Supreme Court rules against hospitals over DSH payment
By Susan Morse / May 1, 2025
The Supreme Court has ruled against hospitals in a case over disproportionate share hospital payments.
The Justices handed up a 7-2 decision on Tuesday.
More than 200 hospitals brought the lawsuit against the Department of Health and Human Services in Advocate Christ Medical Center v. HHS. The case was argued in November 2024.
"The hospitals have lost at every stage of this litigation, including most recently before the D. C. Circuit," said Justice Amy Coney Barrett in writing the opinion for the majority.
WHY THIS MATTERS
The case centered on the interpretation of a law that gives hospitals that treat a high percentage of low income patients additional Medicare funding in a disproportionate share hospital (DSH) adjustment.
To calculate whether a hospital receives a DSH payment and, if so, how much, HHS adds together a Medicare and a Medicaid fraction to yield the disproportionate patient percentage.
At issue is whether the fraction should include all those qualifying for the program, regardless of whether they are receiving Medicare payments for part of all of a hospital stay.
Hospitals insist the law was intended to include all patients enrolled in the Supplemental Security Income (SSI) system at the time of their hospitalization, even if they were not entitled to an SSI payment during the month of hospitalization.
HHS interpreted the language to mean that the only patients who qualify are those entitled to receive an SSI payment during the month in which they were hospitalized.
The D.C. Circuit concluded that SSI benefits are about cash payments for needy individuals and that "it makes little sense to say that individuals are entitled to the benefit in months when they are not even eligible for [a payment]," Barrett said.
The hospitals claim that HHS' interpretation of the law resulted in their being underfunded for DSH payments from 2006 to 2009.
THE LARGER TREND
The Supreme Court agreed with the lower court.
Barrett was joined by Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito Jr., Elena Kagen, Neil Gorsuch and Brett Kavanaugh.
Justice Ketanji Brown Jackson filed the dissenting opinion in which Justice Sonia Sotomayor joined.
"The decision the majority has made in this case will deprive hospitals serving the neediest among us of critical federal funds that Congress plainly attempted to provide," Jackson wrote. "Hospitals that have a disproportionate share of low-income patients are struggling."