Supreme Court challenges HHS’s interpretation of DSH formula

On Monday, a Supreme Court judge questioned whether the Ministry of Health and Human Services had fairly interpreted the medical insurance law when it changed the formula for calculating the disproportionate hospital share.

In oral arguments, judges asked sharp questions about the specific language that HHS interpreted to create its DSH formula. They want to know whether the department should have broad freedom in interpreting the language of Congress that determines policy.

Chief Justice John Roberts said: “So, I think in this case, we should interpret the language used by Congress with extreme precision, without the agency adding any embellishments.”

HHS made procedural errors during the original rule-making process in the early 2000s. DSH payments are determined by measuring the number of days a patient is entitled to Medicare Part A and Supplemental Security Income Benefits in hospital. These figures are combined with the hospital’s total number of days of hospital care for beneficiaries who are eligible for Medicaid but are not entitled to Part A of Medicare.

HHS decided that beneficiaries who have used up all the hospital days covered by Medicare Part A will be included in the Medicare Part, thereby increasing the total number of Medicare patient days in the hospital. This may reduce the hospital’s percentage of DSH, depending on its patient population.

“This is a compliment motive, but the problem is, [is] Does the official language get in the way? “Judge Brett Kavanaugh said.

The judges also questioned whether the Empire Health Foundation, which originally sued HHS for the rule, really had different meanings regarding “right” and “qualified.”

The early decisions of the Ninth Circuit sided with the hospital. The Ninth Circuit stated that the Medicaid Act uses “eligible for” benefits, while Medicare uses “entitlements” because Congress wants them to have a different meaning. Therefore, beneficiaries who have exhausted their hospitalization days should not be included in the medical insurance.

Judge Elena Kagan said that the government’s proposal to develop two formulas for two different groups of people is more meaningful than the hospital’s idea.

But legal experts do not believe that the high court will use this case to make a broader statement about the agency’s powers.

Thomas Barker, co-chair of Foley Hoag’s healthcare business and former CMS general counsel, said that if the Supreme Court was on the side of HHS, hospitals with a large number of health insurance beneficiaries might see their DSH dollars decrease. Since the “Affordable Care Act” cuts will begin in 2024, hospitals are worried that payments will be further reduced, and the “Rebuild Better Act” proposes additional cuts for hospitals in states that have not expanded the Medicaid program.

However, if the High Court decides that HHS’s conduct is out of bounds, the case may eventually affect the power of HHS and other federal agencies to interpret the law in the future.

Buck said the Supreme Court may have decided to hear this case, as well as another case concerning the reduction of 340B payments, in order to grasp the power of federal agencies to interpret the language of Congress.

Although many court observers combined this case with 340B and the judges will hear the debate on Tuesday, the judges do not have to come to the same conclusions about the institutional powers in both cases.

“If there is a case where they want to say that you are unreasonable, you know, where you are unreasonable, you have no reason to respect—institutions, you have gone too far—I think tomorrow’s case is better Candidate,” said Alison Hoffman, a professor of law at the University of Pennsylvania.

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