The Supreme Court ruled 7-2 on April 29 that hospitals that serve large numbers of poor people are not eligible for higher Medicare payments from the government.
Acknowledging the statute governing the Medicare program is “notoriously complex,” Barrett wrote that the hospitals’ flawed interpretation of the law improperly increases “the amount of funding a hospital may receive.”
“We must respect the formula that Congress prescribed,” she said.
Justice Ketanji Brown Jackson filed a dissenting opinion that was joined by Justice Sonia Sotomayor. Jackson wrote that the majority’s interpretation of the law “will deprive hospitals serving the neediest among us of critical federal funds that Congress plainly attempted to provide.”
Advocate Christ Medical Center in Oak Lawn, Illinois, is the lead petitioner, and U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. is the respondent.
At issue was how HHS calculates Medicare payments to “disproportionate share hospitals,” or DSH hospitals, so named because they serve a “disproportionate share” of low-income persons. Medicare provides health insurance to the elderly and disabled.
More than 200 hospitals challenged the government’s funding methodology, saying it violated federal law. Washington-based U.S. District Judge Tanya Chutkan upheld the formula on June 8, 2022.
Because treating low-income patients often costs more, a federal law known as 42 U.S. Code Section 1395ww was enacted to reimburse DSH hospitals.
Supplemental security income benefits are given to the blind, disabled, and needy elderly.
In Empire, 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 [supplementary security income] benefits” covers everyone who qualifies under the [supplementary security income] program, the brief said.
Although HHS’s position was that only patients who took in a supplementary security income cash payment during the month of their hospital stay are “entitled to benefits,” the phrase should “mean the same thing for Medicare part A and [supplementary security income], such that it includes all who meet basic program-eligibility criteria, whether or not benefits are actually received,” the brief said.
In the new opinion, Barrett wrote that Section 1395ww lays out how to calculate how much the government pays a DSH hospital for treating low-income Medicare patients.
Barrett wrote that the percentage comes from adding two fractions: the Medicare fraction and the Medicaid fraction. Medicaid is a joint federal–state program that offers health insurance coverage to low-income Americans.
She wrote that the numerator of the Medicare fraction counts how many patient days can be attributed to Medicare patients who were “entitled to benefits under [Medicare] part A” and were “entitled to supplementary security income benefits … under subchapter XVI,” according to Section 1395ww. Subchapter XVI provides rules for the supplementary security income program.
In math, a numerator is the number above the line in a fraction that shows how many parts of the denominator, or the number below the line, are taken. For example, in the fraction 2/3, two is the numerator and three is the denominator.
In Empire, the court held the phrase “‘entitled to [Medicare Part A] benefits’” includes “all those qualifying for the program, regardless of whether they are receiving Medicare payments for part or all of a hospital stay,” Barrett wrote.
“We did not decide, however, what it means to be ‘entitled to supplementary security income benefits … under subchapter XVI.’”
“Today, we hold that a person is entitled to such benefits when she is eligible to receive a cash payment during the month of her hospitalization,” she wrote.
HHS interprets the statutory text to reference patients who are “entitled to receive [supplemental security income] benefits during the month” in which they were in the hospital. However, the hospitals argue the phrase covers “all patients enrolled in the [supplemental security income] system at the time of their hospitalizations, even if those patients were not entitled to a [supplemental security income] payment during that month,” Barrett wrote.
This approach “sweeps more people into the numerator of the Medicare fraction, thereby increasing the amount of funding a hospital may receive.”
However, “Congress made a specific choice: For purposes of the Medicare fraction, an individual is ‘entitled to [SSI] benefits’ when she is eligible to receive an [supplemental security income] cash payment during the month of her hospitalization. We must respect the formula that Congress prescribed,” Barrett wrote.
The Supreme Court affirmed the ruling of the U.S. Court of Appeals for the D.C. Circuit.
In her dissent, Jackson wrote the majority’s interpretation of the DSH formula reflects “a fundamental misunderstanding of how [the supplemental security income] cash-benefit program works.”
It is “wholly irrelevant” whether an “individual actually received a cash payment under the [supplemental security income] program during the month of their hospitalization.”
“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.
