionally, outlier plans like

the one at issue here threaten the viability of private,

standalone dialysis facilities. These facilities provide

the vast majority of dialysis to End Stage Renal Disease patients. But they receive less from Medicare

than it costs to provide dialysis treatments; independent analysis by the Medicare Payment Advisory Commission has shown Medicare rates to be near or below

breakeven in most years. Dialysis facilities rely on private insurance reimbursement to remain in operation.

If patients are all forced onto Medicare, many facilities—especially in rural areas—may close, limiting

the availability of lifesaving treatments.

In short, discriminatory plans that force End

Stage Renal Disease patients onto Medicare as soon

as they are eligible to enroll threaten to undermine

Congress’s goal of ensuring that dialysis is available

and affordable for all Americans. Such violations of

Congress’s clear intent and statutory design must not

be permitted to stand.

ARGUMENT

Kidney failure is a widespread and fatal ailment.

Each year, over 100,000 Americans are diagnosed

with irreversible kidney failure, known as End Stage

Renal Disease (ESRD). See U.S. Renal Data System,

ESRD in the United States 291 (2018). Less than a

century ago, a diagnosis of ESRD would have been a

death sentence for nearly all of these patients. By the

middle of the last century, advances in medical

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technology (including the development of the artificial

kidney and refinements in dialysis techniques and

kidney transplants) began to offer hope to ESRD patients. Richard A. Rettig, Origins of the Medicare Kidney Disease Entitlement: The Social Security Amendments of 1982, in Biomedical Politics 177-78 (Kathi E.

Hannah ed., 1991).

Unfortunately, the overall impact of these advances was limited. In the 1960s, dialysis was too rare

and expensive for nearly all ESRD patients. Rettig,

supra, at 6. After a growing movement for federal intervention (id. at 187-88), Congress enacted the Social

Security Amendments of 1972, guaranteeing Medicare coverage, including dialysis, for almost every

American diagnosed with ESRD. Pub. L. No. 92-603,

§ 299I (1972).

Ensuring the availability of dialysis for ESRD patients was enormously expensive, however, and the

ballooning need for and cost of dialysis threatened the

viability of the Medicare program as a whole. Allen R.

Nissenson & Richard A. Rettig, Medicare’s End-Stage

Renal Disease Program: Current Status and Future

Prospects, 18 Health Affairs 161, 165 (1999). To combat these costs and safeguard the Medicare fisc—in

addition to protecting the benefits to patients from the

choice of retaining private coverage—Congress enacted a careful public-private balancing scheme in the

Medicare Secondary Payer Act (MSPA) in 1980. Pub.

L. No. 96-499 (1980) (codified at 42 U.S.C. § 1395y).

Essentially, Congress decided that during a “coordination period,” private insurance should be the primary payer for ESRD treatments, but that after the

coordination period Medicare would become the primary payer for the duration of the patient’s need. 42

U.S.C. § 1395y(b)(4), (b)(1)(C)(ii).

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Recently, some outlier private health plans have

sought to upend Congress’s carefully calibrated distribution of dialysis costs. By adopting terms that are

specifically and intentionally unfavorable to insureds

with ESRD, plans like the Marietta Memorial Hospital Employee Health Benefit Plan are designed to

force patients to abandon their private health insurance in favor of Medicare during the coordination period. These plans threaten both the viability of the

Medicare fisc and the availability of affordable dialysis for ESRD patients. Such plans violate Congress’s

clear intent, and cannot be sustained.

A. Congress struck a delicate public-private

cost-distribution scheme in the MSPA.

On March 9, 1960, Clyde Shields started hemodialysis at University Hospital in Seattle. Christopher

R. Blagg, The Early History of Dialysis for Chronic Renal Failure in the United States: A View from Seattle,

49 Am. J. Kidney Diseases 482, 483 (2007). Thus began “one of the most important medical advances of

the 20th century,” ushering in a new era of hope for

ESRD patients around the world. Ibid.

Dialysis, however, remained largely inaccessible

to most Americans for years. “[I]n the early 1970s, a

dialysis treatment lasted around twelve hours and

was very expensive, due to the high outlay for materials and the treatment itself.” The History of Dialysis,

Fresenius Medical Care (accessed Jan. 20, 2022),

perma.cc/7VTZ-AXU5. In particular, dialysis treatment for ESRD patients is expensive because most patients receive dialysis regularly and frequently—typically three times a week, or more than 150 times per

year. Ctr. for Medicare & Medicaid Servs., Medicare

Benefit Policy Manual, Ch. 11 at 10(A)(1) (Mar. 1,

2019), perma.cc/JN5R-LR3N. As a result, this

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lifesaving treatment was rationed—“committees decided on how the small number of treatment slots

should be allocated.” Id.; see Shana Alexander, They

Decide Who Lives, Who Dies, 53 Life 102 (1962); H.G.

Lawson, Kidney Machines Save “Doomed” Patients

Lives but Raise Ethical Issue, Wall St. J. (Aug. 22,

1963).

By the 1970s, however, support was growing for a

federal solution to the dialysis shortage. Congressman

John Fogarty “visited Seattle in November 1965 to see

a patient dialyzing at home” and “returned to Washington expressing support for a home dialysis policy.”

Blagg, supra, at 490. A year later, the Committee on

Chronic Kidney Disease “recommended establishment of a national treatment program” funded by

Medicare. Id. (citing Report of the Committee on

Chronic Kidney Disease, Bureau of the Budget (1967)).

In 1971, Shep Glazer underwent dialysis treatment on

the floor before the House Committee on Ways and

Means. Id. at 491. These efforts culminated in the passage of the Social Security Amendments of 1972,

which expanded Medicare coverage to nearly all

Americans diagnosed with ESRD. Pub. L. No. 92-603

(1972).

Initial estimates predicted that the Medicare expansion would cost around $100 million to treat

25,000 ESRD patients. Rettig, supra, at 197; see also

Blagg, supra, at 492 (noting that the National Kidney

Foundation estimated a first-year cost of $35 to $75

million). These figures almost immediately proved to

be dramatic underestimates. By the beginning of

1973, federal experts calculated first-year costs at

$135 million and predicted that costs would rise to $1

billion annually within ten years. Richard D. Lyons,

Program to Aid Kidney Victims Faces Millions in Excess Costs, N.Y. Times (Jan. 11, 1973),

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perma.cc/D59H-XGPJ. By 1980, increases in ESRD

frequency and dialysis cost had driven Medicare

ESRD costs above $1.2 billion. Nissenson & Rettig, supra, at 165.

To combat ballooning Medicare costs, Congress

passed the MSPA in 1980. Pub. L. No. 96-499 (1980);

see United Seniors Ass’n v. Philip Morris USA, 500

F.3d 19, 21 (1st Cir. 2007) (“The MSP statute . . . was

enacted in 1980 to reduce federal health care costs.”).

The MSPA functions by making Medicare the secondary payer for “medical services provided to Medicare

beneficiaries” in certain circumstances where “payment is available from another primary payer.” Ibid.

In 1981, Congress extended the MSPA to cover ESRD

patients. Pub. L. No. 97-35, § 2146 (1981). Congress

created a coordination period (now 30 months) in

which ESRD patients’ private insurance plans (if any)

serve as the primary payer for ESRD treatments, including dialysis. See 42 U.S.C. § 1395y(b)(4). After

this coordination period ends, Medicare assumes responsibility as the primary payer.

In passing the MSPA, Congress intended to address the situation in which Medicare was paying for

“services [that] could have been paid for by a private

insurance carrier.” H.R. Rep. 96-1167 at 389 (1980).

In particular, Congress was concerned that Medicare

was being used to “relieve private insurers of obligations to pay the costs of medical care in cases where

there would otherwise be liability under the private

insurance contract.” Ibid.

Similar concerns animated Congress’s decision to

extend the MSPA to cover ESRD patients. At the time,

“many private health insurance plans provide[d] very

comprehensive health benefit protection, including

protection against catastrophic health expenses.” S.

Rep. 97-139 at 735 (1981). But those plans paid “little,

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if anything, toward the costs of kidney dialysis treatments or organ transplantation.” Ibid. Congress had

no trouble identifying the cause of this discrepancy:

“most health plans * * * contain provisions that are

intended to prevent payments of benefits where the

insured is also entitled to benefits as a result of coverage under a program such as Medicare.” Ibid. In essence, “since Medicare pays first and provides very

comprehensive benefits for those with end-stage renal

disease, private plans pay little of the expenses incurred by most end-stage renal patients.” Ibid.; accord

Bio-Medical Applications of Tenn., Inc. v. Cent. States

Health and Welfare Fund, 656 F.3d 277, 281 (6th Cir.

2011) (“[T]he precise problem that Congress sought to

ameliorate was that private plans would provide inferior benefits or coverage for medical treatment that

was also covered by Medicare.”).

In addition to concerns of national finance, protecting patients’ ability to remain on private health

plans benefits the patients directly. As Congress has

recognized in the Affordable Care Act, patient choice

of health plans and freedom from discriminatory practices are both important values in the federal regulation of health insurance. Under the current MSPA

structure, dialysis patients can and do choose to retain commercial coverage during the coordination period. And they do so for a variety of reasons. For some

patients, family members who are also covered by a

plan would have different deductibles and cost-sharing requirements if the patient enrolls in Medicare.

Some plans may provide coverage that Medicare does

not offer or have lower coinsurance obligations. Some

patients rely on private insurance as long as they can

because they live in one of the many states that does

not allow dialysis patients to purchase Medigap policies. Congress sought to protect these patients’

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interests, as well, by extending and then repeatedly

reauthorizing the MSPA.

Congress recognized that this new cost allocation

created warped incentives for private insurance plans.

Without additional guardrails, private insurers could

continue to foist nearly all of the costs of ESRD onto

the federal government simply by limiting or eliminating coverage for ESRD patients or ESRD treatments. It should come as no surprise, therefore, that

Congress sought to address such “discriminatory provision[s].” S. Rep. 97-139 at 736.

The antidiscrimination provisions of the MSPA

broadly prohibit several categories of actions by private insurance plans. See 42 U.S.C. § 1395y(b)(1)(C).

In general, a plan “may not take into account that an

individual is eligible for or entitled to Medicare benefits on the basis of ESRD during the coordination period.” 42 C.F.R. § 411.161(a)(1). The “take into account” regulations echo Congress’s concern that plans

will attempt to structure themselves in such a way as

to force ESRD patients to rely on Medicare. See, e.g.,

42 C.F.R. § 411.108(a)(9) (prohibiting plans from

“[p]roviding misleading or incomplete information

that would have the effect of inducing a Medicare entitled individual to reject the employer plan, thereby

making Medicare the primary payer”). Nor can plans

“differentiate in the benefits [they] provide[] between

individuals having end stage renal disease and other

individuals covered by such plan on the basis of the

existence of end stage renal disease, the need for renal

dialysis, or in any other manner.” 42 U.S.C. §

1395y(b)(1)(C)(ii) (emphasis added). This provision extends to blatantly discriminatory practices such as

differential pricing based on an ESRD diagnosis as

well as “[f]ailure to cover routine maintenance dialysis or kidney transplants, when a plan covers other

10

dialysis services or other organ transplants.” 42

C.F.R. § 411.161(b). Congress crafted these broad provisions with the clear intent to prevent plans from

forcing dialysis patients off of private coverage and

onto Medicare.

B. Petitioners’ health plan was designed

specifically to defeat Congress’s preferred

allocation of costs.

Congress crafted an intricate, well-balanced

scheme to ensure that dialysis would remain available

to ESRD patients. But unlike the vast majority of insurers, plans like Petitioners’ threaten to upset that

delicate balance by attempting to game the system. By

crafting plan terms that are designed to force ESRD

patients off of private insurance and onto Medicare,

Petitioners and similar plans flaunt Congress’s intent

and threaten the stability of the entire dialysis system.

1. The unambiguous intent and clear

consequence of Petitioners’ plan design is to

force insureds to rely on Medicare during the

coordination period.

Health plans like Petitioners’ will have the predictable result of driving insureds with ESRD off of

the private insurance and onto Medicare during the

coordination period—as Respondents have ably explained. Respondents’ Br. 12-16. Unlike nearly all

other large private insurance plans, Petitioners’ plan

has “no network for [outpatient dialysis] services.” JA

13. This lack of a network exposes ESRD patients to

significant financial risk, putting them on the hook for

the delta between what the plan pays out-of-network

providers and the cost of the treatment. Respondents’

Br. at 15-16. And the plan exposes ESRD patients to

higher deductible and coinsurance payments. Ibid.

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Unsurprisingly, these factors combine to nudge patients with ESRD to turn to Medicare instead.

Nor can there be any real doubt that this is precisely the result that these nonstandard plan-designers intend. MedBen, for example, is a benefit manager

who advertised that its “proprietary dialysis health

plan language” can save employers “substantial savings on” outpatient dialysis. Costly Dialysis Legislation Should Spark Plan Language Change, WayBack

Machine — MedBen Blog (Aug. 24, 2018),

perma.cc/69ZW-78XW?type=image. Until recently,

MedBen also described the company’s Layered Reference-Based Pricing as specifically “[t]arget[ting] highcost medical treatments, such as kidney dialysis.” Networks, MedBen (Apr. 11, 2021), perma.cc/NZA73PPU.

Renalogic, a consulting company based in Arizona, similarly touts a “dialysis cost containment”

program that it claims can save insurers huge sums

in dialysis payments each year. Br. for Appellants,

Davita, Inc. v. Amy’s Kitchen, Inc., No. 19-15963 (9th

Cir. 2019). The structure of Renalogic’s cost containment program is similar to the plan at issue here—it

eliminates in-network coverage for outpatient dialysis

treatments while leaving all other coverage the same.

Ibid. But separately, Renalogic’s chief legal officer has

explained that the “well established strategies * * * to

pay dialysis claims at less than provider-billed

charges—for example, using specifically designed

plan language and consistent methodologies, such as

defined ‘usual and customary’ or ‘usual and reasonable rate’ provisions * * * vary in legal defensibility.”

John Christiansen, The Hidden Perils of Dialysis

Claims,

Leader’s

Edge

(Oct.

29,

2019),

perma.cc/JGE4-8ZUJ.

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Plans such as Petitioners’—along with those who

develop and sell these strategies—unabashedly seek

to reduce dialysis costs by shifting costs and risk to

ESRD patients. But ESRD patients are already disproportionately members of vulnerable communities.

According to the United States Renal Data System,

the adjusted prevalence of ESRD was 3.4 times higher

in Black Americans than White Americans. United

States Renal Data System, 2020 USRDS Annual Data

Report: Epidemiology of Kidney Disease in the United

States, Vol. 2, Ch. 1, at 1 (2020). This reflects only incremental progress over the last ten years—the ratio

was 3.7 in 2008. Ibid. Similarly, the ESRD prevalence

in Hispanic populations was found to be more than 1.5

times higher than in non-Hispanics in 2018. Ibid. Patients in these populations are also less likely to receive transplants, meaning that they will need dialysis for longer. Ibid. at Figure 6.9.

There can be no question that these outlier insurers’ goal is to force patients off of their plans and onto

Medicare, seeking to do precisely what Congress prohibited: “‘gaming’ Medicare when it comes to ESRD.”

Christiansen, supra. On top of the blatant inconsistency with Congressional purpose and statutory design, Petitioners’ approach will expand existing inequities in the delivery of healthcare to individuals with

kidney disease.

2. Petitioners’ defiance of Congress’s costallocation scheme carries grave risks.

In addition to directly contradicting Congress’s

designs, outlier plans like Petitioners’ create significant risk to the availability of dialysis as a whole.

Forcing patients to rely on Medicare during the coordination period undermines the stability of both the

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public and private components of the system, to the

ultimate detriment of ESRD patients.

1. First, plans that disregard Congress’s allocation of costs during the coordination period threaten

the viability of the Medicare fisc. As described above,

Congress passed the MSPA in part to curb ballooning

Medicare dialysis payments. Increased prevalence of

ESRD and cost of dialysis caused Medicare expenditures to quickly outstrip early estimates. See, e.g., Lyons, supra. The Senate estimated in 1981 that extending the MSPA to cover ESRD patients would save

$440 million within the first four years alone. S. Rep.

97-139 at 736.

The MSPA has been enormously effective in reducing Medicare dialysis costs. When Congress extended the coordination period to its current 30month length in 1997, the Congressional Budget Office estimated that the extension alone “would save

$7.5 billion between 1998 and 2002.” H.R. Rep. No.

105-149, at 1400 (1997). The Congressional Research

Service has estimated that the MSPA reduced Medicare expenditure by about $50 billion between 2006

and 2012, billions of dollars of which are attributable

to the inclusion of ESRD. Suzanne M. Kirchhoff,

Cong. Rsch. Serv., RL33587, Medicare Secondary

Payer: Coordination of Benefits 2 (May 8, 2014).

Elimination of these savings would constitute a

significant diminution of the benefits from the MSP

program that could threaten the Medicare fisc. Congress has made that clear with the passage, continuous reenactment, and expansion of the MSPA. The nation’s experience with the early days of dialysis rationing illustrates that a purely private solution cannot

ensure the widespread availability of lifesaving ESRD

treatments including dialysis. See Alexander, supra;

Lawson, supra. As Congress recognized when

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extending the MSPA to cover ESRD patients, the existence and solvency of Medicare is a precondition to

the availability of dialysis relied on by hundreds of

thousands of Americans each year. Plans such as Petitioners’ threaten the entire system and must therefore not be permitted to dodge Congress’s allocation of

costs.

2. Just as a purely private payment system was

inadequate to ensure widespread availability of dialysis for ESRD patients, so too would a purely public reimbursement scheme fail. Dialysis providers rely on

private insurance payments to remain in business.

Forcing ESRD patients to rely on Medicare during the

coordination period threatens the availability of dialysis from these providers, creating a risk of dialysis

scarcity and imposing additional burdens on patients

who may have to travel further or wait longer for necessary treatments.

Freestanding dialysis facilities provide the vast

majority of dialysis treatments. In 2019, for example,

freestanding outpatient facilities furnished 96% of

treatments, and for-profit facilities furnished 89%.

MedPAC, Report to the Congress: Medicare Payment

Policy 174 (Mar., 2021), perma.cc/ESM9-EYYK.

But for years, the cost of providing dialysis has exceeded the amount Medicare reimburses for the treatment. In 2017, for example, an independent review of

public information estimated that Respondent lost

$21 for each dialysis treatment provided to a Medicare

patient—almost 10% of the total cost of the treatment.

Adam A. Shpigel et al., A Comparison of Payments to

a For-Profit Dialysis Firm from Government and Commercial Insurers, 179 JAMA Internal Med. 1136, 1137

(2019). Naturally, dialysis providers must recoup this

deficit in order to stay afloat—the only alternative to

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ceasing operation and thus depriving ESRD patients

of necessary dialysis treatments.

But experts estimate that Medicare is the secondary payer for nearly 10% of all ESRD patients, as compared to the nearly 60% for which it is the primary

payer. Suzanne M. Kirchhoff, Cong. Rsch. Serv.,

R45290, Medicare Coverage of End-Stage Renal Disease (ESRD) 7-8 (Aug. 16, 2018). The MSP population

represents a significant portion of the patient population from which dialysis providers can recoup enough

of their costs to continue operations—especially since

nearly 15% of the patients for whom Medicare was not

counted as the primary payer were in Part C Medicare

Advantage plans. Id. at 7.

These risks are especially acute for rural dialysis

facilities, which make up 17% of all freestanding dialysis facilities and account for 12% of all dialysis treatments at such facilities. MedPAC, supra, at 188. Rural

facilities have lower margins than urban facilities,

due to the lower treatment volume. Id. at 186. And

government incentives designed to keep low-volume

facilities in business have historically resulted in dramatic underpayment. See U.S. Gov’t Accountability

Off., GAO-13-287, End Stage Renal Disease: CMS

Should Improve Design and Strengthen Monitoring of

Low-Volume Adjustment 11 (2013). These rural facilities—which many Americans rely on for life-sustaining treatments multiple times per week—are

uniquely vulnerable to the decreased margins from

plans forcing patients off of private insurance and

onto Medicare. 2

The same is true for low-volume urban dialysis facilities,

which often provide treatments in underserved areas. While urban facilities typically have higher operating margins than rural

facilities, facilities across locations in the lower two quintiles of

2

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***

Congress sought to ensure that Americans with

ESRD have access to lifesaving dialysis treatments by

extending access to Medicare. It then sought to ensure

the continued viability of Medicare by carefully balancing the allocation of costs between the government

and private insurance plans, to which many patients

had been making payments for decades with the expectation that the plans would pay for treatment in

the event of chronic illness. Plans like Petitioners’

flaunt Congress’s well-considered and delicate choices

about these programs. In doing so, they jeopardize

both the solvency of Medicare and of private, freestanding dialysis facilities that provide the vast majority of treatments. Such an outcome is plainly inconsistent with Congress’s intent, and with the intricate

statutory and regulatory scheme that it crafted to help

create a world in which a diagnosis of ESRD no longer

spelled imminent, needless death for Americans.

treatment volume typically have negative margins when compared to the Medicare reimbursement rate. MedPAC, supra, at

189 Fig. 6-6.

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CONCLUSION

The Court should affirm.

Respectfully submitted.

PAUL W. HUGHES

Counsel of Record

CHARLES SEIDELL

McDermott Will & Emery LLP

500 North Capitol Street NW

Washington, DC 20001

(202) 756-8000

phughes@mwe.com

Counsel for Amicus Curiae