Last week, the Supreme Court issued its opinion in Advocate Christ Medical Center v. Kennedy, siding with the government and holding that, for purposes of the Medicare disproportionate share hospital (DSH) calculation, Medicare beneficiaries “entitled to supplemental security income [(SSI)] benefits under Title XVI of the Social Security Act” means only those patients eligible to receive cash SSI payments during the month of hospitalization. “Today we hold that a person is entitled to such [SSI] benefits when she is eligible to receive a cash payment during the month of her hospitalization.” The Supreme Court’s ruling affirms the D.C. Circuit’s September 2023 decision, which had affirmed the D.C. District Court’s grant of summary judgment to HHS in June 2022.
The case involves more than 200 acute care hospitals across the country challenging HHS’s interpretation of the Medicare DSH calculation. The DSH adjustment derives from two statutory formulas known as the Medicare fraction and the Medicaid fraction. This case turns on the Medicare fraction. The numerator of the Medicare fraction is the number of patient days attributable to Medicare patients who are “entitled to Part A” and “entitled to” SSI benefits, while the denominator is the number of patient days attributable to all patients entitled to Medicare Part A.
Title XVI of the Social Security Act establishes the Supplemental Security Income (SSI) program which provides cash payments to financially needy individuals who are aged, blind, or disabled. Individuals must apply for this benefit, and their eligibility to receive cash payments is determined monthly, depending on their income and resources during the month. Once an individual qualifies for the cash payment during a particular month, the individual remains enrolled in the SSI program, and their eligibility for cash payments is determined each month until the individual fails to qualify for cash payments for a period of twelve consecutive months. While enrolled in the program, individuals may also receive two further benefits: (1) they are eligible for a subsidy under Medicare Part D, which they receive for at least six months regardless of whether they continue to qualify for monthly payments; and (2) they are eligible to receive vocational rehabilitation services, which eligible enrollees may continue to use after they fail to qualify for monthly payments.
In 2022, the Supreme Court ruled in Becerra v. Empire Health Foundation that “entitled to [Medicare Part A] benefits” included “all those qualifying for the [Medicare] program,” whether or not Medicare paid for that hospital stay. 597 U.S. 424, 445 (2022). However, in Empire, the Court left open the question of whether the phrase “entitled to [SSI] benefits” also includes all those who qualify for the SSI program. Advocate Christ answers that question:
[A]n individual is ‘entitled to [SSI] benefits[’] … when she is eligible to receive an SSI cash payment. And because eligibility is determined on a monthly basis, an individual is considered ‘entitled to [SSI] benefits’ for purposes of the Medicare fraction only if she is eligible for such benefits during the month of her hospitalization.
The 7-2 decision saw the majority siding with HHS, which interpreted the phrase “entitled to SSI benefits” to denote only those patients who are determined to be entitled to a cash payment during the month they were hospitalized as inpatients. The hospitals, on the other hand, had argued the phrase included all patients enrolled in the SSI program at the time of hospitalization, even if they did not qualify for a cash payment in the particular month. The hospitals posed two key arguments—neither of which the majority found availing.
First, the hospitals argued that SSI benefits under Title XVI included not only cash payments but also other ancillary benefits, such as automatic Medicaid eligibility and vocational rehabilitation services. The majority sided with HHS, finding that “[t]he hospitals’ theory stumbles out of the gate, because neither vocational rehabilitation services nor continued Medicaid coverage fits the description of a ‘supplementa[l] security income’ benefit.”
Second, the hospitals argued that eligibility for SSI benefits persists until a person must reapply for them, which occurs after twelve consecutive months of ineligibility for a cash payment. According to the hospitals, the SSI program is akin to income insurance whereby SSI enrollees are guaranteed, for at least a twelve month period, that if their income falls below a certain threshold for the month, they will receive an SSI payment. The majority disagreed and echoed the D.C. Circuit’s observations: “it makes little sense to say that individuals are ‘entitled’ to the benefit in months when they are not even eligible for it.”
Although the majority agreed with the government that the numerator of the Medicare fraction should only include patients that were eligible for a cash benefit in the specific month at issue, it left open the question of whether CMS’s current policy appropriately captured all such patients. Under a policy enumerated in 2010, CMS only treats three SSI status codes as being reflective of SSI entitlement and excludes dozens of others status codes. 75 Fed. Reg. 50,042, 50,280-81 (Aug. 16, 2010). Patients who have had their SSI cash benefits suspended because their whereabout were unknown or because they did not accept direct deposit, for example, are excluded from CMS’s calculation. Since the Court stated that “we take no position on whether HHS has unreasonably excluded particular [status] codes from the Medicare fraction,” hospitals can continue to argue that while these and similar patients may not have received a cash payment for some administrative reason, they were nonetheless “eligible to receive a cash payment” and were therefore inappropriately excluded under the standard announced by the Court.
The dissent endorsed the hospitals’ argument that the SSI program essentially operates as “income insurance” and that the Medicare fraction, therefore, should include all patients enrolled in the program regardless of whether those patients actually received a cash payment in a particular month. The dissent argued that the majority’s interpretation ignored the critical context and endorsed an interpretation of the Medicare formula that arbitrarily undercounted a hospital’s low-income patients. The dissent explained:
No one disputes that Congress’s ultimate goal was to provide hospitals that serve the neediest among us with the appropriate level of critical funds. The only logical basis for the formula’s reliance on SSI, then, is to draw from that program’s pre-existing pool of individuals that have already been designated as our society’s neediest—not to assess the wholly irrelevant fact of whether any such individual actually received a cash payment under the SSI program during the month of their hospitalization.
The Supreme Court decision is available here, the D.C. Circuit decision is available here, and the D.C. District Court decision is available here.
