Justices Weigh Whether Hospitals Merit Higher Medicare Pay (1)

US Supreme Court justices Tuesday tried to untangle the complicated rules of federal hospital reimbursement during oral arguments in a case in which plaintiffs want greater clarity on a 2022 decision that upheld the way Medicare calculates payments for certain hospitals.

The case, Advocate Christ Medical Center v. Becerra, is being pressed by more than 200 hospitals and revolves around the meaning of the phrase “entitled to benefits.” It involves the federal Supplemental Security Income program for low-income disabled and elderly people and the Medicare “disproportionate share hospital” adjustment, or “DSH payment” enhancement, for hospitals that serve a large share of low-income beneficiaries.

The case “tests whether a person who is enrolled in SSI, but who did not qualify for cash benefits for the month of their hospitalization,” should count favorably toward that hospital receiving the higher DSH payment adjustment, according to an American Bar Association case summary written by Stephen D. Schwinn, a law professor at the University of Illinois Chicago School of Law.

Plaintiffs’ attorney Melissa Arbus Sherry, a partner at Latham & Watkins, argued Tuesday that it does. Ephraim McDowell, a Department of Justice attorney, argued that it does not.

Sherry said the outcome hinges on the justices’ interpretation of the phrase “entitled to SSI benefits” in the Medicare Act.

“Just two terms ago,” in a related case, “this Court looked at the words ‘entitled to benefits’ under Medicare Part A and said that it means qualifying for the Medicare Part A program,” Sherry argued. “‘Entitled to SSI benefits’ in the same sentence should mean the same thing, qualifying for the SSI program.”

But Justice Samuel Alito disagreed. He said Sherry’s lead argument—that the phrase “entitled to benefits” can’t mean two things—was “catchy when you read it.” But he added, “I don’t see how the government’s argument does that at all. What you’re saying seems to me, when you think about it, terribly superficial.”

“It’s the nature of the entitlement,” Alito added. “So, if the entitlement is different under Medicare and under SSI, then that argument falls apart.”

Justice Elena Kagan said in its starkest form this is a question about the nature of SSI. She said it’s essentially a matter of whether the SSI program “gives you lots of different kinds of benefits once you qualify for it, one may go away but you retain the others. Or is SSI just a monthly check that you get in the mail?”

Sherry agreed that’s a key part of the analysis. “I would hesitate to say it’s everything because I think you still have to come back to the text of DSH and I think you still have to come back to the purpose,” she said.

McDowell said the government’s rule doesn’t turn on whether a patient actually receives the payment. “Our rule is not an actual receipt rule,” he said.

Justice Amy Coney Barrett said she was confused about that aspect. “Why isn’t that an actual receipt rule if those people are excluded?” she asked.

In a previous decision, Becerra v. Empire Health Foundation, the high court in 2022 agreed with the Department of Health and Human Services that ‘“entitled to [Medicare part A] benefits’ included ‘all those qualifying for the [Medicare] program,’ whether or not Medicare paid for that hospital stay. But Empire expressly left open the question of whether ‘entitled to [SSI] benefits’ likewise includes all those who qualify for the SSI program,” according to a Supreme Court case summary of the main issue before the court.

Supplemental Security Income, or SSI, is a needs-based program that provides monthly payments to people with limited income and resources. Once a person qualifies for SSI, they remain enrolled even if they don’t qualify for cash benefits in a certain month.

Before the court’s 2022 ruling in Empire, Advocate Christ Medical Center in Oak Lawn, Ill., and more than 200 hospitals sued the HHS in 2017 over the department’s method of determining DSH payments. The hospitals claimed the formula didn’t fully account for care provided to patients eligible for SSI benefits, which is used by the HHS as a proxy for care provided to low-income patients.

But the US District Court for the District of Columbia rejected the hospitals’ arguments and granted summary judgment to the HHS in a June 2022 ruling that found the disputed funding formula was consistent with the statute and reasonable. The court also denied the hospitals’ claim for recalculation of their compensation for fiscal years 2006-2009. The US Court of Appeals for the District of Columbia Circuit in September 2023 upheld the lower court’s rejection.

In December 2023, attorneys for the unsuccessful plaintiff hospitals petitioned the US Supreme Court to revisit the lower courts’ decision.

The case is Advocate Christ Med. Ctr. v. Becerra, U.S., No. 23-715, oral argument held 11/5/24.