A federal court in Georgia Feb. 19 upheld the right of Blue Cross Blue Shield to cut its payment rates to dialysis provider National Renal Alliance by 88% to treat out-of-network non-Medicare patients.

The court dismissed claims by National Renal that Blue Cross violated the Medicare Secondary Payer Act (MSP), saying the reimbursement cuts did not affect Medicare and that commercial insurers are not obligated to pay more for treatments to help dialysis providers make up for lower Medicare payments for rural and underserved areas. Even with the revised rates, the court noted, the Blue Cross payments were higher than Medicare rates.

National Renal Alliance, which was bought by dialysis provider Renal Advantage last November, was providing out-of-network dialysis services to less than 20 Blue Cross beneficiaries with kidney disease in rural areas of Georgia. National Renal sued Blue Cross after the insurer cut its reimbursement rates for dialysis services to all out-of-network providers under its preferred provider organization (PPO) and point of service (POS) plans.
 
Because National Renal was not in Blue Cross' preferred network, nearly all of the patients were enrolled in PPO and POS plans, some of which are employee welfare benefit plans under the Employee Retirement Income Security Act (ERISA).

National Renal claimed in a civil complaint filed Jan. 16 of last year that Blue Cross had violated federal anti-discrimination laws by targeting their reimbursement rate reduction for ESRD treatments specifically to out-of-network patients and violated ERISA by paying only 12% of the customary charges and nullifying the "out-of-pocket" maximum financial liability under the plans.

National Renal also asserted various state law claims, including breach of contract (for patients in non-ERISA plans), misrepresentation and unfair and deceptive trade practices.

According to a summary of the court's decision from the Feb. 27 issue of Health Lawyers Weekly, "Blue Cross' action in lowering its reimbursement rates for dialysis services rendered by non-network providers did not run afoul of the MSP because they had not differentiated between Medicare enrollees and non-Medicare enrollees."

Blue Cross said it lowered their payments for dialysis because the National Renal charges were "excessive," with costs at over $2,000 per patient per treatment.