Opinion ID: 4576558
Heading Depth: 3
Heading Rank: 2

Heading: The Take-Into-Account Clause

Text: The take-into-account clause states that a “group health plan” “may not take into account that an individual is entitled to or eligible for benefits under” 42 U.S.C. § 426-1 for a discrete period of time. 42 U.S.C. § 1395y(b)(1)(C)(i). DaVita again asserts that this clause does not permit group health plans to offer a neutral benefits package that has a disparate impact on those who are Medicare eligible. At the least, DaVita suggests, the neutral plan could violate this provision if an entity adopted its terms with an intent to target Medicare-eligible individuals. Yet, for the same reasons that I have already discussed, I read this clause to bar only group health plans that contain terms expressly targeting Medicare-eligible individuals who are eligible because of their end stage renal disease. The clause, for example, prohibits a plan from disqualifying an individual from coverage if the individual becomes Medicare eligible. See Bio-Med., 656 F.3d at No. 19-4039 DaVita, Inc. et al. v. Marietta Mem. Hosp. et al. Page 50 282–83. The clause does not, by contrast, prohibit neutral plans that treat Medicare-eligible individuals the same as everyone else—regardless of any disparate impact or plan-sponsor intent. First, the text compels this reading. Like the differentiate clause, this clause applies to a “group health plan,” not the employer or payer. So it regulates the “formal program” or “arrangement,” not the motives of the “entities” that adopted it. 42 C.F.R. § 411.21; Random House, supra, at 1480. The phrase “take into account” next shows that the clause bars that arrangement from giving “consideration” to, or making “allowance” for, something. 1 Oxford English Dictionary 86 (2d ed. 1989) (defining “account”); Longman Dictionary of Phrasal Verbs 649 (1983); see Bio-Med., 656 F.3d at 282. The something? Unlike the differentiate clause, this clause shifts the focus from all individuals with end stage renal disease to certain individuals with that disease. It says that, for 30 months, the plan may not consider the fact “that an individual is entitled to or eligible for” Medicare benefits under 42 U.S.C. § 426-1. The clause thus has a narrower scope because Medicare does not cover all individuals with end stage renal disease. It instead starts covering individuals only after they have received dialysis treatment for three months (or have had a kidney transplant). Id. § 426-1(b)(1)–(2); see also 42 C.F.R. § 406.13(e)(2). Thus, this clause prohibits plan terms that consider an individual’s Medicare eligibility under § 426-1, not terms that consider an end-stage-renal-disease diagnosis. When the clause is read in this way, the Marietta Plan does not violate it. DaVita concedes that the plan terms do not facially target Medicare-eligible individuals. Consider this point from a participant’s perspective. A patient with end stage renal disease must seek dialysis treatments under the Marietta Plan’s rates for the first three months. See 42 U.S.C. § 426-1(b)(1). After that period, the patient will become Medicare eligible. Does that change in status affect this Medicareeligible participant in any way? No, it will not have any effect on the benefits that a participant receives or the reimbursement rate offered to dialysis providers. I thus do not see how the Marietta Plan itself could be said to take into account a participant’s Medicare eligibility. That participant is treated the same as a participant with end stage renal disease who is not Medicare eligible. Second, the contextual factors I discussed earlier caution against finding liability for neutral plan terms. If anything, these contextual clues apply with even more force here. To begin with, No. 19-4039 DaVita, Inc. et al. v. Marietta Mem. Hosp. et al. Page 51 nowhere does the take-into-account clause contain the type of “results-oriented” language that the Supreme Court has required for disparate-impact liability. Tex. Dep’t of Hous., 576 U.S. at 535; see Doe, 926 F.3d at 242. In addition, the Medicare Secondary Payer Act uses the same “take into account” phrase in nearby provisions. The Act indicates that a group health plan may not “take into account” that a plan participant is entitled to participate in the general Medicare program because of age or disability. 42 U.S.C. § 1395y(b)(1)(A)(i)(I), (B)(i). A disparate-impact theory thus would not be cabined to this end-stage-renal-disease provision. It would prohibit group health plans from enacting any neutral term that caused a disparate impact on, for example, individuals over 65 who are Medicare eligible. Many diseases and conditions uniquely impact the elderly, and disparate-impact liability would leave plans with no guidance concerning plan terms for these elder-focused services. Additionally, this disparate-impact theory would render superfluous a nearby provision that bars plans from providing inferior benefits to those over 65 as are available to those under that age. Id. § 1395y(b)(1)(A)(i)(II). That illegal age-based differential treatment would also have an obvious disparate impact on Medicare-eligible individuals over 65. It confirms that the take-into-account clause should not be broadly read to impose disparate-impact liability. Third, while I again find the language clear, regulations confirm my reading that the clause bars discriminatory plan terms that target Medicare-eligible individuals, not neutral plan terms that apply to all participants. See 42 C.F.R. §§ 411.108, 411.161(a)(1). All of the regulatory examples of improper “taking into account” involve plan terms that target Medicare-eligible individuals. A plan may not terminate “coverage because the individual has become entitled to Medicare,” id. § 411.108(a)(3), impose “limitations on benefits for a Medicare entitled individual that do not apply to others enrolled in the plan,” id. § 411.108(a)(5), or pay “providers and suppliers less for services furnished to a Medicare beneficiary than for the same services furnished to an enrollee who is not entitled to Medicare,” id. § 411.108(a)(8). The examples, by contrast, nowhere suggest that a plan could improperly “take into account” Medicare eligibility by providing the same reimbursement for Medicare-eligible and non-eligible individuals if those neutral rates disparately affected the former group. If anything, the examples suggest that a group health plan may apply neutral rules to all individuals. They note that a plan could neutrally extend to Medicare-eligible No. 19-4039 DaVita, Inc. et al. v. Marietta Mem. Hosp. et al. Page 52 individuals the requirement that an employee must have worked for a year as long as that requirement applied to all other participants. Id. § 411.108(b)(1). Fourth, precedent again supports my view. The same district courts discussed above agree that a plan only violates this provision when it “treats those eligible for Medicare differently than those who are not.” Marietta, 2019 WL 4574500, at ; Dialysis of Des Moines, 2019 WL 8892581, at ; Amy’s Kitchen, 379 F. Supp. 3d at 972–733; Nat’l Renal All., 598 F. Supp. 2d at 1354. To date, moreover, our court has found a violation of the take-into-account clause only when a health plan expressly eliminated coverage for participants who were eligible for Medicare. Bio-Med., 656 F.3d at 282–83. Yet the Marietta Plan falls on the right side of this divide because, unlike the plan in Bio-Medical, it does not target Medicare-eligible individuals for unique treatment. It thus does not violate this take-into-account clause.