In a significant decision affecting hospitals that serve low-income patients, the U.S. Supreme Court ruled 7-2 on Tuesday in favor of the Department of Health and Human Services (HHS) in a long-running dispute over how Medicare calculates extra payments to hospitals treating a disproportionate share of poor patients. The case, Advocate Christ Medical Center v. Kennedy, centered on the technical formula used to determine these “disproportionate share hospital” (DSH) payments, funds that are crucial for many safety-net hospitals across the country.
At the heart of the case was the interpretation of which patients are considered “entitled to Supplemental Security Income (SSI) benefits” for purposes of the Medicare payment formula. HHS argued that only patients who were eligible to receive a cash SSI payment during the month they were hospitalized should be counted. More than 200 hospitals, the plaintiffs, contended that all patients enrolled in the SSI program at the time of hospitalization, including those not receiving a cash payment that month, should be included.
The hospitals argued that the narrower HHS approach undercounted their low-income patient population, costing them an estimated $1.5 billion annually in lost federal funding. They maintained that SSI eligibility should encompass both cash and non-cash benefits, such as continued Medicaid coverage and vocational rehabilitation, and that eligibility should not be limited to a single month.
Writing for the majority, Justice Amy Coney Barrett held that SSI benefits are strictly cash payments, and eligibility for those benefits is determined on a monthly basis. Therefore, only patients who are eligible for a cash SSI payment during the month of their hospitalization are counted in the DSH formula. The Court emphasized that Congress prescribed a specific formula for these calculations and that the judiciary must respect the statutory language, even if it leads to less generous payments for hospitals serving low-income populations.
The majority rejected the hospitals’ broader interpretation, noting that non-cash benefits and continued Medicaid coverage are not SSI benefits under the relevant statute and that eligibility for SSI is inherently a month-to-month determination.
Justice Ketanji Brown Jackson, joined by Justice Sonia Sotomayor, dissented, warning that the decision would deprive hospitals serving the neediest among us of critical federal funds that Congress plainly attempted to provide. The dissent argued that Congress intended the formula to capture all patients enrolled in SSI, not just those receiving a payment in a particular month, and criticized the majority for what it called a misreading of the statutory purpose.
The dispute dates back to 2017, when the hospitals first challenged HHS’s methodology for calculating DSH payments. Lower courts consistently sided with the government, and the Supreme Court’s decision affirms those rulings. The outcome is expected to have a significant financial impact, with estimates suggesting at least $1 billion in federal funding each year is at stake for hospitals nationwide.
