Supreme Court to decide Medicare reimbursement issue

WASHINGTON — The Supreme Court will decide a dispute about hospital reimbursement rates under Medicare, with hundreds of hospitals arguing the government had shorted them for treating low-income patients.

More than 200 hospitals in more than 30 states, led by Advocate Christ Medical Center in Illinois, have asked the justices to overturn a lower court ruling that allows the Department of Health and Human Services to reimburse a lower rate for treating a high proportion of low-income patients. The dispute, which the hospitals said could affect more than $4 billion in federal funds, hinges on how to determine which patients count toward that reimbursement rate and follows a 2022 Supreme Court decision over the same program.

The justices announced Monday that they would decide the case, which means oral arguments and a decision would come in the next term that starts in October.

The hospitals argued in a petition that HHS should base the “Disproportionate Share Hospital” rate on Medicare patients who are enrolled in Social Security’s Supplemental Security Income program, regardless of whether that patient is actually receiving cash payments at the time of admission.

Hundreds of hospitals across the country rely on the DSH reimbursement to keep treating patients well, or even keep their doors open, the hospitals’ petition stated.

“By reducing compensation to hospitals already operating on the brink of insolvency, improperly suppressed DSH payments leave patients served by safety net hospitals in peril,” the petition said.

The Biden administration has defended its position, which hinges on whether the patient is actually receiving cash payments at the time of hospital admission. That smaller number was upheld by a decision of the U.S. Court of Appeals for the District of Columbia Circuit because the statute says a patient must be “entitled” to the SSI cash benefit to count toward reimbursement.

In a Supreme Court brief, the administration argued that only SSI cash benefits, not non-cash services like rehabilitation, count toward the law’s reimbursement formula. Also, the administration said that, because a patient’s eligibility for SSI can change from month to month, the reimbursement calculation should hinge on when a patient is actually paid the cash benefit, rather than simply enrolled.

“The decision of the court of appeals — which sustained the interpretation of the SSI portion of the Medicare fraction that HHS has followed since the outset of the DSH program — is correct and does not conflict with any decision by this Court or another court of appeals,” the Biden administration brief stated.

The case follows from a 2022 decision by the court in Becerra v. Empire Health Foundation, where the justices said HHS could base the reimbursement rate on whether a patient was eligible for Medicare, regardless of whether their Medicare coverage paid for the service received.

The hospitals argued that the Biden administration has taken the opposite position on SSI benefits, parsing when someone is “entitled” to a benefit rather than looking at the category of Medicare eligibility as the court upheld in Empire.

The dispute covers reimbursement for the years 2006 to 2009, but the petition said taking the case could prevent years of future litigation.

“Conclusively resolving the question presented is also essential to forestall continued litigation arising from the agency’s inability to otherwise get payments right,” the petition said.

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