The Supreme Court recently ruled in favor of HHS’ revised formula for calculating disproportionate share hospital adjustments, which help cover the costs that hospitals incur in treating patients on Medicaid as well as uninsured patients, to safety-net facilities for patients covered by Medicare.1
The case was brought by Empire Health Foundation, which took issue with HHS’ 2004 interpretation of the formula used to determine payment amounts for safety-net hospitals, arguing that the decision resulted in lower payments for facilities that treat a greater number of lower-income patients, including some on Medicare.1,2
A key question in the case was whether patients who remained in the hospital after their Medicare Part A coverage ran out were factored into DSH payments.1 HHS adds the Medicare fraction, which represents the percentage of hospital patients on Medicare who are considered low income, and the Medicaid fraction, which represents a hospital’s percentage of low-income patients who aren’t covered by Medicare, to tally DSH adjustments.3 Empire argued that HHS’ interpretation in 2004 wasn’t consistent with the statutory formula.1 The court, in a 5-4 ruling, sided with HHS, saying the agency correctly interpreted the formula.1
“[T]he point of the statute is not to pay hospitals the most money possible; it is to compensate them for serving a disproportionate share of low-income patients,” Justice Elena Kagan wrote in the majority opinion.2
Justice Brett Kavanaugh, who wrote the dissenting opinion, argued that HHS revamped the statute in 2004 likely in an effort to “save money” and said the agency misinterpreted its own statute.2
The decision comes at a time when health care costs and Medicare expenditures are rising.4,5 The court’s ruling lends support to safety-net hospitals and helps them with uncompensated care while also avoiding excessive spending.
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References
- De Vogue, Ariane; Luhby, Tami; and Sneed, Tierney. Supreme Court backs HHS approach to Medicare payments for hospitals serving low-income patients. CNN. June 24, 2022. https://edition.cnn.com/2022/06/24/politics/medicare-payments-low-income-hhs-supreme-court/
- King, Robert. Supreme Court sides with HHS over Medicare DSH rule dispute in blow to hospitals. Fierce Healthcare. June 26, 2022. https://www.fiercehealthcare.com/providers/supreme-court-sides-hhs-over-medicare-dsh-rule-dispute-blow-hospitals
- Pifer, Rebecca. Supreme Court rules in favor of HHS in Medicare disproportionate share payments case. Healthcare Dive. June 27, 2022. https://www.healthcaredive.com/news/supreme-court-hhs-medicare-disproportionate-share-payments/626099/
- National Health Expenditure Projections 2021-2030: Forecast Summary. CMS. https://www.cms.gov/files/document/nhe-projections-forecast-summary.pdf
- The Facts About Medicare Spending. Kaiser Family Foundation. June 2022. https://www.kff.org/interactive/medicare-spending/
