Supreme Court to hear challenge of DSH payment calculations

Photo: Mike Kline/Getty Images

The Supreme Court has agreed to review a case challenging how the Department of Health and Human Services calculates Disproportionate Share Hospital payments. 

In February, the American Hospital Association and five other hospital organizations had urged the court to review the case. 

The current formula costs DHS hospitals more than a billion dollars each year, according to the AHA.

"The AHA is pleased that the Supreme Court agreed to consider this case," said Chad Golder, AHA general counsel and secretary, by statement. "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. 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." 

WHY THIS MATTERS

This case, and one heard by SCOTUS in 2002 called Becerra v. Empire Health Foundation, can be viewed as being two sides of the same coin. Both deal with a different portion of the DSH fraction that determines payment. The Empire Health case dealt with the Medicare portion. This latest case is about the Supplemental Security Income portion. 

The AHA and other organizations have argued that HHS incorrectly adopted the view that a patient is entitled to Supplemental Security Income benefits only if the patient actually received cash SSI payments during a hospital stay. This interpretation is inconsistent with the court's reasoning in Becerra v. Empire Health Foundation, the AHA said. 

That 2022 decision said that patients are entitled to Medicare Part A benefits for purposes of the DSH formula if they qualify for the program, even if Medicare is not paying for their hospital stay. 

"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 AHA and other organizations wrote in their brief to the court. 

THE LARGER TREND

In February, the American Hospital Association and five other national hospital associations representing hospitals urged the Court to review the case challenging how HHS applies Congress' formula for calculating Disproportionate Share Hospital payments.. 

"The correct interpretation of the DSH formula is vitally important to America's hospitals," the brief said. "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. ... HHS's error thus has far-reaching implications for hospitals, patients, and the American healthcare system." 

Becerra v. Empire Health Foundation was a United States Supreme Court case that in 2022 clarified calculations for the Medicare fraction -- one of two fractions the Medicare program uses to adjust the rates paid to hospitals that serve a higher-than-usual percentage of low-income patients, according to SCOTUSblog. Those individuals "entitled to [Medicare Part A] benefits" are all those qualifying for the program, regardless of whether they receive Medicare payments for part or all of a hospital stay, the court ruled.

In Becerra v. Empire Health Foundation, the court ruled 5-4 that HHS had properly interpreted the underlying statute and reversed and remanded the decision of the United States Court of Appeals for the Ninth Circuit.

Email the writer: SMorse@himss.org