Justices Reject Hospitals’ Bid for Higher Medicare Payments (1)

The US Supreme Court Tuesday ruled in favor of the US health department in a case that challenged the bounds of eligibility for enhanced hospital reimbursement under the Medicare program.

By a 7-2 decision in the case, Advocate Christ Medical Center v. Kennedy, the justices upheld an appeals court ruling that the hospitals, which serve a large share of low-income Medicare beneficiaries, aren’t eligible to receive a higher Medicare disproportionate share payment adjustment, or DSH payment.

The case revolved around the meaning of the phrase “entitled to benefits,” and involved the federal Supplemental Security Income program for low-income disabled and elderly people, as well as Medicare DSH payments.

“The hospitals claim that, as a result of HHS’s misinterpretation of the phrase, HHS miscalculated the hospitals’ DSH adjustment and underfunded the hospitals from 2006 to 2009. The hospitals have lost at every stage of this litigation,” said the decision authored by Justice Amy Coney Barrett.

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, the case tested “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 DSH payment adjustment.

The plaintiffs, a group of more than 200 hospitals, argued that it does. The US Department of Health and Human Services maintained it doesn’t.

Barrett was joined in the decision affirming the federal government’s argument by six other justices. Justices Ketanji Brown Jackson and Sonia Sotomayor dissented.

“Congress made a specific choice,” Justice Barrett wrote in the opinion, “an individual is ‘entitled to [SSI] benefits’ when she is eligible to receive an SSI cash payment during the month of her hospitalization. We must respect the formula that Congress prescribed.”

“Today, we hold that a person is entitled to such benefits when she is eligible to receive a cash payment during the month of her hospitalization,” Barrett added.

In her dissent, Justice Jackson said “the majority’s interpretation of Medicare’s disproportionate-share formula is based upon a fundamental misunderstanding of how SSI’s cash-benefit program works. And that misunderstanding has led the majority to evaluate the Medicare statute without regard to the function of the formula’s reference to the SSI program, causing it to reach the wrong conclusion.”

Court’s Ruling in Empire Health

In a previous decision, Becerra v. Empire Health Foundation, the high court in 2022 agreed with the HHS 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.

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. Kennedy, U.S., No. 23-715, Opinion 4/29/25.