Hospitals’ Dispute Over Medicare Reimbursements Reaches Supreme Court

Xavier Becerra, secretary of Health and Human Services (HHS), speaks during a press conference at the HHS headquarters in Washington, on June 28, 2022. Nicholas Kamm/AFP via Getty Images

Hospitals serving poor people urged the Supreme Court on Aug. 7 to consider whether they are being shortchanged by the U.S. Department of Health and Human Services (HHS).

The case, Advocate Christ Medical Center v. Becerra, will be heard on Nov. 5.

Lead petitioner Advocate Christ Medical Center is in Oak Lawn, Illinois, and HHS Secretary Xavier Becerra is the respondent.

At issue is how HHS calculates Medicare payments to “disproportionate share hospitals,” or DSH hospitals, which are so named because they serve a “disproportionate share” of low-income persons.

More than 200 hospitals challenged the government’s funding methodology but U.S. District Judge Tanya Chutkan upheld the formula, dismissing the lawsuit on June 8, 2022.

In separate litigation, the Supreme Court sided with HHS, upholding the formula in Becerra v. Empire Health Foundation on June 24, 2022.

Then, on Sept. 1, 2023, the U.S. Court of Appeals for the District of Columbia Circuit affirmed Chutkan’s ruling.

The hospitals petitioned the Supreme Court on Dec. 29, 2023, questioning the meaning of the wording the court used in Becerra v. Empire Health Foundation, and asking the justices to provide greater clarity. The court granted the petition without comment on June 10.

Because it often costs more to treat low-income patients, a federal law known as 42 U.S. Code [Section] 1395ww was enacted to reimburse DSH hospitals.

A hospital receives larger payments partly based on how many days it gives inpatient care to senior or disabled low-income patients, “measured as those who ‘were entitled to benefits under part A of [Medicare] and were entitled to supplementary security income [SSI] benefits,’” according to a new brief the hospitals filed on Aug. 7.

In the Empire ruling, the Supreme Court found that “entitled to [Medicare part A] benefits” encompasses “all those qualifying for the [Medicare] program,” regardless of whether Medicare covered the hospital stay, but did not resolve the issue of whether “entitled to [SSI] benefits” covers everyone who qualifies under the SSI program.

HHS’s position is that only patients who took in an SSI cash payment during the month of their hospital stay are “entitled to benefits.”

But the hospitals are arguing that “entitled to benefits” should “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 brief states.

It “should be obvious” that “entitled to SSI benefits means eligible for or qualifying for the SSI program.” This interpretation of the law “has the virtue of actually measuring the low-income patient population Congress intended to capture,” the brief says.

Solicitor General Elizabeth Prelogar filed a brief on April 18, saying the DC Circuit Court’s ruling in the case “is correct and does not conflict with any decision by this Court or another court of appeals.”