Hospital Groups Rally Against HHS’ Interpretation of DSH Payments Formula

The American Hospital Association (AHA) and five other hospital groups are calling on the Supreme Court to challenge the Department of Health and Human Services’ (HHS) interpretation of disproportionate share hospital (DSH) payments.

Medicare reimbursement rates are often not high enough to cover all of the costs hospitals spend on patients, especially those with complex care needs. DSH payments are intended to offset a portion of hospitals’ uncompensated care costs, allowing facilities to stay open and continue serving vulnerable populations.

The DSH formula set by Congress determines payments based on the size of hospitals’ needy patient populations. The formula focuses on three public assistance programs: Medicare, Medicaid, and Supplemental Security Income (SSI).

The formula calculates a fraction for patients who are over 65 or disabled; the SSI-entitled Medicare population is the numerator, and the total Medicare population is the denominator. The amicus brief—submitted by AHA, the Association of American Medical Colleges, America’s Essential Hospitals, Catholic Health Association, Federation of American Hospitals, and National Rural Health Association—revolves around the question of whether patients entitled to SSI benefits are counted when they are eligible for SSI benefits or when they are actually receiving cash SSI benefits.

The organizations stated that HHS has adopted the view that a patient is only entitled to SSI benefits if they received cash SSI payments during a hospital stay—a view that AHA and the other groups say goes against a previous Supreme Court ruling.

In Becerra v. Empire Health Foundation, the Supreme Court ruled that a patient must be counted in the Medicare fraction in the DSH formula when they are qualified for Medicare, even if Medicare is not paying for their hospital stay. The Court reached this decision by examining the Medicare statute, which uses the phrase “entitled to benefits.”

Although the Empire Health case did not address SSI entitlement, the Medicare statute uses the same language to describe Medicare-entitled and SSI-entitled patients, the amicus brief stated. Thus, the meaning should be the same in that a patient is entitled to SSI benefits if they qualify for those benefits.

The hospital groups maintain that HHS’ interpretation of SSI eligibility undermines the DSH program and limits the amount of DSH payments hospitals receive.

“The correct interpretation of the DSH formula is vitally important to America’s hospitals,” the brief stated. “Although HHS has refused to share the data that would allow hospitals to accurately count the SSI-eligible patients whom the agency’s approach excludes, the available estimates suggest that hospitals will lose more than a billion dollars each year in DSH funds. What’s more, a hospital’s eligibility for DSH payments affects its entitlement to other federal benefits designed to help hospitals ‘provide a wide range of medical services’ to vulnerable populations.”

These impacts will hurt rural and safety-net hospitals the most, as they already face financial challenges. Rural hospital closures limit access to care even further for low-income and other vulnerable communities.

The amicus brief urges the Supreme Court to direct HHS to use the correct interpretation of SSI eligibility in the DSH formula in Advocate Christ Medical Center v. Xavier Becerra.