Supreme Court to review Medicare DSH case

The Supreme Court on Monday said it will review a lower-court’s decision that limits Medicare payments for hospitals that treat a disproportionate number of low-income patients.

The U.S. Court of Appeals for the District of Columbia Circuit sided with the Health and Human Services Department in September. A group of 213 hospitals that filed the initial case in 2017 petitioned the Supreme Court in December to review that decision.

Related: Hospitals sue HHS to recoup adjusted DSH payments

The American Hospital Association said in a statement it is pleased the Supreme Court agreed to consider the case.

"It is critical to hospitals and health systems that HHS interpret the DSH fraction consistently across the statute," Chad Golder, AHA general counsel and secretary, said in the statement. "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.”

An HHS spokesperson said the agency does not comment on ongoing litigation.

Hospitals argue HHS should increase the number of patients who are eligible for Supplemental Security Income benefits under the Medicare disproportionate share hospital payment program. Benefits not only include cash payments but also the Medicare Part D subsidy and vocational rehabilitation services, hospitals argue.

HHS claims those benefits are only for patients who receive cash Social Security payments during the month that they are in the hospital. Hospitals contend patients enrolled in Social Security should receive those benefits, regardless of whether they received payments during the month of their hospitalization.

In a decision issued in September, the appellate court disagreed with the hospitals, citing statute that “expressly defines the term ‘supplemental security income benefits under subchapter XVI’ as ‘a cash benefit.’”

At least $1.5 billion in annual Medicare DSH payments are at stake, the hospitals said in the petition for the Supreme Court to review the case. The plaintiff hospitals estimate that shortfall based on a 15% gap between Medicare DSH payments doled out from 2006 to 2020 and providers' interpretation of the reimbursement calculation.

The case has wide-reaching implications for hospitals and patients, including payments tied to the 340B drug discount program, the AHA, Association of American Medical Colleges, America’s Essential Hospitals, Catholic Health Association, Federation of American Hospitals and National Rural Health Association wrote in a related brief filed in February.