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June 24, 2022

Around the nation: SCOTUS rules against DaVita in employer health plan case

Daily Briefing

    The Supreme Court ruled 7-2 that Marietta Memorial Hospital Employee Health Benefit Plan did not violate federal law by limiting outpatient dialysis benefits, in today's bite-sized hospital and health industry news from California, the District of Columbia, and Rhode Island.

    • California: On Thursday, 1,000 nurses at Kaiser Permanente Los Angeles Medical Center began a one-day strike over patient care and staffing shortages. Since September, the California Nurses Association/National Nurses United has been in negotiations with the health system for a new contract. During negotiations, nurses have requested more supplies, including syringes and the kits used to start IVs, and asked the health system to invest more in nurses and ancillary staff. While Kaiser Permanente said it is "disappointed" by the union's call for nurses to "walkawayfromtheirpatients'bedsides," RN and union representative Violet Galinato noted that nurses must frequently take on the work of certified nursing assistants, food service workers, and housekeepers because the hospital does have adequate ancillary staff. "Taking valuable time away from providing care is not fair to our patients," she said. According to Kaiser Permanente, no bargaining sessions are currently scheduled with the union. "We hope [the California Nurses Association] will stay at the bargaining table meaningfully working toward an agreement that will allow us to demonstrate our high regard and respect for our nurses," the health system said. (Christ, Modern Healthcare, 6/23)
    • District of Columbia: The Supreme Court on Tuesday ruled 7-2 in favor of Marietta Memorial Hospital Employee Health Benefit Plan, asserting that the group health plan did not violate federal law. In 2018, dialysis provider DaVita sued the hospital's health plan, alleging that its policy discriminated against kidney failure patients by limiting dialysis coverage. The employee health plan only covers dialysis providers as "out of network," with lower reimbursement rates—a policy that DaVita claimed discouraged providers from joining its network. In addition, DaVita alleged that the plan violated the Medicare Secondary Payer Statute, which stipulates that Medicare should not have to pay for services that should be covered by another entity. On Tuesday, the Supreme Court ruled in favor of the hospital health plan, reversing a 2020 ruling by the U.S. Court of Appeals for the 6th Circuit. In the court's majority opinion, Justice Brett Kavanaugh wrote that while the plan pays lower reimbursement rates for dialysis than it does for other treatments, it does not discriminate against end-stage renal disease patients since it offers the same amount of coverage for all patients who have kidney disease, which complies with federal law. "Neither the statute nor DaVita offers a basis for determining when coverage for outpatient dialysis could be considered inadequate," the majority opinion read. "And neither the statute nor DaVita supplies an objective benchmark or comparator against which to measure a plan's coverage for outpatient dialysis." According to the opinion, siding with DaVita would create "judicial and administrative chaos" with courts trying to set appropriate reimbursement rates. (Goldman/Tepper, Modern Healthcare, 6/21; Mann, SCOTUSblog, 6/21; Morse, Healthcare Finance, 6/21; Hellmann, Roll Call, 6/21)
    • Rhode Island: CVS Health appointed Violetta Ostafin as its new EVP and chief strategy officer, effective July 11. Previously, Ostafin served as the global chief operation officer, health solutions for professional services firm Aon. In her new role, Ostafin will lead the company's core business strategy development and identify market opportunities and product innovations. "Violetta's deep health care experience has been focused on bold innovation and finding new sources of growth, two priorities for CVS Health," said CVS Health president and CEO, Karen Lynch. "Her accomplishments are driven by a passion for improving how consumers experience health care, which aligns with our goals and values." (Blackman, Health Leaders Media, 6/22)


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