Supreme Court agrees to review Medicare DSH case

The US Supreme Court will revisit a case seeking greater clarity on how HHS calculates Medicare Disproportionate Share Hospital (DSH) payments for certain hospitals.

The case, Advocate Christ Medical Center v. Becerra, involves whether certain patients entitled to benefits should be considered in the formula for determining the amount Medicare DSH hospitals receive in supplemental payments.

In a 2022 decision, the Supreme Court sided with the government challenging a multi-billion dollar cut to Medicare DSH payments after HHS altered the formula for determining the payments to qualifying hospitals. Hospitals receive Medicare DSH payments when they treat a significant portion of low-income patients.

Supreme Court judges ruled in a 5-4 vote that HHS has the authority to modify Medicare DSH payment calculations. They agreed with HHS that individuals entitled to Medicare Part benefits should be used in the calculations, whether or not the hospital received Medicare payments for part of all of their hospital stays.

However, in July 2017, over 200 hospitals sued HHS over another issue with the formula for calculating payments. They argued that the way HHS determined payments for hospitals did not fully account for care rendered to patients eligible for Supplemental Security Income (SSI) benefits. HHS uses the metric to help identify the proportion of low-income patients hospitals treat.

A district court dismissed their case in June 2022, ruling HHS’ method was consistent with the Medicare statute, which details how HHS should calculate DSH payments. The court also dismissed the hospitals’ request for a recalculation of their Medicare DSH payments for fiscal years 2006-2009.

In February 2024, the American Hospital Association (AHA) and five other national hospital associations urged the Supreme Court to review the case. A friend-of-the-court brief argued that HHS did not properly use patients entitled to SSI benefits in calculations, only using the patients if they actually received cash SSI payments during a hospital stay. The associations claim that interpretation is inconsistent with the Court’s ruling in the 2022 decision.

“This case concerns a question that is critical to calculating the Medicare DSH fraction: When are patients ‘entitled to’ SSI benefits and so counted in the numerator? Is it when they are eligible for SSI benefits, or when they are actually receiving cash SSI benefits,” the associations wrote.

AHA said of the recent announcement from the Supreme Court that it is pleased judges will consider the case.

“As we explained in our amicus brief urging the Court to grant certiorari, it is critical to hospitals and health systems that HHS interpret the DSH fraction consistently across the statute,” Chad Golder, AHA general counsel and secretary, said in a statement. “The agency’s longstanding failure to do so has cost hospitals more than a billion dollars each year, directly harming the hospitals that serve America’s most vulnerable patients. We look forward to the Supreme Court rectifying this legal error next term.”