Supreme Court Sides With Hhs In Dispute Over Calculation Of Medicare Payments To Hospitals

The Supreme Court on Tuesday ruled for the federal government in its dispute with a group of more than 200 hospitals over the formula used to identify and compensate hospitals that serve a large number of lower-income patients. The vote was 7-2, with Justice Amy Coney Barrett writing for the majority in a case that she described as “highly technical.”

Justice Ketanji Brown Jackson dissented, joined by Justice Sonia Sotomayor. She warned that the majority’s interpretation of the law at issue “will deprive hospitals serving the neediest among us of critical federal funds that Congress plainly attempted to provide.”

The Medicare program provides health insurance to Americans who are elderly or disabled, and it reimburses hospitals that care for those patients. To provide hospitals with an incentive to treat lower-income patients, who are often more expensive to treat, the Medicare program provides an enhanced payment to hospitals that treat larger numbers of such patients.

One part of the formula used to calculate the enhanced payment is known as the “Medicare fraction,” which in turn considers (among other things) the number of patients who were “entitled to supplementary security income benefits” – a federal program that provides a subsistence allowance to lower-income Americans who are elderly, blind, and disabled. The Department of Health and Human Services interpreted the phrase to apply to patients who were entitled to receive SSI benefits during the month in which they were hospitalized, while the hospitals interpreted the phrase more broadly to apply to all patients who were enrolled in the SSI system when they were hospitalized, even if they did not receive a payment during that month.

The majority on Tuesday sided with the federal government. Barrett explained that “SSI benefits are cash benefits.” And the Medicare law also makes clear, she continued, that whether someone is eligible to receive those benefits “is determined on a monthly basis.” Therefore, she concluded, “an individual is considered ‘entitled to [SSI] benefits’ for purposes of the Medicare fraction only if she is eligible for such benefits during the month of her hospitalization.”

In her dissent, Jackson contended that the majority’s decision was “based upon a fundamental misunderstanding of how SSI’s cash-benefit program works.” When it adopted the enhanced-payment program, Jackson reasoned, Congress’s goal was to ensure that hospitals that serve a disproportionately large number of lower-income patients had access to the funding that they need. The formula’s use of SSI benefits, she stressed, was to “draw from that program’s pre-existing pool of individuals that have already been designated as our society’s neediest — not to assess the wholly irrelevant fact of whether any such individual actually received a cash payment under the SSI program during the month of their hospitalization.”

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