The Supreme Court has sided with the Department of Health and Human Services (HHS) in a dispute over the formula used for calculating disproportionate share hospital (DSH) payments.
The justices affirmed the lower court's 2023 decision, 7 to 2, that a person is considered entitled to Supplemental Security Income (SSI) benefits only when they are eligible to receive a cash payment during the month of their hospitalization. The ruling implies that HHS did not ultimately underfund those hospitals from 2006 to 2009, as the plaintiffs have argued.
The high court agreed to review the case, filed as Advocate Christ Medical Center v. Becerra, last summer. First launched in 2017, it included a group of more than 200 hospitals that argued HHS' method for calculating DSH payments undercounted patients who were eligible for SSI benefits.
The HHS makes DSH payments to hospitals that serve a high number of low-income patients, recognizing they are often costlier to treat. The payments are calculated based on two factors: the hospital’s Medicare patients with low incomes, and those with low incomes but not on Medicare.
The HHS takes the position that only those eligible for a payment during the month of their hospitalization, not more broadly, count as low income in the calculation. This is given that a person's eligibility for SSI benefits is determined on a monthly basis, the SCOTUS majority opinion states.
The hospitals argued the calculation should encompass all patients enrolled in the SSI system at the time of their hospitalizations, even if they are not entitled to a payment in that month. They said SSI benefits include both cash and noncash benefits, including vocational rehabilitation services and continued Medicaid coverage.
“This approach sweeps more people into the numerator of the Medicare fraction, thereby increasing the amount of funding a hospital may receive,” Justice Amy Coney Barrett wrote (PDF), delivering the opinion of the court Tuesday. “The hospitals’ theory stumbles out of the gate, because neither vocational rehabilitation services nor continued Medicaid coverage fits the description of a 'supplementa[l] security income' benefit.”
Hospitals have claimed (PDF) that the narrow view taken by the HHS has cost them, for the years in question, “approximately $1.5 billion annually nationwide." The American Hospital Association declined to comment on the ruling.
In a separate case involving DSH payments in 2022, the Supreme Court also sided with the HHS. Becerra v. Empire Health Foundation considered how to count Medicare patients when Medicare is not paying for their hospital treatment. SCOTUS held that patients entitled to Medicare Part A are still counted as such whether Medicare paid for that hospital stay. This lowers DSH payments for hospitals, the court explained in its ruling.
But, in that case, Empire expressly left open the question of whether "entitled to [SSI] benefits" includes all those who qualify for the SSI program, similar to the Medicare question, per a Supreme Court case summary (PDF) of the main issue before the court.
In her dissenting opinion, Justice Ketanji Brown Jackson, joined by Justice Sonia Sotomayor, wrote that the majority’s interpretation of Medicare’s disproportionate-share formula is "based upon a fundamental misunderstanding of how SSI’s cash-benefit program works."
"And that misunderstanding has led the majority to evaluate the Medicare statute without regard to the function of the formula’s reference to the SSI program, causing it to reach the wrong conclusion," Jackson wrote.
The only logical basis for the formula’s reliance on SSI is to draw from that program’s preexisting pool of individuals that have already been designated as society’s neediest, Jackson noted. Whether any such individual actually received a cash payment under the SSI program during the month of their hospitalization is irrelevant, she wrote.
"The majority’s interpretation both ignores this critical context and endorses an interpretation of the Medicare formula that arbitrarily undercounts a hospital’s low income patients," Jackson wrote.
Jackson also warned that the majority's decision "will deprive hospitals serving the neediest among us of critical federal funds that Congress plainly attempted to provide."
"Hospitals that have a disproportionate share of low-income patients are struggling. Indeed, it is undisputed that systemically undercounting low-income patients for the purposes of the disproportionate-share formula might cause many such hospitals to close their doors entirely," she wrote in the dissenting opinion.