In a significant decision on April 29, the U.S. Supreme Court delivered a victory to the Department of Health and Human Services (HHS) in a case that has sparked heated debate among more than 200 hospitals serving low-income communities. These hospitals had filed a lawsuit challenging the method used by the government to determine additional Medicare reimbursements for their services.
The Court, in a 7-2 ruling authored by Justice Amy Coney Barrett, upheld HHS’s approach, stating that it aligned with the intent of Congress. The key issue at hand was how hospitals should be reimbursed for providing care to low-income patients under Medicare. According to the ruling, only patients who actually received payments from federal assistance programs, such as Supplemental Security Income (SSI), could be counted in the reimbursement formula — not simply those eligible for the program.
The hospitals, which span 32 states, argued that this calculation method resulted in a shortfall of about $1.5 billion in Medicare funds annually between 2006 and 2009. They contended that this underfunding contributed to the closure of rural hospitals and left them struggling to meet the needs of vulnerable populations.
However, the Supreme Court ruled that the law’s language clearly intended for only those patients who received SSI payments during their hospital stay to be included in the reimbursement calculation. This decision rejected the hospitals’ argument that all eligible patients, regardless of whether they received payments, should be counted.
In dissent, Justices Ketanji Brown Jackson and Sonia Sotomayor argued that the scope of benefits from SSI enrollment extends beyond direct payments, asserting that all eligible patients should be considered in the reimbursement formula.
The case, which centers on the calculation of “disproportionate share hospital” funding, is seen as a pivotal moment in the ongoing debate about how to support hospitals serving high proportions of low-income individuals. This decision is likely to have lasting implications for hospitals’ financial health and their ability to care for underserved populations.
