US Supreme Court sides with HHS in dispute over reimbursement for needy patients

By Diana Novak Jones

April 29 (Reuters) - The U.S. Supreme Court on Tuesday sided with the U.S. Department of Health and Human Services in a lawsuit brought by more than 200 hospitals that serve low-income populations that had challenged the government’s method of determining the hospitals’ compensation.

In a 7-2 opinion authored by Justice Amy Coney Barrett, the majority held that HHS’ method of determining when to provide additional Medicare reimbursement to hospitals that serve disproportionately low-income populations was in line with Congress’ intent.

The case focused on how to reimburse hospitals for care provided to low-income patients. The court said Congress' language in the statute governing how to adjust reimbursement rates made clear that the patient has to receive a payment from a certain federal assistance program — not just be eligible for it — to be counted.

The hospitals, which are located in 32 states, had challenged that methodology, saying it shortchanged them on Medicare funding by about $1.5 billion per year between 2006 and 2009 and contributed to the closure of rural hospitals.

A spokesperson for HHS did not immediately respond to a request for comment. Neither did an attorney representing the hospitals.

Liberal Justices Ketanji Brown Jackson and Sonia Sotomayor dissented from the decision, saying the benefits of being enrolled in the federal assistance program go beyond simply receiving a check and therefore the reimbursement calculation should count everyone who is eligible.

The hospitals' 2017 lawsuit centered on how HHS should calculate so-called disproportionate share hospital funding, which under federal law provides additional Medicare reimbursement to hospitals that serve a high percentage of low-income patients. One of the factors used to determine the funding is how many Medicare patients also qualify for supplemental security income, a federal assistance program. The law covering reimbursement calculations states that HHS must divide the number of Medicare patients who qualify for SSI by the total number of Medicare patients, adjusted for how many days they spend in the hospital.

The hospitals claimed that HHS is breaking the law by counting only patients who actually receive SSI payments while they are in the hospital and not all who are simply eligible. SSI payments are determined on a monthly basis, and may be zero for a particular month even while a patient remains "eligible" for the program, the hospitals argued.

But the high court said that HHS was correct to only count patients who actually received an SSI payment during the month of their hospitalization.

The case is Advocate Christ Medical Center et al v. Kennedy, U.S. Supreme Court, No. 23-715.

For the hospitals: Hyland Hunt of Deutsch Hunt

For the government: then-Solicitor General Elizabeth Prelogar