Pending before the Supreme Court is Marietta Memorial Health Plan v. Davita. At issue is the crafty way Marietta designed its health plan to encourage its members to drop their employer plan and sign up for Medicare coverage. As anyone who has paid much attention to DVA knows, virtually all of the company's profits are derived from commercial reimbursement. That is a little like a few governors around the country that have come to depend on a tiny number of taxpayers to make budget. It works, but not forever.
SCOTUSBlog had anticipated a quick decision for DVA which has not happened. The justices are exploring a pretty small corner of federal law, so it is pretty hard to guess what happens when they issue their opinion. They could rule as early as Wednesday.
DVA's problems go well beyond the SCOTUS decision. If the justices rule for DVA, it will probably take a couple of years for health plans to adjust and follow the Marietta model. If they rule against, DVA must still contend with a high mortality among its current and future patients, high labor costs, stalled reimbursement and a restless union. In deteriorating credit markets with a rising leverage ratio, things could get a little difficult to navigate.
Dialysis as an industry seems destined for secular decline. One harbinger might be a few rumors we have heard on the ground about FMS. I covered that on the morning call yesterday. Listen here.
Have a great day.
Emily Evans
Managing Director – Health Policy
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