Health Law Daily Wrap Up, SUPREME COURT NEWS—Supreme Court agrees to hear DSH case on Medicare payment limitations, (Jun 11, 2024)

By Cathleen Calhoun, J.D.

Over 200 hospitals sued to recoup adjusted disproportionate share hospital (DSH) payments, but so far, the courts have sided with HHS.

The U.S. Supreme Court agreed on Monday, June 10, to hear a case about how HHS is paying hundreds of disproportionate share hospitals (DSH) under Medicare. The court granted the certiorari petition filed by the hospitals that argued the U.S. Court of Appeals for the District of Columbia Circuit erred in its decision last year in favor of HHS. The hospitals initially sued in 2017, claiming that HHS limited Medicare payments to hospitals that treat a disproportionate number of low-income patients.

Court of appeals decision. Medicare reimburses hospitals for the care they provide to a greater degree if the Medicare beneficiaries the hospitals treat are also entitled to Supplemental Security Income (SSI) benefits under Title XVI of the Social Security Act. This is often referred to as the DSH adjustment. Last September, the U.S. Court of Appeals for the District of Columbia Circuit found that hospitals challenging the level of their Medicare reimbursements for treating low-income populations misconstrued the meaning of the Social Security Administration (SSA) SSI benefit. According to the court, the applicable SSI benefit consisted of cash payments only, and Medicare Part D and vocational training benefits were not cash benefits. The court agreed with and adopted the HHS Secretary’s interpretation of the “Medicare fraction” used to calculate the hospitals’ “disproportionate patient percentage” (DPP) for Medicare reimbursements, without any need to consider Chevron deference. The court disagreed with the hospitals that HHS had applied the law in any way that was arbitrary and capricious, largely because, according to the court, the hospitals were mistaken about how HHS calculated their Medicare fractions (see Hospitals serving low-income populations lose appeal challenging calculation of ‘Medicare fraction, September 7, 2023).

Question presented. In its petition to the U.S. Supreme Court, the hospitals stated that HHS insists, contrary to its Medicare interpretation, that only patients who received an SSI cash payment for the month of their hospital stay are “entitled to benefits.” As a result, according to the hospitals, the case presents Becerra v. Empire Health Foundation’s open question (see Supreme Court persuaded by HHS’ interpretation of Medicare DSH statute). The hospitals stated that the open question is:

“Does the phrase “entitled … to benefits,” used twice in the same sentence of the Medicare Act, mean the same thing for Medicare part A and SSI, such that it includes all who meet basic program eligibility criteria, whether or not benefits are actually received.”

The court will hear oral arguments in its next term, the 2024-2025 term, that begins in October.

Companies: Advocate Christ Medical Center, et al.

MainStory: TopStory NewsStory SupremeCtNews CMSNews BillingNews CoverageNews DSHNews PaymentNews PartANews PartDNews