Supreme Court set to take up case on disproportionate-share hospital payments

View of the Supreme Court building
The Supreme Court has agreed to hear a case that could impact as much as $4 billion in uncompensated care payments. (sframephoto/iStock/Getty Images Plus/Getty Images)

The Supreme Court has agreed to hear the Trump administration’s appeal on a case that could impact as much as $4 billion in hospital payments for uncompensated care.

The administration petitioned the court to take a look at the case in May.

That came after a panel of three federal judges—one of whom was current SCOTUS nominee Brett Kavanaugh—invalidated a Medicare rule in July 2017 that would drastically overhaul the way the Centers for Medicare & Medicaid Services calculates disproportionate-share hospital payments.

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James Segroves, a partner at Reed Smith in Washington, D.C., said it will be the first Medicare-related case the Supreme Court has taken up in several years.

The implications for the ruling are significant, as interpretive rules are commonly used by CMS, Segroves said in a statement emailed to FierceHealthcare.

RELATED: Feds settle litigation with hospitals over uncompensated care

Led by Allina Health Services, the health systems who brought the suit alleged that CMS undercounted the number of Medicare beneficiaries who receive help—and thus would count in the DSH calculations.

The Department of Health and Human Services, however, is asking the Supreme Court to decide if it can issue interpretive rules without needing a comment period under the Medicare Act. The appeals court judges argued that these rules would not be excluded from a comment window.

HHS argued in its petition that the lower court’s decision “threatens to undermine [its] ability to administer the Medicare program in a workable manner.”

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The case has been working its way through the courts since 2014. The case specifically centers on between $3 billion and $4 billion in DSH payments from between 2005 to 2013.

Segroves told Fierce in a May interview that the case is appealing to the Supreme Court for a number of reasons—there's a large amount of money at stake and any provider can, at present, sue under the Medicare Act in D.C., where they’re likely to get a favorable ruling.

CMS has since proposed changes to the way it reimburses hospitals for uncompensated care: In a 2017 rule, it finalized a new method of calculating these payments.