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July 01, 2022

USSC Sides with HHS on Low-Income Hospital Reimbursement Rates

In Becerra v. Empire Health Foundation, the U.S. Supreme Court upheld an HHS regulation that adjusts Medicare payments for hospitals serving a disproportionate share of low-income patients, or disproportionate share hospitals (DSH). The regulation reduced payments to DSH hospitals based on HHS’s modification of the rule in 2005 to include all patients “entitled to” Medicare Part A benefits in the denominator of the Medicare fraction, while poor patients were counted in the numerator. The court engaged in statutory interpretation of HHS’s use of the phrase throughout the regulations and held that the agency’s interpretation was clear and consistent. Although the Court did not invoke the Chevron doctrine, it considered the clear meaning of a term in statute and concluded that the agency’s interpretation of the phrase aligned with statute. Notably, the decision could cause DSH hospitals, which serve as safety-net hospitals for low-income individuals, to lose millions of dollars based on the ruling. 


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